Barclays Private Trust v C

• Jurisdiction: Cayman Islands
• Court: Grand Court (Cayman Islands)
• Judge: (Smellie, C.J.)
• Judgment Date: 24 January 2014
• Date: 24 January 2014

BARCLAYS PRIVATE BANK AND TRUST (CAYMAN) LIMITED

and

C, K and ATTORNEY GENERAL

(Smellie, C.J.)

Grand Court, Financial Services Division

Trusts-powers and duties of trustees-control by court-‘blessing’ of trustees”‘momentous’ decision gives court no discretion of its own-restricted to approving trustee”s entitlement to make distribution-may approve distribution even if no consent by representative for minor and unborn beneficiaries, provided no reason to think minor or unborn beneficiaries would object to transaction-sanction means no challenge possible against trustee”s good faith when making distribution

Trusts-powers and duties of trustees-power to make disposition-may make charitable disposition to third party even though it may later use distributed property for non-charitable purposes, provided primary purpose and motivation behind exercise of dispositive power charitable-charitable purpose of disposition not negated by fact that other objects may benefit-third party”s ability to alter its purposes not relevant consideration to disposition if provides written assurance that it will not do so

Held, approving the distribution:

(1) The trustee was entitled to make the distribution. The distribution to O Ltd. was within its powers because O Ltd. was named as a beneficiary of the trust. Although O Ltd. had listed some of its objects as non-charitable, it had done so at the time that it was added as a beneficiary and the settlor must have intended that money could be transferred to it despite the existence of those objects. Further, it was irrelevant that O Ltd. might later confer a benefit on objects which were not the same as those which might benefit directly under the E Trust. As the primary purpose and motivation behind the proper exercise of the dispositive power, the charitable nature of the trustee”s disposition was not negated by the fact that other philanthropic objects might benefit. Although O Ltd. was able to change its objects so as to benefit others, the assurance from its directors that this would not happen meant that this was not a reasonable concern which could weigh against the decision to make the distribution (paras. 7–10).

(2) One of the purposes of the E Trust was to fulfil what the adult beneficiaries regarded as their moral obligation to make charitable donations. The disposition to O Ltd. would be a significant step to discharging that obligation and so would benefit the beneficiaries. There was no reason to think that the minor or unborn beneficiaries would take a different view of this. Further, the remaining trust assets (as well as the assets contained in other trusts) were more than sufficient to meet the adult, minor and future beneficiaries” financial needs. The fact that the

representative of the minor and future beneficiaries had not consented to the distribution did not, therefore, prevent the court from sanctioning it and, because of the sanction, there could be no future challenge by these beneficiaries to the trustee”s good faith when exercising the power to make the distribution (paras. 12–15).

(3) The distribution did not unfairly prejudice the interests of charity. The trustee”s statement that it did not consider itself absolved of its obligations meant that it would continue to consider making further dispositions to charity-charity”s interests were therefore protected. Additionally, the trustee”s decision to make a single lump-sum payment, rather than several periodic payments, was appropriately made for the reasons of, inter alia, better meeting the charitable objectives of the E Trust and avoiding the associated costs with ongoing payments and assessment. Further, the application was for the court-acting within its supervisory jurisdiction-to provide its ‘blessing’ of the trustee”s momentous decision to distribute an extremely large portion of the trust assets. The court was therefore able to sanction the distribution without the need for the trustee to surrender its discretion to the court (paras. 16–18).

(4) The inclusion of the Attorney General as parens patriae for charity was appropriate and the trust would be ordered to pay his costs. Charity was a named beneficiary of the trust and was therefore entitled to be heard and represented in the course of the application. Further, the application was not part of hostile litigation and there was no dispute that charity should be represented. The trust was...