Like in many other common law jurisdictions, trusts have a long history in the Isle of Man, with evidence of trust deeds going back 350 years ago, and probably much earlier.
With that history, trusts have built an important role in the Isle of Man as a flexible and convenient device for both commercial and personal circumstances.
However, you can’t have a trust without a trustee, and the office of trustee brings with it perils and pitfalls which can leave a trustee at personal jeopardy and expense.
In this article, litigation advocate Andrew Langan-Newton considers a recent judgment where the Cayman Islands court assisted a professional trustee caught in the invidious position of wishing to retire but being unable to find a replacement.
The important but onerous office of the trustee
The office of trustee may not be for the faint hearted.
The England & Wales judgment in Roome v Edwards (1981) unsympathetically counselled that a trustee would “have only themselves to blame” if they took on the office without undertaking the requisite due diligence.
Still, fortunately for trustees, given the long history and value of trusts, the Isle of Man courts have sought to assist trustees in navigating the trials and tribulations of their office. The policy behind this is to strike a balance between policing compliance with the important duties of trusteeship and avoiding a context where no person would ever take on such a responsibility.
This was captured in the England & Wales judgment of Ex p. Belchier (1754), where Lord Hardwicke noted that without such policies there was a risk that the mere office of trusteeship would “strike a terror into mankind acting for the benefit of others”, discouraging respectable people from accepting the office.
The court’s policy to support trustees includes the right to seek the court’s assistance and guidance. The inherent right has now been codified in section 61 of the Trustee Act 1961 (“Section 61”), granting trustees the right to seek the court’s opinion, advice, or direction on any question respecting the management or administration of trust property.
The Cayman Islands judgment
In the Cayman Islands judgment of In the matter of the O Trust (2025), the Cayman Islands court gave helpful guidance to trustees finding themselves wishing to retire as trustee but being unable to find a replacement.
The professional trustee had found itself challenged by the primary beneficiary of the trust, described in the judgment as the beneficiary having “huffed and puffed” and “grumbled”. However, despite having been given ample opportunity to do so (by the trustee and then by the court), the beneficiary had not explained any coherent criticisms against the conduct of the trustee.
As a result, over a protracted six years, the trustee had found itself in a difficult position of wishing to retire but being unable to find a replacement trustee or complete the administration of the trust. With the beneficiary’s intractable and uncompromising attitude, the trustee was forced to apply to the Cayman Islands court for assistance (in similar terms to that offered to trustees of Isle of Man law-governed trusts via Section 61).
The trustee’s application proposed a middle course between the extreme option of leaving the trust without a trustee and the impractical option of the court fully taking over the administration of the trust.
The Cayman Islands court granted the trustee’s application, directing that the trustee:
- Be “held before the Court” (receiving its usual fees and expenses from the trust fund) without being discharged from its office until a replacement could be found; and
- File accounts with the court annually without a need (unless the court requested otherwise) for the accounts to approved by the court.
The pragmatism of the Cayman Islands court provided an environment of confidence and certainty for the trustee (particularly for the trustee’s fees) in continuing to administer the trust (notwithstanding the truculent primary beneficiary) whilst enquiries could continue for a replacement trustee to be found.
As a jurisdiction with similar trust law to the Isle of Man, the judgment in the O Trust is likely to be persuasive upon an Isle of Man court faced with similar circumstances. This should provide confidence to trustees of Isle of Man law-governed trusts facing similar intractable disputes.
If you have any questions on the issues raised in this article, please contact Andrew Langan-Newton.