Case details

Investec Trust (Guernsey) Limited and others (Respondents) v Rawlinson and others (Appellant) (Guernsey)

Case ID: JCPC 2016/0017

Jurisdiction: The Court of Appeal of Guernsey

Case summary

Issue(s)
  1. Whether Article 32(1)(a) of the Trusts (Jersey) Law 1984 applies to the BVI companies’ claims (2016/216);
  2. The meaning and effect of Article 32(1)(a) of the Trusts (Jersey) Law 1984 (2016/16; 2016/17);
  3. whether, as a matter of construction of the loan agreements, the Former Trustees were personally liable to the BVI companies 92016/35);
  4. the correct test for establishing restitutionary liability (2016/16);
  5. whether the Court of Appeal erred and/or breached Articles 6 and Article 8 ECHR in not ordering a retrial or permitting amendment of a notice of appeal (2016/18);
  6. whether Article 32 of the Trusts (Jersey) Law 1984 and/or section 42 of the Trusts (Guernsey) Law 2007 applies to the costs orders (2016/80; 2016/81; 2016/83).
Facts

Glenalla Properties Ltd ("Glenalla"), Thorson Investments Ltd ("Thorson"), Eliza Ltd ("Eliza") and Oscatello Investments Ltd ("Oscatello") are all companies incorporated in the British Virgin Islands ("the BVI companies").

Investec Trust (Guernsey) Ltd and Bayeux Trustees Ltd ("the former trustees") are the former trustees of a Jersey Trust known as the Tchenguiz Discretionary Trust ("the TDT").

On 24 August 2007, the former trustees as trustees of the TDT received assets from a related trust including the shares in the BVI companies. At the same time, the former trustees entered into deeds of novation whereby they assumed liability for certain debts owed to two of the BVI companies Glenalla and Thorson; and also in relation to certain liabilities under a loan agreement with the Icelandic bank Kaupthing Bank hf ("Kaupthing").

In December 2007 the shares in Glenalla and Thorson (and other companies) were transferred to another of the BVI companies, Oscatello, which granted security to Kaupthing in exchange for further lending to pay existing debt. As a result, funds were loaned to Oscatello from Kaupthing and Oscatello used some of those funds to pay the liabilities to Kaupthing which had been novated in August 2007.

Rawlinson & Hunter Trustees SA ("R&H") replaced ITGL and Bayeux as trustees in July 2010. Between 2008 and 2010, Kaupthing appointed joint receivers over certain assets held by Oscatello and Eliza (including the shares of Glenalla and Thorson); subsequently, those same joint receivers were appointed by Kaupthing to be joint liquidators of Oscatello, Glenalla and Thorson and by the BVI Court to be joint liquidator of Eliza.

The former trustees subsequently commenced proceedings in the Royal Court of Guernsey seeking declarations: (i) as to the extent, if any, of their liability for monies said to be due to the BVI companies; (ii) that, by the effect of Article 32(1)(a) of the Trusts (Jersey) Law 1984, they were not personally liable to the BVI companies; (iii) that, as a matter of construction and/or implied terms, they were only liable to the BVI companies as trustees (not personally) and (iv) that they had a right of indemnity against the TDT assets. The BVI companies counterclaimed for sums due under the loan agreements; and R&H sought by a counterclaim a declaration that the BVI companies had no claims to monies due and that the former trustees were not entitled to any indemnity out of the TDT assets. R&H also claimed that ITGL/Bayeux were liable for grossly negligent breach of trust in assuming or failing to divest themselves of their liabilities (if any) to Thorson, Glenalla and Oscatello.

LB Chadwick at first instance found that the former trustees were personally liable to the BVI companies and could not rely on Article 32. LB Chadwick upheld the former trustees’ right of indemnity against the assets of the TDT in respect of the claims of the BVI companies. He dismissed R&H’s claim for grossly negligent breach of trust. The court also held that Oscatello had a valid claim in restitution against the former trustees. The former trustees and R&H appealed to the Court of Appeal of Guernsey, who allowed certain (but not all) of the appeals.

On 22 December 2015 the Court of Appeal granted permission to appeal to the JCPC to both the BVI companies (as to whether Article 32 applied to their claims) and R&H (as to the meaning and application of Article 32) (2016/16; 2016/17).

The JCPC granted the BVI companies permission to appeal in respect of the Court of Appeal’s finding that Oscatello did not have a valid claim in restitution (2016/16).

The JCPC granted R&H permission to appeal in respect of the Court of Appeal’s failure to order a retrial or to permit amendments to their notices of appeal and ancillary applications (2016/18).

The JCPC granted the former trustees permission to appeal in relation to the issue of whether their personal liability had been contractually excluded (2016/35).

The JCPC granted the former trustees, R&H and the BVI companies permission to appeal against the Court of Appeal‘s costs orders and in particular whether Article 32 (and/or section 42 of the Trusts (Guernsey) Law, 2007) applies to such orders (2016/80; 2016/81; 2016/83).

Parties

Appellant(s)

Rawlinson and others (Appellant) (Guernsey)

Respondent(s)
  1. Investec Trust (Guernsey) Limited and others
  2. Thorson Investments Limited
  3. Glenalla Properties Limited

Appeal

Justices

Lord Mance, Lord Sumption, Lord Carnwath, Lord Hodge, Lord Briggs

Hearing start date

28 Nov 2017

Hearing finish date

30 Nov 2017

Watch hearing
27 Nov 2017 Afternoon session
28 Nov 2017 Morning session Afternoon session
29 Nov 2017 Morning session Afternoon session
30 Nov 2017 Morning session Afternoon session
Watch preliminary hearing
01 Nov 2017 Afternoon session