Re the C Trust

• Jurisdiction: Bermuda
• Judgment Date: 22 July 2019
• Date: 22 July 2019
• Docket Number: Civil Jurisdiction 2019 No 53
• Court: Supreme Court (Bermuda)

[2019] Bda LR 55

In The Supreme Court of Bermuda

Civil Jurisdiction 2019 No 53

In the matter of the C Trust

and in the matter of the Trustee Act 1975

and in the matter of Order 85 of the Rules of the Supreme Court

Mr K Robinson for the Plaintiff

Mr Mrs F Rana-Fahy for the 1^st & 2^nd Defendants

Mr M Watson for the 3^rd Defendant

Mr J O'Mahoney for the 4^th Defendant

The following cases were referred to in the judgment:

Re New [1901] 2 Ch 534

Chapman v Chapman [1954] AC 428

In the matter of the Z Settlement [2016] JRC 048

Schmidt v Rosewood Trust Ltd [2003] 2 AC 709

Statutory jurisdiction of the Court to appoint trustees — Inherent jurisdiction of the court — Previous actions of trustees were valid and effective

JUDGMENT of Hargun CJ

Introduction

1. At the conclusion of the hearing of this matter on 27 June 2019 I ordered that:

• i. The Plaintiff (“Current Trustee”) be appointed as from the date of the Order as the sole trustee of the C Trust (“the Trust”) under section 31(1) of the Trustee Act 1975 (“1975 Act”);

• ii. The Current Trustee may be at liberty to continue to manage the assets of the Trust on the basis that it had been validly appointed as trustee of the Trust by deed dated 1 July 2015.

2. The application was formally made by the Current Trustee and was supported by a range of adult beneficiaries as well as the guardian ad litem representing all minors, unborn and unascertained beneficiaries of the Trust. Indeed, the adult beneficiaries who appeared in relation to this application expressly sought relief from the Court in terms of paragraphs (i) and (ii) above.

3. I now give my reasons for making the Order I made on 27 June 2019.

Background

4. The Trust was established by deed dated 22 June 1965 between the Settlor and the Original Trustee (“the Trust Deed”). The Trust is a discretionary trust for the benefit of a class of beneficiaries that includes the Settlor and the Settlor's brothers, then living or born at any time thereafter, subject to certain limitations in favour of the male line of descendants.

5. Pursuant to an Order dated 9 May 2019, the First and Second Defendants were appointed to represent all minors, unborn and unascertained beneficiaries of the Trust.

6. The assets owned by the Trust include controlling shares of several holding companies which in turn own a vast network of industrial trading entities in Africa, employing a very substantial workforce, and are extremely valuable.

7. By a Deed of Retirement and Appointment of New Trustees dated 29 December 1999 (“the Deed”), the Original Trustee retired and the Current Trustee was purportedly appointed in its place.

8. The power of appointing new trustees under the Trust Deed was vested in the Protectors appointed under the Trust Deed. The Trust Deed provided that a named company incorporated in the United Kingdom and another named company operated in the state of New York, United States of America, acting jointly, constituted the Protectors.

9. However, it appears that when the Current Trustee was appointed by the Deed, the appointment was made with the consent of a successor Protector. The validity of the successor Protector's own appointment is very much in doubt.

10. The Current Trustee has been recently advised by its legal advisers that it is likely its appointment was invalid, or ineffective, or void, and therefore it does not have the legal title to the assets and all the actions the Current Trustee has taken with respect to the Trust assets and all distributions that have been made in the belief that the Current Trustee was validly appointed, are likely to be invalid.

11. The same difficulty arises in respect of both subsequent purported changes of trustee. By a deed dated 9 August 2001, the Current Trustee was replaced by a trust company registered in Lichtenstein, followed by a deed dated 1 July 2015 whereby the Current Trustee was again purportedly appointed and the Lichtenstein trust company retired.

12. It is in these circumstances that the Current Trustee makes the application seeking an order that: (1) it be appointed as the sole trustee of the Trust; and (2) it may be at liberty to continue to manage the assets of the Trust on the basis that it had been validly appointed as the trustee of the Trust.

13. The present applications are supported by guardian ad litem to the First and Second Defendants. It is the considered position of the guardian ad litem that there can be no benefit to the class of beneficiaries to allowing the Trust to operate without a properly and validly appointed trustee who has the power and authority to perform the duties of trustee. In his view, the task of reconstituting the records of the Trust over the last 20 years would be an impossible task, and the expense of doing so would likely be an enormous drain on the resources of the Trust, which will also not be for the benefit of minors, unborn and unascertained beneficiaries of the Trust.

14. The Third Defendant is a beneficiary of the Trust and represents the position of 10 adult beneficiaries (including himself). In his view the Current Trustee has been involved in...