Trustee Knowledge Series Advanced Paper Seven: Rights To Information

• Published date: 04 February 2022
• Subject Matter: Corporate/Commercial Law, Litigation, Mediation & Arbitration, Charities & Non-Profits , Trials & Appeals & Compensation, Trusts
• Law Firm: Appleby
• Author: Mr David Dorgan

"Knowledge is of two kinds. We know a subject ourselves, or we know where we can find information on it." - Samuel Johnson.

Notwithstanding that trustees are under a general duty to keep the affairs of the trust confidential, questions over the scope of that duty and how it may interact with the disclosure of trust information will inevitably arise in the professional life of a trustee. The agreed legal position fundamental to trusts is that one of the irreducible core obligations owed by trustees to beneficiaries is the duty of trustees to account to beneficiaries for the administration of the trust and the right of beneficiaries to trust documents enabling beneficiaries to enforce that duty to account.

Disclosure of trust information broadly falls within 5 categories:

1. Disclosure by trustees to beneficiaries (voluntarily or upon demand);
2. Trustees' duty to notify beneficiaries of their interests;
3. Disclosure to other interested parties;
4. Disclosure in trust litigation; and
5. Disclosure by outgoing trustees to their successors.

We have previously looked at disclosure by outgoing trustees in our paper on Changing Trustees and we will cover disclosure in trust litigation during the final part of this series. This paper principally addresses disclosure to beneficiaries, which will be the issue most commonly faced by trustees as well as briefly considering disclosure to other parties with an interest (or, at least, purported interest) in a trust.

DISCLOSURE OF INFORMATION - THE STATUTORY POSITION

Article 29 of the Trusts (Jersey) Law 1984 (as amended) (Law) contains the statutory positions on disclosure of trust information and/or documentation. It was rewritten by the Trusts (Amendment No. 7) (Jersey) Law 2018 and reads as follows:

1. Subject to any order of the court, the terms of a trust may:

(a) confer upon any person a right to request the disclosure of information or a document concerning the trust;

(b) determine the extent of the right of any person to information or a document concerning the trust; or

(c) impose a duty upon a trustee to disclose information.

2. Subject to the terms of the trust and to any order of the court -

(a) a beneficiary under the trust not being a charity;

(b) a charity which is referred to by name in the terms of the trust as a beneficiary under the trust; or

(c) an enforcer, may request disclosure by the trustee of documents which relate to or form part of the accounts of the trust.

3. Subject to any order of the court, a trustee may refuse to comply with -

(a) a request for disclosure of information or a document concerning the trust under paragraph (1)(a) or any document which relates to or forms part of the accounts of the trust under paragraph (2); or

(b) any other request for disclosure of information or a document concerning the trust, where the trustee in the exercise of its discretion is satisfied that it is in the interests of one or more of the beneficiaries, or the beneficiaries as a whole, to refuse the request.

4. Notwithstanding paragraphs (1), (2) and (3), subject to the terms of the trust and to any order of the court, a trustee shall not be required to disclose to any person information or a 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 the trustee;

(b) discloses the reason for any particular exercise of a power or discretion or performance of a duty referred to in sub-paragraph (a), or the material upon which such reason shall or might have been based; or

(c) relates to the exercise or proposed exercise of a power or discretion, or the performance or proposed performance of a duty, referred to in sub-paragraph (a).

5. Notwithstanding the terms of the trust, on the application of the trustee, an enforcer, a beneficiary or, with leave of the court any other person, the court may make such order as it thinks fit determining the extent to which any person may request or receive information or a document concerning the trust, whether generally or in any particular instance.

Consequently, the terms of the trust can expressly confer upon a person (e.g. a beneficiary, protector or enforcer) a right to request trust information or documents or can determine the extent of those rights (e.g. restrictions on disclosure) or otherwise oblige the trustee to disclose information (e.g. upon a beneficiary turning a certain age). The aforementioned provisions were introduced in 2018 and provide more flexibility to settlors and trustees in the drafting of disclosure provisions in trust instruments.

Article 29 entitles beneficiaries, named charities and enforcers to request information relating to or which form part of the accounts of the trust to show its financial position. This is in order that they may...