High Court refuses to grant interim relief to prevent a trustee from dealing with trust assets

Jonathan Scrine

In Baxendale-Walker v Bay Trust International [Unreported] (19/12/17), the High Court refused to grant interim relief to prevent the defendant trustee from dealing with trust assets.

The claimant had set up a number of offshore trusts and the defendant was a Belize trust company which was trustee of a number of the trusts.

The claimant applied for the removal of the defendant as trustee on the basis that trust money had been misapplied by the defendant which had made payments to various persons who should not have received them, giving rise to adverse tax consequences. The claimant sought an interim injunction against the defendant.

It was common ground that the American Cyanamid principles applied and also that the three issues for the court were whether the claimant had demonstrated that the case was one of urgency, that the trust assets were in jeopardy and whether the claimant was able to provide a worthwhile cross-undertaking in damages.

As regards urgency, similar proceedings had been brought in Belize in which an injunction had been obtained but it had subsequently expired. The claimant had taken a leisurely approach to pursuing the matter in England and so urgency had not been shown.

It could also not be said that trust property was in jeopardy. A central complaint was that the defendant was operating the trust in a way that gave rise to adverse tax consequences. However, HMRC had already begun to inquire into the claimant’s tax affairs so any adverse tax consequences had already been occasioned. There was no other immediate threat to trust assets.

The court was not satisfied that the claimant could offer a worthwhile cross-undertaking in damages.

For all of the above reasons, the application for an interim injunction was rejected.

Baxendale-Walker v Bay Trust International [Unreported] (19/12/17)

 

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