Analysis
The corporate trustees of a Bermuda discretionary trust made proposals to the beneficiaries to restructure the trust administration. Some beneficiaries objected to the proposals and requested that particular directors of the trustee companies, being closely allied with other beneficiaries, resign. Other beneficiaries broadly supported the proposals, and said the Court could not order such resignations. The trustees sought directions from the Court, including a direction as to whether they should remain as trustees, and certain directors offered to retire if the Court signified that they should do so.
The issues before the Court were:
1) Did the Court have power to require a director of a corporate trustee to resign?
2) Alternatively, should the court signify that resignation would be appropriate for the directors of the trustee companies?
Held
1) The Court’s supervisory jurisdiction was broad and flexible as concisely summarised in Lewin on Trusts (19th Ed) paragraph 13–063. The Court has no jurisdiction to direct the removal of directors from corporate trustees; that power lay only with the shareholders of the companies concerned. Nevertheless, the Court may indicate that it would be in the best interests of the trusts for directors to resign, or that a director’s continued deployment in the administration of a particular trust would be inconsistent with the due administration of the relevant trust.
2) On the facts, no such indications would be given. Although one group of beneficiaries had, subjectively, lost confidence in the trustee directors, the court had to assess whether, objectively, the breakdown in relations is likely to jeopardise the proper administration of the trust – National Westminster Bank v Lucas [2014] EWCA Civ 1632 followed. It was inherently improbable that professional -trustees capitulated to the demands of one branch of beneficiaries. The trustees’ proposals were not indicative of a final decision having been made, and were expressed in provisional terms after taking advice from experienced leading counsel. There were no objective grounds for a loss of confidence, or that the proper administration of the trust was in jeopardy.
Directions accordingly.
JUDGMENT IAN RC KAWALEY CJ Introduction [1] By an Originating Summons issued on February 21, 2018, which was amended on April 23, 2018, the Trustees sought directions in relation to various matters relating to the administration of the X Trusts. The present Judgment relates to their application under paragraph 12(b) of the Amended Originating Summons …Continue reading "In the Matter of the X Trusts [2019] WTLR 1055"