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Supervisory jurisdiction of the Cayman Court regarding trusts

21 June 2022

A recent ruling of Justice David Doyle (Standard Chartered Trust (Singapore) Limited as Trustee of the Emerging Markets Diversified Fund Trust) provides a helpful reminder as to the Court's ability to assist trustees in discharging their duties when faced with unusual and/or difficult circumstances.


The Trustee's attorneys made an application pursuant to the Trusts Act for directions as to how to manage/administer trust assets in circumstances where the trust was owed approximately $80 million although the only available offer to meet that liability was one in the region of $200K.  Clearly this was a very meagre settlement but unfortunately the only one on the table.  Importantly the Trusts Act provides that a trustee making an application for guidance under its provisions will be deemed to have discharged their duty when acting upon guidance issued by the Court.

The Trustee sought approval to accept the settlement, pay its legal fees for the Court application and thereafter distribute the balance to the beneficiaries before terminating the trust.

The decision

Justice Doyle cited Cayman Islands, Jersey (CI), English and Isle of Man authorities in reaching his decision summarising the well-known test for the Court's approval of so called momentous decisions by a trustee i.e.:

  • The trustee's decision has been arrived at in good faith;
  • The decision is one which a reasonable trustee properly instructed could have reached; and
  • The decision s not vitiated by any actual or potential conflict of interest.

The critical question is whether the proposed decision is one which a reasonable trustee could have reached.  Justice Doyle also noted the importance of the applicant trustee making full and frank disclosure in its application.

Justice Doyle was ultimately satisfied that the trustee was acting in the most appropriate manner in the unfortunate circumstances, the test was met and Trustee's proposed course of action was sanctioned.


This brief judgement serves as a timely reminder as to the Court's supervisory jurisdiction and the important (and helpful) protections it can afford trustees placed in difficult positions.

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