Alan Adams & Ors v FS Capital Limited & Ors

Alan Adams & Ors v FS Capital Limited & Ors

The sale of the Loan Assets was effected for an improper purpose, namely to exclude the beneficiaries and benefit the Defendants, in breach of fiduciary duty. The Defendants, particularly FS Capital Limited, had actual notice of the breach. Under Jersey law and Cloutte v Storey, the sale was void as to the beneficial interest. The Claimants are entitled to declaratory relief setting aside the sale and reconstituting the trusts. The Defendants are liable for breach of trust and, in theory, for equitable compensation, though no material loss was shown beyond the void transaction.

Parties
Claimant: Alan Adams; Claimant: Further Claimants (approx. 700 individuals); Defendant: FS Capital Limited; Defendant: Pinotage Trustees SARL; Defendant: PNG Services Limited
Jurisdiction
England and Wales
Judgment Date
11 September 2024
Procedural Posture
Civil (trusts/equity) / Judgment After Full Trial
Outcome
Claimants' challenge to the sale succeeds; sale declared void as to beneficial interest; counterclaim dismissed.
Legal Topics
Breach of Trust, Fraud on a Power, Improper Purpose, Bona Fide Purchaser for Value Without Notice, Constructive Trust, Equitable Compensation, Trustee Duties, Insolvency of Trusts, Assignment of Trust Assets, Jersey Law
Trusts Equity Private International Law Breach of Trust Fraud on a Power Improper Purpose Bona Fide Purchaser for Value Without Notice Constructive Trust +5 more

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Parties

Alan Adams

Claimant

Further Claimants (approx. 700 individuals)

Claimant

FS Capital Limited

Defendant

Pinotage Trustees SARL

Defendant

PNG Services Limited

Defendant

Procedural Posture

Civil (trusts/equity) / Judgment After Full Trial

Legal Issues

  1. 1 Whether the sale of debt assets (Loan Assets) from Jersey trusts to FS Capital Limited was effected for an improper purpose and in breach of trust
  2. 2 Whether the sale is void or voidable
  3. 3 Whether FS Capital Limited is a bona fide purchaser for value without notice

Ratio Decidendi

The sale of the Loan Assets was effected for an improper purpose, namely to exclude the beneficiaries and benefit the Defendants, in breach of fiduciary duty. The Defendants, particularly FS Capital Limited, had actual notice of the breach. Under Jersey law and Cloutte v Storey, the sale was void as to the beneficial interest. The Claimants are entitled to declaratory relief setting aside the sale and reconstituting the trusts. The Defendants are liable for breach of trust and, in theory, for equitable compensation, though no material loss was shown beyond the void transaction.

Court Disposition

Claimants' challenge to the sale succeeds; sale declared void as to beneficial interest; counterclaim dismissed.

Orders

  • Declaration that the sale of Loan Assets was void for improper purpose and breach of trust
  • Order for reconstitution of the trusts and restoration of assets