The Supreme Court Of Bermuda Considers Whether To Exercise Its Inherent Jurisdiction To Intervene In The Administration Of A Trust And Confirm The Actions Of Trustees Which Had Been Invalidly Appointed

Summary

The Supreme Court of Bermuda has recently given judgment in a case concerning the actions of invalidly appointed trustees (C Trust [2019] SC (Bda) 44 Civ (22 July 2019)). The invalidity of the appointments arose due to a technical failure to comply with the appointment provision in the trust deed. In order to resolve the issue, the Current Trustee brought an application (which was supported by the beneficiaries) for an order that:

The Current Trustee be appointed from the date of the order as the sole trustee, pursuant to section 31(1) of the Trustee Act 1975; and The Current Trustee may be at liberty to continue to manage the assets of the trust on the basis that it had been validly appointed as trustee of the trust, from the date of the invalid deed of appointment (1 July 2015). The court granted the application. When considering the first limb, the Current Trustee was appointed on the basis that it would be expedient for the trust as a whole. When considering the second limb, the court confirmed its inherent jurisdiction to intervene in the administration of a trust. When exercising its jurisdiction, the court held that confirming the actions of the invalidly appointed trustees was an easier alternative to the ratification of all the actions of the trustees over the twenty year period.

The case confirms that the courts of Bermuda have the power to validate the actions of invalidly appointed trustees. However, it was emphasised that the court must consider the particular facts of each case, when determining whether to exercise its inherent jurisdiction to intervene in the administration of a trust. The case is considered in further detail below.

Background

The case concerns a discretionary trust which was established by deed in 1965 (the “Trust Deed“). The assets owned by the trust include the extremely valuable controlling shares of several holding companies, which in turn own a vast network of industrial trading entities in Africa. The class of beneficiaries under the trust includes the Settlor, his family and their descendants.

Under the terms of the Trust Deed, the power of appointing new trustees is vested in two protectors of the trust acting jointly. In 1997, the family incorrectly assumed that it could validly appoint a sole protector in place of the two original protectors, and proceeded to do so.

In December 1999, the original trustee retired and the Current Trustee was purportedly appointed in his place. The appointment...

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