Re E Trust

• Jurisdiction: Bermuda
• Judgment Date: 30 November 2017
• Neutral Citation: [2017] SC Bda 103 Civ
• Date: 30 November 2017
• Docket Number: CIVIL JURISDICTION 2017: 257
• Court: Supreme Court (Bermuda)

[2017] SC (Bda) 103 Civ

In The Supreme Court of Bermuda

CIVIL JURISDICTION 2017: 257

In the Matter of the E Trust

Mr Michael Mello QC and Mrs Jennifer Woods, Appleby (Bermuda) Limited, for the Applicants/Defendants

Mr Ben Adamson, Conyers Dill and Pearman Limited, for the Respondents/Plaintiffs

Jurisdiction — trust governed by Bermudian law but administered in Jersey-proceedings commenced by trustees in Jersey to approve the decision of the trustees to sell a trust asset-proceedings commenced in Bermuda to remove trustees and to prevent trustees from exercising powers in a way approved by the Jersey Court — application by Defendants to set aside Order granting leave to serve them out of the jurisdiction-forum non conveniens-lis alibi pendens-abuse of process-comity

RULING

(in Camera)

Introductory

1 The E Trust is governed by Bermudian law but administered in Jersey. On June 15, 2017, DW Trustees Ltd., the Trustee of the E Trust (“the Trustee”), commenced proceedings (“the Representation”) in the Royal Court of Jersey (“the Jersey Court”) seeking directions, inter alia:

• (1) confirming that the Trustee was not required to retire;

• (2) declaring that any purported removal of the Trustee under section 26(1) of the Trustee Act 1975 under Bermuda law was invalid; and

• (3) approving the Trustee's decision to sell a trust asset consisting of real estate (the “Property”).

2 On July 10, 2017 the Jersey Court, following an inter partes hearing of the a jurisdictional challenge by the Respondents/ Plaintiffs herein:

• (1) ruled that Jersey was “ clearly the most convenient forum for the Representation”;

• (2) approved the Trustee's decision not to retire;

• (3) ordered that the Trustee “ shall remain as trustee of the said trusts until further order of this Court”; and

• (4) approved the decision of the Trustee to market the Property.

3 On July 12, 2017, the settlor and one beneficiary of the E Trust issued a Generally Endorsed Writ out of this Court seeking, inter alia, the following relief:

• (1) An order under section 31 of the Trustee Act 1975 removing and replacing the Trustee; and

• (2) An order setting aside the purported decision by the Trustee to sell the Property. Alternatively, declaring that the decision was invalid.

4 On July 14, 2017, the Respondents issued an Ex Parte Summons seeking, inter alia, leave to serve the Writ out of the jurisdiction under Order 11 rule 1(1) (j) 1 of this Court's Rules. It was argued that despite the potential for competing decisions from the two courts, in legal terms only this Court had the competence to deal with the removal of the Trustee. I granted leave to serve out on July 20, 2017.

5 On October 5, 2017, the Jersey Court delivered a full reasoned judgment on jurisdiction (explaining its July 10, 2017 decision) and rejected the Respondents' application for a stay, having been advised that the present proceedings had been commenced. Commissioner Clyde-Smith pivotally held that the following factors justified the conclusion that “Jersey was the most appropriate forum”:

• • the Trustee was resident in Jersey;

• • the Trust was administered in Jersey;

• • four out of five of the Trustee's directors were resident in Jersey;

• • the majority of beneficiaries and the settlor were UK domiciled;

• • there were no assets in Bermuda;

• • the relief sought by the Trustee was directions as to its own conduct;

• • requiring the Trustee to litigate in Bermuda at its own initial expense would impose un unfair additional costs burden;

• • the only connection with Bermuda was the proper law of the Trust.

6 Having obtained leave to enter a conditional appearance, the Applicants issued a Summons herein on October 9, 2017 seeking the following substantive relief:

• (1) an order setting aside this Court's July 20, 2017 Order on the grounds of forum non conveniens and lis alibi pendens; alternatively

• (2) an order staying all further proceedings on the same grounds.

7 On October 31, 2017, the Jersey Court approved the Trustee's further decision to sell the Property, and gave reasons for that decision on November 9, 2017.

8 Meanwhile, back in Bermuda, directions were ordered in relation to the Applicants' Summons on October 20, 2017. Skeleton arguments were to be filed three days before the hearing. The Respondents filed no skeleton argument leaving the Court and the Applicants' somewhat bemused as to what opposition, if at all, the Respondents proposed to mount. In fairness, the 2 ^nd Respondent in an Affidavit sworn on November 3, 2017 had prior to the hearing revealed the following somewhat beguiling stance:

• • the application to set aside the Ex Parte July 20, 2017 Order was opposed;

• • it was agreed that the present action should be stayed to allow proceedings before the Jersey Court and the Court of the lex situs of the Property to “run their course”;

• • the dismissal of the present action was opposed;

• • the proposition that Jersey was a more appropriate forum than Bermuda, a question of law, was opposed.

9 In the event, Mr Adamson in his oral response to the opening submissions of Mr Mello QC conceded that as a result of unsuccessful attempts to appeal the Jersey Court's jurisdictional ruling, his clients could no longer seek the relief they originally sought in relation to the Trustee's dealings with the Property. He conceded that paragraphs (4) to (7) of the Endorsement of Claim were liable to be struck out and did not oppose setting aside the July 20, 2017 Order to that limited extent. However, he contended that as regards the removal of the Trustee aspect of the present action, there was no sufficient legal basis for either setting aside leave to serve out or dismissing or even staying the present proceedings altogether. The applicants' counsel orally applied for the present action to be dismissed to avoid any possible impediment to the sale of the Property.

10 On November 28, 2017, I accordingly reserved judgment on the contentious aspect of the application and costs, and further indicated that when deciding the reserved issues, I would give reasons for my decision to Order on that date that:

• (1) the Ex Parte Order dated July 20, 2017 shall be set aside as regards the Plaintiffs' claim for the relief set out in paragraphs (4) to (7) of the Endorsement of Claim contained in their Generally Endorsed Writ;

• (2) paragraphs (4) to (7) of the said Endorsement shall be struck out on the grounds that pursuit of such relief would constitute an abuse of process.

11 The only issues in controversy are whether (a) the Respondents are correct to contend that only this Court, and not the Jersey Court, is competent to remove the Trustee, and that (b) there is a fundamental distinction to be made between the application to remove the Trustee and the relief originally sought in relation to the sale of the Property. It is common ground that the Respondents can no longer pursue the latter heads of relief. These issues can best be addressed after explaining why I decided at the end of the hearing to set aside leave in relation to those portions of the claim that related to the Trustee's dealings with the Property and to strike out the related portions of the Endorsement of Claim.

Reasons: why it would have been an abuse of process to permit the Respondents to seek to impugn the decisions of the Jersey Court to approve the Trustee's decisions to market and sell the Property

12 These issues were determined at the end of the hearing in circumstances where the Respondents' counsel did not have the temerity to attempt to formulate written legal opposition to the Applicants' Skeleton Argument. Three pivotal submissions which were advanced on behalf of the Applicants:

• (1) The Jersey Court clearly had personal jurisdiction over the Trustee and the competence to supervise the administration of a trust governed by Bermudian or any other foreign law;

• (2) although Bermuda and Jersey were both competent fora, Jersey was clearly the most appropriate forum;

• (3) Not only was the Jersey Court seized of the issues in controversy having made final orders in relation to the Property. The Respondents/Plaintiffs had now seemingly submitted to the jurisdiction of the Jersey Court as a matter of Jersey law, having challenged the jurisdiction of that Court unsuccessfully and allowed its appeal rights to expire.

13 The first submission was supported by various authorities, notably:

• • ‘Lewin on Trusts’, 19 ^th edition: “ a trustee may invoke the assistance of the English court to determine a question arising in the administration of the trust, even though the proper law of the trust is not English and the trustee himself is based abroad” (paragraph 11-008);

• • Chellaram v Chellaram [1983] 1 Ch 409 at 427B (Scott J): “… the principle that the English court has jurisdiction to administer the trusts of foreign settlements remains unshaken. The jurisdiction is in personam, is exercised against the trustees on whom the foreign obligations lie, and is exercised soas to enforce against the trustees the obligations which bind their conscience”;

• • The Jersey Court's October 5, 2017 judgment in the present matter (at paragraphs 26–27): “The Court is given jurisdiction over Jersey resident trustees under Article 5 of the Trust Law. It is a jurisdiction which is given over the Jersey resident specifically in its capacity as trustee of the foreign trust… we have no doubt that prior to the enactment of the Trusts Law, the Court had jurisdiction over Jersey resident trustees of foreign trusts, on...