News Publication Date: 07 February 2014
IN THE HIGH COURT OF JUSTICE OF THE ISLE OF MAN
Delphi Trust Limited - Applicant
Judgment summary issued by the High Court of Justice of the Isle of Man
This summary is provided to assist in understanding the judgment of the court. It does not form part of the judgment. The judgment itself is the only
authoritative document. The full judgment is available at www.judgment.im.
On the 4 February 2014 the Honour Deemster Doyle First Deemster and Clerk of the Rolls sitting in the High Court of Justice of the Isle of Man Civil Division Chancery Procedure delivered a judgment which gave guidance as to whether a court should sit in private or open court when considering applications by trustees.
The First Deemster reviewed authorities from England, Jersey, Guernsey, Bermuda, the British Virgin Islands and the Cayman Islands and set out the position in Manx law stressing the importance of the fundamental principle of open justice.
The First Deemster concluded that in broad terms the four categories of applications by trustees under section 61 of the Trustee Act 1961 could be shortly outlined as follows:
(1) Where the issue is whether some proposed action is within the trustees’ power which is ultimately a question of construction of the trust instrument or a statute or both;
(2) Where the issue is whether the proposed course of action is a proper exercise of the trustees’ powers where there is no real doubt as to the nature of the trustees’ powers and the trustees have decided how they want to exercise them, but, because the decision is particularly momentous, the trustees wish to obtain the blessing of the court for the action on which they have resolved and which is within their powers;
(3) In cases of the surrender of discretion properly so called;
(4) When trustees have actually taken action and that action is being attacked in hostile litigation as being either outside their powers or an improper exercise of their powers.
Normally (following authorities in England and Jersey) cases falling within categories (1) and (4) would be heard in open court whereas cases within categories (2) and (3) would be heard in private. These categories are not cast in concrete and there will be overlap and there may be applications not covered by any of the categories. Sometimes cases falling within category (1) may be heard in private. As Robert Walker J stated it will not always be easy to distinguish situations in categories (1) and (2). It would however be very rare for an application in category (4) to be heard in private.
Normally the court would sit in private to hear a Beddoe application whereby a trustee is seeking directions from the court in respect of existing legal proceedings or proposed proceedings and in particular what action or stance the trustee should adopt in respect of such proposed or existing proceedings. The disclosure to the public or other parties of full and frank information in respect of such proceedings by a trustee including any weaknesses in the case of the trustee may adversely impact on the best interests of the beneficiaries. Applications by trustees for rectification would normally be dealt with in open court. Hostile applications to remove trustees or protectors would normally be dealt with in open court. Hostile applications for disclosure orders against trustees in respect of substantive proceedings for the replacement of trustees would normally be dealt with in open court.
In the Isle of Man we accord great importance to the fundamental principle of open justice. We also accord great importance to our vibrant trust industry and the need to respect the confidentiality of private trusts and the privacy concerns of settlors and beneficiaries in non-contentious matters.
The court should normally only sit in private where it is strictly necessary in order to secure the proper administration of justice and where privacy considerations legitimately override the important principle of open justice.
In this case the Applicant as trustee applied to the court for assistance under the court’s inherent jurisdiction and/or section 61 of the Trustee Act 1961. The Applicant sought an order that the proceedings be held in private as a major charitable beneficiary had expressed concerns that the publicity associated with the matter might have adverse consequences internally and externally for the charity as there could internally be competition for the allocation of funding and externally donations could drop because of the size of the fund.
The First Deemster ordered that all hearings and the trial be conducted in open court but placed restrictions on references to the identity of the settlor, the beneficiary, the size of the fund and the amounts of the proposed distributions.
The First Deemster considered the wide ranging relief sought by the Applicant and endeavoured to balance the important interest of open justice and the legitimate concerns of a beneficiary in respect of privacy and confidentiality.