Re a Trust (Change of Governing Law)

• Jurisdiction: Bermuda
• Judgment Date: 19 May 2017
• Date: 19 May 2017
• Docket Number: Civil Jurisdiction 2017 No 136
• Court: Supreme Court (Bermuda)

[2017] Bda LR 53

In The Supreme Court of Bermuda

Civil Jurisdiction 2017 No 136

Re A Trust (Change of Governing Law)

Mr B Green QC and Mr J Elkinson for the Plaintiff

Mr F Barlow QC and Mr D Kessaram for the 1^st Defendant

Mr C Rothwell for the 2^nd Defendant

No appearance for the 3^rd Defendant

Trust — Differential provision for legitimate and illegitimate children — Proposed change in governing law — Abolition of legal distinctions between legitimate and illegitimate children — Application for declaration

JUDGMENT of Kawaley CJ

Introductory

1. By an Originating Summons issued on April 24, 2017, the Trustee sought, inter alia, the following relief:

“1. A Declaration as to whether an exercise by the Plaintiff of the power in paragraph 6 of the Schedule of the [Trust] to change the governing law of the [Trust] from the law of the Cayman Islands to the law of the Islands of Bermuda:

• (a) would not or

• (b) would

cause sections 18A to D of the Children Act 1998 (Bermuda) as inserted bythe Children Amendment Act 2002 (Bermuda)—

• (i) thenceforth to apply to the [Trust] and

• (ii) in the future upon the exercise of any power under the [Trust] to apply to any property of the [Trust] subject to such exercise.”

2. On May 15, 2017, I granted a declaration in the negative sense pursuant to paragraph 1(a) of the prayer in the Originating Summons. I now give reasons for that decision.

Factual matrix

3. The Trust was created under Caymanian law in 2007 after the Children Amendment Act 2002 introduced a new Part IIA containing sections 18A–18D into the Children Act 1998 (“the 1998 Act”) with effect from January 19, 2004. However, it was supplemental to an earlier trust which was settled in 1983. Apart from charitable objects, the beneficiaries included the principal beneficiary and his legitimate issue.

4. The Trustee wished to modernise various provisions of the Trust and to change the governing law to Bermuda so as to be able to upgrade the Trust structure under the flexible jurisdiction conferred by section 47 of the Trustee Act 1975. If the effect of changing the domicile of the Trust from the Cayman Islands to Bermuda was to automatically trigger the application to the settlement of the relevant provisions of the 1998 Act, the change of domicile could not properly be exercised as such a course would be materially adverse to the interests of the unborn (legitimate issue) beneficiary class.

5. The Trustee's counsel argued, without any opposition from the 1st Defendant's counsel, that the change of governing law power could be exercised without triggering the operation to the Trust and any instruments executed under it of the relevant statutory provisions in the 1998 Act.

The 1998 Act

6. Sections 18A-G of the 1998 Act contain provisions which were enacted by the Children Amendment Act 2002 with effect from January 19, 2004. Section 18A of the 1998 Act provides as follows:

“Abolition of distinction between legitimate and illegitimate children

18A (1) Subject to subsection (2), for all purposes of the law of Bermuda a person is the child of his natural parents and his status as their child is independent of whether he is born inside or outside marriage.

(2) Where an adoption order has been made under the Adoption of Children Act 2006 or any previous enactment relating to the adoption of children or the law of any other jurisdiction, the child is in law the child of the adopting parents as if they were the natural parents.

(3) Kindred relationships shall be determined according to the relationships described in subsection (1) or (2).

(4) Any distinction between the status of a child born inside marriage and a child born outside marriage is abolished and the relationship of parent and child and kindred relationship flowing from that relationship shall be determined in accordance with this section.

(5) This section applies in respect of every person whether born before or after this Act comes into force and whether born in Bermuda or not and whether or not his father or mother has ever been...