Mourant wins landmark breach of trust and gross negligence claim

Mourant recently acted for a beneficiary who succeeded in his claim against a professional trustee on the basis of exercising its powers for an improper purpose, breach of trust on the basis of inadequate deliberation and irrationality, plus gross negligence in its drafting of trust documentation (Stewart v Suntera Private Wealth (Guernsey) Limited & ors [2026]GRC040).

Background

The Plaintiff was a beneficiary of two discretionary trusts (the Old Trusts). The Old Trusts were dynastic in character and intended to benefit the Plaintiff’s late father and mother (the Second Defendant), their children, being the Plaintiff and the Third Defendant, and their future descendants.

The First Defendant, Suntera Private Wealth (Guernsey) Limited (the Trustee) acted as trustee of the Old Trusts.

In February 2021, the Trustee exercised its powers of amendment and appointment to restructure the assets of the Old Trusts into three new trusts (the Restructuring) being:

• a trust for the Plaintiff’s benefit (the A Trust);
• a trust for Third Defendant’s benefit (the B Trust); and
• a trust for descendants (the Future Gen Trust).

Each new trust was structured as a Foreign Grantor Trust, conferring extensive powers (including revocation and appointment) on designated ‘Grantors’ subject to consent of a third-party consent holder (TPCH). The Grantor of the A Trust was the Second Defendant. The Grantor of the B Trust and the Future Gen Trust was the Third Defendant.

The Plaintiff claimed that the Trustee acted in breach of trust in exercising its powers to carry out the Restructuring.

Issues

Ahead of the trial, the parties agreed that the Court should consider liability at this stage with consequential relief to be dealt with in due course.

The key issues were whether the Trustee:

• exercised its powers for an improper purpose;
• failed to take into account relevant considerations or took into account irrelevant considerations (inadequate deliberation);
• acted irrationally or perversely; and
• was grossly negligent in drafting the A Trust instrument.

Application of the law

Improper Purpose

The Court applied established principles that fiduciary powers must be exercised for the purposes for which they were conferred. The proper purpose is determined objectively, whereas the trustee’s actual purpose is assessed subjectively.

The Court found that the Restructuring enabled each Grantor to exercise control akin to ownership, removing assets from fiduciary control and undermining the trusts’ dynastic purpose. These were ‘radical changes’ that undermined the fundamental nature of a discretionary trust.

Accordingly, the Restructuring was found to be for an improper purpose and therefore void.

Inadequate Deliberation

The Court considered whether the Trustee breached its duty to take into account relevant considerations and exclude irrelevant ones.

The Court found that the Trustee effectively delegated or abdicated its decision-making role to others and failed to weigh relevant considerations, including the effects of Grantor powers on beneficiaries and the trust structure. There was a failure to obtain independent advice or address conflicts of intertest. There was also a notable absence of proper trustee decision-making processes, with no board-level deliberation, inadequate records, and no evidence of structured consideration.

The Trustee had ‘failed to properly exercise its independent discretion’ and ‘acted more like a family office than a trustee‘. In respect of the Plaintiff himself, the Trustee had treated him as a ‘hostile adversary‘, acting with ‘increasing animus‘ towards him, failing to verify allegations made against him or to engage meaningfully, despite offers of discussion or mediation.

These failures were sufficiently serious to constitute a breach of fiduciary duty. The Court indicated that, but for the finding of improper purpose, it would have set aside the Restructuring on this basis.

Irrationality

The Court considered whether the Trustee’s decisions were irrational, applying the test of whether no reasonable trustee could have made them.

It held that the Trustee failed to consider the fundamental consequences of introducing Grantor powers.

It prioritised tax considerations without evaluating structural risks and it failed to balance competing objectives, including preservation of dynastic structure and protection of beneficiaries.

The Court concluded that the Trustee’s decisions were irrational and perverse, such that setting aside the Restructuring would also have been appropriate on this basis.

Gross Negligence

The Court considered whether the drafting of the A Trust instrument amounted to gross negligence.

It found that:

• The Trustee failed to understand or analyse the interaction of Grantor powers, trustee powers, and consent mechanism;
• The Trustee obtained no proper advice on how these provisions would operate in practice; and
• The resulting drafting was incoherent and created uncertainty, leading directly to litigation.

The Jurats found the Trustee’s disregard of the implications of the Grantor powers to be ‘jaw-dropping’ and held that the Trustee’s conduct amounted to gross negligence.

Conclusion

The Court found for the Plaintiff on all grounds, concluding that the Trustee had acted for an improper purpose in implementing the Restructuring, rendering it void. It also found that the Trustee’s actions of bringing about the Restructuring would be voidable and liable to be set aside due to inadequate deliberation and irrationality / perversity.

Further, the Court found that the degree of negligence by which the Trustee drafted the A Trust instrument was sufficient to amount to gross negligence.

Issues of relief and consequences were reserved for further determination, although the Court confirmed that the wrongful exercise of powers constituted a breach of trust.