Barclays Private Bank & Trust (Cayman) Ltd Plaintiff v MR. C MR. K Attorney General Defendants

• Jurisdiction: Cayman Islands
• Judge: The Hon. Chief Justice
• Judgment Date: 12 December 2013
• Court: Grand Court (Cayman Islands)
• Docket Number: FSD CAUSE NO: 123 of 2013 (ASCJ)
• Date: 12 December 2013

In the Matter of a Settlement by deed dated 15 July 1967

And in the Matter of section 48 of the Trusts Law (2011 Revision) and/or GCR O.85 and/or the inherent jurisdiction of the Court

Between

Barclays Private Bank & Trust (Cayman) Ltd.

Plaintiff

and

MR. C

MR. K

The Attorney General

Defendants

[2014] CIGC J0124-1

Before

The Hon. Chief Justice

IN CHAMBERS AND IN PRIVATE

FSD CAUSE NO: 123 of 2013 (ASCJ)

IN THE GRAND COURT OF THE CAYMAN ISLANDS

RULING

1 The Trustee of the E Trust applies for the Court's approval in respect of the Trustee's exercise of its power to make a distribution of trust capital, in the form of shares in an underlying trust company, to O Limited, one of the named beneficiaries of the E Trust (the ‘Proposed Distribution’).

2 The Proposed Distribution would be in the magnitude of value of $750 million and as such, a ‘momentous decision’ in the life of the E Trust, regarded by the Trustee as justifying this application for the sanction of the Court.

3 All persons having an interest in the E Trust, as well as charity, have been notified of the application and all interests have been represented before me by way of representatives appointed by earlier order or by the Trustee and, in the case of charity, by Mr. Paget-Brown Q.C. on behalf of the Attorney General asparens patriae and upon whom notice of the application was also served.

4 All are agreed that the Trustee has the power as it proposes — in keeping with Clause 2.2 of the E Trust Deed — to make the Proposed Distribution.

5 I record that I am satisfied that the Trustee of this fully discretionary trust, has the power to order the Proposed Distribution and to do so by way of a payment out to O Limited as a named beneficiary of the E Trust.

6 The question was raised in the course of the hearing whether O Limited, as an entity whose objects comprise not only charitable but also philanthropic objects and purposes, can properly benefit from the Proposed Distribution while philanthropy is not itself an object of the E Trust, as those objects are identified in Clause 1.6 of the Trust Deed. In other words, the question is whether the exercise of the dispositive power vested in the Trustee to benefit O Limited would be a ‘fraud on the power’ because an object which does not come within those identified by the Trust Deed would be benefited.

7 There is a plain answer to that question that appears from the fact that O Limited is itself named as a beneficiary of the E Trust and qualifies for the ProposedDistribution on that basis. It was added as a beneficiary as long ago as 1984 and has included philanthropy as one of its objects ever since. It is, in my view, irrelevant that O Limited might itself in turn benefit objects which are not the same as those which might benefit directly as objects of the E Trust. Moreover, it is clear that benefiting charity is a primary objective of O Limited and so it matters not that some other philanthropic object could be benefited as well: see Re Q Trusts1 where it is explained that the fact that a proposal would also benefit other objects does not alter or negate the primary purpose and motivation behind a proper exercise of a dispositive power.

8 I am satisfied that the exercise by the Trustee of the power to benefit O Limited by way of the Proposed Distribution would not be a fraud on the power vested in the Trustee in the sense that the exercise of the power would benefit someone who was not an object of the power or would be for a purpose outside the scope of the power.2

9 That conclusion holds true as well in respect of another concern raised: which is that O Limited's constitutional documents allow its members to change O Limited's objects so as to benefit others — including individuals or non-charitable organizations — who would not now qualify for benefit under the E Trust.

10 In light of the written assurances which have been given by the directors of O Limited against that happening, I do not regard any such possibility as a

reasonable concern weighing against the Trustee's decision to make the Proposed Distribution.

11 As to the other relevant considerations that the Trustee must consider, I comment briefly as follows:

• (1) I note that the adult beneficiaries — A, J, K, N and Ce. — have all consented to and positively support the Proposed Distribution. It is particularly to be noted that A and J may be considered not only to be beneficiaries but also to be the real economic settlors of the E Trust and that the Trust businesses have been developed over the years to a large extent due to the business acumen of A in particular. While C, as the remaining adult does not feel compelled, in his representative capacity on behalf of the minors and future unborn beneficiaries, to consent to the Proposed Distribution, he does not oppose it either. It is especially because their representative cannot aver that the Proposed Distribution would be in the interest of the minor and future unborn beneficiaries so as to bind them to the...