Jersey: Representation Of The Z Trusts

Last Updated: 24 April 2015
Article by Oliver Passmore

Most Read Contributor in Jersey, September 2016


This case concerned among other things whether or not there is a form of equitable remedy which would justify an earlier trustee who had disposed of assets to a successor trustee having an entitlement to recover such of those assets as is necessary for the purpose of satisfying that earlier trustee's right of indemnity.

This question was considered by the Guernsey Court of Appeal in Investec Trust (Guernsey) Limited et al v Glenalla Properties Limited et al, who were required to determine the Jersey law position for the purposes of resolving a dispute over which the Guernsey Court had jurisdiction, in a decision dated 29 October 2014.

However, this decision is the first occasion on which the Royal Court of Jersey has been asked to determine the question.


Mrs C ("Mrs C") established eight Z Trusts of which Equity Trust (Jersey) Limited ("Equity") was the original trustee.  Equity retired as trustee of all of the trusts in 2006 with Volaw Trustee Limited ("Volaw") becoming trustee of the Z Trust and Z II Trust and Barclays Private Bank and Trust Limited ("Barclays") trustee of the remaining six trusts.  Under the terms of the deeds by which Equity retired in 2006, all of which were in substantially in the same terms, it handed over the assets of the trusts in return for fairly standard indemnities.

Since that time Equity had been put on notice of two claims for which it said it was entitled to be indemnified both contractually and in law.

The current position was that the Z II and III Trusts were insolvent and the remaining trusts, whilst solvent, faced a number of financial difficulties.  Mrs C was critical of the conduct of Equity as trustee and, with others, had brought breach of trust proceedings against it in which Equity had raised its own counterclaims.  Mrs C placed the blame for many of the problems now facing the trusts upon Equity and there was therefore a general background of hostility.  Mrs C stated that resolving these difficulties would be very much facilitated by the appointment of one trustee to replace Volaw and Barclays and that Rawlinson & Hunter Trustees SA ("R&H"), who are based in Switzerland, had agreed to take on that role.   Mrs C alleged, however, that Equity had refused to be a party to deeds of appointment and retirement of trustees and were otherwise obstructing this proposed change of trusteeship.

For its part, Equity asserted an equitable lien over the assets of the ZII Trust and was concerned to ensure that this was not destroyed, diminished or jeopardised.  In particular, Equity was concerned that the appointment of a non-resident trustee would make enforcement of its rights under the indemnities and under its separate equitable lien more difficult.


The Court was referred to the decision of the Guernsey Court of Appeal in Glenalla, wherein the Logan Martin JA, delivering the judgment of the Court, and referring to English authority stated:

"... we are satisfied that we may find that within the law of Jersey there is a form of equitable remedy which would justify an earlier trustee who had disposed of assets to a successor trustee having an entitlement to recover such of those assets as is necessary for the purpose of satisfying a claim which has been established under Article 32(1)(a) [of the Trusts (Jersey) Law 1984]1".

Commissioner Clyde-Smith, having regard to the fact that the Guernsey Court of Appeal is a closely connected senior court, considered that the decision in Glenalla reflected the law of Jersey and accordingly Equity, as a former trustee, had an equitable right in the sense described in Glenalla and was therefore entitled to ensure that Volaw and Barclays did not take any steps which would "destroy, diminish or jeopardise" that right.

The Commissioner noted, however, that that equitable right would only extend to the liabilities for which Equity would have been entitled to reimbursement out of the trust fund if it had remained trustee i.e. liabilities reasonably incurred in connection with the trusts; and that both Volaw and Barclays had reserved their positions in this respect, and also that creditors of the trusts may wish to do the same.

Questions of priority

Equity also submitted that its equitable rights constituted a first charge or lien upon the trust funds in priority not only to the beneficiaries but also to other current creditors of the trusts.

Although this issue was also referred to in the Glenalla decision, the Commissioner considered that creditors (who were not before the Court on this application) should be given an opportunity to argue that point at a subsequent hearing.  The question has therefore been left over for determination at a later date, and a judgment may therefore be issued in that regard in due course.


The decision to confirm in Jersey the decision of the Guernsey Court of Appeal in Glenalla, that under Jersey law a former trustee's rights of indemnity give them an equitable interest in the trust property, will no doubt be welcomed by professional trustees.  There had previously been uncertainty in this regard.  Indeed, this uncertainty had been explicitly acknowledged in the Economic Development Department's Green Paper dated 22 July 2008 which noted that while the Guernsey trust legislation had been amended in 2007 to provide for a statutory lien, and while in most common law jurisdictions the right of a trustee to indemnity has been seen as not only conferring a right to retain possession of trust property, but also as a property right equivalent to (and ranking ahead of) the interests of the beneficiaries, Jersey law did not have any clearly developed concept of lien.  As a result, an amendment was proposed to provide for a trustee to have a non-possessory lien over the trust property.  That proposal did not result in any such amendments.  However, the decision in this case would seem to have the effect of confirming that, in fact, the trustee does have an equitable interest in the trust property.

The scope of the equitable interest is yet to be fully determined, although that may be more fully explored at the next hearing in this case.  The Commissioner was prepared, however to make certain observations.  He considered that it was tolerably clear that a trustee's equitable right takes priority over the claims of the beneficiaries.  However, he considered the issue of priority over other creditors was not straight-forward.  In particular, in circumstances where the current and former trustees all have equitable rights in respect of the liabilities, costs and expenses they have each incurred, whose rights should have priority in the case of a deficiency of assets to satisfy all such claims?  It may that the Court will be required to rule on this question in this case, if that cannot be agreed amongst the parties.

As to whether this decision will produce any change in practice in the drafting of deeds of retirement and appointment, that remains to be seen.  The purpose behind the proposal in the 2008 Green Paper was in part to address the issue of the proliferation of indemnities and chains of indemnities which arise upon the retirement of a trustee, which can make the execution and administration of trusts inefficient, thereby adding to costs.  However, to some extent, the effectiveness of a lien depends on its recognition before the Court where it is sought to be enforced.  Therefore, if a trust is transferred to a trustee in another jurisdiction, what comfort does the former trustee have that its lien will be recognised by the Court in that jurisdiction?  As noted above, this was precisely the concern that Equity had in this case.  It would seem likely, therefore, that outgoing trustees will still wish to retain the comfort of contractual indemnities.


1 Which provides that where a trustee is party to any transaction or matter affecting the trust, if the other party knows that the trustee is acting as trustee, any claim by the other party shall be against the trustee as trustee and shall extend only to the trust property.

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.