A trust, a Swiss bank and three absent beneficiaries: court case raises questions about dormant accounts

The Supreme Court was yesterday asked to decide the future of a “relatively modest” sum of money in a Swiss bank account linked to a Gibraltar-based trust whose beneficiaries cannot be traced, in a case that raises wider questions about how to handle funds in dormant accounts.

Chief Justice Anthony Dudley was asked to decide what to do with $120,209 “and a few pennies” belonging to three beneficiaries whose whereabouts are currently unknown.

Daniel Feetham, QC, the barrister representing the claimant in yesterday’s hearing, Lloyd’s Trust Company (Gibraltar), said the issue of dormant accounts was a global problem but asked whether Gibraltar could better deal with the complexities that arise in such situations.

Worldwide, he told the court, there are “tens of billions” of dollars in dormant accounts which often come to light only when banks merge or wind down parts of their operations.

“They look at accounts in detail and find there are accounts belonging to people who can’t be traced,” Mr Feetham said.

“What do we do with those accounts?”

Some jurisdictions have legislation in place to deal with situations like this, he added.

In the UK, for example, the law allows for the government to take over funds belonging to beneficiaries of dormant accounts who cannot be located, and to donate those funds to charity.

It is estimated that there is as much as £5 billion lying in dormant accounts in the UK, the court was told.

But in Gibraltar, there is no such legislation in place, meaning the only recourse is to turn to the courts.

The case before the Supreme Court yesterday related to investment funds managed by Lloyd’s Trust Company (Gibraltar) as custodian trustee and held in a bank in Geneva.

The funds were held for the benefit of several investors in a scheme set up in 1985 but which no longer operates in Gibraltar.

After hearing legal submissions, Chief Justice Anthony Dudley granted an order requiring that every reasonable effort be made to locate the remaining beneficiaries, but setting an 18-month deadline.

After that, the beneficiaries would be deemed “dead or unobtainable” and the money would be paid into the court account and held there for six years.

Mr Justice Dudley said the order would protect the interests of the beneficiaries but would also, if they could not be found, enable the trustee to recover the costs of the exercise from the funds. Legal costs alone were estimated in the region of £50,000.

Beyond the six years, any unclaimed funds would be released by the court into the Gibraltar Government’s consolidated fund.

“But let’s see how much is left,” Mr Justice Dudley said.

“There’s a real chance that very little is going to be paid into court.”

Outside court, Mr Feetham said he would be raising the case with Justice Minister Neil Costa and would consider bring a Private Members’ Bill to Parliament to mirror the UK’s legislation in this area.

The aim would be to ensure cases such as this can be resolved fairly, swiftly and efficiently, and that any unclaimed funds in dormant accounts can be handed to charity rather than whittled down by unnecessary legal and administrative costs.

Mr Feetham was assisted by Darren Martinez.