Advantage Bermuda

Keith Robinson and Anthony Poulton explain why Bermuda's legislation on the variation of trusts gives the jurisdiction an edge over England and Wales

Bermuda has broadly similar legislation to that of England and Wales dealing expressly with the variation of trusts.1 Section 48 of the Bermudian Trustee Act 1975 closely mirrors s1 of the Variation of Trusts Act 1958. These provisions allow the court in each jurisdiction to provide consent to a variation on behalf of beneficiaries who are unable to consent for themselves.2

The Bermudian statute provides further flexibility, however, in s47. This section supplies the court with the jurisdiction to confer upon trustees additional powers even though those powers might result in a variation of beneficial interests.

This article compares s47 with s57 of the Trustee Act 1925 in England and Wales, which, while similar, is narrower in scope. It will be suggested that s47 provides Bermuda with a competitive advantage.

SECTION 52, TRUSTEE ACT 1925

Section 57 authorises the court to confer additional powers on trustees to undertake transactions relating to trust property where the trust instrument does not provide the power for the trustees to do so. The key provision, s57(1), reads as follows: 'Where in the management or administration of any property vested in trustees, any sale, lease, mortgage, surrender, release, or other disposition, or any purchase, investment, acquisition, expenditure or other transaction, is in the opinion of the court expedient, but the same cannot be elected by reason of the absence of any power... the court may by order confer upon the trustees, either generally or in any particular instance, the necessary power for the purpose...'

(Emphasis added.)

The advantage of a s57 application is that, unlike an alternative application under the Variation of Trusts Act 1958, s57 does not require the trustees to obtain the consent of all beneficiaries of full capacity - an expensive and challenging proposition in the case of a large number of geographically dispersed beneficiaries.

This does not mean, however, that s57 provides an unqualified and procedurally simple method for obtaining wide-ranging powers. On the contrary, a close reading of the full provision indicates otherwise, and the courts have been careful to safeguard the boundaries of this power.

'Management or administration'

The first point to note is that s57(1) is limited to the 'management or administration' of trust...