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Wealthy beneficiaries entitled to anonymity

Monday, 27 October, 2014

The England and Wales High Court has ruled that a court judgment concerning trust beneficiaries cannot be published without special permission, and in any case must be anonymised in order to protect them from the 'adverse personal effects' of their wealth.

In the case, the settlor of three family trusts had asked the court to vary the trusts' terms to the advantage of their minor beneficiaries and future unborn beneficiaries. Given that the trustees and the adult beneficiaries supported the variation, the decision was fairly routine and the variation was quickly approved by the judge, Mr Justice Morgan.

More problematic was the fact that all the parties to the case wanted the court to hear it in private. The judge was reluctant to agree to this, but he did agree to sit in private to hear the application for an order that the substantive cases be heard in private.

For this hearing, the parties relied on Civil Procedure Rule 39.2. This states that a case may be heard in private if:

  • there were confidential matters that would be damaged by publicity; or
  • a private hearing was necessary to protect the interests of any child or patient; or
  • it involved uncontentious matters in the administration of trusts or estates.

The parties contended that hearing the case in public would reveal that the trusts had very large assets, public knowledge of which would create a risk as to the personal security of both the adult and the minor beneficiaries.

Moreover, the trusts received large dividends from some very profitable private companies. If the size of these dividends were made public, the companies' customers would realise what large profits they were making, and would then squeeze them down.

It was also contended that the case involved uncontentious matters arising in the administration of trusts.

In his ruling, Mr Justice Morgan dismissed all these reasons judging them insufficient to outweigh the strong presumption in favour of open justice. If the disclosure of profits argument were valid, he noted, 'there would be very few cases in the Companies Court which would be suitable to be heard in open court'. The argument that the beneficiaries' personal security required that they should remain anonymous, he dismissed as 'very slender indeed'. He did accept that the case involved uncontentious matters arising in the administration of trusts, but considered this did not mean that it must be heard in private, only that it might.

However, he gave the most weight to a further consideration: that the five existing minor beneficiaries, all of them still under ten years of age, might be harmed by learning that they were so wealthy. This was particularly relevant because the parents were determined that the children should not know at too young an age of the extent of the family's wealth, in case they were deterred from obtaining a full education and making their own way in life and contributing to society. Their good fortune could also make them a magnet for false friends and fraudsters later on, as well as making them targets for criticism on social media.

Even this argument did not persuade the judge that the case must be heard in secret. However, it did lead him to order reporting restrictions, and that non-parties can only obtain a copy of the judgment (on the substantive issue of the variation of trust) with the court's permission.

Further, the judgment will only be published in anonymised form so that the family cannot be identified.