The evolution of gross negligence in Guernsey trust litigation

Within the context of trust disputes, gross negligence arises when a trustee’s failures go beyond errors in judgement and the concept is engaged where a trustee’s conduct demonstrates a significant and blatant disregard for their fiduciary, statutory and common law duties. 

Trustees are legally required to act with a high standard of care and diligence when managing trust assets on behalf of a trust's beneficiaries. Those found to have acted with gross negligence may be personally liable for any losses to the trust and removed from their role.  

Historically, trustees have often relied on exoneration clauses in trust instruments to limit their personal liability. However, Guernsey law (in line with other international finance centres) explicitly prevents exoneration clauses being used to exempt a trustee from gross negligence, meaning that if a trustee is alleged to have been grossly negligent, exoneration protections may not apply. 

As a result, once a rarely litigated standard, gross negligence is now a key gateway to barring trustees from sheltering behind exoneration clauses. 

Gross negligence has become an important consideration in Guernsey trust litigation, a shift shaped by common law and the progressive judicial clarification over the past two decades. 

The importance of precisely pleading gross negligence

Section 39(7) of the Trusts (Guernsey) Law 2007 (the Guernsey Trusts Law) states that “the terms of a trust may not relieve a trustee of liability for a breach of trust arising from his own fraud, wilful misconduct or gross negligence”. 

Recent judgments have further highlighted that exoneration clauses can no longer protect trustees from liability for gross negligence, fraud and wilful misconduct. 

However, due to the seriousness of a gross negligence allegation against a trustee, it must be precisely pleaded.  

As reiterated by the Guernsey Court of Appeal in Investec Trust (Guernsey) Ltd v Glenalla Properties Ltd [2022] GCA091 (Investec v Glenalla) and recently affirmed in Pilatus (PTC) Limited v RBC Trustees (Jersey) Limited [2025] GRC043 (Pilatus v RBC), a plaintiff bears the burden of informing a defendant “with precision of the extent of the duty said to have been broken, how it had been broken, what should have been done instead, why the breach was said to have been gross and how the breach had given rise to the loss”. 

The evolution of gross negligence in trust disputes  

English authorities have previously expressed doubts as to whether gross negligence should be considered: 

• as a separate concept 
• as ordinary negligence with a “vituperative epithet”, or  
• as a severe degree of wrongdoing 

However, the Channel Islands courts have clarified that the distinction is a real and substantive one. 

The starting point came with the Judicial Committee of the Privy Council’s decision in the Guernsey matter Spread Trustee v Hutcheson [2012] 2 AC 194, in which Sir Robin Auld concluded that gross negligence is not a different kind of negligence, but a difference in “the degree or seriousness of the want of care” and that gross misconduct “may be committed in good faith and, therefore, without dishonesty or wilfulness”. 

This approach was further developed in Guernsey in Investec v Glenalla and, most recently, by the Court of Appeal in Khuller v First International Trustees Ltd [2020] GCA051 (Khuller v First) and then by the Royal Court in Pilatus v RBC.  

Determining gross negligence in Guernsey trust disputes 

The Royal Court in Pilatus v RBC considered that “whilst negligence, without qualification, is an inadvertent falling short of a duty to take reasonable care in all the circumstances, gross negligence necessarily has to be something more serious”, further setting out that the test for gross negligence in Guernsey trust disputes is defined as “a serious or flagrant degree of negligence, more fundamental than failure to exercise proper skill and / or care constituting negligence, and capable of embracing not only conduct undertaken with actual appreciation of the risks involved, but also serious disregard of or indifference to an obvious risk”. 

Importantly, gross negligence does not require proof of recklessness or mens rea, a point settled in Khuller v First. In that decision, the Court of Appeal endorsed the Royal Court’s direction to the Jurats (who were determining whether, as a question of fact, there was gross negligence on the part of the trustee) that gross negligence must, “as a matter of impression” be something that “excites astonishment” denoting a degree of careless disregard well beyond mere error or inadvertence. 

So, in any claim against a trustee involving an allegation of gross negligence, an aggrieved beneficiary must plead, with clarity: 

• which duty was breached 
• how it was breached, and  
• why the breach can be characterised as gross negligence, attained to the standard set out above   

This is, of course, in addition to the usual requirements to plead causation and loss as part of the overall claim.   

Conclusion 

In the past 20 years, gross negligence in trust disputes has become a well-articulated threshold for the Guernsey courts to consider, aligned with statutory changes and judicial developments.  

The test to determine gross negligence is no longer vague and practitioners must treat it as a distinct and serious concept – one that, if pleaded, must be substantiated by precise and clear particulars so that both the parties and the court can properly determine liability on this issue. It is, of course, fact specific as to whether the trustee’s conduct could be characterised as gross negligence, but the legal test is now clear.   

How Ogier can help 

Ogier has one of the largest Dispute Resolution teams across our jurisdictions, advising on technical, strategic and procedural aspects across the spectrum of contentious commercial issues and disputes. 

Our team has experience in all matters relating to international arbitral proceedings, and we have a pedigree in local and cross-border trust dispute resolution. Our trusts disputes specialists, who were named Contentious Trusts and Estates Team of the Year at the 2024 STEP Private Client Awards, form part of Ogier's Trusts Advisory Group. They work seamlessly alongside Ogier's non-contentious private client and corporate lawyers.  

For more information or to find out how Ogier can advise you in this area, contact a member of the team listed below. 

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Disclaimer

This client briefing has been prepared for clients and professional associates of Ogier. The information and expressions of opinion which it contains are not intended to be a comprehensive study or to provide legal advice and should not be treated as a substitute for specific advice concerning individual situations.

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