Judgment Summary: Directions Re Disclosure To Foreign Courts

Background

In 2011 the trustee applied for directions from the Royal Court to approve two "momentous" decisions, namely (1) the disclosure of trust information to beneficiaries knowing that the beneficiary was likely to pass the information to a non-beneficiary (a spouse) and the Family Division of the English High Court ("Family Division") in divorce proceedings; and (2) not to submit to the jurisdiction of the Family Division in a beneficiary's divorce proceedings. These directions were held in private.

In 2012 a new application for directions was made to the Royal Court by the beneficiaries seeking leave of the Royal Court to disclose the information to the Family Division, if it requested the beneficiaries to do so. Leave of the Court was required for this purpose because the 2011 directions were held in private and to make a disclose without the Royal Court's permission would place the beneficiaries in contempt of Court.

Directions in Private

Whether a trustee is surrendering its discretion to the Court or not, directions hearings are an important part of the supervisory jurisdiction of the Court and are invariably held in private. Privacy is required for the following reasons:

directions often relate to legal or commercial sensitive administrative matters rather than adversarial matters; the trustee is under a duty, and must feel able, to make full and frank disclosure to the Court; the trustee must be able to summarise arguments for and against the proposed course of action, including any weakness or possible risks; information and documents received by those who are convened as parties to the directions hearing should be held in confidence; and it is essential that directions serve the purposes for which they are intended. Consequently to disclose information received only as part of a directions hearing held in private will result in contempt of court. A party cannot be held in contempt of court if he was already in possession of the information beforehand (Westbond International Bank Limited v Cantrust (CI) Limited [2004] JRC111).

Disclosure to the High Court

Previously the Royal Court has refused the Family Division's request for disclosure of information made to the Royal Court pursuant to a directions application on the basis that the trustee must be able to apply to the Court to make a candid appraisal of its position and the problems which are to be addressed (Deery-v-Continental Trust Company Limited [2010] JRC 001).

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