The E Trust

• Jurisdiction: Bermuda
• Judgment Date: 30 November 2017
• Docket Number: Civil Jurisdiction 2017 No 257
• Date: 30 November 2017
• Court: Supreme Court (Bermuda)

[2017] Bda LR 131

In The Supreme Court of Bermuda

Civil Jurisdiction 2017 No 257

In The Matter of The E Trust

Mr M Mello QC and Mrs J Woods for The Applicants

Mr B Adamson for the Respondents

The following cases were referred to in the judgment:

Chellaram v Chellaram [1983] 1 Ch 409

Spiliada Maritime Corp v Cansulex Ltd [1986] 3 All ER 843

Re A Trust [2012] Bda LR 79

ISG Technologies v Guerin [1992] 2 Lloyd's Rep 430

Bermuda trust administered in Jersey — Jurisdiction — Approval of decision to sell trust asset — Removal of trustees — Application to set aside order for service out of the jurisdiction — Forum non conveniens — Lis alibi pendens — Abuse of process — Comity

RULING of Kawaley CJ

Introductory

1. The E Trust is governed by Bermudian law but administered in Jersey. On 15 June 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:

• i. confirming that the Trustee was not required to retire;

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

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

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

• i. ruled that Jersey was “clearly the most convenient forum for the Representation”;

• ii. approved the Trustee's decision not to retire;

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

• iv. approved the decision of the Trustee to market the Property.

3. On 12 July 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:

• i. An order under section 31 of the Trustee Act 1975 removing and replacing the Trustee; and

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

4. On 14 July 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 20 July 2017.

5. On 5 October 2017, the Jersey Court delivered a full reasoned judgment on jurisdiction (explaining its 10 July 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 9 October 2017 seeking the following substantive relief:

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

• ii. an order staying all further proceedings on the same grounds.

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

8. Meanwhile, back in Bermuda, directions were ordered in relation to the Applicants' Summons on 20 October 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 3 November 2017 had prior to the hearing revealed the following somewhat beguiling stance:

• • the application to set aside the Ex Parte 20 July 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 20 July 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.

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