Trust administration requires balance – Chief Justice
Chief Justice of the Cayman Islands Hon Anthony Smellie has noted the legitimate and important role that trusts play in estate planning and has cited the need for fairness, probity and balance in the way they are developed and administered.
The Chief Justice was delivering the keynote address at the International Trust and Private Client Conference, hosted by Mourant Ozannes at the Ritz-Carlton Grand Cayman on 5 October.
Citing the role of the local judiciary in “the process of innovation in the development of the trust concept,” he noted that careful attention had been paid to statutory advancements.
“The success of the offshore trust industry, growing as it has from its roots in English law, has depended on the willingness of the English courts and those in the leading offshore jurisdictions to develop common law and equity to ensure that those who might seek to exploit the “dark side” of the trust concept will soon discover that they are most unwelcomed and will find no haven in our jurisdictions,” the Chief Justice noted.
In an address titled, ‘Balancing the Requirements of the Trust with Fairness and Probity’, the Chief Justice explored instances of the “darker side” of trust law, which he said had affected how offshore trusts were perceived
“While participants in the offshore financial industry understand the need for innovation and flexibility to meet the legitimate diverse objectives of clients, others regard the offshore legislative agenda with suspicion. These detractors have argued that, in their drive to maintain flexibility and utility of the offshore trust, some jurisdictions are obstructing the leading economic powers in their quest to increase and protect their revenue base.”
He noted that the fallout from the 2008 financial collapse has led to a shift in perspective, in the way offshore jurisdiction promote their efforts to strengthen regulation and fiscal transparency, as well as a change in the expectation of those who wish to do business offshore.
Against this background, the Chief Justice noted that the local judiciary has to strike a balance between those who may wish to protect their assets and creditors, including governments, who wish to recover revenue and the fight against international crime.
“It is fair to say, that while the international financial centres have led the way in the evolution of modern trust law in the last 20 or 30 years, some commentators have expressed a concern that they are in danger of leaving the core concept of the trust, as it is recognised in English law, too far behind in the drive to attract new business and meet the demands of clients,” he said.
Noting that the trust concept has been frequently examined in Cayman’s courts, the Chief Justice said that certainty in the application of legal principles would be key to continued success in the trust business.
“This is exemplified most frequently in the Grand Court’s inherent jurisdiction to supervise the administration of trusts in the Islands,” Mr Smellie stated.
“In furtherance of that supervisory jurisdiction, trustees, beneficiaries, executors, administrators and enforcers alike have a right to apply to the Grand Court for the determination of a question arising in the administration of an estate or in the execution of a trust,” he stated.
He added that trustees are also entitled to apply to the court under section 48 of the Trusts Law (2011 Revision) for an opinion, advice or direction on any question relating to the management or administration of trust assets, such application to be served on all parties with an interest in it.
“Everyone who transacts here needs to have confidence that their business disputes will be handled professionally, efficiently and cost effectively by the courts, its attorneys and the other professionals who practise here,” the Chief Justice noted.