Onzm & Anor v Watson & Ors

Onzm & Anor v Watson & Ors

In cases involving defaulting trustees or constructive trustees, the appropriate rate of equitable interest is that which acts as a proxy for the investment return that trust funds with the general characteristics of the fund in question could expect to make. The rate should not be based on the cost of borrowing, as trusts do not typically borrow to fund investments. The court has discretion to admit objective evidence of investment returns post-judgment to determine a fair rate. In this case, the rate is set at 6.5% per annum, compounded annually, based on objective trustee investment indices.

Parties
Claimant: Sir Owen George Glenn KNZM ONZM; Claimant: Kea Investments Limited; Defendant: Eric John Watson; Defendant: Novatrust Limited; Defendant: Miles John Anthony Leahy; Defendant: Nucopia Partners Limited; Defendant: Spartan Capital Limited; Defendant: Munil Development Inc
Jurisdiction
England and Wales
Judgment Date
25 September 2018
Procedural Posture
Civil (trust/equitable Compensation) / Post Trial, Ruling on Consequential Issue of Interest Rate
Outcome
Application for equitable interest rate determined; interest rate set at 6.5% per annum, compounded annually.
Legal Topics
Equitable Compensation, Interest on Trust Funds, Breach of Trust, Constructive Trust, Assessment of Interest Rates
Equity Trusts Civil Procedure Equitable Compensation Interest on Trust Funds Breach of Trust Constructive Trust Assessment of Interest Rates

Case Brief

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Parties

Sir Owen George Glenn KNZM ONZM

Claimant

Kea Investments Limited

Claimant

Eric John Watson

Defendant

Novatrust Limited

Defendant

Miles John Anthony Leahy

Defendant

Nucopia Partners Limited

Defendant

Spartan Capital Limited

Defendant

Munil Development Inc

Defendant

Procedural Posture

Civil (trust/equitable Compensation) / Post Trial, Ruling on Consequential Issue of Interest Rate

Legal Issues

  1. 1 What is the appropriate rate of equitable interest to award against a defaulting trustee or constructive trustee?
  2. 2 Should the rate be based on investment returns or cost of borrowing?
  3. 3 Is it appropriate to admit new evidence on investment returns post-judgment?

Ratio Decidendi

In cases involving defaulting trustees or constructive trustees, the appropriate rate of equitable interest is that which acts as a proxy for the investment return that trust funds with the general characteristics of the fund in question could expect to make. The rate should not be based on the cost of borrowing, as trusts do not typically borrow to fund investments. The court has discretion to admit objective evidence of investment returns post-judgment to determine a fair rate. In this case, the rate is set at 6.5% per annum, compounded annually, based on objective trustee investment indices.

Court Disposition

Application for equitable interest rate determined; interest rate set at 6.5% per annum, compounded annually.

Orders

  • Equitable interest on the sum of £129 million to be calculated at 6.5% per annum, compounded annually, for the relevant period.