Crociani v Crociani and Ors [2018] JRC 091A (18 May 2018)

Crociani v Crociani and Ors [2018] JRC 091A (18 May 2018)

The hypothetical performance of the Grand Trust portfolio must be assessed by reference to how a prudent trustee would have managed it, which entails adopting a moderate risk profile, engaging professional investment managers, and measuring performance against the border of the first and second quartile of the Morningstar moderate peer group, resulting in a total return of at least 31%. The first and third defendants are jointly and severally liable to pay the difference between the actual value and the hypothetical value, plus interest. The interest-free loans due from Croc Investments SA and the Fortunate Trust are recoverable in full, as those entities were sufficiently solvent.

Citation
[2018] JRC 091A
Parties
First Plaintiff: Cristiana Crociani; Second Plaintiff: A (by her Guardian ad Litem, Nicholas Delrieu); Third Plaintiff: B (by her Guardian ad Litem, Nicholas Delrieu); First Defendant: Edoarda Crociani; Second Defendant: Paul Foortse; Third Defendant: BNP Paribas Jersey Trust Corporation Limited; Fourth Defendant: Appleby Trust (Mauritius) Limited; Fifth Defendant: Camilla De Bourbon des Deux-Siciles; Sixth Defendant: Camillo Crociani Foundation IBC (Bahamas) Limited; Seventh Defendant: BNP Paribas Jersey Nominee Company Limited; Eighth Defendant: GFin Corporate Services Limited; Party Cited: Ocorian Trustees (Jersey) Limited
Jurisdiction
Jersey
Judgment Date
18 May 2018
Procedural Posture
Trusts / Post Substantive Judgment, Inquiry Into Portfolio and Loan Valuation
Outcome
First and third defendants held jointly and severally liable for compensation to the party cited.
Legal Topics
Breach of Trust, Equitable Compensation, Trustee Duties, Hypothetical Valuation, Investment Management, Recovery of Trust Assets
Trusts Equity Fiduciary Law Breach of Trust Equitable Compensation Trustee Duties Hypothetical Valuation Investment Management +1 more

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Parties

Cristiana Crociani

First Plaintiff

A (by her Guardian ad Litem, Nicholas Delrieu)

Second Plaintiff

B (by her Guardian ad Litem, Nicholas Delrieu)

Third Plaintiff

Edoarda Crociani

First Defendant

Paul Foortse

Second Defendant

BNP Paribas Jersey Trust Corporation Limited

Third Defendant

Appleby Trust (Mauritius) Limited

Fourth Defendant

Camilla De Bourbon des Deux-Siciles

Fifth Defendant

Camillo Crociani Foundation IBC (Bahamas) Limited

Sixth Defendant

BNP Paribas Jersey Nominee Company Limited

Seventh Defendant

GFin Corporate Services Limited

Eighth Defendant

Ocorian Trustees (Jersey) Limited

Party Cited

Procedural Posture

Trusts / Post Substantive Judgment, Inquiry Into Portfolio and Loan Valuation

Legal Issues

  1. 1 How should the hypothetical performance of the Grand Trust portfolio be assessed for compensation?
  2. 2 Are interest-free loans recoverable from associated entities?
  3. 3 What investment strategy would a prudent trustee have adopted?

Ratio Decidendi

The hypothetical performance of the Grand Trust portfolio must be assessed by reference to how a prudent trustee would have managed it, which entails adopting a moderate risk profile, engaging professional investment managers, and measuring performance against the border of the first and second quartile of the Morningstar moderate peer group, resulting in a total return of at least 31%. The first and third defendants are jointly and severally liable to pay the difference between the actual value and the hypothetical value, plus interest. The interest-free loans due from Croc Investments SA and the Fortunate Trust are recoverable in full, as those entities were sufficiently solvent.

Court Disposition

First and third defendants held jointly and severally liable for compensation to the party cited.

Orders

  • First and third defendants to pay US$31,107,584 to the party cited, representing the difference between the portfolio's value on 16 May 2011 and its hypothetical value on 11 September 2017, plus interest at the judgment rate from 11 September 2017 until payment.
  • First and third defendants to pay the full amount of the loans due from Croc Investments SA and the Fortunate Trust, plus interest at the judgment rate from 11 September 2017 until payment.