Trustees Disclosure - Two Recent Decisions From The Common Law Jurisdictions

The thorny issue of what a trustee must disclose at the request of any beneficiary is a topic which has received much judicial guidance over recent years. The key decision for trustees is still that of Schmidt v Rosewood [2003] UKPC 26 which imposes judicial supervision over disclosure decisions in proper cases. Two recent cases, Breakspear v Ackland [2008] EWCH 220 and Wingate v Butterfield Trust [2008] WTLR 357 give further guidance to Jersey trustees in this most difficult area.

In Breakspear v Ackland the key question was whether a letter of wishes should be disclosed. In Wingate v Butterfield, the question was whether the documents of a wholly owned subsidiary company to a discretionary trust should be disclosed.

BREAKSPEAR V ACKLAND [2008] EWCH 220 (CH); [2008] 2 ALL ER (COMM) 62

In this English case, beneficiaries of a discretionary family trust sought disclosure of a Letter of Wishes and of oral statements of the de facto settlor's wishes which he had sent or communicated to trustees. The test as stated in Schmidt v Rosewood was relied upon by Briggs J in re-affirming that there is now virtual unanimity amongst the common law jurisdictions that a request for disclosure of a letter of wishes (or 'wish letter' as Briggs J referred to it) calls for an exercise of discretion by the trustee, rather than any examination of proprietary rights which the beneficiary may have.

When considering whether to disclose the letter of wishes (which was by its very nature inherently confidential) Briggs J disagreed with the view that there was a judicial trend towards disclosure of these types of documents. The question of whether to disclose such a document is entirely within the discretion of the trustee and they should not, Briggs J stated, approach the question of this discretion with a predisposition one way or the other.

Importantly, Briggs J identified that a letter of wishes which was by its very nature 'confidential' could still be disclosed if it was felt appropriate either by the trustees or in a proper case, by a court. Once the trustee had decided upon constituting the trust any decision in regards to the letter of wishes (or any other trust document) was purely one for the trustees or the court. It was not therefore appropriate to attempt to fetter this discretion by including terms within the letter of wishes or seeking to impose any such terms subsequently.

The court in this case was not prepared to conclude that the trustee's decision...