Trustee's Duty And Anti-Bartlett Clauses ' The Ivanishvilli Redux

• Published date: 19 March 2024
• Law Firm: Conyers
• Author: Mr Peter Ch'Ng

Just when trustees are feeling safe to go back into the water after the Hong Kong Court of Final Appeal spoke in Zhang Hong Li v. DBS Bank (Hong Kong) Ltd [2019] along comes Ivanishvilli v Credit Suisse Trust Ltd [2023] where the Singapore Commercial Court held that Credit Suisse Trust as trustee of a Singapore law governed trust, was in breach of its duty to its client to safeguard the trust assets and to account to a record-breaking tune of US$926 million, reliving the thorny issues of a trustee's duty in a "reserved power" trust and validity of anti-Bartlett trustee immunity clauses.

The Singapore case is part of a series of multi-jurisdictional legal proceedings between the plaintiff and the Credit Suisse group arising from the fraud and swindle by an ex-employee of Credit Suisse Bank who had managed the bank investment portfolio of the Trust - itself being part of the wealth management structure put together by the banking group for Mr Ivanishvilli. The crimes included embezzlement, purchasing securities above market price, signature forgery and transfer of monies to cover losses to other accounts he had caused leading to misappropriation and investment losses over a period of 9 years, all sought to be made whole from the trustee on the ground of breach of duty to safeguard trust assets.

Whilst the factual causation of the losses arising from the employee's action were not disputed, the trustee focused on narrowing the extent of its role and duty in a "reserved power" trust where Mr Ivanishvilli...