Geneva Trust Company (GTC) SA re ZII Trust [2020] JRC 053 (26 March 2020)

Geneva Trust Company (GTC) SA re ZII Trust [2020] JRC 053 (26 March 2020)

The Estate's application for payment of incurred and anticipated legal costs from the ZII Trust assets is adjourned pending further evidence of the financial positions of the Estate and connected creditors. The Court finds it inequitable for the Estate alone to bear costs that benefit all connected creditors, but cannot order payment from trust assets in hostile litigation where Equity Trust holds a priority equitable lien, unless it is shown that the connected creditors cannot reasonably fund the litigation. The issue of who should conduct the winding up of the ZII Trust is also adjourned for further consideration.

Citation
[2020] JRC 053
Parties
Applicant: Mr E (Executor of C's Estate); Trustee/respondent: Geneva Trust Company (GTC) SA; Respondent/priority Creditor: Equity Trust (Jersey) Limited
Jurisdiction
Jersey
Judgment Date
26 March 2020
Procedural Posture
Trust Litigation (representation Proceedings) / Interlocutory Application (funding and Insolvency Regime)
Outcome
Application adjourned for further evidence; no order for payment of costs from trust assets at this stage; issue of winding up adjourned.
Legal Topics
Priority of Creditors, Trustee's Equitable Lien, Costs in Hostile Trust Litigation, Funding of Litigation From Trust Assets, Conflict of Interest in Trust Administration
Trusts Insolvency Civil Procedure Priority of Creditors Trustee's Equitable Lien Costs in Hostile Trust Litigation Funding of Litigation From Trust Assets Conflict of Interest in Trust Administration

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Parties

Mr E (Executor of C's Estate)

Applicant

Geneva Trust Company (GTC) SA

Trustee/respondent

Equity Trust (Jersey) Limited

Respondent/priority Creditor

Procedural Posture

Trust Litigation (representation Proceedings) / Interlocutory Application (funding and Insolvency Regime)

Legal Issues

  1. 1 Whether the Estate's legal costs in the Privy Council appeal should be funded from the assets of the ZII Trust
  2. 2 Whether the connected creditors should contribute pro rata to the Estate's litigation costs
  3. 3 Whether GTC or an independent insolvency practitioner should conduct the winding up of the ZII Trust

Ratio Decidendi

The Estate's application for payment of incurred and anticipated legal costs from the ZII Trust assets is adjourned pending further evidence of the financial positions of the Estate and connected creditors. The Court finds it inequitable for the Estate alone to bear costs that benefit all connected creditors, but cannot order payment from trust assets in hostile litigation where Equity Trust holds a priority equitable lien, unless it is shown that the connected creditors cannot reasonably fund the litigation. The issue of who should conduct the winding up of the ZII Trust is also adjourned for further consideration.

Court Disposition

Application adjourned for further evidence; no order for payment of costs from trust assets at this stage; issue of winding up adjourned.

Orders

  • Mr E's application for payment of legal costs from ZII Trust assets is adjourned pending further evidence of financial positions of Estate and connected creditors.
  • No order for reimbursement of incurred costs (£320,694.92) from trust assets at this stage.