History Repeating: A Trustee De Son Tort In Jersey

Published date03 December 2021
Subject MatterFinance and Banking, Corporate/Commercial Law, Fund Management/ REITs, Trusts
Law FirmOgier
AuthorMr Henry Wickham

Becoming a trustee, or ceasing to act in that capacity, is one which will be familiar to all professionals in the offshore trust industry. It is vital that the process is carried out in a manner which is consistent with the interests of the beneficiaries, and complies with the relevant mechanism for the retirement and appointment of trustees. Those mechanics can be found either in the trust instrument itself, or if the trust instrument is silent and governed by Jersey law, in Article 17 of the Trusts (Jersey) Law 1984 (the Trusts Law). The dangers of getting the procedure wrong are exacerbated when the appointment of a new trustee is carried out in-house, so that there is no third party to review the procedure. If a trustee acts without being properly appointed for a long period of time, it may well mean a "lot" and not just a "little" bit of history repeating to remedy the position.

Trustee de son tort duties and obligations

Where a person intermeddles with the affairs of a duly constituted trust, taking upon itself to act as if it were a trustee, it may be liable as if it were a trustee. 1 A person in these circumstances has no title to the trust property, but is often called a trustee de son tort, 2 a de facto trustee, or even a constructive trustee (though only in the sense of giving rise to personal liability). 3 Broadly a trustee de son tort is someone who assumes to act in the administration of trusts without having been properly appointed as a trustee and, in certain circumstances, can be placed in a similar position to a trustee who has been duly appointed. Indeed, it is accepted under Jersey law that a trustee de son tort closely resembles an express trustee. 4

Therefore, one would expect a trustee de son tort to be subject to the duties set out in Article 21 of the Trusts Law. These are to act:

  • with due diligence;
  • as would a prudent person;
  • to the best of the trustee's ability and skill; and
  • subject to the terms of the trust to preserve and enhance the value of the Trust Fund.

A trustee de son tort, therefore has duties to act with due diligence, as would a prudent person and to the best of its ability and skill in everything that it does with regard to the trust. These statutory duties apply at all times and cannot be contracted out of by the terms of the trust or otherwise.

There is also an overriding duty to act in the interests of the beneficiaries.

There is no actual statutory duty to diversify investments but, subject to the terms of...

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