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DISCLOSURE STATEMENT
No potential conflict of interest was reported by the author(s).
Notes
1 See Tang Hang Wu, ‘From Waqf, Ancestor Worship to the Rise of the Global Trust: A History of the Use of the Trust as a Vehicle for Wealth Transfer in Singapore’ (2018) 103 Iowa Law Review 2263, 2284–90; Tang Hang Wu, ‘Teaching Trust Law in the Twenty First Century’ in Elise Bant and Matthew Harding (eds), Exploring Private Law (Cambridge University Press 2010) 125, 129–32.
2 Lionel Smith, ‘Massively Discretionary Trusts’ (2017) 70 Current Legal Problems 17.
3 Ibid.
4 Ibid, 44–45. Smith also points out (at 45–46) the difficulty with the trustees having to take into account the settlor’s wishes when exercising their discretion and the problem that the settlor’s wishes may change over time.
5 See, for eg, James Penner, ‘Justifying (or Not) the Office of Trusteeship with Particular Reference to Massively Discretionary Trusts’ (2021) 35 Canadian Journal of Law & Jurisprudence 365; Mark Bennett and Adam Hofri-Winogradow, ‘The Use of Trusts to Subvert the Law: An Analysis and Critique’ (2021) 41 Oxford Journal of Legal Studies 692, 697–98.
6 Hanoch Dagan and Irit Samet, ‘What’s Wrong with Massively Discretionary Trusts’ (2023) 138 Law Quarterly Review 624.
7 Ibid, 627.
8 Robert Carington, ‘STEP’s “Evidencing the Social and Economic Benefits of Trusts” Report’ IFC Review (12 January 2022) <https://www.ifcreview.com/articles/2022/january/step-s-evidencing-the-social-and-economic-benefits-of-trusts-report/>.
9 Carington (n 8). For an attempt to draw together the evidence and research about the social benefits of trust, see STEP, ‘Evidencing the Social and Economic Benefits’ Report (2021) <https://www.step.org/system/files/media/files/2021-04/step_trust_report_280421.pdf>. Cf. See Adam Hofri-Winogradow, ‘Trust Proliferation: A View from the Field’ (2017) 31 Trust Law International 152 for valuable empirical work on modern trust practice surveying 409 trust service providers in 82 jurisdictions.
10 Carington (n 8).
11 Bernard Rudden, ‘Book Review’ (1981) 44 Modern Law Review 610. See also Ying Khai Liew, ‘Justifying Anglo-American Trusts Law’ (2021) 12 William & Mary Business Law Review 685.
12 We are grateful to the reviewer for making this perceptive point to us.
13 For an overview of the debate see Allison Christians, ‘Avoidance, Evasion, and Taxpayer Morality’ (2014) 44 Washington University Journal of Law and Policy 39. The solution is the adoption of some supranational tax harmonization measures. This has happened in the corporate sphere but not for private individuals. We are grateful to the reviewer for making this perceptive point to us.
14 See Helvering v Gregory 69 F.2d 809, 810 (2d Cir. 1934); Inland Revenue Commissioners v Duke of Westminster [1936] 1 AC 1.
15 Filippo Noseda, ‘Caught in the Crossfire Between Privacy and Transparency’ (2016) 22 Trusts and Trustees 599.
16 First, the settlor should exercise due diligence in the selection of trustees especially professional trustees. Second, the settlor could guide (and therefore restrict) the trustees’ exercise of discretion through a well drafted letter of wishes, which the trustees have to consider in their decision-making. In appropriate circumstances, the trustees may depart from the letter of wishes. Finally, where professional trust companies are appointed as trustees, being businesses and subject to regulatory control in well-regulated jurisdictions, these companies have an incentive to act diligently and professionally in order to maintain or advance their industry reputation.
17 [2022] UKPC 47, [2023] 2 LRC 559.
18 (2021) 2 DS 2021/3.
19 [2021] JRC 248.
20 [2023] CA (Bda) 4 Civ.
21 [2001] WTLR 901.
22 1999 WL 1425717.
23 See, for eg, Richard Nolan, ‘“The Execution of a Trust Shall Be under the Control of the Court”: A Maxim in Modern Times’ (2016) 22 Canadian Journal of Comparative & Comparative Law 469; Daniel Clarry, The Supervisory Jurisdiction over Trust Administration (Oxford University Press 2018); Richard Nolan, ‘Invoking the Administrative Jurisdiction: The Enforcement of Modern Trust’ in Paul S Davies and James Penner (eds), Equity, Trusts and Commerce (Hart Publishing 2019) 151.
24 See generally Richard Nolan, ‘Controlling Fiduciary Power’ (2009) 68 Cambridge Law Journal 293. Nolan helpfully identifies three categories of techniques to control fiduciary’s exercise of powers: (a) doctrines that limit the scope of the power; (b) doctrines that examine the decision-making process of a fiduciary; and (c) doctrines that consider the fiduciary’s competence in the exercise of the relevant power. These three techniques furnish the substantive bases for challenging a trustee’s decision.
25 Nolan, ‘Invoking the Administrative Jurisdiction’ (n 23) 159–68. See also Jessica Hudson, ‘Mere and Other Discretionary Objects in Australia’ in Ying Khai Liew and Matthew Harding (eds), Asia-Pacific Trusts Law: Volume 1: Theory and Practice in Context (Hart Publishing 2021) 19.
26 McPhail v Doulton [1971] AC 424, 457.
27 Nolan, ‘Invoking the Administrative Jurisdiction’ (n 23) 166. For example, the trustees may not ‘properly understand or properly use their powers’ or the objects see no practical reason to use their standing to invoke the court’s inherent jurisdiction.
28 Ibid.
29 [2003] UKPC 26, [2003] 2 AC 709 [67]. See also Lusina Ho, ‘Trustees’ Duties to Provide Information’ in Elise Bant and Matthew Harding (eds), Exploring Private Law (Cambridge University Press 2010) Ch 15.
30 See Nolan, ‘Controlling Fiduciary Power’ (n 24); Jessica Hudson, ‘One Thicket in Fraud on a Power’ (2019) 39 Oxford Journal of Legal Studies 577; Graham Virgo, ‘Abuse of Trust’ in Richard Nolan, Man Yip and Tang Hang Wu (eds), Trusts and Private Wealth Management (Cambridge University Press 2022) Ch 15.
31 (n 17).
32 See Kelvin Low ‘Non-Charitable Purpose Trusts: The Missing Right to Forego Enforcement’ in Richard Nolan, Kelvin Low and Tang Hang Wu (eds), Trusts and Modern Wealth Management (Cambridge University Press 2018) Ch 16 for a critique of the non-charitable purpose trust.
33 Grand View Private Trust (n 7) [8].
34 Ibid, [9].
35 Ibid, [61].
36 Ibid.
37 Ibid, [63].
38 Ibid.
39 Ibid.
40 Ibid, [80].
41 Ibid, [82].
42 Ibid, [94].
43 Ibid, [82].
44 Ibid, [84].
45 Smith (n 2) 44.
46 Tom McPhail, ‘A proper headache: trust drafting and the proper purpose rule after Grand View v Wong’ (2023) 29 Trusts & Trustees 325, 331.
47 See Robin West, ‘Jurisprudence as Narrative: An Aesthetic Analysis of Modern Legal Theory (1985) 60 New York University Law Review 145.
48 Laura Tyson, ‘Sins of the Son Visited on Taiwan Tycoon’ Financial Times (London, 16 November 1996).
49 Ibid. Cf Grant View Private Trust (n 16) [8] (the judgment noted that the settlors had 17 children).
50 Laura Tyson, ‘Taiwan’s Family Feud Erupts: Formosa Plastics faces Uncertain Future Unless Succession Questions Can Be Resolved and the Process May be “Bloody”’ Financial Times (London, 12 November 1996).
51 Tyson, ‘Sins of the Son Visited on Taiwan Tycoon’ (n 47).
52 George Liao, ‘Taiwan’s Formosa Plastics Scion Wishes to Retrieve, Donate Hidden Assets’ Taiwan News (Taiwan, 26 July 2020).
53 Austin Chiu, ‘Family Unity Lost in Battle Over Billions’, South China Morning Post (Hong Kong, 21 December 2011).
54 Chen Cheng-yu and Liu Tzu-hsuan, ‘Business Groups Accused of Using Trusts to Avoid Taxes’.
55 Paul Matthews, ‘Protectors: Two Cases, Twenty Questions’ (1995) 9 Trust Law International 108; Anthony Duckworth, ‘Protectors – Fish or Fowl?’ [1996] Private Client Business 169, 328; Robert H Sitkoff, ‘An Agency Costs Theory of Trust Law’ (2004) 89 Cornell Law Review 62, 670–71; Tsun Hang Tey, ‘Trust Protector’ (2008) 20 Singapore Academy of Law Journal 99, 100; Matthew Conaglen and Elizabeth Weaver, ‘Protectors as Fiduciaries: Theory and Practice’ (2012) 18 Trusts & Trustees 17; Richard Nolan, ‘Trustees and Third-Party Powers’ in Richard Nolan, Kelvin Low and Tang Hang Wu (eds), Trusts and Modern Wealth Management (Cambridge University 2018) Ch 3; Nancy Chien, ‘How Onerous is the Role of Protector’ (2022) 28 Trusts & Trustees 351.
56 Tey (n 5) 100; Gregory S Alexander, ‘Trust Protectors: Who Will Watch the Watchmen?’ (2006) 27 Cardozo Law Review 2807.
57 The office of a protector is not defined in English law, though this office has been defined variously in other jurisdictions: see Patrick Harney and Marie McCallum, ‘The Role of Protectors: a UK perspective’ (2022) 28 Trusts & Trustees 862, 863. Therefore, the term ‘protector’ is not a term of art in every jurisdiction. Hubbard defines a protector as ‘a person who holds powers under the terms of a trust instrument not entirely for his own benefit’: see Mark Hubbard, Protectors of Trusts (Oxford University Press 2013), para 2.02.
58 Chien (n 55).
59 Harney and McCallum (n 57) 864.
60 See text to n 7 above.
61 1993–95 MLR 426, 529.
62 See Conaglen and Weaver (n 5). The authors point out whether a protector is a fiduciary is a question of construction of the trust deed.
63 In the Matter of the A and B Trusts [2012] JRC 169A [3]. As the Jersey court noted (at [4]), the limited powers conferred to the protector did not support a construction that he was appointed to ensure the settlors’ wishes were carried out.
64 2DS 2021/3.
65 Mazzoleni (n 8) [15].
66 Ibid, [11].
67 Ibid, [19] (emphasis in original).
68 Ibid, [21].
69 Ibid, [28].
70 Ibid, [47].
71 Ibid, [63].
72 John Rimmer, ‘With power comes responsibility: Mazzoleni v Summerhill’ (2023) 29 Trusts & Trustees 349, 356.
73 Ibid, [56].
74 Ibid, [56].
75 Ibid, [50]. See further Rimmer (n 73) 354.
76 Mazzoleni (n 18) [57].
77 Ibid, [58].
78 Ibid, [60].
79 Ibid.
80 Rimmer (n 73) 354.
81 Mazzoleni (n 18) [56].
82 This was affirmed by the Manx appeal court: Mazzoleni (n 18) [48].
83 Rimmer (n 7275) 356.
84 [2018] EWHC 777 (Ch) [47].
85 Ibid, [52].
86 Mazzoleni (n 8) [65].
87 Rimmer (n 7275) 355, citing Representation of Centre Trustees [2009] JRC 109.
88 (n 19).
89 (n20).
90 The ‘only known decision’ (Piedmont (n 18) [116(iii)]) prior to Piedmont and X Trusts that dealt with this issue was the English decision of PTNZ v AS [2020] EWHC 3114 (Ch), [2020] WTLR 1423. In that case, Master Shuman adopted a position that is consistent with the Wider Approach. However, the authoritative significance of PTNZ may be limited. The decision was arrived at in PTNZ without the benefit of full arguments (PTNZ [105]). This was explicitly noted by the Bermudian Court of Appeal in X Trusts; and the court also opined that the English court’s decision was ‘wrong’ (X Trusts (n 9) [124]). The Jersey court in Piedmont, on the other hand, conceded not having seen the judgment in PTNZ in arriving at its conclusion (Piedmont (n 19) [116(iii)]).
91 The Protector was also conferred a power to remove and appoint new trustees.
92 Piedmont (n 19) [87].
93 Ibid, [87].
94 Ibid.
95 Ibid, [91].
96 Ibid.
97 Ibid.
98 Ibid, [92].
99 Ibid, [93].
100 Ibid, [91].
101 Ibid, [117].
102 Some of the trusts were governed by Bermudian law; many were governed by English law; and one was governed by Jersey law.
103 Re The X Trusts [2021] SC (Bva) 72 Civ [66].
104 Ibid, [71]–[72].
105 Ibid, [72].
106 Ibid, [74].
107 Ibid, [76]–[77].
108 X Trusts (n 16) [84]. Clarke P provided separate brief observations that are in agreement with Gloster JA’s judgment (see [160]–[165]).
109 Ibid, [109]-[143].
110 Ibid, [129(i)].
111 Ibid, [131]-[133].
112 Ibid, [133].
113 In PTNZ (discussed at n 90), the English High Court did not have to make a determination as to the nature of the consent power in question.
114 Piedmont (n 19) [118].
115 Ibid. See further Sarah Egan, ‘Protectors as “Mere Toothless Tigers”? Advocating in Favour of the “Wider View”’ (2022) 28 Trusts & Trustees 715, 720. Egan points out that the trustee may in the event of a deadline apply to the court under Public Trustee v Cooper Category 2 to seek a court order that the protectors ought to give consent.
116 X Trusts (n 20) [155].
117 Egan (n 115) 721.
118 Smith (n2) 46.
119 Piedmont (n 19) [88]; X Trusts (n 20) [98].
120 X Trusts (n 20) [91].
121 Ibid, [129(iv)].