A High Net Worth Divorce & Family Trust Saga (Part 5)

Trustee’s application seeking directions as to whether it (or its directors) should resign

The trustee, which was a PTC owned by a purpose trust set up by the husband and which includes close associates of the husband as its board members, sought directions from the Trust Court that it should remain as trustee. This was supported by the husband and all his children, albeit the husband (through his delegate) was prepared to countenance a change of the directors of the trustee. The wife argued that there were good reasons for replacing the current trustee and/or its directors, including that it was too closely connected to the husband.

Powers to direct that a trustee (or its directors) should resign

The Trust Court posed the question of whether it could in fact directly order the removal of directors of a PTC, however the issue did not necessarily arise because the directors of the trustee/PTC confirmed that they would resign if the Court directed that they should. The Court did hold that as part of its inherent jurisdiction in supervising the Trust, it could signify if it would be desirable for a director to resign.

Determination (or lack of) of (controversial) facts in trust proceedings

The Trust Court’s position regarding the evidence before it was that “it was not open to the [Trust] Court to make formal findings of fact, such as whether [the trustee] had acted in breach of trust…” and that the “[Trust] Court had to look at the position that exists in the present day and make a pragmatic decision as to what was in the interests of the beneficiaries as a whole” and that the “[Trust] Court was generally bound to accept that each deponent believed the truth of their sworn assertions, and the Court could only resolve actual contentions or draw disputed inferences where a controversial contention was either clearly right or clearly wrong”.

Decision not to remove the trustee (or its directors)

The Trust Court’s decision was that the trustee (and its directors) should remain. The reasons included pragmatism, wherein finding a replacement would be problematic and costly, and was set against the backdrop that the wife would cease to be a beneficiary after resolution or determination of the Family Proceedings (as all parties envisaged a clean break) and all the other beneficiaries would remain and were opposed to any change of the trustee.