Privy Council Hands Down Landmark Ruling On Priority Between Trustees' Competing Rights Of Indemnity

INTRODUCTION

On 13 October 2022, the seven-member Board of the Privy Council handed down its landmark judgment in the joined appeals Equity Trust (Jersey) Ltd v Halabi and ITG Ltd and others v Fort Trustees Ltd and another [2022] UKPC 36 from the Jersey and Guernsey Courts of Appeal.

Both appeals concerned the nature and scope of a trustee's right of indemnity and exculpation in circumstances where: (i) there were multiple trustees with claims against the trust fund under their respective rights of indemnity and exculpation; and (ii) the assets held on trust were insufficient to meet all of the trustees' claims in full, rendering the trusts insolvent in practical terms.

While the trusts in question were both governed by Jersey law, the Board determined that the applicable Jersey trusts law was, in principle, the same as English law in all material aspects. For that reason, the position under English law informed their analysis of the issues to be determined in