Representation of Craigmonie Hotel Limited [2024] JRC 009 (12 January 2024)

Representation of Craigmonie Hotel Limited [2024] JRC 009 (12 January 2024)

The Trust was established by mistake as the Company believed, based on incorrect legal advice, that the family could benefit and inheritance tax could be avoided; the mistake was fundamental and but for it, the Trust would not have been created. It is unjust for the trustee to retain the assets, so the Trust is void ab initio and assets revert to the Company.

Citation
[2024] JRC 009
Parties
Applicant: Craigmonie Hotel Limited; Former Trustee: Atlas Trust Company (Jersey) Limited; Former Trustee: Nautilus Trustees Limited; Current Trustee: Apex Trust Company Limited (now Valla Limited)
Jurisdiction
Jersey
Judgment Date
12 January 2024
Procedural Posture
Application to Set Aside Trust / Judgment
Outcome
Trust declared invalid ab initio by reason of mistake; assets held on bare trust for the Company; trustees entitled to retain remuneration and reimbursement for expenses incurred in good faith; trustees relieved from personal liability except for breaches that would have constituted breach of the original trust.
Legal Topics
Mistake in Trust Creation, Inheritance Tax Avoidance, Trust Validity, Trustee Liability
Trusts Equity Taxation Mistake in Trust Creation Inheritance Tax Avoidance Trust Validity Trustee Liability

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Parties

Craigmonie Hotel Limited

Applicant

Atlas Trust Company (Jersey) Limited

Former Trustee

Nautilus Trustees Limited

Former Trustee

Apex Trust Company Limited (now Valla Limited)

Current Trustee

Procedural Posture

Application to Set Aside Trust / Judgment

Legal Issues

  1. 1 Whether the Craigmonie Hotel Limited Commercial Security Trust is invalid by reason of mistake
  2. 2 Whether assets should be returned to the Company
  3. 3 Whether trustees are entitled to retain remuneration and be relieved from liability

Ratio Decidendi

The Trust was established by mistake as the Company believed, based on incorrect legal advice, that the family could benefit and inheritance tax could be avoided; the mistake was fundamental and but for it, the Trust would not have been created. It is unjust for the trustee to retain the assets, so the Trust is void ab initio and assets revert to the Company.

Court Disposition

Trust declared invalid ab initio by reason of mistake; assets held on bare trust for the Company; trustees entitled to retain remuneration and reimbursement for expenses incurred in good faith; trustees relieved from personal liability except for breaches that would have constituted breach of the original trust.

Orders

  • The Trust is invalid ab initio by reason of mistake pursuant to Article 11(2)(b)(i) of the Trusts (Jersey) Law 1984.
  • The Trust Fund is held by Valla on trust for the Company as settlor absolutely.