• Home
  • News
    • People moves
    • Africa
    • Asia
    • Australia
    • Canada
    • Caribbean
    • Domicile
    • Europe
    • Latin America
    • North America
    • Middle East
    • US
    • US
    • UK
  • Products
    • Funds
    • Pensions
    • Platforms
    • Insurance
    • Investments
    • Private Banking
    • Citizenship
    • Taxation
  • Fintech
  • Regulation
  • ESG
  • Expats
  • In Depth
  • Special Reports
  • Directory
  • Video
  • Advertise with us
  • Directory
  • Events
  • European Fund Selector
  • Newsletters
  • Follow us
    • Twitter
    • LinkedIn
    • Newsletters
  • Advertise with us
  • Directory
  • Events
    • Upcoming events
      View all events
  • European Fund Selector
International Investment
International Investment

Sponsored by

Sharing Alpha
  • Home
  • News
  • Products
  • Fintech
  • Regulation
  • ESG
  • Expats
  • In Depth
  • Special Reports
  • Video
  • Trusts

Hong Kong rules that trustees are protected under anti-Bartlett clauses

Hong Kong rules that trustees are protected under anti-Bartlett clauses
  • Pedro Gonçalves
  • @PeterHSG
  • 27 November 2019
  • Tweet  
  • Facebook  
  • LinkedIn  
  • Send to  

Hong Kong has said that trustees are protected by anti-Bartlett clauses, in a decision bound to reverberate through the private wealth and trusts world.

Hong Kong Court of Final Appeal (CFA) established that so-called anti-Bartlett clauses in the trust deed of a Jersey family trust exempted the trustees from any liability for losses incurred in transactions by the trust's underlying investment company, in what was know as the Zhang and Ji v DBS Trustee case.

Related articles

  • Hong Kong authorities, banking industry launch fraud, money-laundering task force
  • Libor traders likely to walk away with money, say Zaiwalla & Co. lawyers
  • Singapore warns wealth managers not to exploit Hong Kong turmoil
  • MAS 1MDB crackdown continues as Falcon Private Bank suspended and UBS, DBS fined

The Court of Final Appeal reversed the Court of Appeal's findings and ruled that the anti-Bartlett clause contained in the trust deed effectively excluded any "high level supervisory duty" with any purported residual obligation on the part of the trustee in relation to the losses caused by risky investment decisions made on behalf of the trust's underlying investment company.

This is an important decision (and rare high level decision on this issue) which may reassure private wealth and trusts practitioners of the strength and scope of anti-Bartlett clauses"

The Court of Final Appeal similarly found that the corporate director of the investment company also had no such high level supervisory duty and was not in breach its fiduciary duties.

"This is an important decision (and rare high level decision on this issue) which may reassure private wealth and trusts practitioners of the strength and scope of anti-Bartlett clauses," international law firm Herbert Smith Freehills said.

The events took place during the 2008 financial crisis. The trust, Amsun, was settled by Ji Zhengrong, an expert in financial investment, and her husband Zhang Hong Li. They created an offshore company, Wise Lords, owned by the trust to make high-return investments during the bubble before the 2008 crash. Many were high-risk foreign exchange deals, and by August 2008, Wise Lords' portfolio contained 85% in foreign currency exposure, most of it in Australian dollars. Its borrowings of $96.4m were nearly three times its net assets.

When the crash came, Wise Lords suffered significant losses. Ji and Zhang, in their capacity as beneficiaries, together with the successor trustees and the company itself, sued the trustee, DBS Trustee HK, and the corporate director of the company for breach of trust or duty. Their claims succeeded at trial, the Court of First Instance finding that DBS Trustee HK had been in "serious and flagrant breach" of its duties and had breached its "high level of supervisory duty" when allowing Wise Lord to buy the high-risk products. The Hong Kong Court of Appeal agreed.

Reversing the decisions of Hong Kong's Court of Appeal and lower courts, the CFA unanimously found that the trustees had no 'high level residual duty' to supervise the company's activities, given that the anti-Bartlett provisions relieved them from any duty to interfere with or supervise the company's conduct, unless they became aware of actual dishonesty.

The case was heard in the Hong Kong courts and the governing law of the trust was Jersey law. The principles will therefore likely be applicable in most of the major common law trust jurisdictions.

 

Subscribe to International Investment's free, twice-daily, newsletter

  • Tweet  
  • Facebook  
  • LinkedIn  
  • Send to  
  • Topics
  • Trusts
  • Regulation
  • Hong Kong
  • DBS
  • Herbert Smith Freehills
  • Wise Lords
  • DBS Trustee HK
  • anti-Bartlett

More on Trusts

FCA warns pandemic puts 4,000 financial firms at risk of failing

  • Regulation
  • 07 January 2021
FCA slaps Charles Schwab UK with £9m fine over compliance failures

  • Regulation
  • 21 December 2020
FATF removes Bahamas from 'increased monitoring' list

  • Regulation
  • 21 December 2020
FCA orders Blue Gate Capital to pay Connaught investors £200k

  • Regulation
  • 18 December 2020
Feature: How Labuan IBFC stayed on track throughout the pandemic

  • Regulation
  • 18 December 2020
Back to Top

Most read

FCA issues warning on cyrptocurrencies as Bitcoin volatility continues
FCA issues warning on cyrptocurrencies as Bitcoin volatility continues
FCA warns pandemic puts 4,000 financial firms at risk of failing
FCA warns pandemic puts 4,000 financial firms at risk of failing
Australian expats warned of tax bills on return post-pandemic
Australian expats warned of tax bills on return post-pandemic
Wall Street 'rattled' on likelihood of Blue Wave
Wall Street 'rattled' on likelihood of Blue Wave
25% of expats bought health insurance to cover family during pandemic
25% of expats bought health insurance to cover family during pandemic
  • Contact Us
  • Marketing solutions
  • About Incisive Media
  • Terms and conditions
  • Policies
  • Careers
  • Twitter
  • LinkedIn
  • Newsletters

© Incisive Business Media (IP) Limited, Published by Incisive Business Media Limited, New London House, 172 Drury Lane, London WC2B 5QR, registered in England and Wales with company registration numbers 09177174 & 09178013

Digital publisher of the year
Digital publisher of the year 2010, 2013, 2016 & 2017
Loading