Representation of Rawlinson & Hunter Trustees SA re Z Trusts [2019] JCA 106 (28 June 2019)

Representation of Rawlinson & Hunter Trustees SA re Z Trusts [2019] JCA 106 (28 June 2019)

In the administration of an insolvent trust under Jersey law, the claims of all trustees (former and current) and trust creditors to indemnity from trust assets rank pari passu, not by order of creation or time. The equitable lien of a former trustee does not take priority over that of a successor trustee or trust creditors. This approach is consistent with the statutory framework, equitable principles, and the need for fairness and certainty in trust administration. The right of indemnity and associated lien arises with each liability incurred, and the regime of equal ranking avoids complex and impractical inquiries into the timing of each liability. The Commissioner's decision to reject...

Citation
[2019] JCA 106
Parties
Representor: Rawlinson & Hunter Trustees SA (in the place of Volaw Trustees Limited); First Respondent: Advocate Steven Chiddicks, representing the minor beneficiaries of the Z II Trust; Second Respondent: K, adult beneficiary of the Z II Trust; Third Respondent and Appellant: Equity Trust (Jersey) Limited; Fifth Respondent: Fielden Holdings Limited; Sixth Respondent: Rawlinson & Hunter Trustees SA (as trustee of the Z Trust); Eighth Respondent: Rawlinson & Hunter Trustees SA (as trustee of the X Trust); Ninth Respondent: E; Tenth Respondent and Respondent: E in his capacity as Executor of the Estate of the late C
Jurisdiction
Jersey
Judgment Date
28 June 2019
Procedural Posture
Appeal / Judgment on Appeal From Royal Court
Outcome
Appeal dismissed. The Commissioner's judgments are affirmed.
Legal Topics
Trustee Indemnity, Equitable Lien, Priority of Claims, Insolvent Trusts, Subrogation, Trust Administration
Trusts and Equity Insolvency Trustee Indemnity Equitable Lien Priority of Claims Insolvent Trusts Subrogation Trust Administration

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Parties

Rawlinson & Hunter Trustees SA (in the place of Volaw Trustees Limited)

Representor

Advocate Steven Chiddicks, representing the minor beneficiaries of the Z II Trust

First Respondent

K, adult beneficiary of the Z II Trust

Second Respondent

Equity Trust (Jersey) Limited

Third Respondent and Appellant

Fielden Holdings Limited

Fifth Respondent

Rawlinson & Hunter Trustees SA (as trustee of the Z Trust)

Sixth Respondent

Rawlinson & Hunter Trustees SA (as trustee of the X Trust)

Eighth Respondent

E

Ninth Respondent

E in his capacity as Executor of the Estate of the late C

Tenth Respondent and Respondent

Procedural Posture

Appeal / Judgment on Appeal From Royal Court

Legal Issues

  1. 1 Whether a former trustee's equitable right of indemnity and associated lien takes priority over the rights of other claimants (including successor trustees and trust creditors) to the assets of an insolvent trust.
  2. 2 Whether claims of trustees and trust creditors rank pari passu or by order of creation/time.
  3. 3 Whether a trustee is entitled to claim costs incurred in proving a claim against a trust with insufficient assets.

Ratio Decidendi

In the administration of an insolvent trust under Jersey law, the claims of all trustees (former and current) and trust creditors to indemnity from trust assets rank pari passu, not by order of creation or time. The equitable lien of a former trustee does not take priority over that of a successor trustee or trust creditors. This approach is consistent with the statutory framework, equitable principles, and the need for fairness and certainty in trust administration. The right of indemnity and associated lien arises with each liability incurred, and the regime of equal ranking avoids complex and impractical inquiries into the timing of each liability. The Commissioner's decision to reject...

Court Disposition

Appeal dismissed. The Commissioner's judgments are affirmed.

Orders

  • The claims of all trustees and trust creditors to the assets of the Z II Trust rank pari passu.
  • Equity Trust's claim for priority is rejected.