In Re: Caversham Trustees Limited  JRC 65, the Royal Court
set out steps that should be taken by an outgoing trustee in order
to comply with its duty to transfer trust assets to the new
trustees, and provided further guidance as to what security the
trustee could legitimately require.
The Court also clarified that there was no difference in the
duties applicable in a retirement and appointment of trustees to
those owed where the trustee is appointing the trust assets to a
Outgoing Trustees' Duties
Following a relationship breakdown between the
settlor/beneficiary ("Mr. Van Dalfsen")
and the trustee ("Caversham") it was
agreed that the trust assets would be appointed to a new trust.
However, the transfer took four years, and the Court was asked to
determine whether Caversham had caused undue delay. The Court
resolved that as (effectively) an outgoing trustee, Caversham was
under a duty to co-operate fully and actively in the transfer of
the assets, which included taking the following prompt steps:
instructing lawyers to draft the formal documents by which the
assets would be appointed to the new trusts along with any
marshalling and preparing the assets so that they were ready to
ascertaining the identity of the entities to whom the assets
were to be transferred;
where necessary obtaining advice on the steps required to
effect and the tax implications, if any, of and cost to be incurred
in the transfer of the assets in the jurisdictions in which they
setting out a timetable for the transfer of the assets;
providing information to the new trustee to enable it properly
to accept the assets;
carrying out a due diligence on the new trustees; and
providing explanations to questions reasonably raised by the
new trustee in relation to the assets.
However, Caversham's duty to transfer the assets was subject
to its right to be provided with reasonable security for
liabilities, and was also dependent upon the co-operation of the
Security For Liabilities And Outstanding Fees
Article 34(2) of the Trusts (Jersey) Law 1984 provides for a
retiring trustee to be provided with reasonable security for
existing, future, contingent or other liabilities before
surrendering trust property.
Although in this case the Court held that it was reasonable for
indemnities to extend to trustee's officers and employees, it
decided it was unreasonable for Caversham to require indemnities to
cover officers and employees of "associates" of the
trustee or underlying companies forming part of the trust fund.
The Court also considered to what extent the outgoing trustee
could seek security in respect of outstanding fees. In Carafe Trust
 JLR 159, it was held improper for an outgoing trustee to
seek security over the entirety of a trust fund until disputed fees
were paid. However, although the solution in Carafe was an escrow,
the Court in Caversham held that Carafe did not establish a general
principle that escrow arrangements must be accepted by trustees in
all cases involving disputes over fees.
The right to security is a right to "reasonable"
security and what is reasonable security will depend upon the
In this instance the Court held that although the trustees had
exerted improper pressure both in seeking to retain control over
the entirety of the trust funds and then in continuing to exert
pressure by the slow pace of transfer, their rejection of an escrow
arrangement which did not include a mechanism for finally
determining the fees owing, was found to be reasonable on the
The Court held that subject to Caversham retaining reasonable
security in relation to its fees, its duty was to give effect to
the transfer "as soon as reasonably possible", and that
it made no difference that Caversham was appointing out trust
assets as opposed to retiring in favour of replacement trustees
(which duties were reviewed by the Royal Court in Ogier Trustees v.
C.I. Law Trustees  JRC 158). In the circumstances, the
transfers could reasonably have occurred within a six month period,
although in the light of the delay contributed by Mr. Van Dalfsen
and the new trustee, this period was extended by a further three
months to nine months.
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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