Trustees’ Decisions: When good faith is not enough – The importance is in the process.

Trustee decision-making and the Dawson-Damer case

Introduction

Trust law is built on confidence. Trustees hold immense discretionary powers that can shape the lives of beneficiaries for generations. With that power comes a strict fiduciary duty to exercise discretion properly, deliberately, and with full regard to all relevant considerations.

The recent decision of the Judicial Committee of the Privy Council in Ashley Dawson-Damer v Grampian Trust Company Ltd and another (Bahamas) [2025] UKPC 32 has reignited global debate on how trustees should approach their decision-making responsibilities. While the case arose out of a 100 years old family fortune, its lessons apply broadly: trustees cannot rely on good faith alone – the quality of their deliberation is what ultimately matters.

Background to the Dispute

The Dawson-Damer litigation has a long history, but the latest chapter concerned the restructuring of the “1973 Settlement”, a trust created for descendants of George Skelton Yuill. In the early 1990s, assets were moved into a corporate vehicle, Spey Ltd, which then divided them into four separate settlements.

One of these, the Glenfinnan Settlement, maintained a broad discretionary class of beneficiaries that included Ashley Dawson-Damer, wife of John Dawson-Damer (grandson of Yuill). Crucially, Spey Ltd’s board resolved that while some new trusts would benefit adopted children, Glenfinnan would not.

Grampian Trust Company Limited, a Bahamian private trust company, was appointed as trustee. In 2006 and 2009, it distributed 98% of Glenfinnan’s assets – worth over USD 400 million – into new settlements for the benefit of John’s brother George’s children. Ashley, although a discretionary beneficiary, was excluded from these arrangements. Only 2% of the assets, about USD 14 million, were retained in Glenfinnan.

Ashley argued that the trustee had breached its fiduciary duties by failing to give proper consideration to her position, instead relying on outdated and biased advice from family advisers and even newspaper reports. She sought to set aside the distributions.

The Legal Issues

The case raised three central questions:

1. Whose intention counts when the settlor is a company?

The Privy Council confirmed that in cases of corporate settlors, the relevant “intention” is that of the company’s board of directors acting collectively. Spey Ltd’s board intended that Glenfinnan should primarily benefit George’s children and future generations, not Ashley. This intention was a relevant factor for the trustee to consider.

2. What does “adequate deliberation” mean for trustees?

Building on the principles established in Pitt v Holt [2013], the Board reiterated that trustees must consider all relevant matters, disregard irrelevant ones, and base their decisions on current, accurate information. A failure to do so is a breach of fiduciary duty.

3. What is the consequence of a breach of duty?

The court clarified that even where there is a breach, decisions will not be automatically undone. The claimant must show that but for the breach, the trustee would, or at least might, have made a different decision.

The Privy Council’s Decision

The Board agreed with Ashley that Grampian had failed to give adequate consideration to her circumstances. The trustee relied on outdated, adversarial advice and ignored leading counsel’s recommendation to assess all beneficiaries’ positions. This amounted to a breach of fiduciary duty.

However, the appeal ultimately failed. The Board held that Ashley could not demonstrate that the outcome would have been any different. The settlor’s intention, as expressed through Spey Ltd’s board, was that Glenfinnan should benefit future generations rather than her personally.

Furthermore, she was independently wealthy, with access to her late husband’s estate and other assets. The 2% retained in Glenfinnan was considered sufficient to safeguard her needs.
In short: there was a breach, but no remedy.

The Main Principle: Process Matters as Much as Outcome

The headline from Dawson-Damer is not that Ashley lost. Rather, it is that the Privy Council made it clear that trustees are under a positive duty to deliberate properly. Even though Grampian’s decision stood, the judgment emphasises that trustees must:

• Consider all beneficiaries fairly – no beneficiary should be disregarded simply because they are less favoured or less popular.
• Rely on current and accurate information – decisions based on speculation, hearsay, or outdated reports fall short of fiduciary standards.
• Record the decision-making process – minutes and trustee resolutions should show that relevant matters were identified and considered.
• Take the settlor’s intentions seriously – especially in cases of corporate settlors, where the collective view of the board must be attributed to the company.

The Privy Council’s warning is clear: trustees must be able to prove that they thought carefully before acting.

Why this matters beyond this family:

It is easy to dismiss the Dawson-Damer case as a dispute among the wealthy. Yet its implications extend to every trust, whether holding millions or modest family assets:

• For trustees: It is not enough to act in good faith. Courts will examine the reasoning process. Failure to consider relevant matters can amount to a breach, even if the decision is not overturned. Trustees must therefore adopt rigorous decision-making procedures and keep thorough records.
• For beneficiaries: The case highlights both the limits and protections of their position. They can challenge trustee decisions if deliberation is flawed, but remedies will only succeed if it can be shown that the decision might have been different. This emphasizes the importance of staying informed and, where possible, engaging with trustees early.
• For settlors and families: The case illustrates the enduring power of settlor intention. Decisions taken decades earlier by Spey Ltd’s board continued to shape outcomes in 2025. Clarity of drafting, proper records of intention, and foresight in governance structures can avoid costly disputes.

Practical considerations for Trustees

Drawing from Dawson-Damer, trustees should adopt the following best practices:

1. Regularly update information on beneficiaries’ circumstances, rather than relying on assumptions or historical data.
2. Seek balanced professional advice, not only from family advisers who may hold partisan views.
3. Document the reasoning process clearly, showing which factors were weighed and how they influenced the outcome.
4. Revisit settlor intentions periodically, especially when the settlor was a company, to ensure that trustee decisions align with original purposes.
5. Communicate with beneficiaries – while trustees are not obliged to consult on every decision, transparency reduces suspicion and potential challenges.

Conclusion

The Privy Council’s decision in Dawson-Damer v Grampian Trust Company Ltd is a landmark reminder that trustee discretion is not unfettered. Even where a trustee believes they are acting in line with settlor intention, they must demonstrate proper deliberation.

The case reinforces a core truth of trust law: trusteeship is not just about outcomes, it is about the integrity of the process. Decisions that fail to respect this principle may survive in court, as Grampian’s did, but they erode confidence and expose trustees to reputational and legal risk.

For trustees, beneficiaries, and advisers alike, Dawson-Damer is a call to elevate standards of deliberation, documentation, and fairness. Good faith is necessary, but no longer sufficient.

The full judgment of the Ashley Dawson-Damer (Appellant) v Grampian Trust Company Ltd and another (Respondents) (Bahamas), issued by the Judicial Committee of the Privy Council (JCPC) can be found here.

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