Re The P Trusts (Ruling on Rescission)

• Jurisdiction: Bermuda
• Judgment Date: 30 September 2022
• Court: Supreme Court (Bermuda)
• Docket Number: Commercial Jurisdiction 2018 No 389

In the matter of the P Trusts

[2022] Bda LR 128

Commercial Jurisdiction 2018 No 389

In The Supreme Court of Bermuda

Category 2 Public Trustee v Cooper application seeking approval of trustee's decision — Settlement agreement between principal beneficiaries — Whether settlement agreement liable to be rescinded — Whether rescission issue to be determined in separate writ action

The following cases were referred to in the judgment:

Edwards v Ministry of Finance et al [2013] Bda LR 24

Rolls-Royce plc v Unite the Union [2010] 1 WLR 318

Mr J Elkinson and Ms B Smith for the Plaintiffs

Mr K Robinson and Mr O MacKay for the 2^nd, 3^rd and 6^th Defendants

Ms F Rana-Fahy for the 1^st, 4^th and 8^th Defendants

Mr M Watsonn for the 7^th Defendant

Mr M Chudleigh and Ms L Williamson for the remaining Defendants

RULING of Hargun CJ

Introduction

1. By Originating Summons dated 22 November 2018, the Plaintiffs seek an order approving the actions of the First Plaintiff, Company A, in its capacity as Trustee of three Settlements (“the Trustee”) and the Second Plaintiff in his capacity as Protector of those Settlements established by —

• i. The deed dated 27 December 2006 and made between PRP as Settlor (the “Settlor”) and Company A as Trustee and known as the P Family Settlement (2006) (“the Family Settlement”);

• ii. The deed dated 27 December 2006 between PRP as Settlor and Company A as Trustee and known as the JP Family Settlement (“the JP Settlement”); and

• iii. The deed dated 27 December 2006 between PRP as Settlor and Company A as Trustee and known as the JE Family Settlement (“the JE Settlement”) (collectively referred to as the “the Settlements”),

which actions were to give effect to the agreement entered into between the primary beneficiaries of the Settlements (PDP, JP and JE) on 13 July 2018 (“the Settlement Agreement”) such that the collective assets of the Settlements may be redistributed to the Settlements in accordance with the Settlement Agreement and the wishes of the respective adult beneficiaries.

2. The application made by the Trustee is in the nature of a Public Trustee v Cooper category (2) application. The Trustee contends that its decision to accept and implement the terms of the Settlement Agreement is a momentous decision and, in the circumstances, it is appropriate that the Trustee should seek the sanction of the Court.

3. In the preamble, the Settlement Agreement records that:

• i. The Settlements primarily benefit the children and remoter issue of the Settlor, who died on 6 March 2014. The Settlor's descendants comprise three families (“the Families”):

  • (a) his daughter JE (“JE”) and her children and remoter issue (“JE's Family”);

  • (b) his son PDP (“PDP”) and his children and remoter issue (“PDP's Family”); and

  • (c) his son JP (“JP”) and his children and remoter issue (“JP's family”)

• ii. The signatories to the Settlement Agreement (“the Signatories”) are all the adult members of the Families. The signatories are (i) PDP, deceased, his daughter and his son; (ii) JP and his two sons; (iii) JE, her two sons and her daughter.

• iii. The Signatories have reached an agreement between themselves as to how they would wish the assets of the Settlements to be disposed of, and then distributed, for the benefit of the Families, and how the assets should be managed pending distribution.

• iv. The Signatories intend that the terms of the Settlement Agreement will form the basis on which the Trustee will be invited to exercise its powers to procure the distribution of the assets of the Settlements.

• v. It is proposed that the transactions described in the Settlement Agreement will be implemented in accordance with a detailed timetable to be agreed with the Trustee and approved by an order made by the Supreme Court of Bermuda.

4. In clause 20 of the Settlement Agreement, dealing with “Future Steps” the Signatories agreed that:

• i. The implementation of the proposals contained in the Settlement Agreement, if accepted by the Trustee, will require the approval of this Court.

• ii. In any Court proceedings brought to secure the approval, the Signatories will support the implementation of the proposals described in the Settlement Agreement.

• iii. To the extent that the implementation of the proposals contained in the Settlement Agreement requires the agreement of the Signatories to further documentation, they will negotiate in good faith to secure the necessary agreement.

5. In clause 21 of the Settlement Agreement, dealing with “Order of transactions”, the Signatories acknowledged that the order of and timing of the appointment and transactions which they have agreed to request the Trustee to implement, will be a matter for agreement with the Trustee, in light of the need for Court approval, save and except that the II transaction as detailed in clauses 3 and 19 must be completed on or before 16 July 2018.

6. By clause 3 of the Settlement Agreement, the Signatories agreed that the Trustee will procure the sale of 477,666 shares of common stock in II owned by KIL (a company owned indirectly as to 4/7ths of its common stock by JE's Settlement and as to 3/7ths by JP's Settlement) to II for a cash consideration of US $17,303,080.

7. By clause 19 of the Settlement Agreement, the Signatories agreed that, as part of the agreement as a whole, II shall purchase JP's personal holding of 319,667 shares in II for US $17,369,533 in cash.

8. By Order dated 19 July 2022, the Court ordered that:

• i. Any Defendant who wishes to assert that the Settlement Agreement is legally invalid shall inform the Court and the parties of their position by 4 p.m. on Tuesday, 16 August 2022.

• ii. If any Defendant takes the position that the Settlement Agreement is legally invalid, the Court will hear further directions in relation to how that issue is to be dealt with and paragraph 3 of this Order [dealing with directions leading to the hearing of the Originating Summons] shall stand in abeyance.

9. Following the Order dated 19 July 2022...