The effect of the omission of the Settlor from the definition of “the Beneficiaries” was to exclude him from further benefit under the Trust. “a) “the Beneficiaries” means the children and remoter issue of the Settlor born after 6 December 2002 and who presently comprise the Settlor’s three sons …” (1) in the place of the wording of clause 1 a) of the Trust there was substituted the following: “The Appointor, in exercise of the power in clause 2 of the Trust and of every other power it enabling, hereby declares that the Appointor shall continue to hold the Trust Fund and the income thereof upon, with and subject to all of the trusts, powers and provisions of the Trust and of the September 2010 Deed, but as if the trust, powers and provisions of the trust had been varied as follows: Relying on this clause (in the absence of a specific power of exclusion under the trust instrument), the trustee sought to execute a deed of appointment containing the following wording: “THE Trustees STAND POSSESSED of the Trust Fund and the income thereof UPON DISCRETIONARY TRUSTS for the benefit of the Beneficiaries or any one or more of them exclusive of the others in such shares and proportions and subject to such terms and limitations and with and subject to such provisions for maintenance, education or advancement or for accumulation of income during minority or for forfeiture in the event of bankruptcy or otherwise and such other conditions as the Trustees may from time to time appoint by Deed revocable or irrevocable executed before the Vesting Day.” (emphasis added) The power of appointment was contained in the following clause of the trust deed: The exclusion of the settlor would therefore protect the interests of the other beneficiaries. The trustee’s decision to exclude the settlor as a beneficiary was motivated principally by a freezing order issued by the English High Court in matrimonial proceedings against the settlor, which arguably applied to the trust’s assets. The two classes of beneficiaries were (1) the settlor and (2) the settlor’s children and remoter issue. The New Huerto Trust) (BVIHC (COM) 112 of 2013), the applicant trustee sought the BVI Commercial Court’s approval for its exercise of a power of appointment under a trust deed so as to exclude the settlor as a beneficiary of the trust. In so doing it has sent a strong message that English common law principles should usually be applied to questions relating to BVI trusts.
Following a somewhat controversial decision of the BVI Commercial Court in 2013, which had hinted at a slight departure from English common law principles on the scope of powers of appointment, the Eastern Caribbean Court of Appeal has now brought the BVI back into line with other offshore trust jurisdictions in this area. With a highly regarded and flexible legislative regime, the BVI is an increasingly popular jurisdiction for the establishment of trusts, but there remain relatively few reported decisions from the BVI Courts on questions of trust law.
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