Beneficiaries' Rights To The Disclosure of Trust Documents

INTRODUCTION

The purpose of this briefing note is to consider Jersey trust

law in relation to beneficiaries' rights to trust documents, in

particular, Article 29 of the Trusts (Jersey) Law 1984, as amended,

and the cases of In re Rabaiotti 1989 Settlement [2000 JLR 173] and

Schmidt v. Rosewood Trust Company Ltd [2003] 3 All ER

76.

TRUSTEES' DUTY TO ACCOUNT

In the English case of Armitage v. Nurse [1998] Ch 241

it was held that there was an irreducible core of obligations owed

by a trustee to beneficiaries which is fundamental to the concept

of a trust. If those obligations are missing then there is no

trust. The duty of a trustee to account to beneficiaries for his

administration of a trust is one of those core obligations and the

right of beneficiaries to trust documents enables beneficiaries to

enforce that duty to account.

Although it is clear that, in principle, beneficiaries have a

right to see trust documents, it is also the case that there are

limitations on this right and, as a result, it is often difficult

for a trustee to decide how to react to requests for

disclosure.

RIGHTS TO DISCLOSURE CONFERRED ON BENEFICIARIES UNDER THE

TRUSTS (JERSEY) LAW 1984 (AS AMENDED) (THE "LAW")

Article 29

Article 29 of the Law reads as follows:

Trustee may refuse to make disclosure

Subject to the terms of the trust and subject to any order

of the court, a trustee shall not be required to disclose to any

person, any document which ?

(a) discloses the trustee's deliberations as to the

manner in which the trustee has exercised a power or discretion or

performed a duty conferred or imposed upon him or her;

(b) discloses the reason for any particular exercise of such

power or discretion or performance of duty or the material upon

which such reason shall or might have been based;

(c) relates to the exercise or proposed exercise of such

power or discretion or the performance or proposed performance of

such duty; or

(d) relates to or forms part of the accounts of the

trust,

unless, in a case to which sub-paragraph (d) applies, that

person is a beneficiary under the trust not being a charity, or a

charity which is referred to by name in the terms of the trust as a

beneficiary under the trust or the enforcer in relation to any

non-charitable purposes of the trust.

The right of beneficiaries to see the accounts of the

trust

At first glance Article 29 can appear somewhat confusing, but it

is clear that, despite its heading, it confers positive rights on

beneficiaries to see documents relating to the accounts of the

trust (a point confirmed in Rabaiotti).

Unfortunately, the meaning and scope of the phrase,

"documents which relate to or form part of the accounts of

the trust", is not entirely clear. In West v.

Lazard [1987-88 JLR 414] it was given a very wide meaning so

as to include "all accounts, vouchers, coupons, documents,

and correspondence relating to the administration of the trust

property". However In re Lombardo Settlement (5 December

1990 unreported) and In re a settlement [1994 JLR 139] it was

suggested that the phrase did not have such a wide meaning. The

Economic Development Committee, in its recent consultation on

proposed amendments to the Law, did consider introducing a

definition of accounts but decided that to do so would be too

difficult.

Documents which beneficiaries are not entitled to see

Article 29 also sets out several categories of documents which a

trustee is not normally required to disclose to beneficiaries,

namely, documents which fall within sub-paragraphs (a) to (c). In

very general terms, they are those documents which set out the

reasons for the exercise of the trustee's powers or the

performance of his duties.

The role of the courts and the trust instrument

It is also important to note the opening words of the Article,

which make it clear that disclosure or non-disclosure (as the case

may be) is subject to an order of the court (see Rabaiotti below)

or the terms of the trust instrument. In relation to the latter, it

may be possible for a trust instrument to further restrict

beneficiaries' rights to trust documents or indeed widen them

beyond the scope of Article 29. What is clear though is that the

trust instrument cannot unduly restrict or exclude entirely

beneficiaries' rights to...