Re Polar Trust; Bermuda Trust Company Ltd v Ellefsen and Others 1995 Civil Jur. No. 173

• Jurisdiction: Bermuda
• Judgment Date: 16 August 1995
• Date: 16 August 1995
• Docket Number: Civil Jurisdiction 1995 No. 173
• Court: Supreme Court (Bermuda)

In the Supreme Court of Bermuda

Ground, J

Civil Jurisdiction 1995 No. 173

BETWEEN:

Bermuda Trust Company limited

Plaintiff

-and-

(1) Rune Ellefsen

(2) Jarle Ellefsen

(3) Tor Richard Ellefsen (By his Guardian and Next Friend)

(4) Pamela Ellefsen

(5) Tom Alistair Ellefsen

(6) Dag Philip Ellefsen (A Minor)

(7) Tore Nelson Ellefsen

Defendants

Mr. Elkinson for the plaintiff;

Mr. Woloniecki for the first, second and third defendants;

Mr. Kessaram for the fourth, fifth and sixth defendants; and

Mr. M. Diel for the seventh defendant.

Alsop Wilkinson (a firm) v NearyUNK [1995] 1 All ER 431

Re Biddencare Ltd.UNK [1994] 2 BCLC 160

Conveyancing Act 1983, s. 37

Trust dispute — Whether trustee should defend consolidated actions — Action for summary judgment regarding property settlement in divorce action — Enforcement of foreign award — Beddoes application

REASONS FOR ORDER

This matter comes before me on the hearing of the plaintiff trustee's originating summons by which it seeks a direction whether or not it should defend the consolidated actions in causes 421 of 1992 and 202 of 1993, and an indemnity out of the trust fund in respect of all costs and liabilities arising from any such defence.

There exists in Bermuda a discretionary trust known as the Polar Trust (‘the trust’). It was established by the seventh defendant to this application (‘Tore’) as settlor. He is also among the class of potential beneficiaries. The plaintiff in this application is the trustee. The defendants are the beneficiaries. Polar Trust consists of the entire beneficial interest in all the issued shares of Polar Offshore Marine Limited.

The background to the application is that the former Mrs. Ellefsen, the fourth defendant herein (‘Pamela’), has obtained judgments against her Former husband, Tore, from a court in New Hampshire, acting in the exercise of its matrimonial jurisdiction. Those judgments are for a property settlement in the amount of $750,000, and for costs in the further amount of approximately $317,000. Pamela has brought those judgments to Bermuda, and in action 202 of 1993 has obtained, in the ordinary way of enforcing such foreign awards, summary judgment against Tore.

It was Pamela's case in the New Hampshire proceedings that the trust is the alter ego of her former husband, Tore, and that its assets should be regarded as his for the purpose of ascertaining the appropriate award. In the Bermuda proceedings Pamela seeks two different remedies. In the first action (1992 No. 421) she claims that she is the beneficial owner of 40% of the issues share capital of Polar Offshore Marine Limited, and that the purported settlement of those shares by Tore upon the trust was therefore ineffective, or alternatively should be set aside as having been procured by his undue influence over her ‘with the knowledge and privity of the trustee’. If that action succeeds, therefore, 40% of the trust assets, being 4,800 of the 12,000 issued shares of Polar Offshore Marine Limited, will be removed from the trust fund and vested in Pamela. It should be noted that her cause of action does not depend upon her status as beneficiary under the trust, nor upon any claim based upon the matrimonial award of the New Hampshire court. It is simply a proprietary claim upon certain assets of the trust inconsistent with the trustees' title to them. The pleaded defence by the trustees in respect of the substance of these allegations is that they are strangers to the matters relied upon.

In the second action Pamela sought direct enforcement of the New Hampshire order against Tore, but in addition, if she was unsuccessful in the first action, she sought an order setting aside the transfer of the shares to the trustees on the basis that it was effected with the purpose of defeating the claims of creditors within the meaning of section 37 of the Conveyancing Act 1983. If successful this would...