THE CURACAO TRUSTEE
Breach of trust results in liability
Usually a Curacao trust office (service provider) uses one of its own public limited liability companies (NVs) or private companies with limited liability (BVs) to provide the services. This in-house NV or BV will then for instance become the managing director of the client company. A trust office offering services as a Trustee will usually also do this in the form of an in-house NV or BV who will act as the Trustee. The Trustee will be able to fulfill this role with regard to multiple trust assets.
For third parties it is important to know the capacity in which the Trustee is acting and with regard to which trust assets the Trustee is entering into a legal act. If that capacity is known, in the event of breach of contract the third party can then only seek recourse in respect of the respective trust assets and not in respect of the Trustee’s own assets. In other words, in such a case the Trustee is in principle only liable qualitate qua and not pro se. In this connection a comparison can be made with the managing director of an NV or BV and with the receiver in a bankruptcy.
However, if on entering into the legal act the Trustee has breached his obligations under the trust (arising from the law and/or the trust deed) (a so-called ‘breach of trust‘), a Trustee who commits a breach of trust towards the third party will be liable with his own assets. Whether in that case the third party can also seek recourse with regard to the trust assets depends on the question of whether the third party was aware of the breach of trust. If the third party was aware of this when he entered into the legal act, he will not be able to seek recourse in respect of the trust assets and possibly not in respect of the Trustee’s own assets either. If the third party was not aware of this he will be able to seek recourse in respect of the Trustee’s own assets as well as in respect of the trust assets.
The Trustee who commits a breach of trust and therefore violates the standard of due care will be liable for this, and insofar as any recovery by the third party in respect of the trust assets has taken place, the Trustee will be obliged to redress the loss caused by this.
Karel Frielink
Attorney (Lawyer) / Partner
(1 November 2012)
.
