Council overturns appeal concerning multimillion-dollar Bahamian family trust
**News Article: Standards Required of Trustees in Exercising Discretionary Powers**
In a recent ruling by the Privy Council, the standards required of trustees in exercising discretionary powers have been reaffirmed. The case, known as Ashley Dawson-Damer v Grampian Trust Company, centred around the allocation of assets from a family trust fund worth over USD 400 million.
The dispute concerned two appointments made in 2006 and 2009 by Grampian Trust Company, transferring 98% of the trust's assets to newly established trusts. The Privy Council, in a unanimous judgment delivered on July 7, 2025, dismissed an appeal by Ashley Dawson-Damer.
Trustees are held to the highest legal standard: that of a fiduciary. This means they must act with loyalty, impartiality, and solely in the best interests of the beneficiaries, not themselves. When exercising discretionary powers, trustees must follow the trust instrument, act impartially, exercise reasonable care and skill, document decisions, and act with reasonableness and timeliness.
In this case, the Privy Council found that both the trial judge and Court of Appeal mischaracterized the legal test when considering whether there had been a breach of fiduciary duty. The court held that Grampian's failure to seek updated information about Ms Dawson-Damer's financial position did constitute a breach of fiduciary duty. However, the Privy Council upheld both the Bahamian Supreme Court's and the Court of Appeal’s conclusions, despite being critical of aspects of their reasoning.
The Privy Council also drew a clear boundary around when a court should intervene. Courts generally respect the discretion granted to trustees but will intervene in specific circumstances, including breach of fiduciary duty, failure to follow trust terms, abuse of discretion, deadlock or malfeasance, and protection of vulnerable beneficiaries.
The larger and more complex the trust, the greater the scrutiny courts may apply. Trustees must exercise their powers with the utmost care, impartiality, and in strict compliance with the trust document. Courts will intervene only when there is clear evidence of breach, abuse, or failure to follow the grantor’s intent, but otherwise defer to the trustee’s discretion, especially in complex, high-value trusts.
In summary, trustees are expected to act responsibly, consider all relevant factors, and document their decisions. They must balance the interests of all beneficiaries, follow the trust instrument, exercise reasonable care and skill, and act impartially. Courts will only intervene when there is clear evidence of breach, abuse, or failure to follow the grantor’s intent.
In the context of managing such high-value trusts, trustees need to exercise their powers diligently in the finance and business sector, ensuring they adhere to the trust instrument and abide by banking-and-insurance regulations for the benefit of all beneficiaries. Disputes, like the one involving Ashley Dawson-Damer, highlight the importance of trustees following industry standards and seeking up-to-date financial information to avoid breaches of fiduciary duty and potential intervention by the courts.
