Vol 18 (2021) - Issue 1

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ITG & Others v Glenella Properties Limited & Others [2020] GCA 043

Synopsis
The Guernsey Court of Appeal ('GCA') has recently upheld a judgment of the Royal Court in Guernsey (handed down in December 2019) in the long running ITG Limited & Ors v Glenella Properties Limited & Ors litigation. The claim, commenced by ITG Limited (formerly Investec Trust (Guernsey) Limited) and Bayeux Trustees Limited as former trustees of the Tchenguiz Discretionary Trust ('TDT') (the 'Former Trustees'), relates to a trust governed by the laws of Jersey. In particular, two discrete issues have been most recently considered by the GCA: (i) whether the effect of an assignment of certain debts was to extinguish or cancelled by way of merger of the rights and obligations of those debts; and (ii) the priority in which creditors of a trust are to be paid in the event of an insolvency.
This most recent decision of the GCA followed a series of earlier decisions by both the GCA and the Privy Council. Briefly, the GCA had earlier:
(i) found that, in relation to a trustee's liability to third parties, Article 32 of the Trusts (Jersey) Law 1984 ('TJL') was applicable to the relevant transactions and made findings as to its meaning and effect; and had
(ii) on an appeal by the fifth defendant, Rawlinson & Hunter Trustees SA (now Geneva Trust Company (GTC) S.A.) ('GTC') (the then trustee), upheld, the Royal Court's finding of no gross negligence by the Former Trustees and overturned the Royal Court's finding that the Former Trustees were subject to binding obligations and restitution to the fourth defendant, Oscatello Investments Limited.
In a decision handed down on 23 April 2018, the Privy Council determined the substantive issues between the parties. Now, in this article, we provide a summary of the background to the proceedings and outline their current status and what the latest ruling means for the parties and trustees and creditors at large.