Jersey Court of Appeal confirms rights of non-trustee fiduciaries to an indemnity out of the trust fund
On appeal from the Royal Court, the Jersey Court of Appeal held that a fiduciary in relation to a trust had an identical right of indemnity in equity out of the trust fund as a trustee. Additionally, the Re Buckton principles were held to have no bearing on the entitlement of a trustee to an indemnity out of the trust fund and, by corollary, on the entitlement of a fiduciary to such an indemnity.
The underlying structure was an employee benefit trust which had a number of sub-trusts. One such sub-trust was the Bertrand des Pallières Dependent Fund (the B Sub-Trust), which had itself been established for the benefit of Bertrand des Pallières (B) and his family. The settlor of the trust was JP Morgan Chase & Co (JPM). The trustee was Royal Bank of Canada Trustees Ltd.
Though JPM was neither trustee, nor entitled to benefit from the trust as beneficiary, it retained some fiduciary functions in relation to the trust. In the proceedings before the Royal Court, the Court had declined to exercise its supervisory jurisdiction to order JPM as settlor to give disclosure to B as beneficiary. On the subsequent question of costs, the Royal Court ordered that JPM’s costs should be paid out of the B Sub-Trust on the trustee basis, and B’s costs should be paid out of the B Sub-Trust on the indemnity basis…
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