About Louise Charleson
Louise Charleson is a Senior Associate in the Dispute Resolution Group. She has extensive experience in advising both local and international clients on a wide range of commercial litigation and dispute resolution matters including high-value trust disputes and restructures, cases involving telecommunications and regulatory issues, professional negligence, policy coverage and general contractual disputes.
The Chief Justice has recently provided helpful guidance to practitioners seeking confidentiality orders in section 47 applications by handing down an ex tempore ruling in In the Matter of the BCD Trust, supporting the anonymisation and corresponding orders required to ensure that such applications are: “dealt with as private applications, where there is no obvious public interest in knowing about an internal trust administration matter.”
Section 47 of the Bermudian Trustee Act 1975 allows for the restructure of trusts in circumstances where the requisite power to implement the variation is absent from the trust instrument. It gives the Court jurisdiction to authorise transactions which it deems expedient for the trust.
This provision, at present only found in Bermuda and no other jurisdiction, allows the Court to exercise its discretion in sanctioning the variation of administrative powers of the trust which may impact beneficial interests. The beneficiaries’ consent to the variation is not required.
Reliance can be placed on section 47 to inter alia:
• Vary the beneficial interests of the trust;
• Extend the perpetuity period of the trust;
• Ratify decisions made by (de-facto) trustees when their appointment or retirement is defective;
• Vary investment powers;
• Add powers to appoint trustees; and
• Modernise provisions deemed expedient for the trust, e.g. trustee charging powers.
The applications often relate to trusts of substantial value with ultra high net worth beneficiaries who are not necessarily in the public eye. It is desirable for such applications to be kept confidential to assist maintaining the privacy and safety of the beneficiaries, particularly minors. This is because should the extent of wealth and other facts relevant to the trust structure be made publicly available, there is a real risk that certain beneficiaries may be negatively targeted and attacked, for example kidnapping and ransom.
Additionally, certain trust structures hold assets, or their beneficiaries are, related to well known companies. Therefore, there is a potential risk that such companies could be adversely impacted should they become publicly linked to court proceedings regardless of the fact that generally section 47 applications tend to be non-contentious.
It has been the regular practice of the Bermuda Court, where the facts have justified it, for section 47 proceedings to be anonymised, the related files sealed, and the hearings heard in camera. However, there is no automatic entitlement to these arrangements which are designed to keep the matters confidential.
Section 6(10) of the Bermuda Constitution expressly permits Court proceedings to be held in private where it is deemed necessary or expedient for the protection of the private lives of persons concerned in the proceedings. In every case there are competing public and private interests and it is for the Court to determine the correct balance between those competing interests. The recent decision of In the Matter of the BCD Trust will therefore bring much needed comfort, for those trustees and beneficiaries who were previously concerned about participating in section 47 proceedings.
This view has recently been reinforced by the Chief Justice in an unreported s.47 application hearing held subsequent to the BCD ruling. When granting the confidentiality orders sought, the Chief Justice emphasised that in addition to the usual concerns about privacy and safety of beneficiaries, applications such as this basically concern internal trust administration rather than contentious litigation and as such there is no need for these types of applications to be public.