In re F — concerning a Jersey trust administered in Guernsey
In re F concerned a Jersey trust administered in Guernsey. This judgment deals with the in-camera element of a complicated piece of litigation involving a complex trust structure with a substantial portfolio of investments. The parties to the litigation included the trustees of the trust (the current trustee), the protector, the former trustees of the trust (the former trustees) and a potential creditor of the trust (the appellants). The main litigation concerned various debts that the appellants, a group of insolvent companies acting through their joint liquidators, alleged were owed by the former trustees in their capacity as trustee of the trust and personally. After the dispute commenced and the former trustees were replaced as trustee by the current trustee, the former trustees had claimed a lien over the trust property to protect their position until the main litigation was decided. This meant that they still held the trust property, therefore had to be involved in the decision-making process, despite the fact that the current trustees had been appointed in their place.
The appeal in this case was in relation to an application by the former trustees who sought directions as to the refinancing of a loan secured on a substantial property in London that was an asset of the trust. The former trustees applied for directions in a Public Trustee v Cooper-style application on whether they should investigate refinancing and as to whether the costs could be paid out of the trust property. This was because the bank holding the mortgage had indicated that they were not prepared to grant further extensions to the facility, and while an alternative lender was found the cost of the refinance was approximately £720,000. Neither the company owning the building nor its parent company were insolvent; however, neither could meet the costs of the refinancing either. The former trustee’s application was supported by both the current trustee and the protector and opposed by the appellants…
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On 31 July the latest HMRC settlement opportunity came to a close.
As a matter of Jersey law, where a trustee retires or is removed it is entitled to be provided with reasonable security for liabilities before surrendering the trust property.