Analysis
The plaintiff trustee applied for Beddoe relief authorising it to defend proceedings brought by one of the secondary beneficiaries of the trust in the Singapore High Court to terminate the trust. It sought permission to defend both on the substance and to challenge the Singapore court’s jurisdiction on the ground of forum non conveniens, since the trust was governed by Cayman law and the Cayman Islands was the forum for administration of the trust. The Singapore proceedings alleged that refusal to comply with the plaintiff beneficiary’s demands for distribution constituted a breach of trust. A separate injunction granted in Malaysia had frozen most of the trust assets. The settlor’s wishes were for the primary beneficiaries – the grandchildren of the settlor – and the settlor’s wife to benefit from the whole of the trust fund.
The contesting beneficiary and the principal opposing beneficiaries did not attend and were not represented. A representative party was appointed to represent the minor and unborn beneficiaries.
The issues for the court were:
- 1) Had the trustee properly and reasonably surrendered its discretion?
- 2) Should the court make the directions sought?
Held:
The case fell within the third category described in Public Trustee v Cooper because the trustees were in a position of conflict and therefore could properly surrender their discretion. In such a case the role of the trustee was to ensure that all matters were brought to the court’s attention – In the Matter of X Trust and Lewin on Trusts (19th ed) §27-082 followed.
No reasonable trustee would simply admit the Singapore claims or accede to the contesting beneficiary’s demands, which appeared to be based upon a fundamental misconception about the character of an irrevocable discretionary Cayman Islands trust. It was seriously arguable that the proposed distribution fell outside the settlor’s expressed wishes, to which regard would be had without being bound by them. Because the key beneficiaries were not before the court, it was appropriate for the trustee to take a more active role in the application. The trustee would be directed not to make the distributions sought or to terminate the trust, and instead to defend the Singapore proceedings.
Directions accordingly.
JUDGMENT KAWALEY J: [1] The Plaintiff in this matter is the Trustee of a trust known as the Tan Kim Choo Family Scholarship Trust, which was settled on 21 October 2002 (the Trust). The Trust is governed by Cayman Islands law and this jurisdiction is also the forum for administration of the Trust. [2] By …Continue reading "HSBC v Tan Poh Lee & ors [2020] WTLR 493"