The Privy Council Judgment on insolvency of trusts
The recent groundbreaking Privy Council case of Equity Trust v Halabi considers, amongst other things, the nature and scope of a trustee’s right to be indemnified out of trust assets for expenses/liabilities properly incurred - usually via an equitable lien over the trust fund.
Key learning points:
The recent groundbreaking Privy Council case of Equity Trust v Halabi considers, amongst other things, the nature and scope of a trustee’s right to be indemnified out of trust assets for expenses/liabilities properly incurred - usually via an equitable lien over the trust fund.
The judgment focuses on what happens as between successive trustees when there’s an ‘insolvent trust’, rejecting a ‘first in time’ rule in favour of a pari passu one for enforcement between successive trustees. In this session, we consider how this decision will pan out in practice both from the point of view of successive and retiring trustees as well as third parties contracting with trustees.
The judgment focuses on what happens as between successive trustees when there’s an ‘insolvent trust’, rejecting a ‘first in time’ rule in favour of a pari passu one for enforcement between successive trustees. In this session, we consider how this decision will pan out in practice both from the point of view of successive and retiring trustees as well as third parties contracting with trustees.
The speakers, Shan Warnock-Smith KC (who argued in favour of the pari passu rule before the Privy Council), and Paul Hodgson, Deputy Group Head of Trust at Butterfield Group, offer their views from a legal point of view as well as from within the industry.
An overview of the case and practical issues to be addressed and considered, including:
An overview of the case and practical issues to be addressed and considered, including:
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How will the pari passu rule pan out in practice
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What steps should trustees take following Halabi
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The mechanics and issues that need to be considered in the relationship between the outgoing and incoming trustees
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Will the retiring trustee require a retention of trust fund assets
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Could trustees contract out of the pari passu rule to get priority?
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Will trustees now be more cautious about entering into contracts?
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Might third parties now be more cautious about contracting with trustees?
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Might parties to a DORA indemnity seek to insure the indemnity
Meet our Speakers
Nathalie Burn
HNW Advisor
Nathalie is a solicitor and visiting Lecturer at BPP Law School & the University of Law.
Nathalie is a Litigation Professional Support Lawyer with experience in online & face to face lecturing & writing. Nathalie is also fluent in French, German & Italian.
Nathalie is a Litigation Professional Support Lawyer with experience in online & face to face lecturing & writing. Nathalie is also fluent in French, German & Italian.
Shân Warnock-Smith KC
5 Stone Buildings (London), ICT Chambers (Cayman)
Shân is both an adviser and a litigator in the whole range of trust and succession matters. She is ranked among the leading Silks in her field and has appeared in a number of the most important private client cases of recent years.
Shân has an international practice, taking her around the globe to advise and to litigate from her bases in Cayman and London. Shân is also a specialist mediator of trust and succession disputes. She is a frequent speaker at international conferences and writer on private client topics.
Shân has an international practice, taking her around the globe to advise and to litigate from her bases in Cayman and London. Shân is also a specialist mediator of trust and succession disputes. She is a frequent speaker at international conferences and writer on private client topics.
Paul Hodgson
Butterfied Trust (Guernsey) Limited
Paul Hodgson, Deputy Group Head of Trust at Butterfield is primarily responsible for nurturing and enhancing Butterfield Trust’s relationships with both clients and advisors, alongside offering first class technical advice particularly in relation to structures for wealth and succession planning. Paul joined Butterfield in 1998 after 10 years working with KPMG in Australia, London and Hong Kong. He is a Fellow of the Chartered Institute of Accountants, Australia and New Zealand, a Trust and Estate Practitioner and Fellow of the Chartered Institute for Securities and Investment. Paul is Chairman of the Guernsey International Business Association (GIBA) and past Chairman of the Guernsey Association of Trustees (GAT). He received the STEP Founders Award in 2016 for his extraordinary service and contribution to STEP Worldwide.
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