In Re the Sterling Investment Trust [2010]JRC054

Trustee released from Undertaking to retain possible proceeds of fraudulent conversion.

This case arose from the criminal conduct of Mr Raymond Bellows, who owned and controlled a former trustee of the Sterling Trust (the ‘Trust’), Lavy Hancox Trustees Limited. In 1999 Mr Bellows was imprisoned for 5 years for various offences of fraudulent conversion. Prior to his imprisonment, in 1998 the trusteeship had been transferred to Caversham Trustees Limited, the Representor. At that time the police and the Viscount were still investigating the affairs of Mr Bellows, including the possibility that Mr Belllows had defrauded the Midland Bank (now HSBC)of USD500k. For that reason Caversham had given an Undertaking to retain a sum of over USD500k within the Trust pending possible proprietary claims by HSBC, and not to part with it without further Order of the Court.

No such proceedings have materialised, and Caversham therefore applied to the Court to be released from its Undertaking so that the retained sum (now standing at over USD700k) could be released. The Court noted that neither HSBC, the Viscount nor the Attorney General opposed the application, and accordingly Caversham was discharged from its Undertaking.

Comment

In this case the proper law of the Trust was Guernsey Law. However, Article 5 of the Trust (Jersey) Law 1984 as amended gave the Royal Court jurisdiction as the trustee is a Jersey company, the Trust is administered in Jersey and the asset in question is held in Jersey.