In February, the Royal Court of Guernsey handed down two judgments in the case of Artemis Trustees Limited and Another v M Sandle and Another which highlighted the pitfalls for trustees when it comes to their fees and indemnification from the trust.
This judgment comes off the back of a long series of cases concerning an application to remove incumbent trustees and a cross-application for reasonable security. The full facts of the case can be found in our article here.
One issue which needed to be determined as part of the main proceedings was what fees and expenses the outgoing trustees were legitimately entitled to. This particular judgment related to the assessment of the outgoing trustees fee claim. Of the £2.36m claimed by the outgoing trustees the Court accepted that only £300,000 was legitimately payable.
This chain of cases highlights the importance of having a formal fee agreement in place at the outset and the need to keep proper records of work which is carried out. They also emphasise the need for trustees to distinguish between work which is for the benefit of the trust (which is properly payable by the trust) and work which is for the benefit of the trustee personally (which is payable by the trustee only).
This was a particular issue in this case due to the vast legal fees which the outgoing trustees had incurred in relation to its fee claim for which the Court concluded was for the outgoing trustees personal gain.