E&W: Trustees cannot simply brush aside beneficiaries' request for information

Thursday, 19 April 2018
A request by trust beneficiaries for more information about the trust cannot be dismissed by the trustees' mere say-so that they already have enough, the England and Wales High Court has ruled.

 

The case, Lewis v Tamplin (2018 EWHC 777 Ch), concerns a farm on the outskirts of Cardiff that was left in trust by the will of Gladys Tamplin 30 years ago, for the benefit of her six children and their issue.

Only two of the original beneficiaries, Edward Tamplin and Jane Wayne, are still alive, and remain as trustees along with Edward's son John. The three other beneficiaries are the settlor's grandchildren – Hugh Lewis, Rhys Lewis and Sadie Lougher.

These three have been trying to obtain information on the trustees' negotiations and dealings regarding the land, which is now worth a large sum – perhaps GBP10 million – because of its housing development potential. They were concerned that distributions of money had been made to other beneficiaries of the trust, but not to them. They also wanted to check that option agreements with potential buyers had been prudently entered into, and whether the land has been generating any income. At least one housing company is trying to buy it.

The grandchildren, having failed to obtain satisfaction from the trustees, took the matter to court – first the County Court in Bath, from where it was transferred to the Bristol District Registry of the England and Wales High Court, under Matthews HHJ.

In his judgment, Matthews took a dim view of the trustees' attitude. They had, he said, 'taken an extreme and in my judgment indefensible approach to disclosure in this case, first by denying (on a very weak basis) that the claimants were beneficiaries at all, and then by putting forward a series of hopeless arguments against giving information to the beneficiaries'. The evidence was, he said, that the claimants wanted the information for 'precisely the right reasons, namely, to hold the trustees to account, and thus to vindicate their own beneficial interests, by way of an action for breach of trust if need be'.

'I do not accept the argument for the trustees that the court should not order disclosure of particular categories of documents merely because in the opinion of the trustees the beneficiaries already have had sufficient information', he said. The beneficiaries have the right to hold trustees to account for their stewardship of the trust fund and the performance of the trust obligations which they accepted. ... The court will not be satisfied with the say-so of the trustees that they have had sufficient information already, but will make its own mind up as to whether the information sought should be disclosed.'

The trustees had even claimed legal professional privilege against the beneficiaries regarding all the trustees' communications with their lawyers, a position Matthews described as untenable. Legal advice for the benefit of the trustees personally, for example in relation to possible breach of trust liability, and which they paid for out of their own pockets, may well be privileged in favour of those trustees as against these beneficiaries, he said. 'But, where the advice is sought for the benefit of the Tamplin Trust as a whole, and the trustees pay for that advice out of Tamplin Trust funds, then such advice, even though it may be privileged as against third parties, is not privileged as against the beneficiaries, and is liable to be ordered to be produced.'

The allegations made by the claimant grandchildren were, he said, all matters that must excite the suspicion of the court, though there may be perfectly proper and innocent explanations for all of them. 'A prima facie case has been established in those areas', he said, ordering the trustees to disclose a long list of documents to the claimants.

Sources

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