High Court rules against Julius Baer’s Singapore trust arm in US$50 million family trust dispute

[SINGAPORE] The High Court has ruled against the Singapore trust arm of Swiss private bank Julius Baer in a case involving a family trust with assets worth more than US$50 million. 

Julius Baer Trust Company (Singapore) was sued by the settlor, the trust’s beneficiaries and its protectors for breach of trust and fiduciary duty.

But the court struck down a clause giving the trust’s protectors the final say on resolving conflicts, with lawyers noting how the decision could have wider ramifications for the trust industry.

The dispute concerns the Moss Trust, set up in 2016 by Fereydoon Mossanen.

Its assets include properties in the US and the UK. One trophy asset is 25 Kensington Gore, a 19th century, Grade II-listed mansion in London. A Grade II listing marks a property as one of special architectural or historic interest.

Moss Trust was represented by Drew & Napier directors Woo Shu Yan and Gerald Seah.

A trustee’s U-turn

The trust deed was amended several times between 2016 and 2024, including in 2017, 2019 and 2024.

The main beneficiary was the settlor’s wife. The latest version of the deed required the trustee to distribute all remaining assets to the settlor’s children immediately upon her death.

She died in late 2024. According to Drew & Napier, the trustee had not questioned the validity of the latest trust instrument before then.

However, after the wife’s death, a dispute arose over whether the shares of the holding companies should be transferred to the children or if the properties held by the companies were to be transferred instead. The different treatments would have tax implications.

No distribution took place. The trustee argued that it was “highly likely” that all amendments made after 2019 were invalid and that it had no power to amend the trust.

It said the “most likely position” was that the trust’s terms were those set out in the 2017 deed. It also said it was uncertain how the assets should be distributed.

The claimants disputed this, arguing that there was no uncertainty and that the latest instrument governed the trust.

Protector resolution clause

However, the trustee also challenged a clause in the latest deed, referred to as the protector resolution clause.

It gave the protector “absolute authorisation” to resolve any conflicts and ambiguities in the trust and its amendments, in the protector’s “sole and absolute discretion”.

The trustee argued that the clause was invalid and unenforceable because it ousted the court’s jurisdiction.

The Singapore court sided with the trustee on this point – though the Drew & Napier lawyers argued for the protector resolution clause to be valid.

The firm said that – to the best of its knowledge – no reported Singapore case has addressed the validity of such clauses previously, or the powers of trust protectors broadly.

It added that such clauses are a common feature of offshore trusts. With the court finding the clause invalid, the ruling “would have significant ramifications on the trust industry in general”, it said.

The case also concerned the imputed exercise of powers doctrine, which the firm said does not appear to have been considered in Singapore case law before.

In response to queries by The Business Times, a spokesperson for Julius Baer Trust Company (Singapore) said it declined to comment on ongoing legal proceedings.