Jason Fee (LLB 2020) on Trust-owned Companies and the Irreducible Core of the Trust (Trusts & Trustees)

"Trust-owned companies and the irreducible core of the trust"

Jason Fee (LLB 2020)

Trusts & Trustees

Published in September 2020

Abstract: The recent Hong Kong Court of Final Appeal case of Zhang Hong Li v DBS Bank (Hong Kong) Ltd upheld the effectiveness of anti-Bartlett clauses. This gives rise to the question of whether a trust-corporate structure, coupled with a well-drafted anti-Bartlett clause, leaves any room for trust obligations. Through the lens of the law on trust-owned companies, this article thus seeks to reconceptualise the ‘irreducible core of trust obligations’. It argues that the irreducible core means the minimum duties which are necessary to preserve the integrity of the trust concept. It draws a distinction between core and mandatory duties, in that the ‘bells and whistles’ one adds in specific contexts may be mandatory duties reflecting appropriate policies, instead of core duties necessary for a trust to exist. It accordingly considers the proper content of the irreducible core, as distinguished from other mandatory duties.