The ruling also reaffirms the long-held position regarding strangers to a trust, as well as the rights of beneficiaries to obtain trust documents.

The case concerned the CW Family Trust (the Trust), which was established in 2009 by Ms Ying and her former husband to protect and manage their family business assets for the benefit of their four children following their divorce. The primary aim of the Trust was to secure the family business holdings for the children’s benefit while minimising disruption to its operations.

In 2021, the trustees of the Trust, Victor Tong and Ling On (the Trustees), transferred 99.5% of the shares of a company held in the Trust, Lip Hing Holding Ltd (the Company), to a third party, Antony Chow (Mr Chow). Consequently, Ms Ying and one of the child-beneficiaries, Henry Chow (together the Plaintiffs), brought proceedings against the Trustees and Mr Chow, arguing that the share transfer was for little or no value and without notice to the beneficiaries.

Before the Court, the Plaintiffs submitted that the share transfer constituted misappropriation of the assets of the Trust, putting the Trustees in breach of trust and in breach of their fiduciary duties. The Plaintiffs also sought court intervention to compel the Trustees to disclose documentation surrounding the transfer. As well as arguments regarding the Trustees’ breach of duty, the Plaintiffs’ allegations brought complex jurisdictional questions before the Court concerning whether a clause regarding "proper law, forum, and place of administration" gave exclusive jurisdiction to determine the dispute to the courts of the British Virgin Islands. The Plaintiffs challenged the jurisdiction clause, arguing that Hong Kong was the appropriate and most practical forum for the case given its close connection to the Trust’s assets and the parties involved in the dispute.

The Trustees and Mr Chow argued that the jurisdiction clause gave the BVI courts exclusive jurisdiction to determine the dispute and sought a stay of the Hong Kong proceedings in favour of the BVI. The Trustees further argued that the Plaintiffs’ allegations of breach of trust and breach of fiduciary duties lacked specific details and refuted the claim of misappropriation on the basis that it was unsubstantiated. In any event, the Trustees argued that the share transfer fell within their discretion and was conducted in accordance with the Trust’s terms, thereby opposing the Plaintiffs’ demands for additional disclosure or the alleged need for administrative intervention in Hong Kong.

The Court emphasised that even in the absence of the word "exclusive", the use of assertive language such as "shall", together with references to a court in a specific jurisdiction, can imply exclusivity. This is especially the case where these phrases are supported by a broader factual context. In this case, neither party could provide contextual evidence suggesting that the scope of the jurisdiction clause was intended to grant exclusivity to any jurisdiction.

By reference to Lewin on Trusts, the Court considered three key indicators of exclusivity:

1. imperative language (such as "shall");
2. definite articles (for instance, noting "the court of the BVI" instead of a more generic reference to "a court"); and
3. specific country laws suggesting exclusivity unless the deed stated otherwise.

Although the jurisdiction clause, in this case, did not include the word “exclusive”, the Court concluded that it could still be interpreted as exclusive due to the use of imperative language, the definite article in terms of “court of the BVI”, and repeated references to the BVI throughout the jurisdiction clause. This decision emphasises the importance of using clear language and specific court references when drafting exclusive jurisdiction clauses to avoid disputes.

Importantly, Mr Chow also sought to rely on the jurisdiction clause as a basis for seeking a stay of the proceedings in Hong Kong. As a non-party to the Trust deed, the Court decisively ruled that Mr Chow was a “stranger” to the Trust with no right to enforce a clause under the deed.

In the above context and with consideration of the cases Crociani v Crociani  [2014] UKPC 40 and A v B  [2022] HKCFI 1031, the Court rejected the Plaintiffs’ forum non conveniens  argument, finding that the convenience of a forum is not a sufficiently persuasive factor that would override an exclusive jurisdiction clause. Instead, the Court gave weight to the argument that there was a "sufficiently good reason" that it was the appropriate forum to hear the dispute based on the following factors:

1. The Hong Kong court's familiarity with common law trust principles and the availability of expert evidence on BVI law, which rendered the governing law clause a neutral factor.
2. The availability and access to key factual witnesses, who were primarily located in Hong Kong or New York, which further supported Hong Kong as the more convenient forum.
3. The Company’s valuation, which involved significant assets in Hong Kong would necessitate local expert testimony.
4. The fact that most of the documents relevant to the Trust's administration were likely to be situated in Hong Kong.

In terms of the Plaintiffs’ application for the disclosure of trust documents, the Court considered the case of Schmidt v Rosewood Trust Ltd  [2003] UKPC 26, which confirms that beneficiaries have a right to request documents that are necessary to ensure the proper administration of a trust in order to hold the trustee to account for its stewardship of the trust. Based on the principles in Schmidt v Rosewood, the Court determined that the Plaintiffs should be granted access to the trust documents so as to find out whether the Trustees were in breach and to seek remedies accordingly.

In contrast to this case, section 90 of the Cayman Islands Trusts Act (2021 Revision) establishes firewall provisions that function as a statutory “governing law clause”, but do not confer exclusive jurisdiction to the Cayman Islands. This means that all questions regarding a Cayman Islands trust—including the disposition of trust property—must be determined under Cayman law, without reference to the laws of other jurisdictions.

As determined in the case of Geneva Trust Company (GTC) SA v IDF (Re Stingray Trust)  [2021] (1) CILR 186 (Stingray), these firewall provisions do not automatically require disputes concerning Cayman trusts to be exclusively determined in the Cayman Islands, meaning foreign courts may apply Cayman law if they are deemed the more appropriate forum for a dispute. Together, section 90 and any forum for administration clause in a trust deed present substantial protection against foreign claims inconsistent with Cayman law while permitting flexibility if it is more suitable for the court in another jurisdiction to hear a dispute.

While convenience was not considered a persuasive factor by the Hong Kong Court in this case, the case of Stingray  suggests that convenience, though not a definitive factor, may be taken into account by the Cayman court as one part of a broader forum non conveniens  analysis, where various factors may determine the most suitable jurisdiction for the hearing of a dispute.

The Court’s decision in this case highlights the importance of precision in drafting exclusive jurisdiction clauses in trust deeds. These clauses provide certainty to trustees, fiduciaries, and beneficiaries of trusts, particularly in the absence of firewall provisions such as those found in the Cayman Islands Trusts Act (2021 Revision). It also reinforces the longstanding principle that non-parties to a trust deed can expect to be treated as “strangers” to the trust arrangement and, on that basis, cannot enforce or be bound by the clauses in the deed.

Finally, beneficiaries' rights to seek access to trust documents continue to be an important principle governing the administration of trusts, providing judicial discretion to protect confidentiality and acting as a safeguard to beneficiaries in circumstances where a degree of transparency is required and where transactions by a trustee may cause concern.

For more information, please consult with our Private Wealth team, Henry Mander, Charles Moore, Majdi Beji, Greg Coburn or Samantha Conolly.