Victory for Viberts’ client after six year trust battle

Monday 14 December 2015

Viberts has secured an overwhelming victory in the long-running case of MacFirbhisigh & Ching v. CI Trustees & Executors Limited et ors.

After more than six years, represented by Viberts commercial partner Advocate Giles Baxter, the defendant trustee and its director have been vindicated by the Royal Court’s finding that ‘all the plaintiffs’ claims against all the defendants fail and are dismissed’.

It was a sad and hard-fought case in which the plaintiffs had made challenges to the validity of the trust of which they were beneficiaries, as well as various allegations against the trustee and others, including conspiracy, negligent misstatement, breach of trust and dishonest assistance. The original pleading sought to recover in excess of £2m.

By the time of the trial Viberts had successfully challenged virtually all the allegations of dishonesty and conspiracy. The Royal Court has now published a 200-page judgment, dismissing the remainder of the plaintiffs’ claims.

Advocate Baxter has highlighted ten key things to take away from the case from a legal or fiduciary perspective.

From a legal perspective:

- The case provides new authority confirming that the limitation period in Jersey for a breach of fiduciary duty analogous with tort is three years, not ten.

- Even if a plaintiff does not have all the information needed to press home a claim, time may still be running against them towards the limitation deadline.

- Re Beaney provides the applicable test for incapacity in the context of voluntary inter vivos gifts: i.e. is the donor capable of understanding the effect of the deed when it has been fully explained?

- Whether the effect of incapacity on a voluntary inter vivos disposition is to render it void or voidable remains a grey area (i.e. must we strike it down vs. may we strike it down).

- Where a word or description creates uncertainty in the provisions of a trust the court will seek to find a workable meaning based on a sufficient degree of probability as to what the settlor had in mind.

- Cross-examination of expert witnesses is not to be restricted merely because there is no opposing expert testimony upon which to base a challenge.

 From a fiduciary best-practice perspective:

- A trustee should be very careful when using ‘in house’ or past precedents and must ensure that settlors understand what trust arrangements are being put in place.

- Trustees should be scrupulous in their accounting for initial property and will likely be bound by the receipt recorded in the trust instrument.

- Trustees should carry out the best due diligence they can in order to limit the risk of taking on property they later wish they had not.

- Officers and advisers should be careful not to assume personal liability, for example in negligent misstatement and dishonest assistance.

Advocate Baxter said: "In this case, the defendants had no choice but to fight a complicated series of highly contentious and exaggerated complaints which could easily have left them feeling overwhelmed.

"Key to the defendants’ successful strategy was the careful use of interlocutory hearings to narrow and define the issues and material evidence before trial.

"It is clear that the Royal Court reached the right decision and we are pleased with the outcome for our clients as well as the series of judgments which contain some useful guidance on the legal principles relevant to the case.”