Spread Trustee Company Limited v Sarah Anne Hutcheson and Others [2011] UKPC 13

The Privy Council case of Spread Trustee Company Limited v Hutcheson recently affirmed the decision of the United Kingdom Court of Appeal in Armitage v Nurse [1998] Ch 241 deciding by 3:2 that, in Guernsey, trustees could limit their liability for gross negligence. 

As indicated by the dissenting judgments, this case was a close call with compelling arguments on either side.  However, this case may have limited application in New Zealand because:

  • Guernsey's particular customary and statutory law, as it related to trustees limitation of liability at the time of the breach of trust (1989-1990), was central to the case
  • New Zealand has specific legislation dealing with trustee liability.  For example, section 62 of the Securities Act 1978 restricts the ability to limit the liability of a trustee.

There is also understandable reluctance in New Zealand (and, no doubt, in other jurisdictions) for trustees to limit their liability for gross negligence.  This case should not be seen as a charter for grossly negligent trustees