Re the F Trust and the A Settlement

CourtSupreme Court (Bermuda)
Judgment Date13 November 2015
Date13 November 2015
Docket NumberCivil Jurisdiction 2015 Nos 206 & 207

[2015] Bda LR 116

In The Supreme Court of Bermuda

Civil Jurisdiction 2015 Nos 206 & 207

Re The F Trust and The A Settlement

Mr K Robinson for the Plaintiffs

Mr C Rothwell for the 2nd and 3rd Defendants

No appearance by the 1st Defendants

The following cases were referred to in the judgment:

Von Knieriem v Bermuda Trust Company LimitedBDLR [1994] Bda LR 50

Re Skeats' SettlementELR (1889) 42 ChD 522

Green v CobhamUNK [2002] STC 820

In the matter of the Green GLG Trust Royal Court of Jersey, 9 December 2002

Trusts — Rule in Re Hastings-Bass— Power to appoint trustees — Tax implications

Ruling of Kawaley CJ


1. By Originating Summonses issued on June 8, 2015 in each of the two related actions by the same Plaintiffs, three Trustees of the F Trust and the A Settlement (‘the Trusts’) sought Orders setting aside Deeds of Appointment and Retirement of Trustees executed in 2005 and 2008, respectively, to the extent that they appointed the 1st Defendant (‘D1’) as a Trustee. Each Summons invoked section 47A of the Trustee Act 1975 and/or the inherent jurisdiction of the Court.

2. On June 25, 2015, the first return date of the Originating Summons, the 2nd and 3rd Defendants were appointed to represent the interest of all adult, minor, unborn and unascertained beneficiaries. The Plaintiffs' substantive application was no in the even opposed. On September 23, 2015, I ordered in each case that:

‘The Deed of Retirement and Appointment of Trustees … be set aside in so far as that deed appointed [D1] as a Trustee … (to the intent that for all purposes the appointment of [D1] as a trustee shall be treated as never having occurred) …’

3. I now give reasons for that decision.

Factual findings

4. The F Trust was established in Bermuda with a corporate trustee in 1958 and the A Settlement was established in Bermuda with the same corporate trustee in March 1968. Individual trustees were subsequently appointed before D1, a British resident, was appointed in 2005 (the 1st and 2nd Plaintiffs) and in 2008 (by the Settlor) as trustee of the F Trust and A Settlement respectively. The Settlor died in 2011.

5. The combined assets held by the Trusts are estimated to be worth in excess of $50 million. The 2nd Plaintiff deposed that he and the 1st Plaintiff appointed D1 as a trustee of the F Trust after another trustee died having regard to the wishes of the Settlor that at all times there should be at least three trustees. Despite some anxiety of the 2nd Plaintiff's part about the UK tax implications, neither UK tax advice nor any legal advice was sought. The 2nd Plaintiff believes that the Settlor obtained no advice before appointing D1 as trustee of the Settlement three years later.

6. As regards the F Trust, the adverse UK tax implications were only immediate as regards income tax. However, more significantly, capital gains tax (‘CGT’) consequences did not bite until 2007, two years after the appointment. I was satisfied by evidence placed before the Court that at the time of the exercise of the power of appointment, public consultations in the UK on the proposed CGT changes which were brought into effect two years later were already in train. It was accordingly clear that had tax advice been sought prior to the appointment of D1 in 2005, the appointment would not have been made.

7. As regards the A Settlement appointment, made in 2008, the adverse tax consequences were immediate.

8. The Plaintiff Trustees subsequently made voluntary disclosure to HMRC (Her Majesty's Revenue and Customs) and me the assessed UK tax liabilities. They nevertheless now wished, quite understandably, to return the Trusts to their original tax status, namely outside the ambit of the UK tax regime. In these circumstances, the Plaintiffs very properly accepted that in seeking to set aside the appointment of D1 ab initio, HMRC should be given notice of the present proceedings and an opportunity to appear in opposition to the relief sought.

9. On June 25, 2015, I directed that HMRC should be notified within seven days that should it wish to intervene it should do so by application no later than July 15, 2015. HMRC raised various queries about the present proceedings with the Plaintiffs' London Solicitors, Macfarlanes, and the time for HMRC to intervene and the effective hearing date of the Originating Summons were both extended until the effective hearing date of September 23, 2015 was eventually fixed.

10. The Plaintiffs' counsel placed the correspondence with HMRC before the Court so the Court could take into account the queries raised about the application even though HMRC had elected not to intervene and be heard.

11. I rejected the suggestion that nno flawed exercise of the appointment power could be...

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3 cases
  • St John's Trust Company (PVT) Ltd v Watlington and Ors
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    • 26 March 2020
    ...General v President and Scholars of Magdalen College, Oxford (1857) 6 HL Cas 189 In the matter of H [2011] JRC 070 Re the F Trust [2015] Bda LR 116 MacDougall v Gardiner (1874–75) LR 10 Ch App 606 Burland v Earle [1902] AC 83 Bentley-Stevens v Jones [1974] 1 WLR 638 Application for strike-o......
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    ...Trustees Mr N Le Poidevin QC and Mrs F Rana Fahy for the Protector The following case was referred to in the judgment: Re the F Trust [2015] Bda LR 116 Jurisdiction of the court to set aside flawed exercise of fiduciary power — Application for grant of power to trustees to vary terms of the......
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    • Mondaq Bermuda
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    ...settlor, with a substantial contingent interest in the trust fund) subject to appropriate safeguards. Re F Trust and the A Settlement [2015] Bda LR 116 - The Bermuda Supreme Court applied s47A of Trustee Act to, on application by the trustees of a Bermuda law trust, set aside a flawed exerc......

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