Update: Receivers and Revocable Trusts

Nigel K. Meeson Q.C. • Posted 31/10/2009 • Under Articles

UPDATE: A RECEIVER CANNOT BE ENTRUSTED TO REVOKE A TRUST Court of Appeal upholds the decision of the Chief Justice of the Cayman Islands

In TMSF v Merrill Lynch Bank and Trust Company (Cayman) Limited and others (26 June 2009) Smellie C.J. had to consider whether a judgment creditor was entitled to an order for the appointment of receivers by way of equitable execution, in order to force the judgment debtor to exercise his reserved power as settlor of two Cayman Islands trusts; to revoke those trusts and apply the proceeds in partial satisfaction of the judgment debt.

The Chief Justice held that a receiver could not be appointed because the power of revocation was not property. The ruling was appealed to the Cayman Islands Court of Appeal (Chadwick P, Mottley & Vos JJA) who dismissed the appeal on 18th September 2009.

A version of this article was published in Trusts & Trustees Journal.