Two recent decisions highlight the need for trustees to think carefully before refusing information requests by beneficiaries.
In Re. the Tchenguiz Family Trust (BVIHCM 2017/00026), the Swiss trustee of a BVI trust was ordered by the BVI Commercial Court to provide information to a discretionary beneficiary relating to claims made by the trustee in various liquidations. The trustee had refused, partly on the basis that the beneficiary might use the information for a collateral purpose, which might cause harm to the trust. The Court held that “to the extent that it is necessary to weigh [the beneficiary’s] purpose against any potential harm to the [trust], the balance falls firmly in favour of disclosure. [The beneficiary] has a real purpose in seeing the documents in his capacity as beneficiary, but the [trustee] has not exhibited any real prospect of damage.”
Another point made in the Tchenguiz decision was that the trustee had insisted that the claim was served on it out of the jurisdiction via Hague Convention channels, resulting in substantial delays. The Judge was critical of this approach; the trustee of a BVI trust was subject to the supervisory jurisdiction of the BVI Court and “delaying or allowing to be delayed the timely determination by the Court of a question turning on the trustee’s own conduct, is a matter of concern to the Court and legitimate concern to the beneficiary seeking to hold the trustee to account.”
In Lewis v Tamplin  EWHC 777 (Ch), the beneficiaries sought disclosure of information from the trustees relating to the granting of development options over land. The trustees refused to provide the information on a number of grounds, and raised a threshold argument for disclosure, submitting that a beneficiary needed to establish grounds for “real suspicion based on substantive grounds” that the trustees may have got a decision wrong before the Court would intervene to order disclosure. The trustees’ arguments were roundly rejected by the English High Court. On the threshold point, the judge held that there was no need to “excite the suspicion of the Court”, as the trustees had submitted, and that “the court is entitled to interfere with a disclosure decision whenever it thinks proper to do so in order that the beneficiaries may be able to hold the trustees to account.”
The short lesson to trustees from these decisions is to think very carefully, and if in any doubt take advice, before refusing an information request from a beneficiary. The consequences of getting this wrong (not least in potential personal cost exposure for the trustee) can be severe. And from a beneficiary’s perspective, the door to disclosure may have been opened a little bit wider, so these decisions are to be welcomed from that perspective.
Harneys acted for the successful beneficiary in Re. the Tchenguiz Family Trust.