BVI Trustee Act 2003

1
No. 11 of 2003
VIRGIN ISLANDS
TRUSTEE (AMENDMENT) ACT, 2003


ARRANGEMENT OF SECTIONS
Section
1. Short title and commencement.
2. Interpretation.
3. Section 16 amended.
4. Section 18 repealed and substituted.
5. Section 58 amended.
6. Section 58A inserted.
7. Section 81 amended.
8. Section 82 amended.
9. Section 83 amended.
10. Section 83A inserted.
11. Section 84 amended.
12. Section 84A inserted.
13. Section 89 repealed and substituted.
14. Section 92 repealed and substituted.
15. Section 93 amended.
16. Parts X and XI and First Schedule inserted.
17. Schedule amended.
2
No. 11 of 2003 Trustee (Amendment) Act, 2003 Virgin
Islands
I Assent
THOMAS MACAN,
Governor.
17th October, 2003
VIRGIN ISLANDS
No. 11 of 2003
An Act to amend the Trustee Ordinance (Cap. 303).
[Gazetted 6th November, 2003]
ENACTED by the Legislature of the Virgin Islands as follows:
1. (1) This Act may be cited as the Trustee (Amendment) Act, 2003.
(2) The provisions of this Act shall come into force on such date or dates as
the Governor may, by Proclamation published in the Gazette, appoint, and the
Governor may appoint different dates for the coming into force of different
provisions of this Act.
2. In this Act, “principal Act” means the Trustee Ordinance.
3. Section 16 of the principal Act is amended by inserting after the words
“acting together,”, the words “(or in the case of a trust created on or after the date
on which section 3 of the Trustee (Amendment) Act, 2003 comes into force, a
personal representative or a trustee)”.
Short title and
commencement.
Interpretation.
Cap. 303
Section 16
amended.
3
4. (1) Section 18 of the principal Act is repealed and the following section
is substituted:
“Validation of 18. (1) No appointment made in exercise of any power to
appointment appoint any property among two or more objects shall be invalid
where objects on the ground that
are excluded
or take (a) an unsubstantial, illusory or nominal share only is
illusory appointed to or left unappointed to devolve upon
shares. any one or more of the objects of the power; or
(b) any object of the power is thereby altogether
excluded,
but every such appointment shall be valid notwithstanding that any
one or more of the objects is not thereby, or in default of
appointment, to take any share in the property.
(2) No selection made in exercise of any power to select
among two or more beneficiaries shall be invalid on the ground
that any beneficiary is thereby altogether excluded.
(3) This section does not affect any provision in the
instrument creating the power which declares the amount or the
share or shares, or any selection, from which any object of the
power is not to be excluded.
(4) In this section, “share” shall include a contingent or
limited interest in capital or income.
(5) This section applies to appointments made before, on
or after the date on which this section comes into force.”.
(2) Subsection (1) shall not affect the application of the section repealed by
that subsection in relation to any payment or advancement made before the
coming into force of this section.
5. Section 58 of the principal Act is amended
(a) in subsection (1),
(i) in paragraph (b), by inserting after the words “shall
not include any”, the word “ascertained”;
Section 18
repealed and
substituted.
Section 58
amended.
4
(ii) by deleting from the words “varying or revoking all
or any of the trusts” to the end and substituting the
words “varying, adding to, revoking or replacing all
or any of the trusts, enlarging, restricting or
removing all or any of the powers of the trustees of
managing or administering any of the property
subject to the trusts or all or any other powers of the
trustees, or varying, adding to, removing or
replacing any or all of the other provisions of the
trusts: Provided that except by virtue of paragraph
(d) the Court shall not approve an arrangement on
behalf of any person if carrying it out would be
detrimental to that person.”; and
(b) by inserting after subsection (4), the following subsections:
“ (5) The references to an interest in subsections
(1)(a) and (1)(b) shall be construed to include references to
a discretionary interest.
(6) This section applies to any trust, whether
created before, on or after the date on which this subsection
comes into force.”.
6. The principal Act is amended by inserting after section 58, the following
section:
“Power to 58A. (1) Where a trust instrument provides for the
appoint appointment of any person (including the holder of any office
persons to under the trust) to approve any arrangement described in section
consent to 58(1) on behalf of any of the persons referred to in paragraphs (a)
variations on to (d) thereof (whether specified by name or by description and
behalf of whether or not the identity of such persons is ascertained or
those ascertainable), and where such approval is subsequently given
incapable. pursuant thereto, such approval shall have the same effect as if the
Court had approved such arrangement on behalf of such persons
pursuant to the powers vested in it by section 58(1):
Provided that no such approval shall be given on behalf of
any persons referred to in paragraphs (a) to (c) of section 58(1)
unless, in the opinion formed in good faith of the person giving the
approval, carrying out and giving effect to such arrangement would
Section 58A
inserted.
5
not be detrimental to the person or persons on whose behalf it is
given.
(2) Nothing in subsection (1), nor in any such provision in
a trust instrument as is referred to in that subsection, shall be taken
to limit the powers conferred by section 58 or 59 or by section 6 of
Cap. 80 the West Indies Associated States Supreme Court (Virgin Islands)
Act.
(3) References to the holder of any office under the trust in
subsection (1) include references to a trustee or any protector or
protective committee of the trust.
(4) This section applies only to trusts created on or after
the date on which this section comes into force.”.
7. Section 81 of the principal Act is amended
(a) in subsection (3), by deleting the words “an event” and
substituting the words “any event, other than any of the
events described in subsection (4), which is”;
(b) by inserting after subsection (3), the following subsection:
“ (4) The events referred to in subsection (3) are
(a) an order of the Court;
(b) the institution of criminal
proceedings against the settlor, the
trustees or any of the beneficiaries;
and
(c) an investigation in relation to the
settlor, the trustees, any of the
beneficiaries of the trust or any part
of the trust property by the Financial
Services Commission pursuant to
any enactment.”.
8. Section 82 of the principal Act is amended
(a) in paragraph (e), by deleting the word “or”;
(b) by deleting paragraph (f) and substituting the following
paragraph:
Section 81
amended.
Section 82
amended.
6
“(f) the Court is otherwise the natural forum for the
litigation;”;
(c) by inserting after paragraph (f), the following paragraphs:
“(g) the parties submit to the jurisdiction of the Court; or
(h) the trust instrument contains a provision referring
disputes to the jurisdiction of the Court.”.
9. Section 83 of the principal Act is amended by inserting after subsection
(2), the following subsection:
“ (3) This section shall only apply to trusts created before the date
on which section 83A comes into force.”.
10. The principal Act is amended by inserting after section 83, the
following section:
“Conflict of 83A. (1) In this section and the First Schedule, unless the
laws rules context otherwise requires
for certain
trusts and “disposition”, in relation to any property, includes every form of
dispositions. conveyance, transfer, assignment, lease, licence, mortgage,
First Schedule charge, pledge, encumbrance or other transaction of that
property or by which any interest in it is created or
extinguished;
“foreign law” means the law of any part of the world outside the
Territory, other than a provision in an Act of the Parliament
of the United Kingdom, or an enactment made under such
Act, which extends to the Territory as part of the law of the
Territory;
“Hague Trusts Convention” means the Convention on the Law
Applicable to Trusts and on their Recognition, as
U.K.S.I. 1989 applicable to the Territory by virtue of the Recognition of
No. 673 Trusts Act 1987 (Overseas Territories) Order 1989;
“heirship rights” means any right, claim or interest in, against or to
property of a person arising, accruing or existing in
consequence of, or in anticipation of, that person’s death,
other than any such right, claim or interest created by will
or other voluntary disposition by such person or resulting
Section 83
amended.
Section 83A
inserted.
7
from an express limitation in the disposition of the property
to such person;
“judgment” means any judgment or award of arbitration given by a
court, tribunal or arbitrator in any part of the world,
whatever the judgment or award may be called, including a
decree, order, decision or writ of execution, as well as the
determination of costs or expenses by an officer of the
court or by a tribunal or arbitrator;
“personal relationship” includes every form of relationship by
blood or marriage, including former marriage, and, in
particular, a personal relationship between two persons
exists if
(a) one is the child of the other, natural or adopted
(whether or not the adoption is recognised by law),
legitimate or illegitimate;
(b) one is married to the other (whether or not the
marriage is recognised by law);
(c) one cohabits with the other or so conducts himself
in relation to the other as to give rise in any
jurisdiction to any rights, obligations or
responsibilities analogous to those of a parent and
child or husband and wife; or
(d) personal relationships exist between each of them
and a third person;
“settlor”, in relation to a trust, includes every person who, directly
or indirectly, on behalf of himself or on behalf of any other,
as owner or as holder of a power in that behalf, makes a
disposition of property to be held in that trust or declares or
otherwise creates such trust;
“terms” includes express and implied terms;
“Virgin Islands trust” means a trust the essential validity of which
is, for the time being, governed by the law of the Territory
and which is
(a) created on or after the date on which this section
comes into force; or
8
(b) created before the date on which this section comes
into force, but the proper law of which has been
changed to the law of the Territory after that date in
accordance with section 81;
First Schedule (2) For the purposes of this section and the First Schedule,
no change in circumstances causes a personal relationship, once
established, to terminate.
(3) In the definition of “Virgin Islands trust” in subsection
(1), subsections (9) and (12) and items 2, 3, 4(A) and 7 of the First
First Schedule Schedule, “law” excludes choice of law rules, but otherwise in this
section and the First Schedule, where the context so admits, “law”
includes choice of law rules.
(4) In subsection (11), “internal law” excludes choice of
law rules.
(5) For the purposes of identifying the law applicable
under this section and the First Schedule, the Territory shall be
treated as a State and where a State comprises more than one
territorial unit, each of which has its own rules of law, each
territorial unit shall be treated as a State.
(6) Without prejudice to subsections (13) to (18), in
ascertaining whether a trust has been completely constituted, the
preliminary issues referred to in Article 4 of the Hague Trusts
Convention shall be determined, to the extent so provided, in
First Schedule accordance with subsections (7) to (11) and the First Schedule.
(7) The formal and essential validity of a disposition, not
being a testamentary disposition, of immovable property or
tangible movable property, and the capacity to make the
disposition, shall be determined according to the law of the State in
which the property is situated at the time of the disposition.
(8) The formal and essential validity of a disposition, not
being a testamentary disposition, of intangible movable property,
and the capacity to make the disposition, shall be determined in
accordance with the First Schedule, or, in the case of intangible
movable property not provided for in the First Schedule, in
accordance with the law under which the property came into
existence.
(9) The capacity to subject property to a trust, not being a
testamentary trust, as distinct from the capacity to dispose of that
9
property, shall be determined in accordance with the law governing
the essential validity of the trust.
(10) Where a person declares a trust of his own property,
there shall be no requirement for compliance with the rules on
formal or essential validity or capacity applicable to a disposition
of that property or of any interest in it.
(11) Where, under subsections (6) to (10) and the First
First Schedule Schedule, an issue falls to be determined by the law of the
Territory, the choice of law rules of the Territory shall designate
the internal law of the Territory to determine the issue.
(12) Subject to subsections (6) to (11) and the First
First Schedule Schedule, all questions arising in regard to the validity,
construction, effect or administration, whether the administration is
conducted in the Territory or elsewhere, of a trust including
(a) questions relating to any of the following matters,
being matters specified in Article 8 of the Hague
Trusts Convention
(i) the appointment, resignation and removal of
trustees, the capacity to act as a trustee, and
the devolution of the office of trustee;
(ii) the rights and duties of trustees among
themselves;
(iii) the right of trustees to delegate in whole or
in part the discharge of their duties or the
exercise of their powers;
(iv) the powers of trustees to administer or to
dispose of trust assets, to create security
interests in the trust assets, or to acquire new
assets;
(v) the powers of investment of trustees;
(vi) restrictions upon the duration of the trust,
and upon the power to accumulate the
income of the trust;
10
(vii) the relationships between the trustees and
the beneficiaries including the personal
liability of the trustees to the beneficiaries;
(viii) the variation or termination of the trust;
(ix) the distribution of trust assets;
(x) the duty of trustees to account for their
administration; and
(b) to the extent that they do not fall under paragraph
(a), questions as to
(i) the fiduciary or non-fiduciary powers,
obligations or duties of the trustees or to the
liabilities or rights of the trustees;
(ii) the existence and extent of powers conferred
or retained, including powers to vary or
revoke the trust and powers of appointment,
and questions as to the validity of any
exercise of any such power,
are to be determined by the proper law of the trust or, where there
are different proper laws for different aspects of the trust, the
proper law applicable to the area in which the question falls.
(13) Subject to any express provision to the contrary in the
trust or disposition, no Virgin Islands trust, and no disposition of
property to be held upon the trusts of such a trust, is void, voidable,
liable to be set aside or defective in any fashion, nor is the capacity
of any settlor in relation to the trust or disposition to be questioned,
nor is the trustee or any beneficiary or other person to be subjected
to any liability or deprived of any right, by reason that
(a) the law of any foreign jurisdiction prohibits or does
not recognise the concept of a trust, or
(b) the Virgin Islands trust or the disposition
(i) avoids or defeats any right, claim or interest
conferred by foreign law upon any person
by reason of a personal relationship to the
settlor or by way of heirship rights; or
11
(ii) contravenes any rule of foreign law or any
foreign judicial or administrative order or
arbitration order or action intended to
recognise, protect, enforce or give effect to
such a right, claim or interest.
(14) Heirship rights conferred by foreign law in relation to
the property of a living person shall be disregarded when
determining rights of ownership of property subject to, or claimed
to be subject to, a Virgin Islands trust.
(15) Heirship rights conferred on persons by foreign law
shall not be taken to constitute those persons creditors for the
purposes of section 81 of the Conveyancing and Law of Property
Cap. 200 Ordinance, nor to constitute those persons “creditors or others” for
the purposes of the Act against Fraudulent Deeds, Gifts,
13 Eliz 1, c. 5 Alienations, etc. to the extent, if any, that that Act has any
application in the Territory.
(16) Subject to subsection (17), the law designated as
applicable to succession by virtue of the Territory’s choice of law
rules shall apply to a Virgin Islands trust, not being a testamentary
trust, only to the extent that it does not contain rules conferring any
right, claim or interest upon any person by reason of a personal
relationship to the settlor or by way of heirship rights.
(17) Subsection (16) shall not apply where the law so
designated is that of the Territory.
(18) In the case of a conflict between any of the provisions
of subsections (13) to (17) and any of the provisions of subsections
(6) to (11) and the First Schedule, the provisions of subsections
(13) to (17) shall prevail.
(19) To the extent that it is inconsistent with subsections
(13) to (18), a foreign judgment shall not be recognised or enforced
or give rise to any estoppel, and both its recognition and its
enforcement shall be regarded as contrary to the public policy of
the Territory,
(20) Subsections (6) to (12) apply only to trusts created on
or after the date on which this section comes into force.”.
12
11. Section 84 of the principal Act is amended
(a) in subsection (3) by inserting after the word “applies”, the
words “and, for the avoidance of doubt, the rule against
perpetuities and remoteness of vesting includes the rule
against inalienability, the rule against perpetual trusts, any
rule prohibiting a trust under which trust property would,
apart from that rule, be inalienable beyond a permissible
period, and any rule prohibiting a trust or power under
which trust property would, apart from that rule, be capable
of application for a purpose beyond a permissible period”;
(b) by inserting after subsection (11), the following
subsections:
“(12) Where any of the persons specified in
subsection (13) has reason to believe that no trustee of a
trust to which subsection (2) applies is a designated person
or that no designated person is likely in the immediate
future to be appointed as a trustee pursuant to the terms of
the trust instrument, that person shall use all reasonable
endeavours to secure the appointment of a designated
person as a trustee of the trust and if such endeavours fail to
result in such an appointment he shall make an application
to the Court for the appointment of a designated person
pursuant to the provisions of subsection (14).
(13) The persons referred to in subsection (12) are
(a) any trustee of the trust who is not a
designated person; and
(b) any person who has been appointed
to enforce the trust.
(14) If, at any time following its creation, a trust to
which subsection (2) applies does not have at least one
trustee who is a designated person, on the application in
relation to the trust by
(a) any existing trustee of the trust,
(b) a person who has been appointed to
enforce the trust, or
Section 84
amended.
13
(c) the Attorney General,
the Court shall make an order appointing a designated
person as a trustee of the trust.
(15) On an application in relation to a purpose trust
by
(a) a trustee of the trust; or
(b) a person who has been appointed to
enforce the trust,
the Court may in such manner as it thinks fit vary any of
the purposes of the trust, or enlarge or otherwise vary any
of the powers of the trustees or other provisions of the trust.
(16) In exercising the powers conferred upon it by
subsection (15), the Court shall have regard to such factors
as the Court thinks material, which may include
(a) such changes in circumstances since
the trust was created as are in the
opinion of the Court relevant; and
(b) such factors and proposals as are set
out in the application.
(17) The changes in circumstances referred to in
subsection (16)(a) may include the fact that the execution
of the trust in accordance with its terms has become in
whole or in part
(a) impossible or impracticable;
(b) unlawful or contrary to public
policy; or
(c) obsolete in that, by reason of
changed circumstances, it fails to
achieve the intention of the settlor
and the spirit of the gift.
(18) Where any costs are incurred in connection
with an application under subsection (15), the Court may
14
make such order as it considers just as to payment of those
costs, including payment out of the property of the trust.
(19) Where any costs are incurred by the person
who has been appointed to enforce the trust in connection
with enforcement, the Court may make such order as it
considers just as to payment of those costs, including
payment out of the property of the trust.
(20) For the purposes of section 203 of the
No. 1 of 1997 Criminal Code, 1997 property held upon the trusts of a trust
to which subsection (2) applies shall be regarded, as against
the trustee and as against the person who has been
appointed to enforce the trust, as belonging to others, and
an intention on the part of any such person to defeat the
trust shall be regarded as an intention to deprive others of
their property.
(21) The trustee of a trust to which subsection (2)
applies who is a designated person shall keep in the
Territory a documentary record of
(a) the terms of the trust;
(b) the identity of any other trustees and
the person who has been appointed
to enforce the trust;
(c) all settlements of the property upon
the trust and the identity of settlors;
(d) the accounts of the trust; and
(e) all distributions or applications of the
trust property.
(22) This section shall only apply to trusts created
before the date on which section 84A comes into force.”.
12. The principal Act is amended by inserting after section 84, the
following section:
“Purpose trusts 84A. (1) For the purposes of this section,
created on or
after the com- “charitable trust” means a trust for exclusively charitable
mencement purposes;
of this section.
Section 84A
inserted.
15
“designated person” means
(a) a barrister or solicitor practising in the Territory;
(b) an accountant practising in the Territory who
qualifies as an “auditor” for the purposes of the
No. 9 of 1990 Banks and Trust Companies Act, 1990;
(c) a licensee under the Banks and Trust Companies
Act, 1990, or
(d) such other person as the Minister of Finance may,
by Order, designate; and
“rule against trusts or powers of excessive duration” includes, but
without limitation,
(a) the rule known as the rule against inalienability,
sometimes referred to as the rule against perpetual
trusts; and
(b) so far as not embraced within paragraph (a),
(i) any rule prohibiting a trust under which trust
property would, apart from the rule, be
inalienable beyond a permissible period, and
(ii) any rule prohibiting a trust or power under
which trust property would, apart from the
rule, be capable of application for a purpose
beyond a permissible period.
(2) A person may create a valid trust for any purpose or
purposes if the conditions set out in subsection (3) are satisfied.
(3) The conditions referred to in subsection (2) are
(a) the purpose or purposes are specific,
reasonable and possible;
(b) the purpose or purposes are not immoral,
contrary to public policy or unlawful;
(c) at least one trustee of the trust is a
designated person;
16
(d) the trust instrument appoints a person as
enforcer of the trust, and provides for the
appointment of another enforcer on any
occasion on which there is no enforcer, or
no enforcer able and willing to act;
(e) the enforcer appointed by the trust
instrument is a party to the trust instrument
or gives his consent in writing, addressed to
the trustee who is a designated person, to act
as enforcer of the trust.
(4) In this section a trust for a purpose or purposes that
satisfies the conditions in subsection (3), not being a charitable
trust, is referred to as a “purpose trust”.
(5) No rule against trusts or powers of excessive duration
shall apply to a purpose trust.
(6) Nothing in this section shall operate to invalidate a
trust which, apart from this section, would be a valid trust.
(7) Nothing in this section affects the law with respect to
charitable trusts and, in particular, nothing in this section shall
affect the ability of the Attorney General to enforce a charitable
trust.
(8) Without prejudice to subsections (6) and (7), any
purported appointment of an enforcer of a charitable trust shall be
of no effect.
(9) The Court may, whenever it is expedient to appoint an
enforcer of a purpose trust and it is found inexpedient so to do
without the assistance of the Court, make an order appointing an
enforcer either to fill a vacancy or in substitution for the existing
enforcer.
(10) Where a trustee of a purpose trust who is a designated
person has reason to believe that there is no enforcer of the trust, or
no enforcer able and willing to act, and that no enforcer is likely in
the immediate future to be appointed, that trustee shall as soon as
practicable inform the Attorney General in writing of the fact and
send him a copy of the instrument creating the trust.
17
(11) On being informed under subsection (10), the
Attorney General shall, with all reasonable speed but in any event
within ninety days, apply to the Court for the appointment of an
enforcer under subsection (9).
(12) Where any costs are incurred by the Attorney General
in connection with any application under subsection (11), the Court
may make such order as it considers just as to the payment of those
costs out of the assets of the trust.
(13) Where a designated person fails to comply with
subsection (10), then, subject to subsection (14), the designated
person commits an offence and is liable on summary conviction to
a fine not exceeding five thousand dollars.
(14) It shall be a defence to a charge of committing an
offence under subsection (13) to prove that the designated person
took all reasonable steps and exercised all due diligence to avoid
committing the offence.
(15) A trustee of a purpose trust shall provide the enforcer
of the trust with
(a) the accounts of the trust;
(b) copies of the trust instrument and of deeds
and other written instruments executed
pursuant to the trust instrument;
(c) legal and other professional advice received
by the trustees; and
(d) such, if any, other documents and
information as the trust instrument requires
to be provided.
(16) The instrument declaring or evidencing a purpose
trust may, but need not, do any of the following:
(a) specify an event or date upon the happening
or occurrence of which the trust ceases to be
a purpose trust;
(b) provide for the disposition of assets of the
trust when the trust ceases to be a purpose
trust; or
18
(c) provide that, for so long as the trust is a
purpose trust, the trustees owe no duty
(i) to any persons entitled to such assets
when the trust ceases to be a purpose
trust; or
(ii) in relation to any purposes for which
such assets are then to be applied.
(17) An enforcer of a trust appointed in accordance with
the provisions of this section shall have both the power and the
duty of enforcing it.
(18) A person may not be or become a trustee of a purpose
trust while he is the enforcer of that trust.
(19) Where any of the persons specified in subsection (20)
has reason to believe that no trustee of a purpose trust is a
designated person or that no designated person is likely in the
immediate future to be appointed as a trustee pursuant to the terms
of the trust instrument, that person shall use all reasonable
endeavours to secure the appointment of a designated person as a
trustee of the trust and if such endeavours fail to result in such an
appointment he shall make an application to the Court for the
appointment of a designated person pursuant to the provisions of
subsection (21).
(20) The persons referred to in subsection (19) are
(a) any trustee of the trust who is not a
designated person;
(b) the enforcer of the trust.
(21) If, at any time following its creation, a purpose trust
does not have at least one trustee who is a designated person, on
the application in relation to the trust by any of the following
persons:
(a) the settlor, unless the trust instrument
provides otherwise,
(b) any existing trustee of the trust,
19
(c) the enforcer of the trust, or
(d) the Attorney General,
the Court shall make an order appointing a designated person as a
trustee of the trust.
(22) On an application in relation to a purpose trust by
(a) any person appointed by the instrument
declaring or evidencing the trust for the
purposes of this subsection,
(b) the settlor, unless the trust instrument
provides otherwise,
(c) a trustee of the trust, or
(d) the enforcer of the trust,
the Court may in such manner as it thinks fit vary any of the
purposes of the trust, or enlarge or otherwise vary any of the
powers of the trustees or other provisions of the trust.
(23) In exercising the powers conferred upon it by
subsection (22), the Court shall have regard to such factors as the
Court thinks material which may include
(a) such changes in circumstances since the
trust was created as are in the opinion of the
Court relevant; and
(b) such factors and proposals as are set out in
the application.
(24) The changes in circumstances referred to in
subsection (23)(a) may include the fact that the execution of the
trust in accordance with its terms has become in whole or in part
(a) impossible or impracticable;
(b) unlawful or contrary to public policy; or
20
(c) obsolete in that, by reason of changed
circumstances, it fails to achieve the
intention of the settlor and the spirit of the
gift.
(25) Where any costs are incurred in connection with an
application under subsection (22), the Court may make such order
as it considers just as to payment of those costs, including payment
out of the property of the trust.
(26) Where any costs are incurred by the enforcer of a trust
in connection with enforcement, the Court may make such order as
it considers just as to payment of those costs, including payment
out of the property of the trust.
No. 1 of 1997 (27) For the purposes of section 203 of the Criminal Code,
1997 property held upon the trusts of a purpose trust shall be
regarded, as against the trustee and as against the enforcer of the
trust, as belonging to others, and an intention on the part of any
such person to defeat the trust shall be regarded as an intention to
deprive others of their property.
(28) The trustee of a purpose trust who is a designated
person shall keep in the Territory a documentary record of
(a) the terms of the trust;
(b) the identity of any other trustees and the
enforcer of the trust;
(c) all settlements of the property upon the trust
and the identity of settlors;
(d) the accounts of the trust; and
(e) all distributions or applications of the trust
property.
(29) This section shall only apply to trusts created on or
after the date on which this section comes into force.”.
21
13. Section 89 of the principal Act is repealed and the following section is
substituted:
“Construction 89. (1) In the absence of any contrary provisions in the
of power to trust instrument, an express power to amend in a trust instrument
amend trust. shall be construed as a power to vary all or any of its terms,
including terms implied by law.
(2) In this section,
“vary” includes enlarge, add to, replace, remove, and restrict;
“terms” means terms of any description whatsoever, and in
particular, but without limitation, terms declaring trusts and
terms conferring powers whether dispositive or
administrative; and
“power to amend” includes any express provision, howsoever
worded, contained in the trust instrument indicating that the
trust or the trust instrument may be varied, amended or
modified by the trustees or any other person.
(3) This section applies to any trust, whether created
before, on or after the date on which this section comes into
force.”.
14. Section 92 of the principal Act is repealed and the following section is
substituted:
“Trust duty. 92. (1) In this section,
“authorised person”, for the purposes of a trust to which a
chargeable instrument relates, means
(a) the settlor of the trust;
(b) a trustee of the trust;
(c) any person who has executed the chargeable
instrument on behalf of a corporate trustee of the
trust;
(d) any person duly authorised to execute documents on
behalf of a corporate trustee of the trust;
Section 89
repealed and
substituted.
Section 92
repealed and
substituted.
22
(e) any beneficiary or person capable of benefiting
from the trust;
(f) any person authorised or appointed by any of the
persons described in paragraphs (a) to (e) to cancel
the revenue or postage stamp referred to in
subsection (3)(a);
(g) a barrister, solicitor, attorney, advocate or lawyer
acting for any of the persons described in
paragraphs (a) to (f) who is admitted to practise in
any jurisdiction other than the Territory; or
(h) a barrister or solicitor who is admitted to practise in
the Territory;
“chargeable instrument” means an instrument in writing executed
on or after the date on which this section comes into force,
which is either
(a) an instrument declaring or evidencing a trust of
which the proper law is, immediately following the
creation of the trust, the law of the Territory, or
(b) an instrument changing the proper law of a trust to
the law of the Territory,
but which is not
(i) a will or codicil;
(ii) an instrument creating or recording a bare
trust;
(iii) an instrument creating or recording a trust
which is exclusively for charitable purposes;
(iv) an instrument executed in exercise of a
power vested in a trustee or any other person
conferred or reserved by the terms of a trust;
or
(v) an instrument directing or declaring that
further property is to be held upon the trusts
of an existing trust;
23
“trust duty” means the duty referred to in subsection (2).
(2) Every chargeable instrument shall be liable to trust
duty in the sum of one hundred dollars.
(3) Subject to subsection (4), trust duty shall be deemed to
have been duly paid on a chargeable instrument only when within
three months of the date of the instrument
(a) a revenue or postage stamp of the Territory
for one hundred dollars is affixed to the
chargeable instrument; and
(b) an authorised person has cancelled the
revenue or postage stamp referred to in
paragraph (a) by writing on or across it his
name and the date on which his name has
been so written on or across it.
(4) Where, in relation to a trust, two or more instruments
are chargeable instruments, trust duty shall be deemed to have
been paid on each of those instruments if it is deemed to have been
duly paid, by virtue of a stamp affixed and cancelled in accordance
with subsection (3), on any one of them.
(5) Where trust duty is not deemed to have been duly paid
on a chargeable instrument in accordance with the provisions of
this section, that instrument (and, in the case of a chargeable
instrument changing the proper law of a trust to the law of the
Territory, any instrument declaring or evidencing the trust to which
such chargeable instrument relates) may not be pleaded or given in
evidence or admitted to be good, useful or available in law or
equity in civil proceedings unless, following the payment in the
manner described in subsection (7), of
(a) a penalty in the sum of two hundred dollars
for each calendar year or part thereof that
shall have elapsed from the creation of the
trust to which the instrument relates or the
date upon which its proper law became the
law of the Territory, as the case may be, and
(b) the sum of one hundred dollars (hereinafter
in this section called “late duty”),
the Court by order at its discretion so directs.
24
(6) The provisions of subsection (5) shall not affect any
rights to plead or give in evidence or admit to be good, useful or
available in criminal proceedings any chargeable instrument or
other document.
(7) The penalty referred to in subsection (5)(a) and the late
duty shall be paid by affixing to the chargeable instrument a
revenue or postage stamp of the Territory for the amount of the
penalty and the late duty on or across which shall be written by any
person, the date upon which the stamp is affixed to the instrument.
(8) No chargeable instrument or other document which is
liable to trust duty, the penalty referred to in subsection (5)(a) or
the late duty shall be produced to the Treasury, Post Office or other
public body for the purposes of payment of such trust duty, penalty
or late duty.”.
15. Section 93 of the principal Act is amended by inserting before the
word “Schedule” occurring in the marginal note and in subsection (1), the word
“Second”.
16. The principal Act is amended by inserting after section 93, the
following Parts and Schedule:
“PART X
TRUSTEES AND DEALINGS
WITH THIRD PARTIES
“Definitions. 94. (1) In this Part
“contract” includes a warranty, undertaking, covenant and any
other legal commitment;
“transaction” includes a contract;
“trust fund”, in relation to a trust, means the property for the time
being subject to the trust.
(2) In this Part, references, in relation to a power, to
requirements for its exercise are references solely to requirements
for the exercise of the power, including, in particular, requirements
for consent, expressly laid down by the terms of the power.
Section 93
amended.
Parts X and XI
and First
Schedule
inserted.
25
Transactions 95. (1) For the purposes of this Part, where a person (“the
deemed to be third party”) enters into a transaction with a trustee, the transaction
properly shall be deemed to be properly entered into by the trustee if the
entered into condition stated in subsection (2) is satisfied.
with trustees.
(2) The condition referred to in subsection (1) is that when
entering into the transaction it appears to the third party after
reasonable enquiry that
(a) the trustee has power, conferred by the terms
of the trust or by law, to enter into a
transaction of the kind in question; and
(b) if there are any requirements for exercise of
that power, the trustee has complied with
them.
(3) Satisfaction of the condition in subsection (2) shall not
require the third party to make enquiry as to whether, in the
particular case, the exercise of the power referred to in subsection
2(a) would be in breach of any duty of the trustee, apart from any
duty to comply with any requirements for its exercise.
(4) Subsection (1) shall not apply in construing the
provisions of sections 97(3) and (4) and 98(2).
(5) Subsection (1) shall not apply otherwise than for the
purposes of this Part, and in particular shall not affect a trustee’s
obligation to make restitution or pay compensation if he has acted
improperly.
Protection of 96. (1) Where a person (“the third party”) enters into a
persons dealing transaction with a trustee of a trust and that transaction has been
with trustees. properly entered into by the trustee, the provisions of subsections
(2) and (3) shall apply, except to the extent that the transaction
otherwise provides.
(2) Property acquired by the third party in or by virtue of
the transaction shall be taken free and discharged from the trust.
(3) The third party shall not be concerned to see that
property acquired by the trustee from the third party in or by virtue
of the transaction is properly applied.
(4) Subsections (1) to (3) shall not prejudice any other
right or claim of the third party in relation to the transaction.
26
Optional 97. (1) This section applies to a trust where the terms of
provision the trust expressly so provide.
concerning
liability of (2) Where this section applies to a trust, the provisions of
trustees. subsections (3) and (4) shall have effect.
(3) Except as otherwise provided in the contract, a trustee
of the trust shall not be personally liable under or by virtue of a
contract with any party properly entered into by the trustee in the
trustee’s fiduciary capacity in the course of administering the trust
if the trustee disclosed in the contract the fiduciary capacity, or if
the party was otherwise aware of that capacity.
(4) A claim based on
(a) a contract entered into by a trustee of the
trust,
(b) an obligation arising from ownership or
control of trust property, or
(c) a tort committed in the course of
administering the trust,
may be asserted by a party in a judicial proceeding against the
trustee in the trustee’s fiduciary capacity, whether or not the trustee
is personally liable for the claim, and so that the claimant shall be
entitled to satisfaction out of the trust fund directly rather than by
way of subrogation to any right of indemnity of the trustee.
Limitation of 98. (1) Where section 97 does not apply to a trust, this
trustee’s section shall apply to it.
personal
contractual (2) Subject to subsection (3), where, in a contract properly
liability. entered into by a trustee, the trustee discloses his fiduciary
capacity, or the other party was otherwise aware of that capacity,
the trustee is personally liable for any sum payable under the
contract only to the extent of the value of the trust fund when the
payment falls due.
(3) When computing the value of the trust fund for the
purposes of subsection (2), the fund shall be treated as still
including any property which, since the contract was entered into,
has been distributed.
27
(4) Subsections (2) and (3) shall have effect subject to any
contrary provision in the contract.
(5) For the purposes of subsection (3), property shall be
taken to have been distributed if it has ceased to be subject to the
trust otherwise than on a disposal in good faith for valuable
consideration in the management or administration of trust
property.
Protection 99. A trustee is personally liable for torts committed in the
from tortious course of administering a trust, or for obligations arising from
liability. ownership or control of trust property, including liability for
violation of any law relating to protection of the environment, only
if the trustee is personally at fault.
Provisions 100. (1) Subject to the terms of the trust and without
relating to the prejudice to section 97 where applicable,
right of
subrogation. (a) where a trustee of a trust has incurred a
liability in favour of another party (“the
third party”) under or by virtue of a contract
properly entered into by the trustee, the
trustee shall have a right of indemnity in
relation to that liability against the trust fund
and against distributed property or its
traceable product, to which right the third
party shall be subrogated; and
(b) in computing the amount of the indemnity
any indebtedness of the trustee shall be
disregarded.
(2) If the contract is deemed, by virtue of section 95, to be
properly entered into when in fact it was entered into without the
requisite power or without compliance with any requirements for
its exercise or otherwise in breach of duty, the trustee shall be
liable to compensate the trust fund for any amount to which the
right of subrogation applies by virtue of subsection (1).
(3) The disregarding of any indebtedness of the trustee
under subsection (1)(b) shall be solely for the purpose of
establishing the extent of the third party’s right of subrogation, and
shall not eliminate or otherwise affect that indebtedness.
28
(4) For the purposes of this section, indebtedness of a
trustee includes all liability, quantified or not, of the trustee to
make restitution or pay compensation to the trust fund, including
the liability specified in subsection (2).
(5) Rights of indemnity conferred by this section,
(a) shall not prejudice any rights of indemnity
or reimbursement to which, apart from this
section, a trustee would be entitled,
(b) shall subsist notwithstanding any purported
waiver or exclusion, in whole or in part, by
the trustee.
(6) For the purposes of subsection (1), property shall be
taken to have been distributed if, since the contract was entered
into, it has ceased to be subject to the trust otherwise than on a
disposal in good faith for valuable consideration in the
management or administration of trust property.
Optional power 101. (1) This section applies to a trust where the terms of
to vary trust the trust expressly so provide.
for protection
of creditors. (2) Where this section applies to a trust, subsections (3) to
(6) shall have effect.
(3) Where a person (“the lender”) has lent money to a
trustee of the trust, whether on security or not, that trustee or any
trustee for the time being in office may, where so requested by the
lender for the lender’s protection, by declaration in writing, to such
extent and in such manner as the trustee thinks fit, restrict, or
impose conditions on the exercise of, any of the following:
(a) powers of investment and other powers in
the management and administration of trust
property;
(b) rights of beneficiaries, including objects of
powers, to actual receipt of trust property to
which they have or may become entitled;
(c) powers relating to the appointment,
retirement or removal of trustees.
29
(4) A declaration pursuant to subsection (3)
(a) shall not be made by a trustee unless he
considers it to be compatible with his
equitable duties under the trust in relation to
its beneficiaries;
(b) shall not affect any power of the Court.
(5) A restriction or condition made or imposed under a
declaration pursuant to subsection (3) may subsist only during such
time or times as there is a liability for money lent under or by
virtue of a contract properly entered into by a trustee of the trust.
(6) If, and to the extent that, a trust is for purposes, the
reference in subsection (4)(a) to a trust’s beneficiaries shall be
taken to include a reference to those purposes.
Optional 102. (1) This section applies to a trust where the terms of
power to the trust expressly so provide.
create charges.
(2) Where this section applies to a trust, subsections (3) to
(12) shall have effect.
(3) A trustee of the trust may grant security in accordance
with this section in favour of a person (referred to in this section as
a “third party”) acting in good faith and for value in relation to
liabilities to that third party incurred by the trustee under or by
virtue of a contract properly entered into by the trustee.
(4) The grant of security may take the form of a fixed legal
or equitable mortgage or charge over all or any of the property
subject to the trust, or of a right in equity in accordance with
subsection (5).
(5) A trustee may by writing grant a third party the right in
equity, which shall be enforceable as such, to require the trustee to
discharge liabilities to that third party out of the trust fund, or some
part of it, and a right so granted is referred to in this section as a
“trustee statutory charge”.
(6) A trustee statutory charge shall, except to the extent
otherwise agreed by the parties concerned, have priority over
(a) rights of persons under the terms of the trust,
30
(b) obligations under the trust to apply property
for any purpose,
(c) trustees’ rights of indemnity against the trust
fund,
(d) creditors’ claims against the trust fund not
secured by any fixed charge or right in the
nature of a fixed security over any trust
property, and
(e) any trustee statutory charge entered into at a
later time,
but shall be subject to any fixed charge or right in the nature of a
fixed security over any trust property, and subject to any trustee
statutory charge entered into at an earlier time.
(7) Nothing in subsection (6) shall affect the rights of a
person claiming under a floating security created over property
subject to a trust prior to its becoming so subject.
(8) A person receiving any trust property, otherwise than
on a disposal by a trustee for value in course of management or
administration of the trust fund, shall take it subject to any
subsisting trustee statutory charge, but without prejudice to any
claim of a third party against a trustee for distributing property
before the charge has been satisfied.
(9) A security granted pursuant to subsection (3) may be
on such terms and conditions as the trustee thinks fit.
(10) Subject to the terms of the charge, the trustee for the
time being of a trust shall pay due regard, in the execution,
management and administration of the trust, to the interest of any
person entitled to the benefit of a trustee statutory charge.
Cap. 284 (11) The Bills of Sale Act shall have no application to a
trustee statutory charge.
(12) The powers conferred by this section shall be in
addition to any powers to grant security conferred by the trust
instrument or by any other provision of law.
31
Prohibition of 103. This Part does not permit the application of section
amendment of 97, 101 or 102 to a trust other than in the terms of the relevant
applied section.
sections.
Application 104. This Part shall apply to trusts created on or after the
of Part. date on which this Part comes into force.
PART XI
CHARITIES
Definitions. 105. (1) In this Part,
“charitable company” means a charity which is a company or other
body corporate;
“charity trustees” means the persons having the general control and
management of the administration of charity;
“gross income”, in relation to a charity, means its gross recorded
income from all sources including property which is held
and administered by or on behalf of a charity for any
special purposes of the charity, and is so held and
administered on separate trusts relating only to that
property; and
“trusts”, in relation to a charity, means the provisions establishing
it as a charity and regulating its purposes and
administration, whether those provisions take effect by way
of a trust or not.
(2) In this Part, the expression “charity” does not include
any ecclesiastical corporation or any trust of property for purposes
for which the property has been consecrated.
Occasions for 106. (1) Subject to subsection (2), the circumstances in
applying which the original purposes of a charitable gift can be altered to
property allow the property given or part of it to be applied cy-près shall be
cy-pres. as follows:
(a) where the original purposes, in whole or in
part,
(i) have been as far as may be fulfilled;
or
32
(ii) cannot be carried out generally or
according to the directions given and
to the spirit of the gift; or
(b) where the original purposes provide a use
for part only of the property available by
virtue of the gift; or
(c) where the property available by virtue of the
gift and other property applicable for similar
purposes can be more effectively used in
conjunction, and to that end can suitably,
regard being had to the spirit of the gift, be
made applicable to common purposes; or
(d) where the original purposes were laid down
by reference to an area which then was but
has since ceased to be a unit for some other
purpose, or by reference to a class of
persons or to an area which has for any
reason since ceased to be suitable, regard
being had to the spirit of the gift, or to be
practical in administering the gift; or
(e) where the original purposes, in whole or in
part, have, since they were laid down,
(i) been adequately provided for by
other means; or
(ii) ceased, in law, to be charitable on
the grounds that they have become
useless or harmful to the community
or for other reasons; or
(iii) ceased in any other way to provide a
suitable and effective method of
using the property available by virtue
of the gift, regard being had to the
spirit of the gift.
(2) Subsection (1) shall not affect the conditions which
must be satisfied in order that property given for charitable
purposes may be applied cy-près except insofar as those conditions
required a failure of the original purposes.
33
(3) References in subsections (1) and (2) to the original
purposes of a gift shall be construed, where the application of the
property given has been altered or regulated by a scheme or
otherwise, as referring to the purposes for which the property is for
the time being applicable.
(4) It is hereby declared that a trust for charitable purposes
places a trustee under a duty, where the case permits and requires
the property or some part of it to be applied cy-près, to secure its
effective use for charity by taking steps to enable it to be so
applied.
Power for 107. (1) Subject to the provisions of this section, where it
the Court to appears to the Court that any action proposed or contemplated in
authorise the administration of a charity is expedient in the interests of the
dealings with charity, it may by order authorise that action, whether or not it
charity would otherwise be within the powers exercisable by the charity
property, etc. trustees in the administration of the charity to do so, and anything
done under the authority of such an order shall be deemed to be
properly done in the exercise of those powers.
(2) An order under this section may be made so as to
authorise a particular transaction, compromise or the like, or a
particular application of property, or so as to give more general
authority, and without prejudice to the generality of subsection (1),
may authorise a charity to use common premises, or employ a
common staff, or otherwise combine for any purpose of
administration, with any other charity.
(3) An order under this section may give directions as to
the manner in which any expenditure is to be borne and as to other
matters connected with or arising out of the action thereby
authorised, and where anything is done in pursuance of an
authority given by any such order, any directions given in
connection therewith shall be binding on the charity trustees for the
time being as if contained in the trusts of charity, but any such
directions may on the application of the charity be modified or
superseded by a further order.
(4) Without prejudice to the generality of subsection (3),
the directions which may be given by an order under this section
may in particular include directions for
(a) meeting any expenditure out of a specified
fund;
34
(b) charging any expenditure to capital or to
income;
(c) requiring expenditure charged to capital to
be recouped out of income within a
specified period;
(d) restricting the costs to be incurred at the
expense of the charity; or
(e) the investment of moneys arising from any
transaction.
(5) No order under this section shall authorise the doing of
any act expressly prohibited by any enactment or by the trusts of
the charity, nor shall it extend or alter the purposes of the charity.
Power to 108. (1) This section applies to a charity if
spend
capital. (a) it has a permanent endowment which does
not consist of, or comprise, any land;
(b) its gross income in the twelve months period
ending on the date on which the resolution
referred to in subsection (2) is passed did not
exceed two thousand, five hundred dollars
or such greater sum as the Governor in
Council may, by Order, specify;
(c) there is no express provision in the trust
instrument to the effect that this section does
not apply to the charity; and
(d) it is not a charitable company.
(2) Where the charity trustees of a charity to which this
section applies are of the opinion that the property of the charity is
too small, in relation to its purposes, for any useful purpose to be
achieved by the expenditure of income alone or that its purposes
can be more effectively served by the expenditure of all or any part
of its capital, they may resolve for the purposes of this section that
the charity ought to be freed from the restrictions with respect to
expenditure of capital to which its permanent endowment is
subject.
35
(3) Any resolution passed under subsection (2) shall be
passed by a majority of not less than two-thirds of such charity
trustees as vote on the resolution.
(4) Where charity trustees pass a resolution under
subsection (2), they shall
(a) give public notice of the resolution in such
manner as they think reasonable in the
circumstances; and
(b) send a copy of the resolution to the Attorney
General, together with a statement of their
reasons for passing it.
(5) The Attorney General may, when considering the
resolution, require the charity trustees to provide additional
information or explanation
(a) as to the circumstances in and by reference
to which they have determined to act under
this section, or
(b) relating to their compliance with this section
in connection with the resolution,
and the Attorney General shall take into account any
representations made to him by persons appearing to him to be
interested in the charity where those representations are made
within the period of six weeks beginning with the date when the
Attorney General receives a copy of the resolution by virtue of
subsection (4)(b).
(6) Where the Attorney General has so received a copy of
a resolution from any charity trustees and it appears to him that the
trustees have complied with this section in connection with the
resolution, the Attorney General shall, within the period of three
months beginning with the date when he receives the copy of the
resolution, notify the trustees, in writing, that he either
(a) concurs with the resolution; or
(b) does not concur with the resolution.
36
(7) Where the Attorney General notifies the trustees of his
concurrence with the resolution under subsection (6)(a), the charity
trustees shall have, as from such date as may be specified in the
notification, power by virtue of this section to expend any property
of the charity without regard to any such restrictions as are
mentioned in subsection (2).
(8) An Order under subsection (1)(b) may apply either
generally in relation to all charities or in relation to charities
specified in the Order.
(9) A charity shall be deemed for the purposes of this
section to have a permanent endowment unless all property held
for the purposes of the charity may be expended for those purposes
without distinction between capital and income, and in this section
“permanent endowment” means, in relation to any charity,
property held subject to a restriction on its being expended for the
purposes of the charity.
Application 109. This Part applies in relation to trusts whether created
of Part. before, on or after the date on which this Part comes into force.
FIRST SCHEDULE
(Section 83A)
Type of Intangible property
Law to determine questions
of essential and formal
validity and capacity
1. Shares in a body corporate.
The law of the State of
incorporation (and in the case
of a corporate body whose
place of incorporation has
changed, the law of the State of
incorporation at the time of the
disposition)
37
Type of Intangible property
Law to determine questions
of essential and formal
validity and capacity
2. Rights of all descriptions arising
from a contract (not being rights
attaching to shares in a body
corporate).
This category includes, in
particular
(a) rights to subsisting
contractual debts;
(b) rights to payments under a
contract that might fall due
in the future;
(c) rights, subsisting or future,
under policies of insurance
or assurance.
The law governing the essential
validity of the contract
3. Rights to non-contractual debts.
The law under which the debt
was created.
4. Interests in trusts and other
equitable interests.
(A) As regards disposability,
the law governing the
essential validity of the
trust or interest.
(B) As regards the disposition
itself, the law of the
State in which the
equitable interest is
situated.
38
Type of Intangible property
Law to determine questions
of essential and formal
validity and capacity
5. Patents, trademarks, designs, and
similar rights, required to be
deposited or registered.
The law of the State in which
the deposit or registration has
been applied for, or has taken
place or is under the terms of
an international convention
deemed to have taken place.
6. Intellectual property not falling
within item 5.
The law under which the
property came into existence.
7. Claims in tort.
The law of the State in which
the tort occurred.”.
17. The Schedule to the principal Act is amended
(a) by deleting the heading “SCHEDULE” and substituting the
heading “SECOND SCHEDULE”;
(b) in paragraph 4(d), by deleting the words “as if beneficially
entitled thereto and without being restricted in any way by
the office of trustee” and substituting the words “as if the
Trustees were the absolute beneficial owners thereof”;
(c) in paragraph 4(n), by deleting the words “or arbitration”
and substituting the words “for arbitration”;
(d) in paragraph 4(s), by deleting the word “convenient” and
substituting the word “covenant”; and
(e) in paragraph 8, by deleting the words “to beneficiary” and
substituting the words “no beneficiary”.
Schedule
amended.
39
Passed by the Legislative Council this 30th day of September, 2003.
V. INEZ ARCHIBALD,
Speaker.
DENNISTON FRASER,
Clerk of the Legislative Council.

 

Leave a Reply