FS Capital Limited & Ors v Alan Adams & Ors

FS Capital Limited & Ors v Alan Adams & Ors

The Court held that under Jersey law, as under English law, the exercise of a fiduciary power for an improper purpose is void, not voidable. FS Capital was not a bona fide purchaser for value without notice, as its directors had actual knowledge of the facts constituting the breach of trust and were not satisfied that disregarding beneficiaries' interests was legitimate. Pinotage Trustees SARL retired as trustee to facilitate the breach of trust, making it potentially liable for the resulting breach.

Parties
Appellant (2289), Respondent (2290): FS Capital Limited; Appellant (2289), Respondent (2290): Pinotage Trustees SARL; Appellant (2289), Respondent (2290): PNG Services Limited; Respondent (2289), Appellant (2290): Alan Adams; Respondent (2289), Appellant (2290): Further Claimants listed in Annex 1 to the Claim Form; Advocate for Appellant (2290): Marcus Flavin (Portner Law)
Jurisdiction
England and Wales
Judgment Date
28 January 2025
Procedural Posture
Civil Appeal / Court of Appeal Judgment
Outcome
Appeals dismissed
Legal Topics
Breach of Trust, Improper Purpose, Bona Fide Purchaser Defence, Trustee Retirement, Void Vs Voidable Transactions, Constructive Trusts
Trust Law Equity Property Law Breach of Trust Improper Purpose Bona Fide Purchaser Defence Trustee Retirement Void Vs Voidable Transactions +1 more

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Parties

FS Capital Limited

Appellant (2289), Respondent (2290)

Pinotage Trustees SARL

Appellant (2289), Respondent (2290)

PNG Services Limited

Appellant (2289), Respondent (2290)

Alan Adams

Respondent (2289), Appellant (2290)

Further Claimants listed in Annex 1 to the Claim Form

Respondent (2289), Appellant (2290)

Marcus Flavin (Portner Law)

Advocate for Appellant (2290)

Procedural Posture

Civil Appeal / Court of Appeal Judgment

Legal Issues

  1. 1 Whether the exercise of a fiduciary power for an improper purpose under Jersey law renders the transaction void or voidable
  2. 2 Whether FS Capital was a bona fide purchaser for value without notice under Jersey law
  3. 3 Whether knowledge of the facts or knowledge of the legal consequences is required to fix actual notice under Article 55, Trusts (Jersey) Law 1984

Ratio Decidendi

The Court held that under Jersey law, as under English law, the exercise of a fiduciary power for an improper purpose is void, not voidable. FS Capital was not a bona fide purchaser for value without notice, as its directors had actual knowledge of the facts constituting the breach of trust and were not satisfied that disregarding beneficiaries' interests was legitimate. Pinotage Trustees SARL retired as trustee to facilitate the breach of trust, making it potentially liable for the resulting breach.

Court Disposition

Appeals dismissed

Orders

  • Declaration that the assignment of the Loan Assets to FS Capital was void in equity and FS Capital holds them as constructive trustee
  • FS Capital to transfer the Loan Assets to a new trustee upon notice of appointment, subject to application for directions within 14 days if necessary