St John's Trust Company (PVT) Ltd v The Attorney General

JurisdictionBermuda
CourtSupreme Court (Bermuda)
JudgeSubair Williams J
Judgment Date12 May 2021
Docket NumberCOMMERCIAL JURISDICTION COMMERCIAL JURISDICTION 2020 No: 476

[2021] SC (Bda) 41 Com

In The Supreme Court of Bermuda

Subair Williams J

COMMERCIAL JURISDICTION

2018 No: 376

COMMERCIAL JURISDICTION

2020 No: 476

IN THE MATTER OF THE B TRUST

IN THE MATTER OF RSC O.85 AND PART IV OF THE TRUSTEE ACT 1975

Between:
St John's Trust Company (PVT) Limited (Former Trustee de son tort)
Medlands (PTC) Limited (In its capacity as Trustee)
Plaintiff
and
(1) The Attorney General (In her capacity as representative of the charitable beneficiaries)
(2) Dorothy Kay Brockman (In her personal capacity and as representative of the human beneficiaries, including minors and unborn, of the B Trust)
(3) Bermuda Trust Company Limited (Former Trustee)
(4) Hsbc Private Bank (C.I.) Limited (Formerly Bank of Bermuda (Guernsey Limited) (Former Trustee)
(5) Martin Lang (In his capacity as the Trust Protector)
(6) Grosvenor Trust Company Limited (Former Trustee de son tort)
Defendants

(The “376 proceedings”)

IN THE MATTER OF THE TRUST SETTLED BY A EUGENE BROCKMAN ON 26 MAY 1981 FOR THE BENEFIT OF HIS CHILDREN AND CHARITIES

IN THE MATTER OF RSC O. 85 AND PART IV OF THE TRUSTEE ACT 1975

Between:
Dorothy Kay Brockman (In her personal capacity and in her capacity as intended representative of the other human discretionary and contingent Beneficiaries pursuant to RSC Order 15/13)
Plaintiff
and
(1) Medlands (PTC) Limited (In its capacity as the outgoing Trustee)
(2) The Attorney General (In her capacity as representative of the charitable beneficiaries)
(3) Martin Lang (In his capacity as the Trust Protector)
(4) BCT Limited (In its capacity as the intended new Trustee)
Defendants

(The “476 proceedings”)

Appearances (476 Proceedings)

Plaintiff: Mr. Francis Tregear QC of Counsel and Ms. Sarah-Jane Hurrion ( Hurrion & Associates Ltd)

1 st Defendant: Mr. Robert Ham QC of Counsel and Mr. Matthew Mason ( Wakefield Quin Limited)

2 nd Defendant: Ms. Shakira Dill-Francois (Deputy Solicitor-General) and Ms. Lauren Sadler-Best (Crown Counsel) on behalf of the Attorney General

3 rd Defendant: Mr. John Machell QC of Counsel and Mr. Lewis Preston ( Kennedys Chudleigh Ltd)

4 th Defendant: Mr. Keith Robinson ( Carey Olsen Bermuda Limited)

Application for Directions pursuant to RSC Order 15 Rule 13 for the Appointment of the Plaintiff to appear and partake in Court proceedings on behalf of other beneficiaries / Removal of a Trustee and Appointment of new Trustee under section 31 of Trustee Act 1975 / Application by an outgoing Trustee to retain Trust Assets to meet actual and contingent liabilities — Effect of Contractual Indemnities and whether section 47 of the Trustee Act 1975 applies — the Court's Supervisory and Equitable Jurisdiction to sanction indemnities in favour of an outgoing trustee

RULING

INDEX

TOPIC

Page No.

Introduction

5

The Plaintiff's Application for Appointment to Represent the Human Beneficiaries

9

Medlands' Request for Indemnities

12

Medlands' Request for Indemnities (The Indemnity Agreements entered by Medlands)

13

Medlands' Request for Indemnities (Various Court Proceedings involving the Trust)

14

Medlands' Request for Indemnities (Proposed Scope of Indemnities to be granted)

16

Medlands' Request for Indemnities (The Beneficiaries' Objections)

17

Medlands' Request for a Retention of Trust Assets

18

Medlands' Request for a Retention (Medlands' Financial Position)

23

Medlands' Request for a Retention (The Trust Structure, Assets and Liquidity)

23

Medlands' Request for a Retention (BCT Limited's Domicile)

24

The Relevant Law

26

The Legal Position on a Trustee's Right of Indemnity

26

Whether a Trustee's Right of Indemnity includes a Right of Retention of Trust Funds

28

The Law on the Court's Supervisory Role and Public Trustee v Cooper Applications

35

The Court's Statutory Powers under Section 47 of the Trustee Act 1975

37

Analysis and Findings

39

Analysis and Findings on BCT Limited's Powers to grant Indemnities to Medlands

39

Analysis and Findings (Is BCT Limited surrendering its discretionary power to the Court?)

41

Analysis and Findings (Is it suitable for BCT Limited to surrender its discretion?)

42

Analysis and Findings on the Exercisable Jurisdiction of this Court

44

Analysis and Findings on the Indemnities for Actual and Contingent Liabilities

45

Court's Approval of Indemnity for Medlands' liability to other Former Trustees

46

Court's Opinion of Indemnity for Medlands' liability to Mr. Gilbert and Conyers

46

Court's Approval of Indemnity for Medlands' liability to Zobec

54

Scope of Court's Approval of Indemnity for Medlands' Costs to remain ‘Alive’

54

Analysis and Findings on the Question of a Retention

55

Conclusion

57

RULING of Shade Subair Williams J
Introduction
1

The present applications sample a cluster of Court proceedings which swarm over a charitable trust holding assets worth billions of dollars. The history and factual background to these proceedings is well known to the Courts and to the parties. (See St John's Trust Company (PVT) Ltd v Watlington and Ors [2020] Bda LR 25, per Hargun CJ; Medlands (PTC) Ltd and Ors v Commissioner of the Bermuda Police Service [2020] Bda LR 26, per Harjun CJ; Re the B Trust, Medlands (PTC) Ltd v Attorney General et al [2020] Bda LR 42, per Subair Williams J).

2

Suffice to say, if the tale of the Brockman Trust proceedings was theatrically narrated in English monarchical terms, the 376 proceedings could be featured in the era of the 9 th century King “Alfred the Great” of both Wessex and Mercia while the 476 proceedings might sooner be cast in the later scenes spotlighting the 1066 reign of the Duke of Normandy, William the Conqueror. To put it in more colloquial terms, the 376 proceedings have aged out while the 476 proceedings shows the promise of a new era.

3

The 376 proceedings originated in the Trust Administration and Beddoe jurisdiction of the Court in respect of a trust established in 1981 as an irrevocable discretionary settlement under Bermuda law (“the B Trust”/ “the Brockman Trust” / “the Trust”). (The anonymity and confidentiality orders previously made by this Court in the 376 proceedings are no longer capable of effectively shielding the identity of the Trust as the Brockman Trust nor the names of the settlor or the human beneficiaries.)

4

The present applications are made in the 476 proceedings which invoke the Court's supervisory and equitable jurisdiction. These applications arise out of an appeal from the 376 proceedings (Civil Appeal No. 8 of 2020) wherein St John's Trust Company (PVT) Limited (“SJTC”) sought to impugn my Orders of 1 November 2019 and 19 December 2019 in an attempt to reverse, inter alia, my appointment of Medlands as the then new trustee of the Brockman Trust. That appeal was dismissed and my order removing SJTC as a trustee de son tort was left undisturbed.

5

It was also determined by the Court of Appeal that a new trustee, namely BCT Limited, would be appointed to replace Medlands (PTC) Limited (“Medlands”). In a communication made on behalf the Court of Appeal, dated 2 February 2021, the parties were informed:

“…

The appeal in relation to Civil Appeal No. 8 of 2020 is dismissed with reasons to follow.

The Court is, however, satisfied that a new independent institutional trustee should be appointed and that this Court has power to, and should, make that appointment by this Order.

Accordingly, Medlands (PTC) Ltd shall be discharged as trustee of the B Trust and replaced as trustee by BCT Ltd., a subsidiary of Maples FS, with effect from a date and on such terms as to BCT Ltd's appointment as may be directed by Subair Williams J, upon hearing from such of the 1st, 2nd, 3rd, 6 th and 9 th Respondents 1 and BCT Ltd as wish to appear on such application (but with no other party to this appeal having standing to appear or present evidence or submissions in relation to the matter) at a hearing to be fixed at a time as soon as practicable which is convenient to Subair Williams J.”

6

Directions to this effect were subsequently formalized by the Court of Appeal in its Order dated 2 February 2021.

7

In a letter dated 25 March 2021, Ms. Katie Tornari of Marshall Diel & Myers on behalf of SJTC wrote to the Court inviting this Court to adjourn the hearing of the application giving effect to the transfer of trusteeship. It is suggested by that letter that this hearing ought not to proceed before the Court of Appeal's production of a formal Order and its determination of an intended application for a stay of its order. Notwithstanding, I saw fit to proceed as any Order

of a stay from the Court of Appeal would likely extend to these ancillary directions in any event. For that reason I proceeded to hear the applications made on the Plaintiff's Originating Summons filed for orders granting relief in the following terms:

“1. The Plaintiff be appointed pursuant to Order 15, rule 13 of the Rules of the Supreme Court 1985 to represent the interest in these proceedings of:

  • (a) Thomas David Brockman;

  • (b) Victoria Brockman;

  • (c) Robert Theron Brockman;

  • (d) Robert Theron Brockman II and his minor son;

2. The First Defendant, Medlands (PTC) Limited (Medlands) be discharged as the trustee of the trust settled by A Eugene Brockman Trust on 26 May 1981 for the benefit of his children and charities (the Trust);

3. BCT Limited a controlled subsidiary of Maples FS Limited, which is a licensed trust company in the Cayman Islands subject to the regulation of the Cayman Islands Monetary Authority (CIMA) and authorized by CIMA to act as a trustee to be appointed pursuant to section 31 of the Trustee Act 1975 and pursuant to the inherent jurisdiction of the Court as trustee of the Trust in...

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