09 May 2018

By Andrew Walls

The starting position is that the beneficiaries have a right to seek disclosure of trust documents from the trustees. However, there are no documents that beneficiaries have an absolute right to obtain. In Schmidt v Rosewood Trust Ltd [2003] UKPC 26 the Privy Council clarified that the right to seek disclosure is a facet of the court's inherent jurisdiction to supervise and (if appropriate) to intervene in the administration of trusts. In practice, this means that where trustees have refused to disclose documents requested by a beneficiary, the beneficiary does not have a right that he/she can enforce to obtain the documents. Instead, if he/she wishes to dispute the refusal, he/she must persuade the court that it should exercise its discretion and intervene. 

Nevertheless, there are documents that the court, in most cases, will be persuaded to order be disclosed. For example, it would be an extraordinary case where trustees would not be ordered to disclose trust accounts. While every invocation of the court's jurisdiction will be considered on its merits, the decision in Lewis provides examples of reasons for refusing disclosure which may (and did) not wash:

  • The court will not simply accept on the ‘say-so’ of the trustees that beneficiaries have already had sufficient information. While the amount of information already provided to beneficiaries may be relevant as to whether more should be provided, the opinion of the trustees as to sufficiency will not exclude the court’s jurisdiction.
  • The so-called Londonderry principle (named after Londonderry's Settlement [1965] Ch 918) that trustees will not be required to disclose documents relating to the exercise of their dispositive powers, does not apply to the administrative functions of the trustees. Trustees may refuse to disclose documents that reveal their reasoning for bestowing one level of benefit on Beneficiary A and a different level of benefit on Beneficiary B but may not refuse to explain their reasoning for not providing disclosure.
  • Trustees cannot assert legal professional privilege against the beneficiaries where the legal advice was paid for out of trust funds. While they may be able to assert privilege against third parties in such circumstances, if they want privilege to protect against disclosure to the beneficiaries, they must fund the advice themselves.

The court also provided renewed clarification of where the costs fall where beneficiaries are seeking information that they would be entitled to, but which is not already contained in documents:

information which is not in documentary form is more difficult. For one thing, it is clear that beneficiaries are not entitled to throw the costs of assembling information not already in documentary form on the trust generally. They must pay for it themselves.

Key contact

Kevin Kennedy

Kevin Kennedy Partner

  • Estates and Land
  • Private Wealth
  • Agricultural Disputes

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