Bridge Trust Company Ltd v Att Gen

• Jurisdiction: Cayman Islands
• Judge: (Harre, C.J.)
• Judgment Date: 30 April 1996
• Court: Grand Court (Cayman Islands)
• Date: 30 April 1996

Grand Court

(Harre, C.J.)

BRIDGE TRUST COMPANY LIMITED and SLATTER

and

ATTORNEY GENERAL, WAHR HANSEN and COMPASS TRUST COMPANY LIMITED

T.M.E.B. Etherton, Q.C., C. Tidmarsh and A.J.E. Foster for the plaintiffs;

M.C.C. Hart, Q.C. and W. Helfrecht, Crown Counsel, for the first defendant;

J.V. Martin, Q.C., D. Close and G.F. Ritchie for the second defendant;

A.G. Boyle, Q.C., N. Harrison and N.R.L. Clifford for the third defendant;

R. Smith, Q.C. and S.J. Barrie for the draftsmen of the trust instrument.

Cases cited:

(1) -Att.-Gen. v. National Provncl. & Union Bank of England, [1924] A.C. 262; [1923] All E.R. Rep. 123, distinguished.

(2) -Att.-Gen. (Bahamas) v. Royal Trust Co.UNK(1983), 36 W.I.R. 1; on appeal, [1986] 1 W.L.R. 1001; [1986] 3 All E.R. 423, followed.

(3) -Att.-Gen. (New Zealand) v. Brown, [1917] A.C. 393; [1916–17] All E.R. Rep. 245.

(4) -Blair v. Duncan, [1902] A.C. 37; (1901), 71 L.J.P.C. 22.

(5) -Brisbane City Council v. Att.-Gen. (Queensland), [1979] A.C. 411; [1978] 3 All E.R. 30, considered.

(6) -Chichester Diocesan Fund & Bd. of Fin. Inc. v. Simpson, [1944] A.C. 341; [1944] 2 All E.R. 60.

(7) -Cocks v. MannersELR(1871), L.R. 12 Eq. 574; 40 L.J. Ch. 640, considered.

(8) -Davis, In re, Thomas v. Davis, [1923] 1 Ch. 225; (1923), 92 L.J. Ch. 322.

(9) -Dreyfus (Camille & Henry) Foundation Inc. v. Inland Rev. Commrs., [1956] A.C. 39; [1955] 3 All E.R. 97.

(10) -Houston v. Burns, [1918] A.C. 337; (1918), 87 L.J.P.C. 99.

(11) -Howley, In re, Naughton v. Hegarty, [1940] I.R. 109.

(12) -Hunter v. Att.-Gen., [1899] A.C. 309; [1895–9] All E.R. Rep. 558.

(13) -Income Tax Special Purpose Commrs. v. Pemsel, [1891] A.C. 531; [1891–4] All E.R. Rep. 28, considered.

(14) -Incorporated Council of Law Reporting for England & Wales v. Att.-Gen., [1972] Ch. 73; [1971] 3 All E.R. 1029, considered.

(15) -Inland Rev. Commrs. v. McMullen, [1981] A.C. 1; [1980] 1 All E.R. 884, considered.

(16) -Jacobs, In re, Westminster Bank Ltd. v. Chinn(1970), 114 Sol. Jo. 515.

(17) -Macduff, In re, Macduff v. Macduff, [1896] 2 Ch. 451; [1895–9] All E.R. Rep. 154, considered.

(18) -Maguire v. Att.-Gen. (Ireland), [1943] I.R. 238.

(19) -Mitford v. ReynoldsENR(1842), 1 Ph. 185; 41 E.R. 602; [1835–42] All E.R. Rep. 331.

(20) -Morice v. Bishop of Durham(1805), 10 Ves. 522; 32 E.R. 947, observations of Wigram, V.-C. applied.

(21) -National Anti-Vivisection Socy. v. Inland Rev. Commrs., [1948] A.C. 31; [1947] 2 All E.R. 217, considered.

(22) -Pardoe, In re, McLaughlin v. Att.-Gen., [1906] 2 Ch. 184; (1906), 75 L.J. Ch. 455, observations of Kekewich J. applied.

(23) -Robinson, In re, Besant v. German Reich, [1931] 2 Ch. 122; (1931), 100 L.J. Ch. 321.

(24) -Scottish Burial Reform & Cremation Socy. Ltd. v. Glasgow Corp., [1968] A.C. 138; [1967] 3 All E.R. 215, considered.

(25) -Sir Robert Peel”s School at Tamworth, In re, ex p._Charity Commrs.(1868), L.R. 3 Ch. App. 543; 37 L.J. Ch. 473.

(26) -Smith, In re, Public Trustee v. Smith, [1932] 1 Ch. 153; [1931] All E.R. Rep. 617, dicta of Lord Hanworth, M.R. applied.

(27) -Strakosch, In re, Temperley v. Att.-Gen., [1949] Ch. 529; [1949] 2 All E.R. 6, dictum of Lord Greene, M.R. applied.

(28) -Vagliano, In re, Vagliano v. Vagliano(1905), 75 L.J. Ch. 119; 50 Sol. Jo. 110.

(29) -Whicker v. Hume(1858), 7 H.L. Cas. 124; 11 E.R. 50; [1843–60] All E.R. Rep. 450, followed.

(30) -Williams” Trustees v. Inland Rev. Commrs., [1947] A.C. 447; [1947] 1 All E.R. 513, considered.

Legislation construed:

Interpretation Law (1995 Revision),

s.40: ‘All such laws and Statutes of England as were, prior to the commencement of 1 George II Cap. 1, esteemed introduced, used, accepted or received as laws in the Islands shall continue to be laws in the Islands save in so far as any such laws or Statutes have been, or may be, repealed or amended by any law of the Islands.’

Trusts (Foreign Element) Law, 1987 (Law 17 of 1987), s.3: The relevant terms of this section are set out at page 65, lines 14–16.

s.4(1): The relevant terms of this sub-section are set out at page 65, lines 17–21.

s.4(2): The relevant terms of this sub-section are set out at page 65, lines 22–24.

s.4(3): The relevant terms of this sub-section are set out at page 65, lines 25–30.

s.4(4): The relevant terms of this sub-section are set out at page 65, lines 31–38.

s.4(5): The relevant terms of this sub-section are set out at page 65, lines 39–41.

s.5: The relevant terms of this section are set out at page 65, line 42 – page 66, line 35.

s.6: The relevant terms of this section are set out at page 66, line 36 – page 67, line 4.

Charitable Uses Act, 1601 (43 Eliz. 1, c.4), Preamble: The relevant terms of this Preamble are set out at page 63, lines 1–10.

Trusts-change of law-validity of change-by Trusts (Foreign Element) Law, 1987, s.4(4) change to Cayman law valid if recognized in principle by original governing law-no need to inquire into validity of trust under original law

Charities-charitable purposes-definition-English law interpreting Charitable Uses Act 1601 to be followed-no inconsistent developments in Cayman Islands since 1728 settlement to displace application of English law of charities to Cayman trusts

Charities-charitable purposes-purposes beneficial to the community-interpretation not extended by Cayman public policy-scope of charitable purposes unaffected by status as international financial centre and continued need to attract foreign investment

Charities-charitable purposes-intention of settlor-intention to create exclusively charitable trust implied from use of general words of gift construed ejusdem generis with class of other charitable objects specified

The parties sought a ruling from the court on the validity of a trust.

Assets of a company allegedly owned by the person whose estate was represented by the second defendant had been settled in the Bahamas on the trusts of the Continental Foundation (‘CF’), with the second plaintiff as trustee. By cl. 3 of the trust instrument the trustees were given power to distribute income to ‘any one or more religious, charitable or educational institution or institutions or any organizations or institutions operating for the public good . . . the intention being to enable the trustees to endeavour to act for the good or for the benefit of mankind in general or any section of mankind in particular anywhere in the world or throughout the world.’

The instrument also contained a change of law clause (cl. 39) enabling the trustees to transfer the trust to another country and to make its governing law the law of that country. The trustees elected to change the law governing the trust to that of the Cayman Islands.

Some years later the majority of the CF Trust assets were resettled upon the trusts of a new foundation under powers conferred by cl. 5 of the trust. They were subsequently used for the benefit of the settlor, his family and companies controlled by him.

The second defendant brought proceedings in England alleging misappropriation of trust funds by, inter alia, the plaintiffs in this case; they in turn sought directions from the Cayman court on how best to proceed in the interests of the two foundations. The court ordered that matters relating to the validity of the trusts be tried as preliminary issues.

The plaintiffs, supported by all the defendants except the second defendant, submitted that (a) by s.4(4) of the Trusts (Foreign Element) Law, 1987, as applied to cl. 39 of the CF Trust, the governing law of the trust could only have validly changed from the law of the Bahamas to that of the Cayman Islands if Bahamian law recognized the principle of a change of law. The statute did not, however, require that the clause, or the trust itself, be valid under Bahamian law; rather the court should simply determine the validity of the trust under Cayman law in order to decide whether the change had validly occurred; (b) under s.40 of the Interpretation Law (1995 Revision) the law of charities to be applied in the Cayman Islands was the law in existence at the date of the settlement of the Islands in 1728, as subsequently developed by later Cayman authority. Since there had been no development in Cayman law since 1728 inconsistent with the English authorities interpreting the Charitable Uses Act 1601, the modern English law of charities applied. The court could, however, in determining whether the CF Trust was exclusively charitable, take into account social attitudes and issues of public policy relevant to the Cayman Islands, in particular the status of the Islands as an offshore financial centre which depended on the continued attraction of investment. This factor demanded the widest possible interpretation of charity, to avoid limiting the types of trust enforceable in the Cayman courts; and (c) the objects of the trust were exclusively charitable since, as there were no grounds for holding ‘institutions operating for the public good’ to be outside the equity of the 1601 Act, and there was nothing in the general words of the clause to prevent it, a charitable intention should be inferred. Clause 3 of the CF Trust had listed all four heads of charity established under English law: ‘charitable’ meaning here ‘the relief of poverty,’ and ‘the public good’ coinciding precisely with ‘other purposes beneficial to the community.’ Since the first three heads created an impliedly charitable category, the fourth should be read ejusdem generis so that it too was charitable. The words following the expression ‘public good’ merely evidenced an intention to give a discretion to the trustees which was not geographically limited and did not affect the validity of the trust.

The second defendant submitted in reply that (a) for the purported change to Cayman law to be valid, the Trusts (Foreign Element) Law required the court first to determine the validity of the CF Trust under Bahamian law, then to decide...