The role of the protector

The Privy Council has handed down judgment in what has become known as the “Protector’s Role” litigation (A and 6 others v C and 13 others [2026] UKPC 11). It found that fiduciary protectors exercising consent powers in standard form have the wider role. In other words, the starting point is that fiduciary protectors may, in their discretion, decide whether or not to consent to the exercise of a trustee power exercisable only with protector consent; no limits are placed on how they exercise that discretion other than the limits imposed by acting in accordance with fiduciary duties.

Practical consequences

This is a significant decision for any trust with a protector with power to consent to trustee decisions. Whilst the decision itself is rooted in orthodox contractual interpretation, there are trust law and practical consequences. We see the three main consequences as follows.

1. This is a substantial role. Following this decision, affected protectors are potentially required to follow the same decision-making process as trustees. This can be a difficult, time-consuming and expensive process. Are protectors willing to perform that role? Do they have access to the legal advice and support required to carry it out? Can structures still function with this additional work or will they become too slow and expensive? For many structures this decision will mean that protector powers need to be either amended or removed, because they are likely not to be worth the cost the decision introduces. In some structures, protectors will lack the sorts of exoneration and indemnity provisions routinely provided to trustees.
    
2. The court will not save trustees from their trust instruments. At first instance and on appeal, the courts had placed more weight on the practical implications of the roles and determined that the wider role was “at best a recipe for wasteful duplication and at worst an invitation for deadlock”. They were willing to depart from a literal reading of the trust instrument to give effect to a role that worked in practice and gave the protectors and trustees complementary functions. Whilst the Privy Council recognised those problems, the Board took a more textual approach and focused on the precise words used in the trust instrument. Looking beyond the protector provisions, this should be a warning to any trustee who assumes that the court will not enforce drafting that leads to uncommercial results. The court may hold trustees to the words that were used even if the result is profoundly impractical. Those trust deeds need to be reviewed and amended before a problem arises.
    
3. Be careful of uncontrolled discretions. One natural reaction some families have had when we have discussed this case has been to want to make the power personal and so allow the protector to refuse consent for any reason in the protector’s absolute discretion. There may be times when that can work, especially if the protector is the settlor (although it requires careful consideration of the tax implications). But in most cases, it will solve one problem by introducing one that is worse. Families and settlors need to understand that an uncontrolled discretion means what it says: there may be nothing anyone can do if that protector uses their powers improperly.

Above all, this case should prompt practitioners to consider how protector provisions are best used. Existing trusts should be reviewed and new trusts drafted taking this decision into account. Protectors without adequate exoneration or indemnity provisions will need to consider their position carefully.

The decision

At its heart, the Privy Council’s decision was a simple one. In approaching the scope of a protector’s consent powers, the Privy Council asked the following question:¹ 

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 Privy Council rejected arguments that the trust law context provided any particular limitation on a protector’s consent powers. In particular, the Privy Council rejected the argument that a consent power was an administrative power and so, without express wording in the trust deed allowing protectors to prefer one beneficiary over another, had to be exercised in the best interests of the beneficiaries as a whole.

Nor did the Privy Council consider it persuasive context that the protectors in this case lacked, for example, exoneration and indemnity provisions or that protector consent was not required in the event that there were multiple protectors who disagreed about whether or not to consent. 

A narrower role?

The Privy Council judgment confirms that “protector” is not a term of art. This matters because:² 

[u]nlike a trustee, for example, it is not an office to which the law has thus far attached particular responsibilities, duties, liabilities and rights.

In other words:³

…[the term] ”protector” has not acquired a usage which necessarily imports any particular constraints upon the discharge of the powers typically conferred. Nor do all persons described as protectors in trust instruments have precisely the same powers.

This means that a protector’s role is determined by the specific powers they hold and nothing more. Seen this way, a protector’s role could be narrowly cast. Depending on the precise powers a protector has under a given trust instrument, it may be that they have no standing to involve themselves in the general operation of a trust:⁴ 

The proper purpose duty ensures for example that protectors do not use (or abuse) their powers of veto to cajole the trustees into accepting their views about other aspects of the administration of the trust about which the trustees have not sought, or may not even be obliged to seek, the protectors’ consent.

This draws from a longer passage of Sir Michael Birt’s judgment in In the matter of the Piedmont and Riviera Trusts [2021] JRC 248 that the Privy Council cites earlier in its judgment:⁵ 

…in the context of a power to consent, as in this case, a protector’s discretion lies within a narrower compass than that of a trustee. He is not the trustee. It is for the trustee to make a decision in the first place as to distributions or in relation to the exercise of any other discretionary power conferred on the trustee. It is emphatically not the duty of the protector to take that decision himself or to force the trustee into making the decision which the protector would make if he were the trustee by stating that he will only consent to a particular decision. That would be to exceed his proper role and to use the power given to him otherwise than for its intended purpose. Such conduct would also almost certainly not be in the interests of the beneficiaries and would be likely to lead to deadlock requiring the intervention of the court. A protector may often find that he should consent to a discretionary decision of a trustee on the basis that it is for the benefit of one or more of the beneficiaries even though, if he had been the trustee, he might have made a different decision which he thought to be even more beneficial.

In this connection, it is to be expected and indeed encouraged for there to be full and open discussion between trustee and protector, with a view to finding something upon which they can both agree. We see nothing wrong with the sort of discussions which took place between the protector and the trustees in this case. A protector is not confined to a simple yes or no to a request for consent. A protector and a trustee should work together in the interests of the beneficiaries. It is therefore perfectly reasonable for a protector to explain his concerns about a particular proposal by a trustee and the trustee may often be willing to modify his proposal to take account of these concerns or the protector may be satisfied after the trustee has explained his thinking.

The Privy Council judgment concludes with similar words of judicial encouragement for trustees and protectors:⁶ 

In many, probably most, cases it should be possible for trustees and protectors acting in accordance with their respective fiduciary duties to find common ground. There may be cases…where common ground cannot be found…Necessarily, the possibility of deadlock is deliberately built into the structure but the Board repeats that it is the duty of both trustees and protectors to seek to find common ground. 

(Emphasis to be found in the judgment)

How should protectors exercise their discretion?

The Privy Council’s judgment provides little guidance for protectors in terms of how to exercise their discretion in the context of consent powers. The judgment uses the words “consent”, “veto” and “approval” interchangeably, which suggests that these all mean the same thing in the context of standard form fiduciary protector consent powers (i.e. “the trustees may with the consent of the protector…”). But other than the fact that fiduciary protectors must exercise their consent powers in accordance with fiduciary duties (e.g. in accordance with no-profit and no-conflict duties, and for proper purposes), there is nothing in the judgment about the actual process a protector would need to undertake when considering whether or not to consent.

For example:

• Should a protector effectively repeat the trustee’s decision-making process, albeit taking into account the additional relevant factor of the trustee’s proposed decision to exercise the underlying power in question?
   
• If so, can a protector then only consent to the one decision it would have made itself were it taking the same decision as trustee, or can it consent to a range of decisions which it considers proper and appropriate?
   
• If the latter, how is the range to be determined?
   
• Can a protector communicate the decision(s) to which it would provide its consent to the trustee? The excerpt from the judgment set out above about trustees and protectors seeking to find common ground suggests that perhaps they should, but where is the line between seeking to find common ground and holding a trustee to ransom?
   
• From a trustee’s perspective, how readily can they re-consider their proposed exercise of a power such that they arrive at a decision to which the protector has indicated they would consent?

All of these questions relate to hypothetical decisions where there is not a binary choice but a range of options. The decision-making process for a protector is more stark where the effect of their decision is binary – this is discussed below in the context of deadlock.

The position in relation to these sorts of questions may become clearer once the courts have had to consider challenges to a protector’s decision on whether or not to consent to a particular exercise of a trustee’s powers. Following the Privy Council’s decision, parties now have more clarity as to the starting point from which to challenge such a decision. 

Is it appropriate for protectors to have such a significant role? 

Some settlors will say that protectors should have a wide, discretionary role. Where this is the case, protectors ought to be given appropriate powers, for example around charging, exoneration, information provision and succession. 

Cost implications should also be borne in mind. Protectors will need adequate information to enable them to make informed decisions (underlining the need for effective ongoing communication by trustees with protectors). Protectors will also need their own legal advice, and it may not always be appropriate for that advice to come from a firm representing members of the beneficial class or the trustees. 

Advice may be required in relation to the implications of protectors holding what could be categorised as dispositive powers from a tax perspective. The significance of this will depend on where the protector is resident.

If instead a settlor decides that a protector should have a different role, specific drafting will be needed.

How should deadlock between trustees and protectors be broken? 

As acknowledged in the Privy Council judgment, the wider role increases the risk of deadlock; without specific drafting there is no clear mechanism for breaking deadlock between trustees and protectors. This is because it is possible for both a trustee to be acting reasonably in proposing a potential exercise of a power and a (wider role) protector to be acting reasonably in refusing their consent. 

Although trustees have some options that may help break such deadlock, these options will not always be available or desirable. For example, a trustee could attempt to surrender its discretion to the court. However, there are several problems with this approach: a court will not accept a surrender in every situation; and perhaps more importantly, even if the court accepted the surrender, it is unclear whether the court would seek to bind a protector that had not itself surrendered its discretion in respect of the consent power in question. In any event, a surrender is considered an option of last resort; so it is neither an ideal nor readily available solution to deadlock.

In addition, where a decision has a deadline - for example, whether or not to appoint the trust funds onto the terms of a particular trust by the end of the tax year or to vote shares in a particular way at a shareholder meeting, the protector’s consent will effectively determine what happens. In other words, there may be no deadlock; refusal of consent will mean that the tax deadline is missed or shares are not voted in a particular way. It may be that this reflects the desired balance of power in relation to certain key decisions or actions; but time-sensitive or binary decisions should be considered carefully.  

In summary, where protectors are given wider form consent powers, thought should be given to terms that cater for the potential effect of deadlock. 

The power to appoint and remove trustees

In one particular respect, the facts in this case were unusual: the protectors did not have a straightforward power to remove the trustees; many protectors do. While such a power should not allow a protector to “cajole the trustees into accepting their views”, a power to remove trustees might give protectors a broader role in the operation of a trust. This is because a protector will need to be kept apprised of how the trustees are administering the trust so that they can consider whether to exercise this (albeit extreme) power.

Concluding remarks

Often, trustees and protectors will perform their respective duties without conflict and the precise scope of a protector’s powers may not really matter. However, this case demonstrates that where trustees and fiduciary protectors disagree, deadlock is a real possibility. It is imperative that trust provisions cater for such a scenario (or, if they do not, that this potential for deadlock is fully understood and consciously chosen by a settlor).  

A recurring theme of the judgment is that the precise scope of a protector’s powers is a matter for the settlor to decide. A similarity can perhaps be drawn with another recent significant trust law decision of the Privy Council in Grand View Private Trust Company v Wong [2022] UKPC 47. There, the Privy Council confirmed inter alia that the purpose of a trust power is to be determined by reference to objective evidence of the settlor’s intentions at the time the trust was established and the power created. Again, the practical lesson here is that special care is needed from both settlors and their advisers when establishing a trust and considering its precise terms.