Dec 2012
CAYMAN ISLANDS
HIGH COURT (COMMERCIAL DIVISION)
TRUSTS AND TRUSTEES – THE FAIR-DEALING RULE – EQUITABLE COMPENSATION AS A FREE STANDING REMEDY – FORFEITURE – ESTOPPEL
A settlement agreement was reached under which two beneficiaries of a trust (the minor, “A” and the mother of the minor, “B”) exited the trust. The settlement agreement was brought before the Court for approval. Orders were made by the Court as to the mechanism for valuing the trust assets and the settlement was approved by the Court. After the settlement, A and B brought an action against the Trustees for, inter alia, breach of the fair-dealing rule, on the ground that the valuations underpinning the settlement agreement failed to reflect a transaction that was being negotiated by the Trustees during the settlement talks. It was alleged that this transaction would have had a material impact on the value of the trust assets and that the exiting beneficiaries were deprived its benefit by exiting the trust when they did.