Equity Trust (Jersey) Ltd (Respondent) v Halabi (in his capacity as Executor of the Estate of the Late Madam Intisar Nouri) (Appellant) (Jersey)
Case ID: JCPC 2019/0119
Jurisdiction: Court of Appeal of Jersey
Whether the claim of a former trustee of a Jersey law trust takes priority over the claims of successor trustees on a first in time basis and trust creditors and what is the status of a trustee’s right of indemnity and associated equitable lien in relation to a trust governed by Jersey law.
The Appellant (Halabi, the Executor) and the Respondent ("ETJL") are assumed to be creditors of the Ironzar II Trust, a Jersey law discretionary trust whose liabilities substantially exceed its assets. ETJL is a former trustee of the Ironzar II Trust which contends that its rights of recourse to the trust fund take priority to those of other creditors, including the Executor, who disputes that contention.
The Royal Court of Jersey, giving judgment in favour of the Executor, held that as between a former and current trustee, their liens rank on a pari passu basis and not first in time. It also held, in the alternative, that a trustee’s right of indemnity and lien arise on a liability by liability basis with the trustee acquiring (and releasing) successive rights of indemnity and lien as it acquires (and exonerates) liabilities. The Royal Court further held that a creditor of an "insolvent" trust, including a former trustee claiming pursuant to its right of indemnity, was not entitled to claim its costs of proving its claim from the insolvent fund.
The Court of Appeal of Jersey reversed those findings and allowed ETJL’s appeal. The Court of Appeal held that a trustee’s equitable lien ranks in accordance with the time of its creation; a trustee has priority over the creditors with which it has transacted as trustee; and that ETJL’s cost of proving its claim fell within its right of indemnity and associated lien. The Executor now appeals to the Judicial Committee of the Privy Council.
Simon Halabi (in his capacity as Executor of the Estate of the Late Madam Intisar Nouri)
Equity Trust (Jersey) Ltd
Lord Reed, Lord Briggs, Lady Arden, Lord Stephens, Lady Rose, Sir Nicholas Patten, Sir David Richards
Hearing start date
15 June 2021
Hearing finish date
17 June 2021