Oakhurst Property Developments (Lowndes Square No. 2) Ltd & Ors v Blackstar (Isle of Man) Ltd & Anor

Oakhurst Property Developments (Lowndes Square No. 2) Ltd & Ors v Blackstar (Isle of Man) Ltd & Anor

The indemnities available to the outgoing trustee, being limited to the value of the trust assets from time to time, do not constitute 'reasonable security' as required by clause 6.3(b) of the Trust Deed, given the real risk that the trust assets could be depleted or rendered of little value after the outgoing...

Source-derived case information.

Parties
Claimant: Oakhurst Property Developments (Lowndes Square No. 2) Limited; Claimant: Ronald Edwin Pratt; Claimant: Paul Trevor Heitman; Claimant: Richard Anthony Blythe; Defendant: Blackstar (Isle of Man) Limited; Defendant: Church Street Trustees Limited
Jurisdiction
England and Wales
Judgment Date
07 March 2012
Procedural Posture
Civil / Interlocutory Judgment on Preliminary Issues
Outcome
First defendant has not been removed as trustee; reasonable security not provided; guidance given on what constitutes reasonable security; costs order made; permission to appeal granted.
Legal Topics
Removal and Replacement of Trustee, Reasonable Security for Indemnity, Trustee Indemnity, Construction of Trust Deed, Potential Trustee Liability
Trusts Pensions Equity Removal and Replacement of Trustee Reasonable Security for Indemnity Trustee Indemnity Construction of Trust Deed Potential Trustee Liability

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Parties

Oakhurst Property Developments (Lowndes Square No. 2) Limited

Claimant

Ronald Edwin Pratt

Claimant

Paul Trevor Heitman

Claimant

Richard Anthony Blythe

Claimant

Blackstar (Isle of Man) Limited

Defendant

Church Street Trustees Limited

Defendant

Procedural Posture

Civil / Interlocutory Judgment on Preliminary Issues

Legal Issues

  1. 1 Whether the first defendant has been validly replaced by the second defendant as trustee of the EFRBSs
  2. 2 What constitutes 'reasonable security' for indemnifying the outgoing trustee under clause 6.3(b) of the Trust Deed

Ratio Decidendi

The indemnities available to the outgoing trustee, being limited to the value of the trust assets from time to time, do not constitute 'reasonable security' as required by clause 6.3(b) of the Trust Deed, given the real risk that the trust assets could be depleted or rendered of little value after the outgoing trustee's removal. A personal covenant of indemnity from the claimants, not limited to the value of the trust assets from time to time, is required to satisfy the requirement for reasonable security.

Court Disposition

First defendant has not been removed as trustee; reasonable security not provided; guidance given on what constitutes reasonable security; costs order made; permission to appeal granted.

Orders

  • Declaration that the first defendant has not been removed as trustee under clause 6.3 of the Trust Deed as reasonable security was not provided.
  • Guidance that a personal covenant of indemnity from the claimants, not limited to the value of the trust assets from time to time, constitutes reasonable security.