"Dog-Leg" Claims And Trustee’s Legal Costs

Five recent decisions of the Royal Court of Jersey illustrate that Jersey continues to be at the cutting edge of trust law. The first relates to the so called "dog-leg" claim by beneficiaries of a trust directly against the directors of a corporate trustee. The other four decisions relate to a trustee’s entitlement to repayment of legal costs from trust assets where the trustee is a party to litigation involving the trust and is acting neutrally.

The "dog-leg" claim is based on a director of a company’s duty under, in the case of Jersey, Article 74 (1) (b) of the Companies (Jersey) Law 1991 to "exercise the care, diligence and skill that a reasonably prudent person would exercise" in carrying out the director’s duties in relation to the company. The right to performance of this duty is claimed to be an asset of the trust and, where a director is alleged to have breached the duty, it is claimed that the beneficiaries of the relevant trust can enforce performance