Isle of Man: Disclosure Of Information By Trustees - Offshore Courts’ Approach

As stated in the case of Armitage v Nurse [1997] EWCA Civ 1279, a fundamental concept to any trust is an irreducible core of obligations owed by the trustees to the beneficiaries. In order to enforce these obligations, beneficiaries require a certain amount of information from the trustees. The offshore Courts continue to follow the Schmidt v Rosewood Trust Limited [2003] UKPC 26 approach in exercising their inherent supervisory jurisdiction over the disclosure of information.

In Schmidt v Rosewood Trust Limited it was considered, "that the more principled and correct approach is to regard the right to seek disclosure of documents as one aspect of the court's inherent jurisdiction to supervise, and if necessary to intervene in, the administration of trusts. The right to seek the court's intervention does not depend on entitlement to a fixed and transmissible beneficial interest. The object of a discretion (including a mere power) may also be entitled to protection from a court of equity, although the circumstances in which he may seek protection, and the nature of the protection he may expect to obtain, will depend on the court's discretion."

In two recent cases before the Royal Court in Jersey and the Supreme Court of Bermuda, the trustees in each case were ordered to disclose information to beneficiaries.

In the Bermuda case of In the matter of an application for information about a trust [2013] SC (Bda) 16 Civ, the trust deed provided that no information was to be disclosed to the beneficiaries without the protector's consent. The protector was the primary beneficiary of the trust and was not willing to provide his consent to the release of information to another beneficiary. It was held that the provisions of the trust deed were not working as they should due to the acrimonious relations between the parties. The Court exercised its supervisory jurisdiction and ordered disclosure to allow the beneficiaries to hold the trustees to account. The information control mechanism in this case was held to be impairing this fundamental requirement.

In the Jersey case of In the matter of the B Family Trust [2013] JRC 136, the beneficiary was seeking information to hold the trustees to account for their actions but also to be able to complete a tax return which, if not filed, would put her in breach of local laws. The Jersey Court discussed that in certain cases issues of personal or commercial confidentiality will need to be balanced very carefully. In this case, the Court found that the trustees had failed to provide a constructive response to the beneficiary's requests by failing to provide sufficient evidence to show how the assets of the trust had been dealt with.

Both judgments reinforce the principles that:

  1. a beneficiary is entitled to be provided with sufficient information to be able to hold the trustee to account;
  2. there is a presumption that a beneficiary is entitled to see the trust documents, the accounts and generally those documents that show how the trustee has dealt with the assets of the trust;
  3. offshore Courts have a supervisory jurisdiction to enable beneficiaries to hold trustees to account for the due administration of the trust;
  4. the Court's jurisdiction is not to merely review the trustee's exercise of its discretion; and
  5. the Court's jurisdiction is not to be utilised where the disclosure does not serve the aim at point 1 above or if it harms other interests.

These recent cases confirm that trustees must carefully consider each request for information from a beneficiary on its merits and provide, where appropriate, a constructive response.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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