2020 Trust Law Developments

2020 Trust Law Developments

Re B Trust [2020] SC (Bda) 30 Com (23 July 2020)

This trust is said to hold substantial assets worth billions of dollars. The proceedings were commenced by the Plaintiff Trustee seeking, inter alia, directions in relation to disclosure of confidential and sealed documents on the former trustee. In this case, the Court was also being called to determine the scope of disclosure, if any, to which the aggrieved former trustee was entitled.

The judge noted that jurisprudential attention to disclosure in trust cases is primarily focused on the disclosure rights of beneficiaries, settlors and protectors. Further there was little commentary about the rights of former trustees within Beddoe proceedings.

The judge summarised that the Court’s supervisory jurisdiction does not enable a stranger to the trust to obtain disclosure as a form of pre-action disclosure for the purpose of hostile proceedings against the trustees or indeed enable trustees to obtain disclosure against a person otherwise than in his capacity as beneficiary (or any other person interested under the trust) as a form of pre-action disclosure.

In the present case, the Court was concerned with a former trustee who did not seek to destroy or challenge the validity of the trust, but instead was said to be in pursuit of an order for reinstatement as the trustee of the B trust. The judge confirmed the former trustee was not a stranger to the trust and had no standing to join proceeding under Part IV of the Trustee Act 1975.

In practice, the representative voice of the beneficiaries and the protector supported the new trustee. The judge refused to direct that legal advice obtained by the former trustee could be disclosed to the former trustee now in its current state as stranger of the trust. This refusal was without prejudice to any entitlement the former trustee might establish at the civil procedure discovery stage in any separate litigation.

Trusts (Special Provisions) Act 1989: Enhanced Firewall Provisions

As a result of the various amendments to the Trusts (Special Provisions) Act 1989, further clarity and simplification is provided as to the circumstances in which foreign law shall be excluded from application to a Bermuda trust.

By way of example, section 9 provides that the Supreme Court of Bermuda has express jurisdiction over all trust matters where the trust instrument provides for it. Section 10 provides that foreign law shall not apply to the determination of any question concerning the validity, construction, effects or administration of a Bermuda trust, unless foreign land is concerned, or if foreign law has been chosen to apply to any severable aspect of a Bermuda trust. Section 11 prevents the enforcement or recognition of any foreign court order that conflicts with the provisions of section 11.