GA Settlement

• Jurisdiction: Bermuda
• Judge: Chief Justice Hargun
• Judgment Date: 14 June 2019
• Neutral Citation: [2019] SC Bda 38 Civ
• Docket Number: CIVIL JURISDICTION 2019: No. 153 2019: No. 203
• Court: Supreme Court (Bermuda)

In The Matter of GA Settlement

And In The Matter of GB Settlement

and

And In the Matter of GC Settlement

And In the Matter of the Trustee Act 1975

And In the Matter of Order 85 of the Rules of the Supreme Court 1985

[2019] SC (Bda) 38 Civ (14 June 2019)

Before:

Hon. Chief Justice Hargun

CIVIL JURISDICTION 2019: No. 153

2019: No. 154

2019: No. 203

In The Supreme Court of Bermuda

Application seeking an order for the grant of power to the trustees to vary the terms of the settlements under section 47 of the Trustee Act 1975; application for an order disapplying the perpetuity rule under section 4 of the Perpetuities and Accumulations Act 2009

Appearances:

Mr David Brownbill, QC and Mr Keith Robinson, Carey Olsen Bermuda Limited, for the Trustees

Mr Nicholas Le Poidevin, QC and Mrs Fozeia Rana-Fahy, MJM Limited, for the Protectors

REASONS FOR RULING

(In Camera)

Introduction

1 By Originating Summonses issued in each of the above captioned proceedings, the Trustees of the Settlements, as the Plaintiffs, seek substantially the same relief in the following terms:

• (1) An Order pursuant to section 47 of the Trustee Act 1975 that the Trustees may be given power to vary the Settlements by executing a deed of variation in the terms exhibited to the affidavits sworn on behalf of the Trustees; and

• (2) An Order pursuant to section 4 of the Perpetuities and Accumulations Act 2009 that neither (i) the rule against perpetuities; nor (ii) any other similar rule of law that may limit or restrict the time under which property may be held in or subject to any trust shall apply to the Settlement or to the property held thereunder.

Application for relief under section 47

2 The Trustees, supported by the Protectors, are concerned that a detailed review of the Settlements has identified numerous instances of Settlement provisions which are obscure, over-elaborate or unsuitable. Part of the difficulty lies in the fact that these particular Settlements were intended to reflect the provisions set out in the earlier foundation (and the sub-foundations) established in Lichtenstein by the Founder. The detailed points of concern are set out in the written advice of Mr Brownbill QC and Mr Le Poidevin QC and these points of concern include excessive beneficiary involvement in the administration of the trusts, the commingling of beneficiaries in some funds, the defective cross-accrual provisions, and the cumbersome protector consent procedure.

3 As a result of the review the Trustees, with the support of the Protectors, took the view that the Settlements needed substantial revision, under which the beneficiaries would retain all of the existing control powers at the level of the subfoundations but would relinquish their direct powers at the trust level, whilst at the same time the Protectors' powers under the trusts would be enhanced by the introduction of straightforward powers to appoint and remove trustees. The existing governance structure would be retained but the present individual Protectors would be replaced by a corporate protector and fixed terms of office would be introduced for the directors of the trust company (five years) and the corporate protector (six years).

4 The proposed revised deeds of settlements reflect, inter alia, the following changes:

• (1) The general modernisation of the deeds, with provisions being placed in a more logical and helpful order.

• (2) The simplification of the dispositive/beneficial trusts, resolving the drafting difficulties, expanding and clarifying the scope of the Trustees' dispositive powers.

• (3) Bringing the dispositive/beneficial trusts into line with the terms of the sub-foundations and the Founder's wishes, in particular:

  • (a) Distinguishing, in the cross-accruer provisions, between the disposition of the shares in the underlying investment holding company and all other assets.

  • (b) Ensuring that the current beneficiaries were limited to a single generation. The only exception to the “single generation” principle involves the retention of the power of the Trustees (with the consent of the Protector) to add children and issue of a current beneficiary to the respective classes of beneficiaries during the life of the current beneficiary.

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