Scotiabank & Trust (Cayman) Ltd Plaintiff v Cora Louise Smith Brossard and Others Defendants
| Jurisdiction | Cayman Islands |
| Judge | The Hon. Anthony Smellie |
| Judgment Date | 08 October 2015 |
| Court | Grand Court (Cayman Islands) |
| Docket Number | CAUSE NO. FSD 82 OF 2105 (ASCJ) |
| Date | 08 October 2015 |
In the Matter of a Declaration of Trust Dated 23 October 1973
In the Matter of Section 63 of the Trusts Law (2011) Revision
IN CHAMBERS
The Hon. Anthony Smellie, CHIEF JUSTICE
The Plaintiff brings this application in its capacity as the Trustee of a trust settled under the Laws of the Cayman Islands on 23 October 1973 by the late Warren W. Smith (‘the Trust’) who died in 1983. He was a citizen of Venezuela and was domiciled there at the time of his death.
The application is made under section 63 of the Trusts Law (2011 Revision) and its purpose in the absence of such a power in the Trust Deed, is to seek a power which will enable the Trustee, if it thinks fit in due course, to partition the capital of the trustfund into sub-funds for the benefit of the various branches of the Settlor's family who are the beneficiaries of the Trust.
If the Trustee were granted such a power, I am told that it would enable the Trustee to administer each sub-fund of the Trust in the specific interests of each branch of the family whose needs and circumstances are diverse, as will be further explained below.
The Trustee and the Defendants parties (who are beneficiaries of the Trust) all support the application. It is important to note at the outset that they do not seek to change any of the beneficial interests arising under the Trust, nor would the conferring or exercise of the power have that effect, save so far as would be incidental to the intended purpose of better and more targeted administration of the Trust fund.
Accordingly, the application is properly brought under section 63 rather than by way of an application for variation of trusts under section 72 of the Trusts Law (2011 Revision).
The relevant provision is in sub-section 63(1):
‘63. (1) Where, in the management or administration of any property vested in trustees, any sale, lease, mortgage, surrender, release or other disposition, or any purchase, investment, acquisition, expenditure or other transaction, is in the opinion of the Court expedient, but the same cannot be effected by reason of the absence of any power for that purpose vested in the trustees by the trust instrument, if any, or by law, the Court may, by order, confer upon the trustees, either generally or in any particular instance, the necessary power for that purpose, on such terms, and subject to such provision and conditions, if any, as the Court may think fit, and may direct in what manner any money authorised to be expended, and the costs of any transaction, are to be paid or borne as between capital and income.’
It will be immediately clear from sub-section 63(1) that the powers to be vested by the Court upon any application brought under it can only be administrative and not dispositive in nature. No jurisdiction is here given to the Court to grant powers tomake any allocation to beneficial interests arising under the Trust, save only as already mentioned, so far as would be necessarily incidental to the exercise of the administrative power: ‘the jurisdiction exists if what is proposed …is in essence to he regarded as administrative and not dispositive in nature, as being expedient in the interests of the administration or management of the trust’.
This is now well-settled principle in the case law, as explained by this Court inIn Re Z Trust 2009 CILR 593— a decision from which the passage quoted above is taken and which has since been approved and applied by the English Courts in the application of the equivalent provisions of section 57 of the Trustee Act 1925. See Southgate and Southgate v Sutton et al [2011] EWCA Civ. 6371 and In re English American Insurance Co. Ltd.2
To the extent that what is proposed by the Trustee here by way of sub-division of the Trust fund would not be dispositive but only administrative in nature, it follows that subject to the proposed division being, in the particular words of subsection 63(1)‘in the opinion of the Court expedient’, I would have jurisdiction to confer upon the Trustee ‘either generally or in any particular instance, the necessary power for that purpose…
I am informed however, that the Trustee is not yet at the stage of exercising the required power to sub-divide. Rather, the situation is as follows.
The terms of the Trusts and the circumstances of the beneficiaries
In summary and in effect, the terms of the Trust require the net income of the trust fund to be distributed on the stirpital basis between the four extant branches of the family, headed respectively by the four children of the Settlor. Of those children, two are deceased. Of the remaining children one, the First Defendant, has no issue and after her death the distribution will be between three branches only. As the family tree shows, those three families are now very numerous, running to several generations.
As to capital, the Trust requires 50% of the capital of the trust fund to be distributed on the death of the second to die of the Settlor's surviving children, both of whom are in their 90s.
On the happening of that event, half the capital will be distributed stirpitally between the members of the three extant families. The remaining half of the trust fund will be distributed similarly 21 years less one day after the death of the last to die of the Settlor's issue who were living at the creation of the Trust in 1973.
While many members of the family live in the United States of America, a number live in Venezuela and in the United Kingdom and it is already apparent to the Trustee, that subject to the entitlements to income and capital as described above, different tax planning and investment management arrangements will have to be put in place to respond to the different personal, geographical and fiscal circumstances of...
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