The Substratum Rule: Does It Matter?

Over the past few years, offshore courts have been grappling with whether an overarching equitable concept known as the 'substratum principle' exists. The substratum principle is explored further below, however the essence of the principle is that absent special circumstances, a trustee is precluded from making changes to how a trust operates if doing so will change the very fabric of the trust.

The first of these judgments made in Wong v Grand View [2019] Bda LR 41 ("Wong") suggested that the law of equity had created the "substratum principle" as a freestanding rule of law. However more recent judgments in Jersey (Representation of Rysaffe Fiduciaries Sarl [2021] JRC 230 ("Rysaffe")), Cayman (In the Matter of the Poulton Family Trust (unreported, FSD 0121 of 2016 (IKJ), 18 February 2022) ("Poulton") and a subsequent appeal following Wong in Bermuda (Grand View v Wong (Civil Appeal No. 5A of 2019) ("Grand View") indicate that the Wong decision was wrong,