Investec and Ors v Glenalla and Ors — Court of Appeal judgment 27 June 2014
The judgment in the Court of Appeal in the above matter considered an appeal on one part of the judgment of Lieutenant Bailiff Chadwick (the Judge) of December 2013 (the remainder of the appeal is yet to be heard). While the dispute itself was a complex trust dispute involving several parties’ claims and counterclaims in relation to various transactions, this appeal focused on a very specific but important point: can Guernsey-based trustees of a Jersey-law trust benefit from the limitation of liability provisions available to trustees under article 32 of the Trusts (Jersey) Law 1984 (hereinafter ‘the Jersey Trust Law’) in relation to a contract, the governing law of which is not Jersey?
Investec Trust (Guernsey) and Bayeux Trustees (together the ‘former trustees’) were the Guernsey-based trustees of the Jersey law Tchenguiz Discretionary Trust (TDT). In their role as trustees, the former trustees recorded that a number of loan arrangements had been entered into with several British Virgin Islands (BVI) companies, now in liquidation (the ‘BVI companies’). Proceedings were issued in which the BVI companies sought repayment of the loan arrangements, and the amounts claimed exceeded the value of the assets in the trust. Whether the monies are due and owing was the subject of lengthy litigation. One particular aspect of that litigation was if it were found that monies were due and owing under the loans, whether the amounts claimed were limited to the value of the trust fund or whether the former trustees were personally liable to pay the shortfall once the assets of the trust had been exhausted.
Article 32 of the Jersey Trust Law limits a trustee’s liability to third parties in the circumstances where it is clear that a trustee is acting qua trustee. This acts to limit the trustee’s liability to the trust property (although it should be noted that this does not affect any liability a trustee may have for breach of trust)…
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