Mobile Menu
Offshore Cases

Meritus Trust Company Limited -v- Butterfield Trust (Bermuda) Limited [2016] SC (Bda) 82 CIV

December 2016 Trusts

BERMUDA

SUPREME COURT

REMOVAL OF TRUSTEE - WHETHER TRUSTEE’S EQUITABLE RIGHT TO AN INDEMNITY INCLUDES THE RIGHT TO RETAIN SUFFICIENT ASSETS TO MEET ACTUAL AND CONTINGENT LIABILITIES AND THE RIGHT TO A CONTRACTUAL INDEMNITY

On 21 December 2016, Butterfield Trust (Bermuda) Limited (“Butterfield”) was removed as the Trustee of the E Trust and the M Trust, and Meritus was appointed in its place. Butterfield asserted that it was entitled to retain sufficient trust assets in relation to the contingent costs liability (estimated at US$5 million). Butterfield also asserted that it was entitled to a contractual indemnity, particularly in regard to M Trust, while Meritus countered that no such entitlement existed.

The Court found that Butterfield had no right to retain any trust assets as security for its indemnity rights under the E Trust and M Trust. There was no material present that would support a finding that Butterfield was not adequately protected by its equitable lien, in respect of the actual and contingent liabilities. Neither the relevant trust deed nor the Trustee Act conferred rights of retention of trust assets nor were there any provisions which would compel Meritus to negotiate and consummate an express contractual indemnity. It was not disputed that the outgoing trustee was entitled to an equitable right to an indemnity.

Therefore, the Court refused Butterfield’s application for an Order requiring Meritus to grant them an express contractual indemnity, as no jurisdictional basis for granting such relief was established.

 

To continue reading full articles in PDF format:
Meritus Trust Company Limited -v- Butterfield Trust (Bermuda) Limited [2016] SC (Bda) 82 CIV

 

Accolades
_

"Few firms can come close to Conyers on one critical metric, and this is the breadth of the client base."
- IFLR1000

EDITOR & HEAD OF LITIGATION BERMUDA

Christian R. Luthi
Tel: +1 441 298 7814
Email: christian.luthi@conyersdill.com


Head of Litigation British virgin islands

Mark J. Forte
Tel: +1 284 852 1113
Email: mark.forte@conyersdill.com


Head of Litigation Cayman Islands

Paul Smith
Tel: +1 345 814 7777
Email: paul.smith@conyersdill.com


HEAD OF THE ASIA DISPUTES & RESTRUCTURING GROUP

Nigel K. Meeson, QC
Tel: +852 2842 9553
Email: nigel.meeson@conyersdill.com

Offshore Cases

Meritus Trust Company Limited -v- Butterfield Trust (Bermuda) Limited [2016] SC (Bda) 82 CIV

24 December 2016

BERMUDA

SUPREME COURT

REMOVAL OF TRUSTEE - WHETHER TRUSTEE’S EQUITABLE RIGHT TO AN INDEMNITY INCLUDES THE RIGHT TO RETAIN SUFFICIENT ASSETS TO MEET ACTUAL AND CONTINGENT LIABILITIES AND THE RIGHT TO A CONTRACTUAL INDEMNITY

On 21 December 2016, Butterfield Trust (Bermuda) Limited (“Butterfield”) was removed as the Trustee of the E Trust and the M Trust, and Meritus was appointed in its place. Butterfield asserted that it was entitled to retain sufficient trust assets in relation to the contingent costs liability (estimated at US$5 million). Butterfield also asserted that it was entitled to a contractual indemnity, particularly in regard to M Trust, while Meritus countered that no such entitlement existed.

The Court found that Butterfield had no right to retain any trust assets as security for its indemnity rights under the E Trust and M Trust. There was no material present that would support a finding that Butterfield was not adequately protected by its equitable lien, in respect of the actual and contingent liabilities. Neither the relevant trust deed nor the Trustee Act conferred rights of retention of trust assets nor were there any provisions which would compel Meritus to negotiate and consummate an express contractual indemnity. It was not disputed that the outgoing trustee was entitled to an equitable right to an indemnity.

Therefore, the Court refused Butterfield’s application for an Order requiring Meritus to grant them an express contractual indemnity, as no jurisdictional basis for granting such relief was established.

 

To continue reading full articles in PDF format:
Meritus Trust Company Limited -v- Butterfield Trust (Bermuda) Limited [2016] SC (Bda) 82 CIV

 

 

EDITOR & HEAD OF LITIGATION BERMUDA

Christian R. Luthi
Tel.: +1 441 298 7814
Email.: christian.luthi@conyersdill.com


Head of Litigation British virgin islands

Mark J. Forte
Tel.: +1 284 852 1113
Email.: mark.forte@conyersdill.com


Head of Litigation Cayman Islands

Paul Smith
Tel.: +1 345 814 7777
Email.: paul.smith@conyersdill.com


HEAD OF THE ASIA DISPUTES & RESTRUCTURING GROUP

Nigel K. Meeson, Q.C.
Tel.: +852 2842 9553
Email.: nigel.meeson@conyersdill.com