Background

The Application

The Judgment

• Section 10 of the Law, which provides that the Court has power to appoint new trustees, including in substitution for existing trustees, whenever it is expedient to do so, or if it is otherwise found to be inexpedient, difficult or impracticable to do so without the assistance of the Court;
• Section 12 of the Law, which provides that every trustee appointed by the Court shall have the same powers, authorities and discretions, and may, in all respects, act as if he had been originally appointed a trustee by the trust instrument and
• Section 64 of the Law, which provides that an order for the appointment of a new trustee may be made on the application of any person beneficially interested in the property to which the trust relates.
• Cayman was the appropriate forum for the hearing and determination of the Application, given the terms of the relevant trust deeds.
• The Plaintiffs had standing to bring the Application, given they had a clear beneficial interest in the assets and property which were the subject of the Trusts.
• Other than to note that the allegations made in the US Proceedings were very serious, the Court need not be concerned with the merits of those allegations, or the likelihood of the success of the US Proceedings.
• Similarly, other than to note that there was no question at all of misconduct or breach of trust or unfitness on the part of the Existing Trustee, the Court need not be concerned about the appropriateness or merits of the position taken by the Existing Trustee in refusing to act in the US Proceedings.
• The Court's sole focus was to consider whether, in light of the Existing Trustee refusing to authorise the taking of any steps or to resign, it was expedient to appoint a new trustee and whether it was inexpedient, difficult or impracticable for this to be done without the assistance of the Court.
• In this case, there were substantial assets in the US worth hundreds of millions of dollars, which were likely to be forfeited to the US Government by default or uncontested process unless a party "properly authorised to do so and with standing and sufficient interest in the assets" took such steps as available to them under the relevant law to contest the making of such orders. The Court's assistance was therefore required to protect the welfare of the beneficiaries and to prevent or circumvent omissions that would endanger the trust property. Given the position of the Existing Trustee, there was no practicable manner in which new trustees could be appointed without the assistance of the Court.
• The Substitute Trustee was fit to act and willing to take steps to protect the trust assets and to protect the interests of the beneficiaries, and had given undertakings that it would not take any action that would impair the in rem jurisdiction of the CDCA in the US Proceedings (save for the proper advancement of any claim in respect of the Assets) or cause there to be any change in the ownership of the Assets. Orders for substitution were therefore duly made, and the Existing Trustee was replaced by the Substitute Trustee in respect of all trusts of which the Plaintiffs were ultimate beneficiaries.