Supreme Court Evaluates Scope Of Trustees' Protection In Contentious Trust Litigation

• Published date: 19 October 2020
• Subject Matter: Litigation, Mediation & Arbitration, Criminal Law, Trials & Appeals & Compensation, White Collar Crime, Anti-Corruption & Fraud
• Law Firm: Lennox Paton
• Author: Ms Sophia Rolle-Kapousouzoglou

Discovery applications in contentious trust litigation in the Bahamas can be made by beneficiaries. In a decision handed down earlier in 2018 (Dawson-Damer v Grampian Trust Company Ltd (2015/CLE/gen/0034)), the Supreme Court assessed the protection afforded to trustees by virtue of Section 83 of the Trustee Act 1998,¹ which provides that a trustee cannot be bound or compelled by way of discovery to disclose information and documents about a trust.

Background

Section 83 provides as follows:

(8) Notwithstanding anything to the contrary in this section, trustees shall not be bound or compelled by any process of discovery or inspection or under any equitable rule or principle to disclose or produce to any beneficiary or other person any of the following documents, that is to say -

(a) any memorandum or letter of wishes issued by the settlor or any other person to the trustees, or any other document recording any wishes of the settlor;

(b) any document disclosing any deliberations of the trustees as to the manner in which the trustees should exercise any discretion of theirs or disclosing the reasons for any particular exercise of any such discretion or the material upon which such reasons were or might have been based; or

(c) any other document relating to the exercise or proposed exercise of any discretion of the trustees (including legal advice obtained by them in connection with the exercise by them of any discretion).

(10) No such prohibition or restriction, and nothing in this section, shall prejudice the validity of any trusts or the entitlement of any beneficiaries who have in any manner become aware of any trusts to obtain orders of the Court for administration or accounts, or for the execution of the trusts, or any other order of the Court not being an order for the discovery, inspection, disclosure or production of such documents as are described in subsection (8), or for any information or disclosure which by subsection (2), (3), (5)(a) or (7) trustees are under no legal obligation to make. (Emphasis added.)

Facts

In Dawson-Damer a trustee had used Section 83(8) as a basis to refuse a disclosure request.

The applicant's counsel argued that:

• the section could not be invoked to protect the trustee from any wrongdoing or alleged breach of fiduciary duties;
• the section could not exonerate trustees from liability and
• the power to disclose or provide full disclosure is a fiduciary power and a trustee must supervise its use.

It was also claimed that...