The vexed question of disclosure of Trust documents

 In Trusts

Disclaimer: LawSkills provides training for the legal industry and does not provide legal advice to members of the public. For help or guidance please seek the services of a qualified practitioner.

The vexed question of disclosure of trust documents was discussed again in Lewis v Tamplin [2018] EWHC 777. Ernest Tamplin (who died in 1985) and his wife Gladys (who died in 1988) had 6 children. The family farm of 12.3 acres (Panteg Farm, Lisvane, Glamorgan) passed on their deaths to the children in equal shares:

“for their own use and benefit absolutely and for them to devise bequeath or appoint during their lifetime or in their will as they individually shall decide”

Four of the children had died after Gladys’ death, two of whom left Wills and two of whom died intestate. The farm was potentially developable and said to be worth in excess of £10 million. The trustees, who were wrongly advised, did not initially accept that certain grandchildren (being the children of the intestate children) were beneficiaries as they thought the beneficial interests could pass only by Will or deed of appointment. They reluctantly accepted the trust fund was to be held for a total of 9 beneficiaries in fixed but different shares.

The proceedings were:

(a) for pre-action disclosure and

(b) a claim under Part 8 of the CPR that the beneficiaries (i.e. the above grandchildren) sought disclosure of documents and other information from the trustees on the basis of the obligation owed by trustees to beneficiaries to account to them for their stewardship of the trust

FREE monthly newsletter

Wills | Probate | Trusts | Tax  | Elderly & Vulnerable Client

  • Relevant learning and development opportunities
  • News, articles and LawSkills’ services
  • Communications which help you find appropriate training in your area

Documents sought included:

  • Accounts (as the only account provided began in 1998 not 1986 when the trust commenced)
  • Information about option agreements entered into with the developer Redrow
  • Distributions of income to other beneficiaries
  • Information about why the trustees failed to generate income from the land and whether they had thereby committed a breach of trust
  • Whether one of the trustees had been allowed to use the land personally
  • Information about whether the trustees sought tax advice in order to mitigate a potential large tax liability on the sale of the land for development
  • Correspondence and advice from the trustees’ solicitors

    Case Summary from LawSkills | Private Client specialist trainers

Disclosure had been refused by trustees because:

  • The grandchildren were not beneficiaries
  • The beneficiaries already had sufficient information about stewardship of the trust
  • Disclosure might reveal to the beneficiaries the reasons why the trustees had made the decisions they had and so they were entitled to withhold it under the Londonderry principle (from Re Londonderry’s Settlement [1965] Ch 918)
  • Not all the beneficiaries were seeking disclosure and so the claimants would only be entitled to disclosure if all the beneficiaries sought it as an aspect of the rule in Saunders v Vautier (1841) Cr & Ph 240

The trustees argued that according to Rosewood v Schmidt [2003] 2 AC 709 the beneficiaries had to show suspicion, based on substantial grounds, that the trustees may have got the decision wrong before the court would intervene. It was not normally appropriate to require disclosure of trustees’ reasons for particular decisions (the Londonderry principle). The principle applied to administrative decisions as well as dispositive ones.

The Claimant’s arguments were that there was no authority for a test of having to excite the suspicion of the court and the court’s supervisory role was substantial not merely procedural; nor was there authority for the idea that all the beneficiaries had to act together. Also, it was paradoxical that a beneficiary needed to show there was a case to answer before the trustee had to disclose any documents. They were not troublemakers and had not been given reports and updates the other beneficiaries had received.

The court decided that Claimants with a fixed interest may normally obtain the assistance of the court even in the absence of special circumstances in order to hold the trustees to account. Here the claimants did not have “sufficient information” already. The Londonderry principle does not apply to the exercise of administrative powers. There is no threshold the court has to get over before it is entitled to interfere with a decision to refuse disclosure. They did not have to act collectively under the Saunders v Vautier rule.

As a result the judge allowed for most documents requested to be disclosed save where they were protected by legal privilege or where legal advice had been sought by the trustees for personal benefit; but he did not agree that documents be disclosed which explained why the trustees had not sought legal advice on certain aspects.

Practice points

Practitioners should note the increasing interest beneficiaries are taking in this issue and the use of General Data Protection Regulation to aid discovery.

Trusts & Tax courses coming up in July....

Introduction to Trusts - 10 July 2018 | Taxation of Trusts - 11 July 2018

Trusts are complex.  Add in the tax elements and quite understandably your head might be spinning.  If this is you when you’re handed a trust file to deal with then look no further.  We have just the courses for you.

Introduction to Trusts with Gill Steel – 10 July 2018

Taxation of Trusts with Gill Steel – 11 July 2018

This is your unique opportunity to be trained by one of the country’s leading Trust specialists.  Gill is a skilled trainer focusing on the practical so you will be confident in your approach to Trusts and Tax in the future.

Last remaining places so don’t hesitate!

The LawSkills Monthly Digest

Subscribe to our comprehensive Monthly Digest for insightful feedback on Wills, Probate, Trusts, Tax and Elderly & Vulnerable client matters

Not complicated to read  |  Requires no internet searching |  Simply an informative pdf emailed to your inbox including practice points & tips

Subscribe now for monthly insightful feedback on key issues.

All for only £120 + VAT per year
(£97.50 for 10+)

Lawskills Digest
Recommended Posts
LawSkills Book Reviews for private client practitioners