A landmark Privy Council ruling has been hailed as good news for Guernsey by an island-based lawyer.
Nick Robison acted for trustees of the Tchenguiz Discretionary Trust, who had appealed a Guernsey Court of Appeal ruling of 2015 to the Privy Council.
The Guernsey court had held that a creditor of a trustee may enforce a debt directly against the assets of a trust, even if the trustee had no right to indemnify itself from the trust in order to pay the debt.
The Privy Council overturned this aspect of the Court of Appeal judgment, which Mr Robison said would bring comfort to settlors that, in the event that a trustee unreasonably incurs a liability or acts in breach of trust – invalidating its indemnity – the assets in trust will still be protected from creditors.
“This new ruling in the Privy Council has restored confidence in the security of assets held in Jersey and Guernsey trusts,” said Mr Robison, of Guernsey law firm Babbe, who acted alongside colleague Ian Swan in the proceedings.
“The Privy Council decision will prove to be of huge importance to settlors, beneficiaries and trustees across the offshore world but particularly those interested in Jersey and Guernsey law trusts. ”
Mr Robison added: “The judgment is good news for settlors as well as for those working in the private wealth sector who are advising individuals looking to settle their assets into jurisdictions like Jersey or Guernsey. They know that even if a fiduciary in the islands unreasonably incurs a liability or acts in breach of trust, the trust’s assets will still be protected from the trustee’s creditors.
“Prior to the Privy Council judgment the issue of trustee’s creditor’s rights was unresolved throughout the Commonwealth and it is one of critical, international importance. The judgment will now be considered the leading authority when such matters are considered in other jurisdictions and will be highly persuasive in similar circumstances in other finance centres such as the Cayman and British Virgin Islands.”
Guernsey Finance has stepped up its work in London with the appointment of its new London-based representative.
The island’s promotional agency recently announced Adrian Norman as its latest team member. Adrian will be permanently based in London with a remit to further promote awareness of the island’s finance offering, to educate about Guernsey’s financial services, and to connect London professionals with Guernsey practitioners.
Adrian is Guernsey-born and has 25 years’ finance experience, more than 20 of which he spent on the island, where he has worked across funds, private wealth and banking. He commented:
Having built up many years’ experience working across various sectors in both Guernsey and London, I feel I have a good grasp on the needs of both jurisdictions and the areas where they could work together for mutual benefit. I am looking forward to help grow Guernsey’s connections with the capital.
17 March marked 10 years since the Trusts (Guernsey) Law, 2007, came into full effect. The legislation, which replaced the Trusts (Guernsey) Law, 1989, was designed to create a more flexible framework for the local trust industry and to provide better protection for both settlors and trustees.
Russell Clark, who heads up the trust and private wealth practice at Carey Olsen, said the legislation was ahead of its time when in came into force 10 years ago and that continued to be the case today.
Since its inception in 1989, the Guernsey Trusts Law has been extremely welcome and robust legislation that has helped to underpin the development of the fiduciary industry in Guernsey. We have continued to improve it and tweak it over time and are now seeing many of the changes introduced in 2008 being copied elsewhere. For example, Jersey is now looking to introduce a ‘non-possessory lien’ along the same lines of that which we introduced in the 2007 revision.
In addition to clarification around the position of retiring trustees which saw Guernsey create a ‘non-possessory lien’ over trust assets in favour of retiring trustees, other key changes brought in 10 years ago included the introduction of purpose trusts, a removal of limits on the length of a trust’s duration and clarification around the rights of beneficiaries to information.
Mr Clark added:
It is reassuring that our innovations of a decade ago are being adopted elsewhere, but we must continue to keep the legislation under review. We need to ensure that it remains fit for purpose and that it maintains a balance between the desires of settlors on the one hand and the rights of beneficiaries on the other.