30 years of trusts: Part five

Please also see Part One, Part Two, Part Three and Part Four.

 

A 30‑year trust timeline

1995

Von Knieriem v Bermuda Trust Company Limited & Or.^[1] The Supreme Court of Bermuda (the Supreme Court) considers, in the context of an application to compel an outgoing trustee to transfer shares in an underlying company, the nature of a protector’s power to appoint trustees. The power is held by the settlor’s lawyer. The trust’s terms do not state whether the power was fiduciary, personal or otherwise but do indicate that a protector could not be a beneficiary or otherwise benefit from the trust. The Supreme Court, after considering the England and Wales case of Re Skeats’ Settlement,^[2] holds that the power was fiduciary in nature, largely because the protector was expressly precluded from benefiting from the trust.

1998

Trusts (Special Provisions) Act 1989 (the 1989 Act). Introduces s.12A to provide that a non‑charitable purpose trust may be created under Bermuda law, provided the purposes are:

• sufficiently certain to allow the trust to be carried out;
• lawful; and
• not contrary to public policy.

1999

Trustee Amendment Act 1999. Amends the Trustee Act 1975 (the 1975 Act) to provide trustees powers, subject to a contrary intention expressed in the trust instrument, to:

• exercise a broad range of investment powers that may not have been expressly authorised under the trust instrument;
• delegate investment management and other powers;
• advance capital on very flexible terms, including on discretionary trusts; and
• provide for the appointment (if so provided in the trust instrument) of a managing trustee where certain powers may be reserved to the managing trustee and not the other (administrative or custodian trustee) and the other (administrative/custodian) trustee not being liable for the managing trustee’s acts or omissions in respect of such powers.

2001

Trust (Regulation of Trust Business) Act 2001. Reiterates the requirement for persons carrying on ‘trust business’ in or from Bermuda to be licenced to do so (and have fit and proper controllers and discharge requirements regarding business policies and procedures, etc.), unless they benefit from an exemption.

2002

Thyssen‑Bornemisza litigation.^[3] Spanning a number of years, this case involves a dispute of Baron Thyssen‑Bornemisza’s (the settlor’s) attempt to claw‑back for his own use from a trust in which he ceased to have an interest; trust property valued in excess of USD2 billion. After particularly significant expenses and monopoly of court resources in Bermuda over a long period, the case ultimately culminates in a settlement compromise that the trustee’s entry into was blessed by the Supreme Court.

Trusts (Regulation of Trust Business) Exemption Order 2002. Provides several exemptions to the trustee‑licensing requirement, including an exemption for ‘private trust business’, which is frequently and readily utilised by private trust companies (PTCs).

2009

Amendment to s.12A of the 1989 Act. Removes the statutory requirement for an enforcer to be appointed to enforce the purposes of a trust so that, essentially, any person that the court determines has a ‘sufficient interest’ in the enforcement of the trust may apply to the court to enforce the trust.

Guardian v Bermuda Trust Company.^[4] Along with the claim for substantive relief as to whether the definition of ‘spouse’ in an exclusion clause in a trust deed applies to the same individual when she became a widow (it is held it does not), the Supreme Court considers an application that the judgment should not be published or, if it should, that it should protect the privacy of the beneficiaries. In holding that the decision should be published but anonymised, Justice Kawaley refers to Bermuda’s status as an offshore domicile and states that the Supreme Court is: ‘bound not just to sympathetic privacy needs of those who establish trusts there, but also the need to promote the development of Bermuda trust law as well’. This approach is substantively reflected in many decisions of the Supreme Court relating to Bermuda trusts, including that of GIHL v KL & Ors below.

Perpetuities and Accumulations Act 2009 (the 2009 Act). Replaces the Perpetuities and Accumulations Act 1989, which modified common‑law rules restricting perpetual trusts and accumulations to enable trusts to be created with trust periods not exceeding 100 years. Section 3 of the 2009 Act provides that Bermuda trusts established from 1 August 2009 are not subject to perpetuity period (except for trusts holding Bermuda land: interests in Bermuda land can only be held in trust up to a maximum of 100 years; or a shorter perpetuity period designated by the trust instrument).

2010

BQ, CQ v DQ, EQ and Ors (AQ Revocable Trusts).^[5] The Supreme Court grants the applicants’ (who were two of the settlor’s sons) application for declarations that trusts established by the settlor for the benefit of his sons and grandchildren were invalid. The Supreme Court holds that the trust agreements (which were revocable and made by the settlor in his personal capacity and as trustee) were testamentary in nature and revoked by his subsequent wills and further did not evince an intention to fetter his unhindered control and enjoyed the benefit of the so‑called trust assets during his lifetime. The Supreme Court further holds that s.2(3) of the 1989 Act (inter alia, that the reservation by a settlor of certain rights and powers are not necessarily inconsistent with the existence of a trust) acknowledges the common‑law position.

2011

GIHL v KL & Ors.^[6] In this case, the Supreme Court varies beneficial interests of a Bermuda law trust. It does so not by the operation of s.48 of the 1975 Act, which provides the courts the power to approve a variation on behalf of a minor, unborn or unascertained beneficiaries, but by s.47 of the 1975 Act. Section 47 of the 1975 Act provides the Supreme Court with the power to authorise transactions relating to trust property, where the trust instrument does not provide the trustee the power to carry out the proposed transaction. The decision establishes that s.47 of the 1975 Act provides the Supreme Court with much wider powers than its counterpart (under s.57 of the English and Welsh Trustee Act 1925 (the English Trustee Act)) as it provides the Supreme Court the power to authorise transactions that effect a variation of beneficial interests under a trust. Section 47 of the English Trustee Act is subsequently used regularly to bring about the variation of beneficial interests in trusts (without all adult beneficiaries’ consent), extend perpetuity periods and substantively modify the terms of trusts. Re ABC Trusts is another oft‑quoted decision where s.47 was utilised.^[7]

2014

Trustee Amendment Act 2014. Amends the 1975 Act to introduce s.47A (often referred to as ‘statutory Hastings‑Bass’), which essentially overturns the UK decision in Pitt v Holt and restores the ‘rule in Hastings‑Bass’.^[8] Section 47A provides the Supreme Court a statutory power to set aside innocent flawed exercises of fiduciary powers if the fiduciary did not take into account one or more relevant considerations and if the fiduciary having done so would have exercised the powers differently, another time or not at all. To exercise its powers under s.47A, the Supreme Court does not need to find the fiduciary liable for a breach of its duties or negligence.

Bermuda Trusts (Special Provisions) Amendment Act 2014. Amends the 1989 Act. Section 2A introduces modern and extensive reserved power trust legislation that enables settlors to reserve to themselves or grant to others one or more of a range of powers without invalidating the trust or the property being deemed to form part of the settlor’s estate for the purposes of Bermuda’s Wills Act 1998. The legislation also provides extensive protection to trustees for complying with the exercise of reserved and granted powers. Generally, subject to the terms of the trust, powers reserved to the settlor are treated as non‑fiduciary powers and powers granted to a non‑beneficiary are treated as fiduciary powers.

Stiftung Salle Modulable et al v Butterfield Trust.^[9] The Supreme Court, applying Swiss law with the benefit of expert evidence, holds that it is an implied term of a Swiss‑law governed ‘donation contract’ that the trustee is entitled to terminate the contract upon reasonable notice and for any bona fide reason (and notwithstanding the settlor remained in favour of the project prior to his death).

Re Information about A trust.^[10] The Court of Appeal for Bermuda (the Court) holds that a provision in trust instrument to restrict disclosure of information to beneficiaries does not oust the supervisory jurisdiction of the court and is valid. Under the trust’s terms, the trustee requires the consent of the protector (who was initially not a beneficiary but the successor was a primary beneficiary and son of the settlor) to disclose information, including the terms of the trust and trust accounts, to beneficiaries. The trust’s terms provide that the protector’s veto power was a non‑fiduciary power. However, the Court nevertheless holds that the control mechanism power is not being operated in a manner substantially consistent with the presumed intention of the settlor. The Court holds the presumption in favour of disclosure of trust accounts and certain other trust documents ought to be ordered to another beneficiary (also a son of the settlor, with a substantial contingent interest in the trust fund), subject to appropriate safeguards.

2015

Re F Trust and the A Settlement.^[11] On application by the trustees of a Bermuda law trust, S.47A of the 1975 Act is applied to set aside a flawed exercise of power by the trustees that would result in significant unintended and unforeseen UK income tax charges upon the beneficiary. The trustees would not have exercised the power as it did, or at all, if they had been aware of such tax consequences.

Perpetuities and Accumulations Amendment Act 2015 (the 2015 Act). Amends s.4 of the 2009 Act to provide the Supreme Court a streamlined jurisdiction to disapply or extend the perpetuity period of existing trusts if it determines it expedient to do so.

2016

In the matter of the C Trust.^[12] The first case regarding a disapplication or extension of a perpetuity period following the introduction of s.4 in the 2015 Act. The Supreme Court accepts that the main purpose of s.4 is to create a more simplified means of extending trust periods (for trusts established by instrument prior to 1 August 2009) than was available under existing law (where a relatively more cumbersome process by way of an application under s.47 of the 1975 Act was required). The test the Supreme Court held applies to determine whether to disapply or extend a perpetuity period is one of expediency and, in this regard, the Supreme Court notes:

• the Supreme Court should have regard to the best interests of all interested parties, broadly defined as looked at as a whole; and
• the fact that extending the duration of a trust will dilute the economic interests of existing beneficiaries will ordinarily be an irrelevant consideration.

2017

In the matter of the G Trusts.^[13] The Supreme Court affirms the continuing importance of privacy in respect of internal trust affairs.

Meritus Trust Co. Ltd v Butterfield Trust (Bermuda) Ltd.^[14] The Supreme Court holds that under the statutory vesting provisions in s.27 of the 1975 Act, given the nature of the trust assets in this case, a deed of appointment and removal of trustees vested the trust assets in the appointed trustees and the removed trustee had no right to:

• retain trust assets in respect of known actual or contingent liabilities; or
• require a contractual indemnity from the new trustee unless it is expressly provided in the trust deed that this requirement exists.

There are threatened claims against the removed trustees who had sought to retain USD5 million in trust assets for a disputed estimated potential liability of USD750,000.

2018

In the matter of XYZ Trusts.^[15] The Supreme Court notably construes s.3 of the 2009 Act to override the common‑law ‘relation back doctrine’ (that an instrument exercising a power conferred by a settlement takes its character from the original settlement). Consequently, the Supreme Court holds s.3 operates to not only disapply the rule of perpetuities in Bermuda to trusts (except in respect of Bermuda land) created by instrument dated after 1 August 2009 but also to instruments made following 1 August 2009 in exercise of a power of appointment created by a pre‑1 August 2009 instrument. Prior to 1 August 2009, the maximum perpetuity period for Bermuda law trusts was 100 years. In this case, the settlements were originally established well before 1 August 2009 as Cayman Islands law STAR trusts (and not subject to a perpetuity period under Cayman Islands law) and, after 1 August 2009, the governing law was changed to that of Bermuda. The Supreme Court indicates it would have exercised s.4 of the 2009 Act to disapply any applicable Bermuda perpetuity period if need be.

2019

In the matter of the C Trust.^[16] The Supreme Court exercises its powers under s.31(1) of the 1975 Act to appoint a new trustee. Up until this point, the trustee being appointed by the Supreme Court had been a de facto trustee because an earlier attempt to appoint it by deed had been defective. The Supreme Court holds that the new trustee (who had been acting in good faith) could continue to administer the trust as though it had been properly appointed by the earlier attempt. However, beyond that, the Supreme Court does not relieve the new trustee from any breach of trust that it may have otherwise have committed.

Ashley Dawson‑Damer v Lyndhurst Limited.^[17] This decision may be the first time the Supreme Court grants an interim preservation order over disputed trust assets pending the outcome of foreign proceedings. The Supreme Court grants the injunction to preserve the disputed trust assets and compels the respondent (a Bermuda private trust company) to provide certain information about the Bermuda law trusts, but only on the undertaking that the applicant issue freestanding injunction proceedings in Bermuda.

GRT & Wang Family Trusts.^[18] The trustee in this case amends the GRT Trust to add Grand View PTC as trustee of the Wang Family Trust (a purpose trust) as a beneficiary and excludes existing and default beneficiaries; and appoints the entire GRT Trust fund to the Wang Family Trust.

The Court, overturning the Supreme Court decision, holds:

• that there was no rule that prohibited powers of amendment or addition being exercised in a manner that alters the substratum (underlying purpose) of a trust, not necessary/appropriate to imply a restriction on a clear express power;
• the trustee had acted within scope of the power of amendment/addition;
• the trustee had not exercised its powers of amendment/appointment for an ulterior purpose (i.e., not a ‘fraud on a power’); and
• the appointment was not invalidated by reason of the Wang Family Trust having no perpetuity period (GRT Trust had a perpetuity period of 100 years).

Digital Asset Business Amendment Act 2019. Amends to the Digital Asset Business Act 2018. The amendments include provisions to regulate businesses that qualify as a ‘digital asset trust services provider’ (e.g., a trustee acting on behalf of another person for the purpose of administration or management of trust assets). Private trust companies and underlying companies that hold digital assets on their own account (or licensed trustees that engage a ‘qualified custodian’) to hold digital assets may not require a licence. Further, the Bermuda Minister of Finance has considerable discretion to reduce licence fees and requirements for Bermuda‑licensed trustees that determine they may require a licence.

2020

The Trusts (Special Provisions) Amendment Act 2020. Amends the 1989 Act to modernise its ‘firewall’ provisions. Bermuda law firewall provisions chiefly require Bermuda law to be applied to Bermuda law trusts and to not recognise foreign laws and orders that give effect to foreign forced heirship, matrimonial property or insolvency rights and are inconsistent with Bermuda’s firewall provisions. The amendments also expand the jurisdiction of the Bermuda court, and facilitate the service of proceedings involving Bermuda trusts outside the jurisdiction of Bermuda without the court’s leave.

The Trusts (Special Provisions) Amendment No. 2 Act 2020 and the Children Act 1998 provide flexibility and clarity with respect to excluding illegitimate children from benefiting from a trust.

2021

In the matters of FA & FB Trusts.^[19] Exercising its inherent supervisory jurisdiction, the Supreme Court upholds the trustee’s application, with beneficiaries’ support, to remove as protector (as unfit) a US lawyer who had been subject to censure proceedings by the New York Bar Association and the successor protectors that had been nominated by the protector (namely his wife and his son). Neither the protector nor his family were beneficiaries of the trusts. The Supreme Court holds the test it had to apply was the same as in an application to remove trustees (i.e., would the protector’s continuation in office be detrimental to the due execution of the trust). In an earlier decision, the Supreme Court rejected the protector’s interim application for ‘contemporaneous’ payment of expenses (as appeared to be provided in the trust instruments) in defending trustee’s substantive application on the basis that it was implicit that the protector had properly incurred the expenses and that could only be determined upon determination of the substantive removal application.

X Trusts.^[20] The Supreme Court holds that, subject to the trust’s terms, protectors with veto powers do not have independent discretion and are only required to review trustee decisions and veto a trustee decision if the trustee acted unreasonably. Interestingly, the Royal Court of Jersey (the Jersey Court) in the case of Re Piedmont and Riviera Trust came to a different decision.^[21] The Jersey Court holds that there is no reason to imply restriction on a clear express power because there are good reasons to give protector independent powers, while the trustee nevertheless retains primary discretion. The X trusts decision is on appeal.

2022

In The Matter The XYZ Trusts.^[22] This case confirms a number of useful legal principles. In relation to applications pursuant to s.47 of the 1975 Act, it confirms that such applications may be used in series for the blessing of various stages of a large transaction, the test to be used when asking for the blessing of a momentous decision and that in relation to the variation of a trust it will not create a new settlement. Finally, it confirmed the Bermuda court’s willingness to issue confidentiality orders in cases involving the administration of private trusts.

 

A 30‑year trust timeline

1991

Moti Lal Chhadami Lal Jain v Commissioner of Income Tax, Delhi.^[23] This case deals with the question of whether the settlor, who is also a trustee, has created a valid trust by transferring only the income generated from their property into a charitable trust. The Supreme Court of India (the Supreme Court), deciding on the appeal, holds that although a trust is considered complete only when the trust property is vested in the trustees, a settlor can demonstrate their intention to divest themselves of all beneficial interest in the property and to utilise its income as laid down in the trust deed. If such an intention can be proved (as in this case), the said income from the property would be considered as part of the trust (and consequently cannot be taxed in the hands of the individual). Although this ruling is in a tax context, it may be considered to have persuasive value in relation to the issue of when a trust may be considered to be validly settled.

2004

Canbank Financial Services Ltd. v Custodian.^[24] Two crucial principles are laid down by the Supreme Court while dealing with the question of the relationship between a share‑broker and its customer. First, when a broker purchases a property on behalf of the customer, the transaction creates a presumption of a resulting trust in favour of the ‘person who is proved to have paid the purchase money’ as a result of which a beneficial interest in the property results to the customer. The Supreme Court termed the fiscal relationship entered between a broker and customer as being fiduciary in nature (i.e., of a trust). Second, the beneficial interest that results from the relationship is transferable in nature, the only legal requirement being that the interest should not conflict with essence of the trust.

2005

J.P. Srivastava & Sons (P) Ltd. v Gwalior Sugar Co. Ltd.^[25] The Supreme Court expounds on the provisions under the Trusts Act regarding the permissibility of delegation of powers by the trustees. While upholding the general rule regarding trustees acting in a joint capacity, the Supreme Court lays down a list of exceptions under which a co‑trustee can act for all trustees, where:

• the trust deed allows the trusts to be executed by one or more or by a majority of trustees;
• there is express sanction or approval of the act by the co‑trustees;
• the delegation of power is necessary;
• the beneficiaries competent to contract consent to the delegation;
• the delegation to a co‑trustee is in the regular course of the business; or
• the co‑trustee merely gives effect to a decision taken by the trustees jointly.

2015

Commissioner of Wealth Tax v Estate of Late Vikramsinhji of Gondal.^[26] The Supreme Court clarifies that income gained from a discretionary trust settled offshore cannot be taxed in the hands of a beneficiary unless such income is distributed to the beneficiary.

2016

Indian Trusts (Amendment) Act, 2016 (the Amendment Act). Modifies two sections (ss.20 and 20A) of the Trusts Act dealing with ‘permissible investment’ of trust money. The sections in question, which were introduced through the Trusts Act prior to India’s independence in 1947, restricted the investment of trust money to a very specific set of government‑authorised securities and instruments, in addition to allowing for investment in securities in jurisdictions other than India. This anomaly is addressed through the Amendment Act, which not only widened the scope for investment in securities but also removed references to foreign jurisdictions that were introduced prior to India’s independence.

Vimal Kishor Shah v Jayesh Dinesh Shah.^[27] The Supreme Court holds that disputes relating to trusts, trustees and beneficiaries are not capable of being decided in arbitration, notwithstanding the existence of an arbitration clause in the trust deed. The Supreme Court reasons that since the trust deed is executed by the settlor, and is not signed by beneficiaries, such beneficiaries cannot be considered as parties to the deed. Therefore, no agreement can be entered into between the beneficiaries. This judgment adds another category of disputes that cannot be referred to arbitration. The existing categories being:

• disputes regarding rights and liabilities arising out of or giving rise to criminal offences;
• matrimonial disputes including child custody;
• guardianship matters;
• insolvency and winding up matters;
• testamentary matters; and
• eviction or tenancy matters governed by special statutes.

 

A 30‑year trust timeline

1995

Trusts Act 1995. Creates provision relating to the governing law of trusts; for the exclusion of foreign law in relation to trusts governed by Manx law; and for connected purposes.

1996

Purpose Trust Act 1996. Allows the creation of valid trusts for specific non‑charitable purposes.

1998

Criminal Justice (Money Laundering Offences) Act 1998. Extends the definition of money laundering to cover all serious crimes, and leads to the creation of the Anti‑Money Laundering Code 1998.

2001

Trustee Act 2001. Facilitates better administration of trusts, widens the powers of trustees and imposes safeguards for beneficiaries.

2003

Schmidt v Rosewood Trust Ltd.^[28] Concerns the information rights of a beneficiary under a discretionary trust.

2006

Clarkson v Barclays Private Bank and Trust (Isle of Man) Ltd.^[29] The settlor of a trust is allowed to recover as against the trustees a portion of the funds that he had paid into the trust, on the grounds that they were paid as a result of a mistake.

2008

McBurney v McBurney (re Betsam Trust).^[30] The Isle of Man High Court (the Court) grants equitable relief on the grounds of mistake after unintended inheritance tax is triggered by a gift to a discretionary trust falling foul of the deemed‑domicile rules.

Financial Services Act 2008. Regulates banking, investment business, corporate/trust and money transmission services in the Isle of Man.

2009

Terrorism (Finance Act) 2009. Confers new and further powers to act against terrorist financing, money laundering and certain other activities.

2011

Foundations Act 2011. Introduces foundations into Isle of Man law.

2014

Delphi Trust Limited 2014.^[31] Addresses the question of whether applications to the Court by trustees for directions concerning trust administration should be heard in private.

2015

Trusts (Amendment) Act 2015. Abolishes the rule against perpetuities and enhances the firewall provisions of the Trusts Act 1995.

Income Tax (Common Reporting Standard) Regulations 2015. Amended in 2017 and 2019.

2017

AB v CD.^[32] The Court considers the so‑called rule in Hastings‑Bass, applies the established Isle of Man authorities on mistake and considers the application of the rules set out in Delphi Trust Limited in respect of protected information orders.

Beneficial Ownership Act 2017. Introduces provisions about the beneficial ownership of certain legal entities.

Income Tax (Common Reporting Standard) (Amendment) Regulations 2017. The amendments facilitate the provision of information from reporting financial institutions to the assessor.

2019

Oliver v Fedelta.^[33] Considers the Court’s jurisdiction to set aside transfers into trust on the grounds of equitable mistake (following the ruling in Pitt v Holt, Futter v Futter).^[34]

Charities Registration and Regulation Act 2019. Provides for the registration and regulation of charities in the Isle of Man.

Income Tax (Common Reporting Standard) (Amendment) Regulations 2019.

2020

Masheder & Masheder v Masheder.^[35] Involves an application for rectification of a trust deed that failed to represent the settlor’s intentions.

2021

Beneficial Ownership (Amendment) Act 2021.

 

A 30‑year trust timeline

1995

Lankow v Rose.^[36] The Court of Appeal of New Zealand (the Court of Appeal) holds that a de facto partner could maintain a constructive trust proprietary interest in their partner’s property provided in the partner’s favour based on that partner satisfying the requirements that:

• contributions, direct or indirect, to the property in question;
• the expectation of an interest in the property;
• such expectation is reasonable; and
• the defendant should reasonably expect to yield the claimant an interest.

2001

The constructive trust claim becomes the primary form of relief available to de facto partners prior to their inclusion in the Property (Relationships) Act 1976 (the 1976 Act) in 2001. It is still important for claim in respect of property outside the jurisdiction of the 1976 Act, such as trust property.

2002

Section 44C of the 1976 Act. This is enacted specifically to address dispositions of property to a trust that have the effect of defeating one partner’s claim or rights under the 1976 Act, but where there was no intention behind the disposition. Where the conditions are satisfied, the court can now order one partner to compensate the other from relationship property or separate property in regard to such dispositions. Section 44 and its predecessor legislative incarnations have long empowered the courts to unwind the disposition and recover property from a trust where a person disposed of property to defeat a partner’s relationship property claim or rights under the 1976 Act.

2016

Clayton v Clayton.^[37] The Supreme Court of New Zealand (the Supreme Court) breathes new life into s.182 of the Family Proceedings Act, an old provision designed to deal with marriage settlements in the mid‑19th century. Section 182 gives the court power to vary ‘nuptial settlements’ (i.e., discretionary family trusts formed during a marriage) following a couple’s divorce or civil union dissolution, often resulting in an equal division of the trust assets between them.

Clayton v Clayton.^[38] In a separate decision, the Supreme Court determines that where one spouse/partner had sufficient power and control over a trust, then the trust’s property constitutes ‘relationship property’ for the purposes of the 1976 Act, which made it subject to equal division between the spouses on separation.

Hawke’s Bay Trustee Company Limited & Ors v Judd.^[39] The Court of Appeal holds that there could be a constructive trust on an express trust in the context of family relationships. The decision is significant because property held on trust generally falls outside the 1976 Act, so there is no legislative requirement that trust property be divided at the end of a relationship even if one spouse may have contributed to it.

Erceg v Erceg.^[40] This case restates the principles that guide trustees in respect to disclosure requests by beneficiaries of a trust. These principles are more or less codified in the Trusts Act 2019.

2021

Trusts Act 2019. This Act comes into law with the stated purpose of restating and reforming New Zealand trust law by:

• setting out the core principles of the law relating to express trusts;
• providing for default administrative rules for express trusts;
• providing for mechanisms to resolve trust‑related disputes; and
• making the law of trusts more accessible.

Lambie Trustee Ltd v Addleman.^[41] The Supreme Court holds that beneficiaries under a trust enjoyed a joint interest in any privileged advice obtained by the trustees of a trust. The result is that privilege may only be asserted to prevent disclosure to beneficiaries if the advice received by a trustees relates to litigation that has commenced or is very imminent; such that the parties have reached the point in which their positions are sufficiently conflicting to justify the conclusion that the trustees are taking advice for the purpose of resisting claims or demands by the beneficiary.

 

A 30‑year trust timeline

1994

Thahir Kartika Ratna v PT Pertambangan Minyak dan Gas Bumi Negara (Pertamina).^[42] This is a locus classicus in Singapore as to various issues relating to trust, including conflicts‑of‑law between a civil‑law and common‑law jurisdiction, the duties of a fiduciary and the remedies for breaches of duties.

2001

Securities and Futures Act 2001. Expressly exempts companies registered under the Trust Companies Act from having to apply for or obtain a capital market services licence.

2003–2008

Income tax exemptions. The Inland Revenue Authority of Singapore (IRAS) rolls out a series of tax exemptions for income derived in Singapore under the Income Tax Act 1947. These range from income from foreign trusts,^[43] locally administered trusts,^[44] Singapore fund‑holding companies,^[45] and funds held by approved persons including trusts and other structures.^[46] These tax exemptions were very popular and encouraged the growth of the wealth and trust industries in Singapore. They would be fine‑tuned over the years to suit the needs of the industries, including the adaptation of the 13U tax exemption scheme to apply to master‑feeder structures.

2004

Amendment to Trustees Act 1967. Introduces major amendments to update Singapore trust law. It clarifies that settlor‑reserved powers trusts are not invalidated. This provides the needed balance of vesting the legal title of assets in the trustees while the settlor retained the asset‑management rights. The amendments provide for statutory duty of care of the trustees. This clarifies the liability of the trustees and provided confidence to the public in the trust industry. Additionally, the amendment introduces a firewall provision that protects the validity and integrity of trusts set up in Singapore, regardless of the applicable rule relating to inheritance or succession.

Global Investor Programme. The Economic Development Board of Singapore introduces the Global Investor Programme, which allows applicants who fulfil certain investment criteria to obtain permanent residency status in Singapore for themselves and their family. Over the years, in addition to passive investment in Singapore, the scheme evolves to include investments in businesses and the set‑up of family offices in Singapore.

2005

Trust Companies Act 2005. Mandates the licensing and regulation of trust companies. Trust companies, unless they fall within the Trust Companies (Exemption) Regulations, are supervised by the Monetary Authority of Singapore. Notably, trust companies that are exempted include PTCs that are set up to provide trust business services to trusts where the settlors or beneficiaries are connected. This amendment lays the foundation for the use of PTCs in Singapore.

2007

Institute of Public Character (IPC) is introduced. In the philanthropy space, the IRAS introduces the IPC status and grant makers’ scheme for charitable giving. This allows families to benefit from tax exemption in their charitable giving and encourages the set‑up of charitable foundations and entities in Singapore.

2008

Mental Capacity Act 2008. Allows a person to appoint a donee to deal with their personal welfare and assets in Singapore in the event of the person’s mental incapacity. This completes the suite of tools that a person requires in their succession/wealth planning (wills, advanced medical directive, trusts, and lasting power of attorney, etc.).

Lau Siew Kim v Yeo Guan Chye Terence.^[47] Clarifies the application of the presumptions of resulting trust, advancement and survivorship in relation to jointly held assets. The principles are subsequently reaffirmed in the decision in Chan Yuen Lan v See Fong Mun.^[48]

2010

Shafeeg bin Salim Talib v Fatimah bte Bud bin Talib.^[49] Holds that, if the settlement of the assets into the trust were completed during the deceased’s lifetime, such assets will be treated as trust assets and not part of the estate and effects of the deceased. This is in the context of the deceased being a Muslim and subject to the application of Shari’a succession laws (similar to forced heirship).

2012

Foo Jee Seng v Foo Jhee Tuan.^[50] Holds that even where a trustee has absolute discretion to postpone the sale of trust property, the courts nevertheless retain supervisory jurisdiction over the exercise of such powers and there are limits on the trustee’s discretion to do so.

2013

Kwee Lee Fong Ivon v Lim Gordon.^[51] Upholds the validity of a trust, which a divorcing spouse claims comprise matrimonial assets.

EC Investment Holdings Pte Ltd v Ridout Residence Pte Ltd.^[52] Upholds the validity of a trust, against the claims by creditors.

2019

Lakshimi Prataprai Bhojwani v Moti Harkishindas Bhojwani.^[53] Sets clear guidance on the trustee’s duty to account for trust assets and the persons to whom the trustee is accountable.

2020

The Variable Capital Company (VCC) corporate structure for investment funds is introduced. The VCC provides greater flexibility and improved operational and tax efficiency, allowing funds and families to ring fence the assets and liabilities of sub‑funds and allowing adoption of different investment strategies and risk for each of them.^[54]