Henderson J
Judgment – In Re Polymer Purpose Trust Cause No. 246 of 2011 19.07.11 Page 1 of 5 IN THE GRAND COURT OF THE CAYMAN ISLANDS 1 HOLDEN AT GEORGE TOWN, GRAND CAYMAN 2 3 4 5 CAUSE NO. 246 OF 2011 6 7 8 9 IN THE MATTER OF: THE CONFIDENTIAL RELATIONSHIPS 10 (PRESERVATION) LAW (2009 REVISION) 11 12 13 AND IN THE MATTER OF: SECTION 48 OF THE TRUSTS LAW 14 (2009 REVISION) 15 16 17 AND IN THE MATTER OF: THE POLYMER PURPOSE TRUST 18 19 20 21 Appearances: Ms. Sandie Corbett of Walkers 22 for the Applicant 23 24 Mr. Neil Timms Q.C. instructed by Colin 25 Shaw & Company for Southern Protector 26 Services Limited, the Respondent 27 28 29 Before: Hon. Justice Henderson 30 31 32 Heard: July 19, 2011 33 34 35 36 JUDGMENT 37 38 39 40
The Applicant Alexandria Bancorp Limited (“the Trustee”) is a trust company 41 licensed as such in the Cayman Islands and doing business here. It is the sole 42 Trustee of the Polymer Purpose Trust (“the Trust”) which is a Cayman Islands 43 trust established under the Special Trust (Alternative Regime) Law of 1997 44 Judgment – In Re Polymer Purpose Trust Cause No. 246 of 2011 19.07.11 Page 2 of 5 (and referred to as a “STAR Trust”). The Trustee is an ultimate subsidiary of 1 a Canadian Company, Guardian Capital Group Limited (“Guardian”). 2 3
On May 19, 2011 Guardian received from the Canada Revenue Agency (“the 4 CRA”) a demand for disclosure of documentation about the Trust, including a 5 request for the Deed of Settlement. The Chief Compliance Officer of 6 Guardian then wrote to the Trustee advising it of the demand and asking the 7 Trustee to provide the sought-after documents to Guardian for onward 8 transmission to the CRA. 9 10
The Trustee, being of the view that it would be contrary to the law of the 11 Cayman Islands to comply with the demand but wishing to have the assurance 12 of this Court that its opinion is correct, has presented me with two alternate 13 applications. (The Attorney General has been given notice of these 14 applications but has not appeared at the hearing.) 15 16
First the Trustee has asked for a direction under section 4 (1) of the 17 Confidential Relationships (Preservation) Law (2009 Revision) (“the Law”) 18 permitting it to make the requested disclosure. Section 4 (1): 19 “Whenever a person intends or is required to give in evidence 20 in, or in connection with, any proceeding being tried, inquired 21 into or determined by any court, tribunal or other authority 22 (whether within or without the Islands) any confidential 23 information within the meaning of this Law, he shall before 24 so doing apply for directions and any adjournment necessary 25 for that purpose may be granted.” 26 27 Judgment – In Re Polymer Purpose Trust Cause No. 246 of 2011 19.07.11 Page 3 of 5
An authorization to make disclosure is available under the Law only where the 1 applicant intends to make the disclosure by giving evidence in or in 2 connection with a “proceeding” before a “court, tribunal or other authority”. 3 The demand from the CRA makes no reference to any extant proceeding. Its 4 letter says that it wishes to obtain the information “for purposes related to the 5 administration or enforcement of the Income Tax Act …”. The recipient is 6 asked to contact a named officer of the CRA within ninety-two days to make 7 the “arrangements” for disclosure. Alternatively, the recipient is advised that 8 “compliance with this requirement may be achieved” by sending the requested 9 documentation by registered mail to that party. Clearly, the CRA is 10 conducting an investigation but there is no proceeding in existence before 11 which an officer of Guardian could be compelled to give evidence. The 12 consequence, given that the Deed of Settlement is “confidential information” 13 within the meaning of the Law, is that this Court has no jurisdiction to grant 14 the requested order. That branch of the application is dismissed. 15 16
In the alternative, the Trustee asks for the opinion of this Court on the question 17 of whether its decision that the general law of the Cayman Islands prohibits 18 disclosure of the Deed of Settlement is correct. Such questions may be, and 19 often are, posed to this Court pursuant to section 48 of the Trusts Law (2009 20 Revision) which reads: 21 “Any trustee or personal representative shall be at liberty, 22 without the institution of suit, to apply to the Court for an 23 opinion, advice or direction on any question respecting the 24 management or administration of the trust money or the 25 assets of any testator or intestate, such application to be served 26 upon, or the hearing thereof to be attended by, all persons 27 interested in such application, or such of them as the Court 28 shall think expedient; and the trustee or personal representative 29 Judgment – In Re Polymer Purpose Trust Cause No. 246 of 2011 19.07.11 Page 4 of 5 acting upon the opinion, advice or direction given by the Court 1 shall be deemed so far as regards his own responsibility, 2 to have discharged his duty as such trustee or personal 3 representative in the subject matter of the said application: 4 5 Provided, that this shall not indemnify any trustee or 6 personal representative in respect of any act done in 7 accordance with such opinion, advice or direction as 8 aforesaid, if such trustee or personal representative shall 9 have been guilty of any fraud, willful concealment or 10 misrepresentation in obtaining such opinion, advice or 11 direction, and the costs of such application as aforesaid 12 shall be in the discretion of the Court.” 13 14
Inherent in the role of a trustee is a positive obligation to protect the financial 15 privacy of those concerned with the trust by maintaining confidentiality over 16 trust documentation and information. Moreover, another fundamental duty of 17 a trustee, the duty to safeguard the trust property, also implies an obligation of 18 confidentiality. The trustee can be relieved of these obligations if all those 19 persons having an interest in the enforcement of the trust have given their 20 consent. 21 22
The Trust has two Enforcers. The Enforcers are appointed under section 100 23 of the Trusts Law (2009 Revision). The Trustee has asked each Enforcer for 24 his or its consent but one of them has refused to give it. As the name implies, 25 the primary obligation of an Enforcer is to enforce the terms of a STAR Trust; 26 an Enforcer is deemed to have a fiduciary duty to do so: Trusts Law, section 27 101 (2). 28 29
The Trustee has concluded that, in the absence of express permission from 30 each of the two Enforcers, it is prohibited by the general law of the Cayman 31 Judgment – In Re Polymer Purpose Trust Cause No. 246 of 2011 19.07.11 Page 5 of 5 Islands from acceding to the demand of its parent corporation. It is the 1 opinion of this Court that the Trustee has reached the right conclusion. 2 3 Dated this 19th day of July, 2011 4 5 6 7 Henderson, J. 8 Judge of the Grand Court 9