Scotiabank & Trust (Cayman) Ltd v Brossard and Others

• Jurisdiction: Cayman Islands
• Judge: (Smellie, C.J.)
• Judgment Date: 08 October 2015
• Court: Grand Court (Cayman Islands)
• Date: 08 October 2015

Grand Court, Financial Services Division

(Smellie, C.J.)

SCOTIABANK & TRUST (CAYMAN) LIMITED

and

BROSSARD and OTHERS

Mrs. S. Warnock-Smith, Q.C. and Ms. S. White for the plaintiff;

J. Austin-Smith for the defendants.

Cases cited:

(1) Anker-Petersen v. Anker-Petersen, [2000] WTLR 581, followed.

(2) Brassey”s Settlement, In re, [1955] 1 W.L.R. 192; [1955] 1 All E.R. 577, referred to.

(3) Byng”s Will Trusts, In re, [1959] 1 W.L.R. 375, referred to.

(4) Coates Trust, In re, [1959] 1 W.L.R. 375, referred to.

(5) English & American Ins. Co. Ltd., In re, English Ch. D., Cause No. HC13C02801 of 2013, October 9th, 2013, unreported, referred to.

(6) Mason v. Farbrother, [1983] 2 All E.R. 1078, referred to.

(7) New, In re, [1901] 2 Ch. 534, dicta of Romer L.J. applied.

(8) Shipwrecked Fishermen & Mariners” Royal Benev. Soc., In re, [1959] Ch. 220; [1958] 3 W.L.R. 701; [1958] 3 All E.R. 465, referred to.

(9) Sutton v. England, [2012] 1 W.L.R. 326; [2011] WTLR 1235; [2011] EWCA Civ 637, referred to.

(10) Z Trust, In re, 2009 CILR 593, applied.

Legislation construed:

Trusts Law (2011 Revision), s.63(1): The relevant terms of this sub-section are set out at para. 6.

Trusts—powers and duties of trustees—management and administration—power to partition capital of trust into sub-funds may be granted pursuant to Trusts Law (2011 Revision), s.63 if court determines that (a) grant would be expedient and assist in management of trust; and (b) power sought administrative not dispositive—trustee need not specify precise manner in which power to be exercised—general power to administer trust may be granted pursuant to s.63

The plaintiff trustee sought an order pursuant to s.63(1) of the Trusts Law (2011 Revision) granting it the power to divide the trust fund into sub-funds for the benefit of various members of the settlor”s family.

The trust was established in favour of the settlor”s descendants. It was provided that the trust fund”s income and assets should be distributed on a stirpital basis (i.e. each of the settlor”s children would share equally in any income or assets, and on their deaths their children would share their entitlement, and so on).

As the settlor”s descendants were numerous and lived in the United Kingdom, the United States and Venezuela, the plaintiff made an application pursuant to s.63 of the Trust Law (2011 Revision) seeking a general power allowing it to partition the trust fund”s capital into sub-funds at a future date, submitting that such a power (a) would enable it to manage the trust according to the particular needs of the settlor”s descendants; and (b) was frequently granted to trustees in England and Wales. The defendants supported the application.

Held, granting the order sought:

(1) The plaintiff would be vested with a power pursuant to s.63 of the Trusts Law (2011 Revision) enabling it to partition the capital of the trust fund into various sub-funds for the benefit of the different branches of the settlor”s family, subject to a restriction prohibiting the use of the power to alter the various entitlements of the beneficiaries of the trust. Section 63 of the Law conferred a discretion on the court to make such an order if (a) the court determined that such an order would be expedient, and would assist in management of the trust; and (b) the power sought was administrative and not dispositive (i.e. a power to alter the way in which the trust

was managed was permissible, but a power to alter the entitlements of the beneficiaries was not). Given the diverse needs and circumstances of the various branches of the settlor”s family, the power to divide the trust fund into separate sub-funds would assist the plaintiff to administer the trust in their interests, and therefore it was expedient that the trustee be given the power to divide the fund (paras. 7–8; para. 18; para. 26).

(2) Further, whilst it was unclear when or how the fund would be divided, it was not necessary for the purposes of s.63 of the Law that the power sought was to be exercised for a particular purpose or at a specified time, and therefore a power to partition the fund at a future date would be granted, particularly as it was common in England and Wales to grant a trustee a general power to administer a trust on applications under s.57 of the Trustee Act 1925 (the equivalent of s.63) (paras. 24–25).

1 SMELLIE, C.J.: The plaintiff brings this application in its capacity as the trustee of a trust settled under the laws of the Cayman Islands on October 23rd, 1973 by the late Warren W. Smith, who died in 1983. He was a...