A Number Of Legal Principles Have Been Reaffirmed In Relation To Section 47 Applications Arising From In The Matter The XYZ Trusts

• Published date: 25 May 2022
• Subject Matter: Corporate/Commercial Law, Insolvency/Bankruptcy/Re-structuring, Financial Restructuring, Corporate and Company Law, Trusts
• Law Firm: Carey Olsen
• Author: Stephanie Bernard

Abstract

In The Matter The XYZ Trusts is an important case because it confirmed a number of very useful legal principles. In relation to applications pursuant to section 47 of the Bermuda Trustee Act 1975, it confirmed that such applications may be used in series for the blessing of various stages of a large transaction, the test to be used when asking for the blessing of a momentous decision and that in relation to the variation of a trust it will not create a new settlement. Finally, it confirmed the Bermuda Court's willingness to issue confidentiality orders in cases involving the administration of private trusts.

Issue Section: Case Note

The Supreme Court of Bermuda has recently confirmed a number of legal principles. The Ruling of Mrs Justice Shade Subair Williams In The Matter The XYZ Trusts, issued on 16 February 2022, highlights and confirms the following:

1. section 47 applications may be made in series for the blessing of various stages of a large transaction
2. the category 2 test recognised by the English High Court in Public Trustee v Cooper [2001] WTLR 901 applies when trustees ask the Court to bless a particularly momentous decision
3. the variation of a trust pursuant to a section 47 application will not create a new settlement; and
4. the Bermuda Court's willingness to issue confidentiality orders in cases that involve the administration of private trusts

Section 47 of the Bermuda Trustee Act 1975 allows the Court to authorise transactions relating to trust property. It provides the Court with power, where it considers it 'expedient' to do so, to confer on trustees the necessary power to amend and restructure trusts where the requisite power is otherwise absent from the trust deed. For example, it may be used to vary beneficial and administrative provisions or grant a power to appoint new trustees. In Gelber and another v Sunderland Foundation and others [2018] EWHC 2344 (Ch) at paragraph 11, the English High Court said, 'the notion of expediency is both obvious and slightly elusive. It clearly includes something that is 'advantageous' or 'beneficial'.' In describing the term Lewin on Trusts 20th Edition at 52-019 says it means that 'taking into consideration the interests of all the beneficiaries, the transaction or power in question can fairly be said to be expedient in the interests of the trust as a whole.'

In The Matter The XYZ Trusts is a rags-to-riches story of a self-made businessman (the 'Patriarch') of humble beginnings who...