A recent case has far reaching consequences for trustees dealing
with and financing UK Property and highlights that trustees must
now take great care to avoid personal liability when entering into
Under English law the position has always been that a trustee
acts personally. This means that a trustee is personally liable for
any debt incurred when acting as a trustee, and that liability is
It is common for a trust deed to contain a limitation of
liability clause, however, that limitation is between the trustee
and the beneficiaries and not to third parties. It is possible to
limit trustee liability contractually so that when a trustee by way
of example enters into a contract to sell or lease land, or to
borrow money from a Bank, the trustee must ensure that the terms of
that contract limit the trustee's liability to the assets of
Until now, it had been thought that under Guernsey and Jersey
law, where Guernsey or Jersey trustees entered into a contract
governed by English law (or any law that is not the proper law of
the trust) that they would have the protection of Section 42 of the
Guernsey Trusts Law and Article 32 of the Jersey Trusts Law which
provides that where a counterparty knows or has been made aware
that the trustee is acting as a trustee, then the liability of the
trustee would be limited to the assets of the trust.
That position has been turned on its head by the recent judgment
in Investec Trust (Guernsey) Limited & Bayeux Trustees Limited
v Glenalla Properties Limited & others, about which my
colleague Bethan Boscher has recently written in more
detail in her article
Guernsey Royal Court highlights the importance of careful drafting
to avoid personal liability for trustees. The effect of the
judgment given in the Royal Court of Guernsey is such that where a
trustee contracts with a third party, it must now ensure that it
contractually limits its liability. The team at Collas Crill are
uniquely able to ensure that trustees are fully protected when
dealing with buying, selling, leasing and financing UK
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.
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