Mrs Garcia settled her share of a Spanish marina in the Alhambra
Trust ('Alhambra') of which SGI Trust Limited
('SGI') acted as trustee. Mrs Garcia's former husband,
Mr Lombardo, settled, amongst other assets, his share in the same
marina in another trust, the 18th August Trust ('August').
The original trustee of August subsequently retired in favour of
SGI. Mr Lombardo died before the dispute in question arose.
Subsequently SGI was placed in liquidation and without any
consultation with Mrs Garcia, the trusteeship of both trusts was
assigned to Equinox Trustees Limited ('Equinox'). On
notification that an assignment to Equinox was to take place, Mrs
Garcia wrote to Equinox and requested that if there was to be a
change of trusteeship that it should be to Whitmill Trust Company
Limited ('Whitmill'). Equinox, however, declined to retire
as trustee and Mrs Garcia brought a representation to the Royal
Court. The skeleton argument filed by legal advisors to Equinox
stated that Equinox would be prepared to retire in favour of a
suitable trustee but not Whitmill whom they considered to be
unsuitable. In light of this, Mrs Garcia's counsel requested
that the Court appoint Centurion Trust Company Limited
('Centurion') as trustee of Alhambra. The counsel for
Equinox argued that Centurion should not be appointed as trustee of
Alhambra for two reasons. Firstly, that because the marina was an
underlying asset of both trusts, the two trusts should be treated
as one entity, and therefore the beneficiaries of August should be
consulted, and secondly, that Mrs Garcia's action to remove
Equinox as trustee should be treated as suspicious given that there
had been the same trustee for the two trusts before.
1. The Court noted that it had not been addressed on its power
to remove a trustee under Article 51 of the Trusts (Jersey) Law
2. An application to remove a trustee was a serious matter.
3. It was unusual for a trustee when requested by the sole
beneficiary to retire not to accede to that request.
4. If there were grounds for objecting to a new trustee these
should be drawn to the Court's attention.
5. No grounds had been put forward by Equinox as to the
"unsuitability" of Centurion.
6. It further considered there was no force in the argument that
both trusts should have the same trustee, particularly as the
trusts had had different trustees in the past.
7. Notably the court reasoned that the whole basis of a
relationship between a trustee and the beneficiaries should be
quintessentially one of trust. If that trust breaks down it is
sensible to draw the relationship to a close. The hostility between
Mrs Garcia and Equinox was likely to affect the proper
administration of Alhambra.
The Court directed Equinox to retire as trustee of Alhambra in
favour of Centurion, but gave no indication as to its view on the
merits of any parallel representation in respect of August.
A useful decision affirming the principles the Court would apply
in an application for removal of trustee where the relationship
between trustee and beneficiary had broken down. In addition a
number of points made in the judgement, notably that the
settlor/trustee relationship is grounded in trust and that the
trustee should retire when requested, were consistent with the
views expressed by the Guernsey Court of Appeal in Virani v
Guernsey International Trustees Limited in 2003.
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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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