Analysis
This was an appeal from a judgment of the Chief Justice dated 12 March 2013 and his subsequent order of 24 April 2013 which required the trustees of a trust to produce financial information to a beneficiary of the trust who was interested in 35% of the trust fund (the minor beneficiary). This appeal was brought by the appointed protector of the trust who was also the principal beneficiary of the trust.
The trust deed contained an information control mechanism (clause 9.2 of the trust deed) which prevented the disclosure of financial information to a beneficiary unless the protector consented to such disclosure. In addition, the protector was not accountable to the trust beneficiaries or liable for any action in the absence of his dishonesty or fraud. There was an acrimonious relationship between the minor beneficiary and the protector and the minor beneficiary’s historic requests for financial information had been refused.
The Chief Justice had considered the validity of the information control clause and concluded that this was valid given that there was no inference that this should be read so as to oust the prevailing supervisory jurisdiction of the court. Disclosure of certain financial information relating to the trust was ordered.
The protector then appealed the Chief Justice’s decision, arguing that:
- (i) if the information control clause was valid then the court was wrong to order disclosure of financial information as the clause should be respected;
- (ii) only in circumstances of mismanagement or impropriety should disclosure be ordered;
- (iii) the beneficiary seeking disclosure had assented to the trust structure in 2002 so should not now be able to challenge this;
- (iv) the beneficiary was disqualified from seeking the court’s assistance by reason of his conduct in relation to the trust since 2009; and
- (v) the court exercised its discretion against the combined weight of the evidence.
Held (dismissing the appeal):
- 1) The Chief Justice had been correct in his finding that the information control clause was valid and did not seek to oust the court’s supervisory jurisdiction. The court’s supervisory jurisdiction exists to ensure that trusts are properly administered and that beneficiaries can hold trustees to account; as such, this cannot be excluded.
- 2) The court will not exercise its power to intervene without due regard to the terms of the trust deed.
- 3) The protector’s power under the information control clause should be exercised in the interests of the trust and of its beneficiaries. It was not contended by the Protector that the information control clause sought to exclude any beneficiary’s basic right to seek disclosure of trust information (if this were the case, the clause would be invalid).
- 4) No reasons were given by the protector as to why consent had been denied. There was therefore a prima facie case for disclosure of the trust information.
- 5) The minor beneficiary had not waived his right to this information by agreeing to the protector taking up this role. While the minor beneficiary’s conduct in relation to the trust did not prevent him from invoking the inherent jurisdiction of the court, his conduct was relevant to the court’s exercise of discretion.
- 6) No grounds were found for diverging from the Chief Justice’s judgment and his judgment was agreed with.
- 7) Appeal dismissed.