Grand View Private Trust Co Ltd and another v Wen-Young Wong and others (Bermuda)

A fiduciary power must be exercised only for a purpose, or range of purposes, for which it was conferred. The scope of the power is determined by construction. The proper purpose rule then controls an otherwise intra vires exercise. The power’s purpose is assessed objectively from the trust instrument and admissible context, while the decision-maker’s actual purpose is a question of fact.

For a power to add or exclude objects in a family trust, broad wording and an absolute discretion do not permit the trustee to abandon the trust’s essential family purpose. There is no absolute substratum rule, but the trust’s purpose is a powerful factor. A transfer under one power is not subject to a stricter restriction appearing in another power unless the deed so provides or implication is necessary.

The GRT trustee exercised powers under the trust deed to add Grand View, as trustee of the Wang Family Trust, as a discretionary object, exclude all the Founders’ children and remoter issue, appoint the whole fund to the Wang Family Trust and terminate the GRT.

Kawaley AJ, on a summary judgment application in the Supreme Court of Bermuda, held that the exercises were invalid. The Court of Appeal for Bermuda allowed Grand View’s appeal and granted leave to appeal. The Board considered whether clause 8 permitted the steps taken, whether the powers were exercised for a proper purpose, and whether the transfer infringed the rule against remoteness of vesting.

The Board, in the judgment of Lord Richards with whom Lord Hodge, Lord Sales, Lord Burrows and Lady Rose agreed, unanimously allowed the appeals.

1. Scope and proper purpose. The scope of a fiduciary power is determined by construing the instrument conferring it. The proper purpose rule is distinct. It applies only after the exercise is found to fall within the scope of the power, and asks whether the power was used for a purpose for which it was conferred. The Board adopted the distinction explained in Eclairs Group Ltd v JKX Oil & Gas plc [2015] UKSC 71.
2. Clause 8. The definition of “person” included a person acting in a fiduciary capacity. Clauses 3 and 4 permitted payments or transfers to, as well as for the benefit of, a Beneficiary. Clause 8 therefore permitted the addition of the trustee of a purpose trust. No term excluding such an addition could properly be implied.
3. Purpose of the power. The purpose of the power was to be determined objectively from the GRT trust deed and admissible context. The actual purpose for which the trustee acted was a question of fact. The GRT was a carefully structured family trust. Its discretionary and ultimate beneficiaries were the Founders’ children and remoter issue. In that context, the purpose of the addition and exclusion powers was to further the interests of the Beneficiaries, or one or more of them.
4. Improper purpose. The trustee’s purpose was to remove the entire family class, substitute a purpose trust with wholly different purposes, appoint the whole fund to it and end the GRT because the Founders’ children were expected to inherit substantial personal wealth. That purpose fell outside the purposes of clause 8. The Board rejected an absolute substratum rule, but held that the trust’s purpose was central to the proper-purpose analysis. The challenged decision was therefore void.
5. Remoteness. The stricter equitable restriction against remoteness appearing in clause 9 could not be read into clause 4. The deed deliberately included the restriction in clause 9 but not clause 4, and implication was unnecessary. The remoteness ground accordingly failed; the Board did not decide the further issues that would have arisen if clause 4 had contained the restriction.

• Privy Council The Board allowed the appeals and advised His Majesty accordingly: [2022] UKPC 47 .
• Court of Appeal for Bermuda On 20 April 2020, the Court of Appeal allowed Grand View’s appeal from the Supreme Court and granted leave to appeal to the Board.
• Supreme Court of Bermuda Kawaley AJ granted summary judgment on 5 June 2019 and declared the trustee’s exercises of power invalid, void and of no effect.