Permission to serve out - CPR part 6.36

I act for trustee domiciled in Switzerland. The trust is stated to be governed by English law. The trustee is contemplating application to English court for directions concerning proceedings in the US involving certain beneficiaries. The beneficiaries are domiciled in US. The question is whether the trustee needs permission to serve beneficiaries out of the jurisdiction - given the claim is merely for directions? If so the obvious ground is that the trust is governed by English law.

However, the obvious ground in Practice Direction 6B for giving permission to serve out of the jurisdiction is “A claim is made for any remedy which might be obtained in proceedings to execute the trusts of a written instrument where the trusts ought to be executed according to English law and the person on whom the claim form is to be served is a trustee of the trusts”.

What if (as in my case) the person on whom the claim form is going to be served is someone other than a trustee (e.g a beneficiary or protector)? Lewin suggests that this gateway doesn’t allow trustees to seek permission (18th ed at 11-31(4)). It suggests ways around this problem, which aren’t going to work in this case. I believe that the old RSC Order 11 allowed for permission to be given where the claim was “for any relief or remedy” in relation to an English law trust. It appears that the CPR has narrowed gateway for granting permission to serve out.

The special gateway for trusts provided by para. 3.1(12) of Practice Direction 6B applies only where the defendant is a trustee. So it cannot be invoked where the trustees are applying for directions, even if the trust has an English proper law. If you have even one beneficiary in England, you can serve him or her and then join others as necessary or proper parties (para. 3.1(3)); or perhaps the whole trust property may be in England (para. 3.1(11). But the query says that those ways round the difficulty, which are suggested in Lewin, do not help in this case.

The Trust Law Committee, in a paper of 9 May 2013 (published in the ACTAPS newsletter for July 2013), has canvassed a proposal for widening the gateways for service out in trust cases, including the introduction of a provision to cater for the trustees of an English-law trust who wish to seek directions from the English court. But waiting for a legislative change is obviously an unappealing solution.

Another is to query whether permission is needed at all. Merrill Lynch Bank and Trust Co. (Cayman) Ltd v Demirel [2010] 2 C.I.L.R. 75, Cayman GC, is a decision that a trustee seeking directions from the Cayman court did not need leave to serve out; but that turned on local provisions without English equivalents. Nearer to the mark is Re Hanover Trust [2013] SC (Bda) 38 Civ, Bermuda SC. Although the Bermudian court, like the Cayman court, has an express statutory jurisdiction over trusts which is lacking in England, the court seems to have considered that the requirement to obtain permission applied only when an adverse claim was being asserted against a foreign defendant and not when a trustee was seeking directions. The wording of the English procedural rules is not identical but the decision may make it arguable that they should be construed in the same way.

Nicholas Le Poidevin, Q.C.
New Square Chambers

But why would the Trustee need permission to notify a Beneficiary in any jurisdiction? If a civil action is necessary then the jurisdiction would dictate the procedure to follow.

Paragraph 3.1(12) of the Practice Direction has now been replaced by the following:

(12) A claim is made in respect of a trust which is created by the operation of a statute, or by a written instrument, or created orally and evidenced in writing, and which is governed by the law of England and Wales.

(12A) A claim is made in respect of a trust which is created by the operation of a statute, or by a written instrument, or created orally and evidenced in writing, and which provides that jurisdiction in respect of such a claim shall be conferred upon the courts of England and Wales."

following proposals by the Trust Law Committee. This seems to me to remove the difficulties highlighted above and to offer increased opportunities for proceedings in England.

Robert Ham, QC
Wilberforce Chambers