Ultimately, there was no dispute over the validity of the revocation or as to the bare trust, but issues arose over the entitlement of the defendants, as former trustees of the trust, to retain assets of the trust to indemnify against potential future liabilities, including in particular their alleged exposure to liability in relation to arbitration proceedings brought against the claimant in Venezuela concerning a development project. The defendants were not, and had never been, parties to the arbitration. There was no dispute as to the basic principle that a former trustee is entitled to retain trust assets to cover a risk of future liability if that risk is more than merely fanciful, as explained by the House of Lords in Concord Trust v The Law Debenture Corporation plc  (2005). The issue in these proceedings was the meaning of ‘’fanciful” in this context. The defendants contended, relying on the 2022 decision of the Jersey court in White Willow (Trustees) Ltd v Trilogy Management Ltd, that fanciful means either that there is no risk at all, or the risk is imaginary. The Jersey court held that a risk of liability is only fanciful if there is in fact no risk at all; a risk of liability which is very low or minimal, is still a risk and if there is a risk of a liability, why should that risk be placed on the trustee rather than on the beneficiary who is taking the benefit of the trust assets?

In Perez, High Court Master Kaye held that this approach does not reflect the approach of the House of Lords in Concord; fanciful does not mean no risk at all, or a risk that is imaginary. It is, he holds, clear from Concord  that the test is whether it is reasonably arguable that the alleged risk exists; the bar is not so low that the risk has to be imaginary or illusory before the court can conclude that the risk is fanciful. He holds that, on the facts, the risk in this case falls somewhere between not reasonably arguable and not remotely arguable, and accordingly that the defendants are not entitled to make a retention from the trust assets in respect of the risk of liability in relation to the Venezuelan arbitration.

The decision will be of importance to offshore jurisdictions, including the Cayman Islands, the BVI and Bermuda, where the trust law is derived from English law.