The approach for ascertaining a trustee’s duties and liabilities, effectiveness of anti-Bartlett provisions, and equitable compensation for breach of trust or fiduciary duty: Zhang Hong Li & Ors v DBS Bank (Hong Kong) Ltd & Ors [2019] HKCFA 45

Abstract

Abstract The decision of the Hong Kong Court of Final Appeal in Zhang Hong Li & Ors v DBS Bank (Hong Kong) Ltd & Ors [2019] HKCFA 45 is important not only to Hong Kong but also to the common law world for several reasons. First, it confirms the effectiveness of anti-Bartlett provisions, a type of clause ubiquitous in trust deeds that negate a trustee’s duty to intervene in the business or management of companies owned by the trust. Secondly, it clarifies that there is no free-standing ‘high level supervisory duty’ owed by a trustee in common law. Thirdly, it lays down an approach for ascertaining a trustee’s duties and liabilities, and limiting the effectiveness of anti-Bartlett provisions. Under the approach advocated by the court, the terms of a trust deed should be taken as a starting point and subsequently an exercise of contractual construction should be conducted. Finally, it sets forth how equitable compensation for a breach of trust or fiduciary duty is to be assessed.