A recent decision of the Bermuda Supreme Court has dealt with the question of whether a change of governing law of a trust and disapplication of the rule against perpetuities will result in a resettlement of the trust.

In the case of Butterfield Trust (Bermuda) Limited et al v Matthew Watson [2022] SC (Bda) 92 Civ. 29 November 2022, Hargun CJ considered a request from the Trustees of an English Trust for a declaration from the Bermuda Court confirming that:

1. a change of governing law of the Trust from English law to Bermuda law
2. orders of the Bermuda Court under section 4 of the Perpetuities and Accumulations Act 2009 and under section 47 of the Trustee Act 1975
3. the exercise by the Trustees of the powers conferred by section 47

would not constitute a resettlement of the Trust or otherwise effect a new settlement.

The declaration was granted. It was noted that the House of Lords decision in Roome v Edwards [1982] AC 279 remains the leading authority on the question of whether a new or separate settlement is created. In particular, the indicia considered by Lord Wilberforce remained relevant for consideration in the present case. Following Roome v Edwards, in order for the Bermuda Court to determine whether, on the facts, there is a resettlement, the following factors should be considered:

1. what a person with knowledge of the legal context of the word “settlement” under established doctrine and applying this knowledge in a practical and common-sense manner to the facts under examination, would conclude
2. the intention of the trustees
3. following an appointment, whether the provisions of the original settlement continue to apply to the appointed fund
4. whether there is a separate fund and defined property, a separate trust, separate trustees and separate dispositions establishing the trusts

Accepting Mr Brownbill KC’s submissions on the facts, Hargun CJ held that in this case, following the proposed variation, the principal trusts of the main settlement remain fully operative, and those trusts of the main settlement remain fundamentally the same — being held on discretionary trusts and for essentially the same class of beneficiaries. Although the administrative provisions of the Trust were to be enhanced and provisions made for a protector, these provisions would not change the fundamental nature of the Trust. Furthermore, all of the instruments (the proposed Deed of Change of Governing Law and Deed of Variation) made clear that the Trustees did not intend to create a separate settlement.

As a result, looking at the matter in a practical and common-sense manner, it could not realistically be said that the proposed actions would constitute a resettlement. It was also expressly held on the facts in question that the extension of the trust period would not result in a resettlement.

The case reaffirms the longstanding position under English law and is helpful guidance for trustees who may be considering a change of governing law to Bermuda.

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