A and 6 others v C and 13 others

Where a trust deed gives a fiduciary protector power to consent to a trustee’s proposed exercise of power but does not specify the protector’s role, the issue is one of construction of the deed, read with the general law. The label protector has no settled technical meaning. A consent requirement ordinarily gives the consenting party a veto, subject to express and general-law constraints. It does not inherently confine the protector to reviewing legality or rationality. A narrower role cannot be implied merely because the protector is ancillary to the trustees or because it may reduce deadlock. Under the deeds in issue, the protectors could exercise independent judgment on the merits, subject to fiduciary and professional duties. No narrower term could be implied.

The appellants challenged a declaration concerning the default role of fiduciary protectors under offshore trust instruments. The protectors’ consent was required for specified capital appointments and dealings with specified securities, but the deeds did not expressly define how consent should be exercised.

Kawaley AJ in the Supreme Court of Bermuda held that the protectors had the Narrow Role: to assess whether the trustees’ proposal was lawful and rational. The Court of Appeal affirmed that conclusion, dismissing the appeal in [2023] CA (Bda) 4 Civ and affirming the declaration made in [2021] SC (Bda) 72 Civ. The central issue before the Board was whether the deeds imposed that Narrow Role or permitted the protectors to exercise an independent discretion on the merits.

The Board, in a joint judgment delivered by Lord Briggs and Lord Richards, allowed the appeal and advised His Majesty accordingly.

1. The correct question was not which of two pre-labelled default roles applied. It was what constraints the trust instruments, construed objectively and in context, together with the general law, imposed on the protectors.
2. A requirement to obtain another person’s consent ordinarily confers a power of veto. It does not generally impose a duty to consent where the proposal is lawful or reasonable, unless a restriction arises from the instrument, statute or general law. The word protector does not itself import a particular legal role.
3. The protectors were fiduciaries. Their powers were therefore subject to no-profit, no-conflict and proper-purpose duties, and potentially to a professional duty of reasonable care and skill. Those duties were shaped by the functions undertaken and did not confine the protectors to legality or rationality review.
4. The terms of the deeds supported the Wider Role. In particular, the protectors could waive or release their consent powers, disagreement between joint protectors did not automatically prevent the trustees acting, and consent was reserved for particularly important decisions. These provisions were difficult to reconcile with a purely supervisory role. The risk of deadlock was a deliberate consequence of requiring consent and was not a reason to reject the Wider Role.
5. Neither the fiduciary relationship nor the professional status of the protectors implied a Narrow Role as a term of law. A Narrow Role could not be implied in fact because it was not necessary for workability, did not satisfy the officious bystander test, and lacked sufficiently clear content. Any apparent gap was deliberate. The Court of Appeal’s declaration was therefore set aside and the appeal allowed.

• Privy Council — appeal allowed; the Board advised His Majesty accordingly: [2026] UKPC 11 .
• Court of Appeal of Bermuda — dismissed the appeal by the B Branch and affirmed the Narrow Role declaration: [2023] CA (Bda) 4 Civ; (2023) 27 ITELR 1.
• Supreme Court of Bermuda — Kawaley AJ held that the protectors had the Narrow Role and made the relevant declaration: [2021] SC (Bda) 72 Civ; (2021) 24 ITELR 586.