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BVI Court rules on construction of trusts

30 October 2013

The BVI court recently considered the construction of the Trust Deed of a BVI administered trust (the Trust).  The Trust Deed listed a number of beneficiaries under the Trust defined as Specified Beneficiaries.  Each Specified Beneficiary was listed with a percentage figure that purported to indicate their entitlement under the trust fund of the Trust (Percentage Entitlements). 

Harneys acted for the trustee (the Trustee) and brought an action for the court’s assistance with interpretation of the Trust Deed and a declaration from the court that the Trustee is within its powers to amend the list of Specified Beneficiaries and the related Percentage Entitlements. The Trustee is in possession of a Letter of Wishes from the now deceased settlor, indicating his wish to amend the list of Specified Beneficiaries by deleting one name and adding two more, the Additional Beneficiaries, and to vary the Percentage Entitlements accordingly.
Mr Justice Bannister found that the Percentage Entitlements did not create a fixed interest in the trust fund of the Trust for the Specified Beneficiaries and that the trustees had a legitimate power to vary, amend and delete persons from the list of Specified Beneficiaries and the related Percentage Entitlements under the Trust Deed. 

Mr Justice Bannister made further comment on the construction of the Trust Deed considering the status of superadded terms and definitions in relation to those that exist in a typed precedent document.  The Judge found that although the Specified Beneficiaries and Percentage Entitlements were “undoubtedly” unique to the Trust Deed, it did not follow that “those words of entitlement are to be accorded any special status of priority over the other provisions of the trust deed”.  The Judge found that it was not possible to infer the settlor’s intention from this addition to the Trust Deed and that, because this Trust Deed is not a standard form commercial document in common use between merchants requiring completion or adaptation to conform it to the particular transaction in question, the typed/printed distinction therefore did not arise.
For further information please contact Andrew Thorp (BVI), Phillip Kite (London) or Ian Mann (Hong Kong).