Jersey: Dominion Corporate Trustees Limited & Dominion Trust Limited v Capmark Bank Europe PLC (Formerly GMAC Commercial Mortgage Bank Europe PLC, Now Known as Capmark Management PLC) [2010] EWHC 1605 (CH)

Last Updated: 3 November 2010
Article by Elaine Kelly

Most Read Contributor in Jersey, September 2016

Factual Summary

The claimants are the joint trustees (the "Trustees") of a Jersey property unit trust (the "Trust"), formed as a vehicle for holding real property in the United Kingdom (the "Property"). The vendor contributed the Property to the Trust in exchange for units which were sold to Cantabria Investments Limited for a purchase price of £28.1 million (partly funded by a term loan arranged with the defendant). The Property was mortgaged pursuant to a debenture made between the Trustees of the Trust (as legal owners of the freehold interest in the Property) in favour of the defendant (as security agent) to secure the term loan.

Following a change in the rating law in the United Kingdom, the Property became subject to unoccupied property rates in excess of £1m (the "Rates"). The Property was unoccupied for some time resulting in the rating authority obtaining an order for recovery of the Rates against the Trustees as the legal owners entitled to possession of the Property.

In April 2009 the term loan became repayable and following a failure to meet the repayments, receivers of the Property were appointed and the Property was subsequently sold for less than the amount owing pursuant to the secured term loan. This resulted in the Trustees having insufficient assets in the Trust to settle the Rates.

Pursuant to the terms of the trust instrument, the Trustees are entitled to be indemnified out of the trust assets for all expenses reasonably and properly incurred by them (which would include any liability for payment of the Rates) and they have a lien over the trust assets for that purpose.

The main issue in this case was whether the Trustees' indemnity and lien ranked in priority to or behind the defendant's security.

Trustees' Submissions

The Trustees' case was that their right of indemnity and lien ranked ahead of the mortgage in favour of the lender.

This claim rested on the construction of the debenture, or alternatively, on a term to be implied in the debenture. It was submitted that since the debenture was entered into by the Trustees in their capacity as trustees, the debenture would affect only those assets held by the Trustees which were available to be applied for the purposes of the Trust (i.e. for the benefit of the beneficiaries under the Trust). The Trustees sought to claim that:

  1. such assets did not includee assets required to satisfy the indemnity in favour of the Trustees; and
  2. to the extent assets were needed to satisfy the Trustees' right of indemnity, they were not trust assets at all but belonged to the Trustees.

The Decision

The High Court disagreed with the Trustee's submissions, stating that it was the property, not the property subject to the Trustees' lien, which was mortgaged. The debenture made no express reservation for the Trustees' lien. Indeed, the Trustees' costs and expenses were not mentioned at all in the waterfall provisions contained in the debenture. Moreover, the Trustees covenanted to indemnify the defendant and any receiver against all costs, expenses and liabilities incurred in the execution of their powers under the debenture.

The Court also rejected the suggestion that the trust assets were the Trustees' personal assets to the extent that they were required to satisfy the Trustees' right of indemnity or lien.


This case provides a useful example of the Court's approach to a claimant's attempts to construe terms in a debenture which are not obvious. It also sets out the circumstances when it is possible to imply terms in a debenture.

Perhaps more significantly, this decision highlights an important issue for local service providers acting as trustees of trusts having, as their only or principal asset, real property in the UK. The Trustees in this case found themselves liable to the rating authority for the payment of the outstanding Rates (as legal owners of the Property) notwithstanding that the Trust had no assets to meet this liability. Since the liability was non contractual, there was no opportunity for the trustees to expressly agree with the rating authority that their liability should be limited to the assets of the trust in accordance with Article 32 of the Trusts (Jersey) Law 1984. in the absence of express limited recourse wording, the Trustees would either have had to settle the liability or sought to rely on the established position regarding the unenforceability of foreign revenue laws in Jersey. To the extent that the Trustees had any UK situs assets that could have been enforced against without recourse to the Jersey courts, this option may not have been feasible.

In our opinion this UK case, in combination with other topical developments such as the aggregation provisions under the UK's Carbon Reduction Energy Efficiency Scheme, is likely to make trust companies review their existing policy and procedures around real estate structures. Since it is not possible to limit non contractual liabilities to the assets of the trust, local service providers should ensure that assets which give rise to non contractual liabilities, such as real estate, are either:

  1. held by private/SPV trust companies (rather than their professional operating trust companies) to the extent title needs to be held directly; or
  2. held by trustees indirectly via an underlying company or a limited partnership with a corporate general partner.

The use of limited companies in this way will ensure that if a non contractual liability arises it remains appropriately ring fenced.

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.

In association with
Mondaq Advice Centre (MACs)
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). 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 & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd 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 or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.