Representation of Rawlinson & Hunter Trustees SA re Z Trusts [2018] JRC 119 (03 July 2018)

Representation of Rawlinson & Hunter Trustees SA re Z Trusts [2018] JRC 119 (03 July 2018)

The equitable lien of a former trustee securing its right of indemnity for liabilities properly incurred during its trusteeship takes priority over the equitable liens of successor trustees and creditors claiming through them, according to the general equitable rule that the first in time prevails, unless the equities are not equal. Article 32(1)(a) creditors must claim through the trustee's indemnity, and their claims are subordinate to the prior equitable lien of the former trustee.

Citation
[2018] JRC 119
Parties
Applicant / Former Trustee: Equity Trust; Former Trustee / Applicant for Directions: Volaw Trustees Limited; Current Trustee / Respondent: Rawlinson & Hunter Trustees SA; Creditor / Claimant in English Proceedings: Angelmist Properties Limited (in liquidation); Creditor / Respondent: Estate of C
Jurisdiction
Jersey
Judgment Date
03 July 2018
Procedural Posture
Trust Law Representation / Directions / Determination of Point of Law on Priority of Equitable Liens in Insolvent Trust
Outcome
Declaration granted in favour of Equity Trust on the point of law.
Legal Topics
Trustee Indemnity, Equitable Lien, Priority of Claims, Insolvent Trusts, Article 32 Trusts (jersey) Law 1984
Trusts Equity Insolvency Trustee Indemnity Equitable Lien Priority of Claims Insolvent Trusts Article 32 Trusts (jersey) Law 1984

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Parties

Equity Trust

Applicant / Former Trustee

Volaw Trustees Limited

Former Trustee / Applicant for Directions

Rawlinson & Hunter Trustees SA

Current Trustee / Respondent

Angelmist Properties Limited (in liquidation)

Creditor / Claimant in English Proceedings

Estate of C

Creditor / Respondent

Procedural Posture

Trust Law Representation / Directions / Determination of Point of Law on Priority of Equitable Liens in Insolvent Trust

Legal Issues

  1. 1 Whether a former trustee's equitable lien for indemnity takes priority over other claimants to the assets of an insolvent trust
  2. 2 Whether the 'first in time' rule applies to competing trustee liens
  3. 3 Effect of Article 32(1)(a) Trusts (Jersey) Law 1984 on creditor claims

Ratio Decidendi

The equitable lien of a former trustee securing its right of indemnity for liabilities properly incurred during its trusteeship takes priority over the equitable liens of successor trustees and creditors claiming through them, according to the general equitable rule that the first in time prevails, unless the equities are not equal. Article 32(1)(a) creditors must claim through the trustee's indemnity, and their claims are subordinate to the prior equitable lien of the former trustee.

Court Disposition

Declaration granted in favour of Equity Trust on the point of law.

Orders

  • It is declared that the equitable lien of Equity Trust as former trustee securing its right of indemnity for liabilities properly incurred during its trusteeship takes priority over the equitable liens of successor trustees and creditors claiming through them, subject to exceptions where the equities are not equal.
  • Costs reserved.