The Trust in question was known as the H Trust. The trustees were a Mr Arthur (the "Individual Trustee") and the settlor. The settlor experienced difficulties in his relationship with the Individual Trustee and decided he wanted to replace him. The settlor selected Church Street Trustees Limited ("the New Trustee"). The power of appointing new trustees rested in the trustees for the time being. On 6 May 2009 lawyers acting for the settlor wrote to the Individual Trustee indicating that the New Trustee should be appointed the new trustee of the Trust. There was no reply to this letter. A representation was issued on 31 May 2009 before the Royal Court seeking an order appointing the New Trustee together with disclosure of all relevant trust documents. Following this, a meeting did take place at which the Individual Trustee agreed to resign in favour of the New Trustee. However, the Individual Trustee still failed to supply the New Trustee with sufficient information to enable it to administer the Trust causing the need for a hearing at which the Individual Trustee failed to appear. The court was satisfied that he had been made aware of the date.
Counsel for the New Trustee asked for two things, namely, firstly, an order that the Individual Trustee should provide further information about the Trust and secondly, for the costs of the representation on an indemnity basis against the Individual Trustee.
The court considered the application. The court noted that most of the trust assets were in a company of which the Individual Trustee was a director. These assets appeared to consist of loans to various entities involved in a property development. Some draft accounts had been produced showing that the loans existed. The Court noted that following the Individual Trustee's retirement some information had been produced but there were still large gaps. The Court was satisfied that the sheet produced at the hearing listing the missing information accurately set out what ought to have been produced by the Individual Trustee.
In the case of Ogier Trustee Jersey Limited v CI Law Trustees Limited and others (2006) JRC 158, it was said:-
"On the transfer of a trusteeship the outgoing trustee is under a duty to co-operate fully and actively in the transfer by making all relevant documents and correspondence available promptly to the incoming trustee and by providing any explanation to questions reasonably raised by the incoming trustee".
The Court said that it was satisfied that the Individual Trustee had failed to live up to the requirements described above. Accordingly the Individual Trustee was ordered to produce the information within 14 days from service. As to the second aspect of the application, the court noted the history of failure by the Individual Trustee to respond, and that accordingly the Individual Trustee had forced the trust to incur these costs which would never have been incurred had he complied properly and fully with his duties as an outgoing trustee and accordingly it ordered indemnity costs of and incidental to the representation against the Individual Trustee.
We are often asked to advise trust company clients on the question of what documentation needs to be transferred on a retirement and appointment of a new trustee. At a minimum, an incoming trustee needs to have sufficient information to enable it to properly administer the assets of the trust. The judgment in this case is not novel but should be a timely reminder to trustees. They will know what an incoming trustee is properly going to need to administer the assets and unless this information is handed over in a timely fashion, the retiring trustee is at risk of this type of application with an order for indemnity costs against it.
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