Section 48 of the Cayman Islands Trusts Law (2018 Revision), which establishes the statutory jurisdiction of the Court, provides the applicant trustees with not only the right to access the Cayman Islands’ judiciary, but also the added protection of being able to rely on a statutory indemnity, as well as the likely costs protection, provided the trustee has applied in good faith.
We have noticed an increase in such proceedings coming before the Court and we will set out our observations arising from our involvement in these applications.
Approachability of the Courts
The Cayman Islands is a trustee-friendly jurisdiction in which to make a Cooper application: the judges we have appeared before have shown a sympathetic ear to the position trustees sometimes find themselves in. The more complicated the structure, the more understanding the Court is likely to be. However, criticism is sometimes levelled at trustees who apply for directions too readily.
The Court will not act as a rubber stamp or look favourably on an applicant who is simply unwilling to make a difficult decision. With proper advice, such unnecessary applications can be avoided, but, in appropriate circumstances, the Court’s assistance is a necessary and invaluable resource for trustees and beneficiaries, and opens the way for the desired restructuring of trusts.
PREPARATION FOR COURT PROCEEDINGS
The more complicated the background and the more material there is to consider, the more comprehensive the preparation for the Court needs to be. Our approach is always to simplify the issues. While it is true that the trustee is expected to make a full and frank disclosure of all material facts, it does not follow that the decision or question it is asking the Court to consider cannot be narrow in scope. This is easier said than done, and will mean covering all possible angles during the evidence-gathering stage and, where necessary, obtaining expert advice from relevant jurisdictions. The last thing the judge wants to be presented with is a hastily thrown-together piece of evidence. If the trustee can predict the issues or gaps in its case before getting to the hearing, then there is a good chance that the judge will be persuaded that the trustee has taken all relevant considerations into account in making its decision. It is important to note that, if the trustee has not made every effort to notify all of the other relevant parties to the trust of its intentions, then the Court will have greater difficulty in blessing the trustee’s decision.
With all of this said, it is inevitable that some applications need to be heard expeditiously, due to commercial pressures or concerns with beneficiaries. If this is the case, the Court has shown itself willing to have the application heard at short notice.
CONFIDENTIALITY OF PROCEEDINGS
It is a well-established principle of law that justice must be seen to be done and that matters should be heard in public. However, it is quite often the case in trust matters that applications should be heard in private. In the Matter of a Settlement dated 16 December 2009 was just such a case, in which a trustee successfully applied for Cooper relief and certain confidentiality orders concerning the trust.
The Honourable Justice Kawaley took the opportunity to confirm the availability of confidentiality orders in trust matters in the Cayman Islands, considered the balance between privacy and open justice, and noted that the route to a confidentiality order will normally involve the welfare of minors and/or the protection of privacy.
Trustees considering making an application in the Cayman Islands for a blessing of a ‘momentous decision’ can take comfort from the sensitivity of how trust matters are heard and the availability of confidentiality orders in appropriate cases. In addition, the more consensus there is among the relevant parties and the better prepared the trustee is, the easier the Court will find it to give its blessing to the decision reached.
