Guernsey: Investec Trust (Guernsey) Limited v Glenalla Properties Limited: Guernsey Court Of Appeal

Last Updated: 3 September 2014
Article by Elaine Gray, John Greenfield, Konrad Friedlaender, Natasha Kapp and Russell Clark

The Court of Appeal of Guernsey has overturned the decision of the Royal Court of Guernsey holding the Guernsey based former trustees of a Jersey law trust personally liable to repay debts amounting to £183 million plus interest.

The court has held that the former trustees are entitled to rely on the provisions of Article 32 of the Trusts (Jersey) Law, 1984 (the "TJL") to limit their personal liability, notwithstanding that the governing law of the obligations was not the law of Jersey.

Court of Appeal's Determination

The Court of Appeal could not find any direct guidance in the authorities or in authoritative writings regarding the status of a trustee (as a legal concept) under the domestic law of the trust in relation to contractual obligations undertaken by the trustee. However, the Court of Appeal considered that assistance could be drawn from what it considered to be a generally accepted rule of private international law regarding companies and partnerships whereby the law of the place of incorporation determines, amongst other things, the extent of an individual member's liability for the debts and liabilities of a company and partnerships. On that basis, the Court of Appeal accepted that, where the law of one jurisdiction made provision regarding the potential liability of persons holding a particular status, those provisions, if of a substantive nature, would be recognised by the courts of the forum of the dispute.

The Court of Appeal held that the analogy with limited companies and limited liability partnerships was strong and if the courts would respect protection afforded to members of companies or partners and partnerships by the foreign laws under which they were incorporated, there was no compelling reason why a court should not similarly apply the foreign law of a trust which limits the liability of trustees.

It also noted that Article 32 of the TJL only arises where the other party to a transaction knows that the trustee is acting as trustee and not personally and considered that contracting parties are thereby put on notice that the person with whom they are contracting is not doing so as an individual but as a trustee.

The Court of Appeal held, relying upon this analysis, that there is no distinctive element in the character of trusteeship which should lead to the application of a different rule regarding the extent of a trustee's liability where that trusteeship is recognised by a jurisdiction and of which the other party to the transaction has been made aware, than is the case in relation to corporate entities or partnerships with separate legal personality.

It also held that Article 32 of the TJL is a substantive provision and that the Guernsey courts should accordingly recognise the applicability of Article 32 of TJL in the determination of the dispute between the parties before the Guernsey courts. The Court of Appeal noted that the provisions of Section 42 of the Trusts (Guernsey) Law, 2007 (the "TGL"), whilst expressed in slightly different terms, appeared to them to have the same effect as Article 32 TJL.

The Court of Appeal held that the Royal Court had given too narrow an interpretation to Section 65 (and Parts III and IV) of the TGL (which provide for the enforceability of foreign trusts in Guernsey such as under Article 32 of TJL). Further it held that a foreign trust should be governed and interpreted in accordance with its proper law, including the effect of the trust under its proper law, to include whether by virtue of that law there is a restriction on liability.

The Court of Appeal accordingly held that the provisions of Article 32 of TJL ought to be applied in considering the liability of the former trustees and that the former trustees should have no personal liability in respect of the loans extending beyond the assets of the trust.

The specific consequences of this finding of the Court of Appeal and the true meaning and effect of Article 32 of TJL will be considered by the Court of Appeal later this year.


Trustees in the Channel Islands (and no doubt also in the Cayman Islands, BVI and the other jurisdictions with similar limitation of liability provisions in their trust legislation) may be relieved following the Court of Appeal's decision.

However, whilst the judgment gives comfort to trustees (to the extent that contracts entered into with third parties subject to Guernsey law will enable the trustees to rely on liability limitation provisions of the applicable foreign law governing the trust) there is no certainty that the courts of other jurisdictions such as England, New York or on the continent will, when applying their law, in the absence of an express provision in the contract, be prepared to give trustees the protection of limited liability provisions afforded by their domestic law.

Trustees contracting under the laws of a jurisdiction other than the governing law of the trust or contracting with parties in other jurisdictions (even if the contract is governed by domestic law) would be well-advised to include express contracting provisions which limit their liability to the extent of the trust fund.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions