In brief
- The Privy Council gave judgment earlier this year on whether a protector's powers are "wide" or "narrow" as a matter of default.
- The central question: is a protector limited to reviewing lawfulness only (Narrow), or must he exercise an independent discretion on the merits (Wide)?
- The Privy Council rejected this binary approach to the debate and held that the question that needs to be asked is: what if any constraints did the trust instrument actually impose, construed in its context and with regard to any constraints imported by the general law?
- The practical significance of this is that the majority of protectors' powers will be considered Wide.
- This has largely settled a longstanding and practically significant debate, but further questions arise about the impact of protectors' powers being wide, including whether applications for blessings of decisions by protectors to veto trustees' proposed courses of action will become more common.
What did the Privy Council decide?
After much anticipation for those working in the trust industry, the Judicial Committee of the Privy Council gave judgment in March this year on whether, as a matter of default, a protector's powers are "wide" or "narrow" in Re X. A detailed case note on this decision written by Peter Steen and Lawrence Hiller-Wood can be read here. In short, the parties to the appeal asked the Board to opine, as a question of Bermudian law, on the default role of protectors holding a fiduciary power of consent to the proposed exercise by a trustee of its power under a trust instrument – a question of significance for many common-law jurisdictions. The question was whether such a protector was limited solely to reviewing the lawfulness of the trustee's proposed course of action, or whether the protector needed to exercise an independent discretion by reference to their own view on the merits of the trustee's proposal. The former is widely known as the "Narrow Role" and the latter as the "Wider Role".
The issue was presented to the Board as if it had to assume that the settlor must have had in mind either the Narrow Role or Wider Role for the trust deed. The Board did not consider this to be the correct approach, explaining that the issue needs to be resolved as a matter of construction of the trust deed. Thus, the question that needs to be asked is: what if any constraints did the trust instrument actually impose, construed in its context and with regard to any constraints imported by the general law? Applying these principles to the present case, the Board found that the relevant trusts did not by any express language impose any constraints upon the protectors in the exercise of the powers of veto.
Practical implications for protectors
The trusts in Re X were in relatively standard form and therefore many protectors will likewise need to exercise an independent discretion on the merits of a trustee's proposal. In circumstances of having such a wide discretion, this opens the question as to whether protectors will now increasingly seek blessings of decisions to refuse trustees' proposed courses of action where these refusals are in themselves momentous decisions – in the vein of the second category of decisions brought to the court for approval as outlined in Public Trustee v Cooper (HC-99-04500).
Will court applications increase?
Certainly, protectors can and do bring applications for blessings of decisions; for example, in the recent 2026 Guernsey case of Re X (Civil No. 2632), a protector sought a blessing of its in-principle decision to remove the trustee and appoint in its place a UK-based trustee, making the trusts subject to UK tax – a decision that was approved.
However, in this author's view, court applications for blessings of protectors' powers of veto will likely remain rare. This is because scenarios where exercising a power of veto amounts to a momentous decision are unusual. Furthermore, if a protector were to bring such an application, there would be a significant risk it would be contested by the trustee (who may well want to justify the decision it made, to avoid criticism), making the application potentially risky for the protector in terms of reputation and costs.
In terms of exercising powers of consent, it is likely protectors will make it a term of their consent, where the decision is a momentous one and the value of the transaction justifies it, that the trustee make an application to the court for the in-principle decision to be blessed if the trustee has not already indicated it will be doing so. The protector could then apply in tandem or sit behind the trustee's application rather than bring a standalone application, therefore limiting additional legal cost to the trust fund. In this scenario it is difficult to see a protector in the receipt of legal advice taking any other course.
It is likely trustees in such scenarios would be making an application for a blessing in any event, which means applications to court for blessings of in-principle decisions by protectors are unlikely to increase.
Conclusion
So, as the dust settles on the Privy Council's decision in Re X, it can be said (at least in this author's view) that, whilst most protectors will have wide discretion when exercising their powers of veto, this will not necessarily result in an increase in applications to the court by protectors for blessings of decisions and therefore burdening trusts with the attendant legal fees.