Helmsman Ltd & anr v Bank of New York Trust Co (Cayman) Ltd [2009] CILR 490

Analysis

The defendant Bank of New York Trust Co (Cayman) Ltd (BNY Cayman) was sole trustee of the Beverley and Howden Settlements from June 1999 until February 2005 and trustee of the London Settlement from March 2000 until November 2002. The first plaintiff, Helmsman Ltd (H(1)), is a Bermudian company and now the sole trustee of the Beverley and Howden Settlements. The second plaintiff, the Hotham Trustee Co Ltd (H(2)), is an English company and the sole trustee of the London Settlement. The Beverley and Howden Settlements (the UK settlements) provide that the proper law of the settlement is the law of England and Wales and, by clause 3(2) of each deed, the forum for the administration of the settlement will (subject and without prejudice to any change made under the power conferred by para 5 of the second schedule in the forum and administration of this settlement) be the courts of England and Wales. The London Settlement, however, is governed by Cayman law and its forum of administration is the Cayman Islands’ courts. The settlor of all three trusts, Mr Malcolm Healey (S), lives in England. BNY Cayman appointed BNY in New York as investment manager and custodian. It appears that the trusts suffered substantial losses, in excess of US$68m for the UK settlements alone, which it is said result from investments in ‘tech stocks at the time of the so-called dot com bubble’ in the years between 2000 and 2005.

On 24 November 2008, H(1) and H(2) changed the forum for administration of the UK Settlements to the Cayman Island Courts under the power conferred on them and on 25 November 2008 commenced proceedings in negligence in the Grand Court, claiming that BNY Cayman adopted a ‘passive or inert stance’ and failed to monitor the activities of BNY New York, the investment manager and S’s longstanding investment advisor, Mr Parker (P) who it appeared was the primary source of investment advice. P lived in Florida at all material times. BNY Cayman applied for a stay of the proceedings on the grounds:

1. (a) Clause 3(2) of the UK settlements confers exclusive jurisdiction on the English court to adjudicate disputes between it and the beneficiaries. As H(1), the successor trustee, claimed on behalf of those beneficiaries, it could not stand in a better position than the beneficiaries themselves. Since the proper law of the settlements was English law, the English court would, in the absence of any jurisdiction clause at all, have had non-exclusive jurisdiction as the forum for administration so that if S intended clause 3(2) to confer only a non-exclusive jurisdiction on the English court, its presence would be otiose. Therefore, to give effect to the clause, it must be viewed as intended to confer an exclusive jurisdiction upon the English court.
2. (b) On the facts of the case, England was the more appropriate forum for the trial of the action since two of the settlements were governed by English law and the Cayman court would otherwise have to receive expert evidence on English law and, further, BNY Cayman wished to claim contribution from P using English legislation.

Held (application dismissed [25]):

1. (1) It was unnecessary to decide whether the clause nominating England as the ‘forum for the administration of’ the trusts would extend to giving jurisdiction over contentious litigation such as a claim for damages for breach of trust or negligence since, under para 5 of the second schedule, the plaintiff trustees had the express power to change the forum ‘at any time’ and had done so before the present action to pre-empt BNY Cayman’s application [13]. Nevertheless, it was unlikely that clause 3(2) would have had that effect because the ‘administration’ of a trust would be unlikely to extend to the resolution of disputes, including hostile litigation for breach of trust [12]. There was no support for the argument the change of forum could not act retrospectively so as to give the court jurisdiction over the trusteeship of BNY Cayman, which ended over four years ago. If a breach of trust action against a previous trustee by a current trustee was one which must be tried in the forum for administration of the trust there was no reason why a trustee currently charged with that administration should be prevented from exercising the discretion it has been given to change the forum for the resolution of such disputes. On the other hand, if a breach of trust action was not an aspect of the trust administration at all, then the change of forum on the eve of litigation had no effect for present purposes. The clause did not assign exclusive jurisdiction to the English courts and the court would need to consider where the most appropriate forum for the trial of the action lay [15].
2. (2) BNY Cayman had been served in the Cayman Islands and therefore that jurisdiction was as of right and the burden of satisfying the court that England was ‘clearly or distinctly’ the more appropriate forum fell upon it. However:
3. BNY Cayman had no presence in England;
4. the Cayman Islands was a British overseas territory, and, given the similarity between English and Cayman law, it was unlikely that the Cayman court would have to hear expert evidence on English law;
5. most of the witnesses resided in the United States so the convenience of the witnesses was not a factor which argued strongly for conducting the proceedings in either jurisdiction;
6. there was no evidence of any possible advantage in conducting proceedings in England because it was doubtful that BNY Cayman would be able to use an English judgment to claim contribution against P since he was resident in Florida; and
7. even though the English courts had previously been responsible for the administration of the trusts at the time of the alleged breach, this was insignificant since no issue was ever referred to an English court.
8. The one way in which the laws of the Cayman Islands and England differed in deciding forum conveniens issues was in respect of public policy. Public policy considerations could be considered in the Cayman Islands and, since it was a significant public concern that a Cayman trust company had failed to carry out its fiduciary obligations, the Cayman court would be the natural forum for such a claim. It was usually appropriate that breaches of trust committed in the Cayman Islands would be adjudicated upon by Cayman courts though this would not be determinative in all cases if there were other more significant factors than domestic public policy [24]. BNY Cayman had not proved on the balance of probabilities that the English court was the most appropriate forum and the application was dismissed [25].

JUDGMENT HENDERSON J: [1] This application is for a stay of proceedings on the ground that the action should be tried in England. I must consider whether a forum clause in two trust deeds assigns exclusive jurisdiction to the courts of that country and, if not, whether it is the most appropriate forum in any …

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