Barclays Private Trust v C

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

Grand Court, Financial Services Division

(Smellie, C.J.)

BARCLAYS PRIVATE BANK AND TRUST (CAYMAN) LIMITED

and

C, K and ATTORNEY GENERAL

C.D. McKie, Q.C. and M. Kish for the plaintiff;

Ms. R. Reynolds for the first defendant;

C. de Serpa Pimentel for the second defendant;

I. Paget-Brown, Q.C. for the Attorney General as parens patriae for charity.

Cases cited:

(1) Al-Ibraheem v. Bank of Butterfield Intl. (Cayman) Ltd., 2000 CILR 507, referred to.

(2) Bridge Trust Co. Ltd. v. Att. Gen., 2001 CILR 132, referred to.

(3) Clore Settlement, In re, [1966] 1 W.L.R. 955; [1966] 2 All E.R. 272, applied.

(4) P Trust, In re, 2001 CILR N–18, referred to.

(5) Public Trustee v. Cooper, [2001] W.T.L.R. 901, applied.

(6) Q Trusts, In re, 2001 CILR 481, applied.

(7) T Trust, In re, 2000 CILR 24, referred to.

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

A trustee applied for the court”s approval of its plan to make a large distribution of trust assets.

The E Trust was established as a discretionary trust to allow the settlor family to make charitable donations and the trustee was given the power to

make discretionary distributions for that purpose. The beneficiaries included adult, minor and unborn members of that family, as well as certain charitable organizations (including O Ltd.). The trust deed also named charity as a separate beneficiary. The trustee determined that the best course of action was to make a large, lump-sum distribution of trust assets to O Ltd. It sought the approval of the court because the size of the proposed distribution meant that it fell into the ‘momentous’ category, and because O Ltd. had some additional non-charitable philanthropic purposes and was able to change its purposes to benefit unknown parties (although its directors made a written commitment that it would not do so). The representative for minor and future unborn beneficiaries did not consent to the proposed distribution (although he did not object to it). The trustee further wished to ensure that the distribution did not unfairly prejudice the interests of charity (although it did not consider itself absolved from further charitable giving by making the distribution).

The trustee submitted that it was able to make the application without surrendering its discretion to the court because it wished to be certain that the distribution would not be a fraud on the power to distribute.

The adult beneficiaries consented to the distribution.

The Attorney General, on behalf of charity, submitted that he did not object to the distribution because of assurances by the trustee that it would continue to consider making distributions to charity.

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...