Offshore

Precedent Set In Guernsey Court Over Property Tycoon's Trust Case, Claims Law Firm

Tom Burroughes, Group Editor, London, 31 January 2014

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A big precedent has been set on the issue of trustee liability in a case held in Guernsey’s Royal Court involving embattled property tycoon Robert Tchenguiz, Carey Olsen, the law firm, says.

A significant precedent has been set on the issue of trustee liability in a case held in Guernsey’s Royal Court involving embattled property tycoon Robert Tchenguiz and one of the offshore trust structures in which he held his assets, according to offshore law firm Carey Olsen.

Investec, a party in the case (see below), declined to comment on the matter when contacted by WealthBriefing, which it said is ongoing.

Carey Olsen acted for Grant Thornton’s Stephen Akers and Mark McDonald, who had been appointed as joint liquidators of some of the companies involved in the Tchenguiz structure and who are now judgment creditors for over £183 million ($301 million). The case is important, Carey Olsen said, because it clarifies the rights of trustees to an indemnity from trust assets and the rights of creditors dealing with trusts.

The judgement, which was made in December 2013, stems from a case that had been held in June 2012.

The case centred over a dispute over enforcement of loans entered into by former trustees of a trust who had, on their removal, exercised a lien over the trust assets. The former trustees argued that they were only liable to the extent of the trust assets. The new trustee disputed this on the basis that the former trustees had been negligent or grossly incompetent. The new trustee argued that the former trustees were personally liable for the loans and should not, therefore, be allowed to pay the loans out of the trust assets, Carey Olsen said in a note on the case.

The court heard evidence about the Tchenguiz family including father Victor Tchenguiz and his three children: Robert, Vincent and Lisa.  The Tchenguiz family had amassed a significant fortune over many years derived mostly from property development and financial engineering. The family members enjoyed the high-life and owned a series of well-known properties in London, where they have non-domiciled status. Much of their wealth was held in the Tchenguiz Family Trust, or TFT.

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