Investec & ors v Glenalla & ors — the risks faced by the trustees of an insolvent trust
The recent judgment in the Guernsey case of (Investec & ors v Glenalla & ors) deals with the risks faced by the trustees of an insolvent trust.
There were two sets of proceedings in this case, known as Guernsey 1 and Guernsey 2. Guernsey 1 was the main claim, which took place in open court. Guernsey 2 was in private and comprised a number of Beddoe/Public Trustee v Cooper-type applications in which approval or guidance was sought from the court in relation to the continuing administration of the trust and its assets. In Guernsey 2, Ogier represented the current trustees, Rawlinson and Hunter (R&H), and played a major role in a large number of these applications.
Guernsey 1 was concerned with a large trust structure called the Tchenguiz Discretionary Trust (TDT). The TDT was a Jersey law discretionary trust, but the trustees were Investec and Bayeux in Guernsey, which ran and administered the trust from Guernsey. The trust contained an indemnity clause stating that no trustee should be liable for any loss to the trust fund or its income unless the loss should arise by reason of that trustee’s own fraud, wilful misconduct or gross negligence…
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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.