Kain v Public Trust
[2023] NZHC 2535
•11 September 2023
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE
CIV-2023-485-015
[2023] NZHC 2535
UNDER the Trusts Act 2019 and Part 19 of the High Court Rules 2016 IN THE MATTER
of the TE MATA PROPERTY TRUST
BETWEEN
GEORGINA KAIN, GEORGE CHARLES KAIN, GEORGE HARRY COUPER KAIN, GEORGE MICHAEL KAIN
Applicants
AND
PUBLIC TRUST as trustee of the TE MATA PROPERTY TRUST
First Respondent
MARY HUTTON
Second Respondent
Hearing: 11 July 2023 Appearances:
D R Bigio KC and S T Dymond for Applicants
A R Galbraith KC and G J D Mander for Second Respondent
Judgment:
11 September 2023
JUDGMENT OF MANDER J
[1] The applicants, Georgina, Charles, Harry and George Kain (the Kain siblings) have applied for an order directing the respondent, the Public Trust, as the trustee of the Te Mata Property Trust (the Trust), to disclose the “deed of advancement of distribution date” (the distribution deed) by which it brought forward the distribution date of the Trust and distributed its capital to the second respondent, Mary Hutton.
KAIN v PUBLIC TRUST [2023] NZHC 2535 [11 September 2023]
Background
[2] The Trust was settled in 1974 by Helen Couper. Its principal asset was a substantial rural property situated near Havelock North. Mrs Couper, together with her husband, Ernest, owned farmland in Hawkes Bay. Before their deaths they had acquired a significant number of assets that were inherited by or gifted to their two children, Janet Kain and William Alexander Xavier Couper (WAX Couper). The beneficiaries of the Trust were the children of Janet Kain, which included the Kain siblings and Mary Hutton, and those of WAX Couper (of which there were none).
[3] The Trust provided for a life interest in the income of the Trust and rights of occupation of the Trust property in favour of WAX Couper. It also bestowed on him a power of appointment of Trust capital. The Trust provided for a distribution date for the capital assets of the Trust of 21 December 2022. However, this was subject to the trustee(s) ability to advance the date of distribution. The power of appointment of capital was exercised by WAX Couper in April 2000 to appoint the capital of the Trust to Mrs Hutton.
[4] In July 2008, Public Trust, exercised its power to advance by deed the date of distribution. The Kain siblings were advised in September of that year by Public Trust that it had exercised its power to advance the distribution date and had executed a deed declaring the distribution date to now be 21 July 2008. The Public Trust gave the following reason for advancing the distribution date:
[to] guarantee that ownership of the Te Mata Property Trust would devolve to Mary as, in the absence of the trustee using its discretion to bring forward the date of distribution, she needed to survive WAX Couper. It was likely that Mary (aged 50 years) would survive WAX (aged 82 years) but not certain.
[5]WAX Couper died on 5 November 2019.
The application
[6] The siblings seek the disclosure of the distribution deed which they have been advised by Public Trust evidences its decision to advance the distribution date of the Trust. They have, through their lawyers, made three requests of Public Trust for the disclosure of the distribution deed but have been declined. Public Trust filed a notice
of opposition to the siblings’ application, but since the involvement of Mrs Hutton as an interested party in opposition to the siblings’ application, it has not participated in the proceeding. Apart from reserving its position in respect of costs it abides by the Court’s decision.
[7] The Kain siblings argue that because the distribution deed has had the apparent effect of terminating their interests in the Trust they have a right to view the evidence of that termination.1 They say disclosure of the distribution deed is necessary to ensure the trustee has complied with its obligations, including with the requirements of the terms of the trust deed. The siblings maintain the distribution deed constitutes trust information to which they are entitled by operation of the Trusts Act 2019 (the Act).
The statutory regime
[8] While the Act is intended to be “the primary source of trust law in New Zealand”,2 it “is not an exhaustive code of the law” governing trusts.3 However, the Act expressly deals with disclosure of trust information by a trustee to beneficiaries of express trusts.4 Notably, there is an emphasis on trustee accountability to beneficiaries that is made explicit in s 50(1). It provides in respect of those provisions that:
The purpose of sections 51 to 55 is to ensure that beneficiaries have sufficient information to enable the terms of the trust and the trustees’ duties to be enforced against the trustees.
[9]Section 51 of the Act states:
51 Presumption that trustee must notify basic trust information
(1)There is a presumption that a trustee must make available to every beneficiary or representative of a beneficiary the basic trust information set out in subsection (3).
(2)However,—
(a)before giving the information, the trustee must consider the factors set out in section 53; and
1 Lynton Tucker, Nicholas Le Poidevin and James Brightwell Lewin on Trusts (20th ed, Sweet & Maxwell, London, 2020) at [21-041].
2 Law Commission Review of the Law of Trusts: A Trusts Act for New Zealand (NZLC R 130, 2013) at [13].
3 Trusts Act 2019, s 5(8)(a).
4 Sections 49–55.
(b)if the trustee reasonably considers (after taking into account those factors) that the information should not be made available to every beneficiary,—
(i)the presumption does not apply; and
(ii)the trustee may decide to withhold some or all of the basic trust information from 1 or more particular beneficiaries or classes of beneficiaries.
(3)The basic trust information is—
(a)the fact that a person is a beneficiary of the trust; and
(b)the name and contact details of the trustee; and
(c)the occurrence of, and details of, each appointment, removal, and retirement of a trustee as it occurs; and
(d)the right of the beneficiary to request a copy of the terms of the trust or trust information.
(4)A trustee is required to consider at reasonable intervals whether the trustee should be making the basic trust information available under this section.
[10]The Act further provides:
52 Presumption that trustee must give information on request
(1)There is a presumption that a trustee must within a reasonable period of time give a beneficiary or the representative of a beneficiary the trust information that person has requested.
(2)However,—
(a)before giving the information, the trustee must consider the factors set out in section 53; and
(b)if the trustee reasonably considers (after taking into account those factors) that the information should not be given to the person,—
(i)the presumption does not apply; and
(ii)the trustee may decide to refuse the request for trust information.
[11]Section 49 of the Act defines what is meant by “trust information”:
trust information —
(a)means any information—
(i) regarding the terms of the trust, the administration of the trust, or the trust property; and
(ii) that it is reasonably necessary for the beneficiary to have to enable the trust to be enforced; but
(b)does not include reasons for trustees’ decisions.
[12] Sections 51 and 52 provide for two different forms of disclosure. Section 51 imposes an obligation on trustees to notify basic trust information as defined in that provision to every beneficiary or their representative without the need for a request. Whereas s 52 concerns the requirement to disclose trust information when requested by a beneficiary. The duties imposed are framed as presumptions which are rebuttable if, after taking into account the mandatory factors set out in s 53, the trustee reasonably considers the information should be withheld. Section 53 provides:
53 Procedure for deciding whether presumption applies
The factors that the trustee must consider (for the purposes of sections 51(2)(a) and 52(2)(a)) are the following:
(a)the nature of the interests in the trust held by the beneficiary and the other beneficiaries of the trust, including the degree and extent of the beneficiary’s interest in the trust and the likelihood of the beneficiary receiving trust property in the future:
(b)whether the information is subject to personal or commercial confidentiality:
(c)the expectations and intentions of the settlor at the time of the creation of the trust (if known) as to whether the beneficiaries as a whole and the beneficiary in particular would be given information:
(d)the age and circumstances of the beneficiary:
(e)the age and circumstances of the other beneficiaries of the trust:
(f)the effect on the beneficiary of giving the information:
(g)the effect on the trustees, other beneficiaries of the trust, and third parties of giving the information:
(h)in the case of a family trust, the effect of giving the information on—
(i)relationships within the family:
(ii)the relationship between the trustees and some or all of the beneficiaries to the detriment of the beneficiaries as a whole:
(i)in a trust that has a large number of beneficiaries or unascertainable beneficiaries, the practicality of giving information to all beneficiaries or all members of a class of beneficiaries:
(j)the practicality of imposing restrictions and other safeguards on the use of the information (for example, by way of an undertaking, or restricting who may inspect the documents):
(k)the practicality of giving some or all of the information to the beneficiary in redacted form:
(l)if a beneficiary has requested information, the nature and context of the request:
(m)any other factor that the trustee reasonably considers is relevant to determining whether the presumption applies.
The siblings’ argument
[13] As something of an opening salvo, the siblings were critical of the approach taken by Public Trust, and in particular its view that Mrs Hutton likely has an absolute vested proprietary interest in the document sought.5 Public Trust had taken the position that, in the absence of a statutory obligation to disclose, it could not elect to do so without Mrs Hutton’s consent. At that stage, Mrs Hutton had not become involved in the proceeding. As noted, when she did, Public Trust took a step back. The siblings maintain Public Trust has effectively ‘washed its hands’ of the matter despite it being the party that carries the duty of disclosure. However, the validity of that criticism is largely beside the point given Mrs Hutton’s active opposition to the application.
[14] Public Trust has no means of funding any ongoing involvement as a trustee. All the assets of the Trust have now vested and, apart from facilitating a wider accounting exercise that relates to earlier litigation, Public Trust views its role as now being limited. Its retirement from the contest is, in the circumstances, understandable and the position it has taken does not bear on the merits of the application or my approach to the outcome.
[15] The Kain siblings argued the distribution deed constitutes “basic trust information” which Public Trust should, on its own initiative, have provided to them.
5 Lambie Trustee Ltd v Addleman [2021] NZSC 54, [2021] 1 NZLR 307 at [43].
However, I do not consider the distribution deed falls into the statutory definition of that term. It was submitted the deed formally informs the Kain siblings “whether or not” they are beneficiaries but the obligation to notify basic trust information includes only the fact that a person is a beneficiary of the trust, not that they are no longer a beneficiary. Arguably, in any event, the letter the Kain siblings received in September 2008 advising the Public Trust had exercised its power under the Trust deed to advance the distribution date and the reasons why it had done so, provided such notification.
[16] In light of the requests made by the Kain siblings of Public Trust, their application rests on the effect of s 52 of the Act and whether the factors to be considered under s 53 do not, in the circumstances, permit the presumption in favour of the disclosure of trust information to be rebutted. Three of those factors were addressed as relevant considerations.
Nature of the siblings’ interest (s 53(a))
[17] The Kain siblings maintained that under the Trust deed they are not simply to be classed as “discretionary capital beneficiaries” but are among a class of capital beneficiaries who, subject to the power of appointment held by WAX Couper, stand or stood in the absence of such an appointment possessed of the trust capital in that capacity “as tenants in common in equal shares”. They argued they have not received convincing evidence their interests have been “properly closed off” and have been seeking formal evidence of that fact since December 2020 when their first request was made. Their position remains that which they communicated to Public Trust at the time of their request, that the trust document they are seeking (the distribution deed) had the effect of terminating their interests and they maintain the right to see formal evidence of that termination.
[18] The Kain siblings reject Public Trust and Mrs Hutton’s position that because they have “no prospect of receiving trust property” their standing to seek such information no longer exists. It was submitted on their behalf that a beneficiary’s right to information has to be assessed with reference to the nature of their interest as it stood at the time the document they are seeking was generated. They argued the contingencies which have now come to pass should not affect their ability to hold the
trustee to account for its trusteeship of the decisions that affected them when they were beneficiaries.
[19] The siblings submitted that as beneficiaries they are entitled to view documents which evidence the making of decisions (if not the reasons for them) that affect them.6 Notwithstanding the contingency of the siblings’ interest, it was argued the distribution deed is a document which affects them and therefore falls into the category of a record which they should be permitted to view. It was submitted that if the distribution deed was not properly executed in compliance with the requirements of the Trust, then notwithstanding the death of WAX Couper in 2019 they could still have a claim to the income of the Trust from that date until the original vesting date of 21 December 2022.
Confidentiality (s 53(b))
[20] In response to Mrs Hutton’s assertion the distribution deed is a confidential document, the siblings submitted that it is entirely unclear what confidential information it would contain that has not already been advised to them in correspondence from the trustee that included the reasons for bringing forward the distribution date. While it is acknowledged that commercial and personal confidentiality are valid considerations, it is noted that Mrs Hutton has disclosed that the Trust property has been vested in a trust for her and her children’s benefit. It is not therefore apparent what other information would be contained in the distribution deed that could be considered confidential.
[21] It was further noted that Public Trust has adopted an inconsistent approach because it has seen fit to disclose the reasons for its decision which is information that falls outside the parameters of trust information, yet withheld the distribution deed itself.7
The effect on the beneficiary of giving the information (s 53(f))
[22] The siblings argued this consideration is not relevant. So long as the distribution deed conforms to the terms of the Trust deed, Mrs Hutton’s position will
6 Lynton Tucker, Nicholas Le Poidevin and James Brightwell, above n 1, at [21–041].
7 Trusts Act, s 49(b).
be unaffected. Concerns about potential non-compliance with the requirements of the Trust cannot legitimately warrant non-disclosure. In respect to any apprehension expressed by Mrs Hutton regarding the genuineness of the siblings’ application and what she has described as an “unhappy history” of long-running family litigation and the fear that disclosure will lead to applications “to re-open the past”, the siblings reject the proposition they have been the predominant source of past litigation. The siblings argued that Mrs Hutton’s real concern is the financial consequences to her should there be some invalidity attaching to the advancement of the distribution date.
[23] Overall, the siblings argued that disclosure is justified. The distribution deed is expressly prescribed as being required by the trust deed, and it is submitted they have a right to ensure the Public Trust exercised its powers properly in compliance with the Trust deed when advancing the date of distribution.
Arguments in opposition
[24] Mrs Hutton argued the application is misconceived, it having been brought some 14 years since the Kain siblings were advised by Public Trust the distribution date had been advanced. Moreover, their interest has now extinguished. It started only as a mere expectation as members of a class of discretionary capital beneficiaries and was replaced in 2000 by a remote contingent expectation that was dependent on Mrs Hutton predeceasing WAX Couper which in turn evaporated in 2008. In any event, notwithstanding the distribution deed, that bare contingent interest dissolved upon his death and Mrs Hutton’s survivorship.
[25] In her formal opposition, Mrs Hutton claimed the distribution deed was a confidential document which in the absence of compelling justification ought not be required to be disclosed. It was emphasised the distribution deed does not constitute basic trust information, and it was argued that as a result the siblings do not have any right to disclosure. It was stressed the Kain siblings had been notified of the trustee’s decision to advance the date of distribution at the time.
[26] The Court was informed that Mrs Hutton had offered to permit a copy of the distribution deed to be inspected on a confidential basis by the Kain siblings’ counsel. Because the only potential utility of disclosure related to its legal validity nothing was
to be gained by them personally accessing the document. Inspection by their counsel, it was argued, would have provided an effective and appropriate resolution to the proceeding.
[27] It was submitted on behalf of Mrs Hutton that, when assessing whether a trustee’s decision not to provide information is reasonable, ss 52 and 53 require a weighing of various factors in the context of the particular circumstances of the individual case. In summary, it was argued the following factors meant there was no justification for disclosure of the distribution deed in this case:
(a)the Public Trust informed the siblings as to the advancement, its entry into the deed and the reasons for it in 2008;
(b)there had been significant delay in making the request for disclosure;
(c)there is no evidence that would suggest invalidity;
(d)it is unarguable the siblings’ interest ceased as at 21 July 2008; and
(e)the siblings’ argument was said to be premised on speculation which points to a collateral motive for disclosure of the deed.
[28] In conclusion, it was submitted the law favours finality, and notwithstanding Mrs Hutton having offered a means to resolve the issue, the siblings seek to pursue their application on a groundless basis.
Analysis
[29] A preliminary issue concerns the standing of the Kain siblings to seek disclosure of the distribution deed. It was suggested that with the lapse of time, the appointment of capital to Mrs Hutton and the death of WAX Couper, that the siblings could no longer be considered as beneficiaries under the Act who could rely upon its terms for disclosure of trust information. The Act defines a “beneficiary” as:8
8 Trusts Act, s 9.
… a person who has received, or who will or may receive, a benefit under a trust (other than a trust for a permitted purpose), and includes a discretionary beneficiary
[30] As noted, the Kain siblings objected to being categorised as a “discretionary beneficiary”. However, the issue that arises regarding the application of the disclosure provisions of the Act is whether in the circumstances the Kain siblings can still be described as persons who “may receive” a benefit under the Trust. In the circumstances of a post facto review of the administration of a trust where a beneficiary has been removed or is no longer eligible to receive a benefit under the trust, the applicant may arguably fall outside the statutory definition of a beneficiary. However, such an approach would undoubtedly impede a former beneficiary’s ability to challenge their ineligible status or hold the trustees to account for decisions made when they were a beneficiary.
[31] I accept Parliament would not have intended the definition of a beneficiary to have resulted in such an outcome. It would conflict with many of the Act’s provisions that emphasise and provide for the accountability of trustees.9 To give effect to the purpose of accountability, a person’s status as a former beneficiary should not preclude them from applying for disclosure of trust information created at a time when they did qualify as a beneficiary under the Act or which, in particular, concerns their exclusion. However, the same circumstances that may bring into question a person’s ability to engage the disclosure provisions of the Act may bear on whether presumptive disclosure should apply to their request and, if so, to what information it should apply.
[32] The distribution deed is information that relates to the administration of the Trust and to trust property. Whether it constitutes information reasonably necessary for the Kain siblings to have to enable the Trust to be enforced is less clear. They argued the distribution deed had the apparent effect of terminating their interest in the Trust so they therefore have a right to view the evidence of that termination. It is further argued that disclosure of the distribution deed is necessary to ensure Public
9 Trusts Act, s 13: “The characteristics of an express trust are as follows:
(a)it is a fiduciary relationship in which a trustee holds or deals with trust property for the benefit of the beneficiaries or for a permitted purpose; and
(b)the trustee is accountable for the way the trustee carries out the duties imposed on the trustee by law.”
Trust has complied with its obligations as trustee of the Trust, including with cl 4 of the Trust deed that is said to require the distribution deed to specifically and expressly provide that the classes of beneficiaries have been closed.
[33]Clause 4 of the trust deed relevantly provides:
SUBJECT to the provisions of clause 1 hereof and subject as herein provided the Trustees shall stand possessed of the capital of the Trust Fund until the arrival of the date of distribution … PROVIDED HOWEVER that the Trustees in their discretion if they think fit so to do may from time to time by Deed appoint a date or successive dates of distribution of the whole or any part of parts of the Trust Fund earlier than the date aforesaid and any such date or dates of distribution so appointed shall then become the date of distribution of the whole or any part or parts of the Trust Fund as by the said Deed or Deeds so appointed for the purposes of this clause 4 and generally of these presents PROVIDED FURTHER that such Deed or Deeds so appointing a prior date or dates of distribution shall not be deemed to close the classes of beneficiaries before the said 21st day of December 2022 unless such deed or deeds specifically and expressly so provide.
(emphasis added)
[34] The Kain siblings submitted that compliance with cl 4 of the Trust deed required Public Trust to have specifically and expressly provided in the distribution deed that the classes of beneficiaries have been closed. Access to that document is said therefore to be needed in order to check whether there has been adherence with that requirement.
[35] Despite the Kain siblings’ submission, it is not apparent from the text of cl 4 that the validity of the distribution deed or a condition of exercising the power to advance the date of distribution is that such a deed specifically and expressly include a statement closing the classes of beneficiaries. The proviso simply ensures the appointment of an earlier date for distribution will not (at least without more) be interpreted as limiting the classes of beneficiaries which may potentially grow. The proviso is a direction as to how such a distribution deed is not to be read. It places no obligation on the trustee to include a particular express statement in order for its effect to be valid.
[36] The relevant factors required to be considered under s 53 of the Act are largely based on those identified by the Supreme Court in Erceg v Erceg.10 The task will involve the Court exercising its supervisory jurisdiction in respect of the proper administration of trusts, in respect of which there are two important considerations to bear in mind. The first is that it must be exercised in accordance with principle, after careful assessment of the factors relevant to the disclosure sought by the particular beneficiary. The starting point will be:11
… the obligation of a trustee to administer the trust in accordance with the trust deed and the duty to account to beneficiaries. A beneficiary who seeks such an account may seek access to documentation necessary to assess whether the trustee has acted in accordance with the trust deed. That can be expected to be the basis on which the beneficiary will seek disclosure of trust documentation.
[37] Secondly, the supervisory jurisdiction is not to be seen as discretionary but one that will involve “assessment and judgment” and which, other than for basic documents, will ordinarily require a careful review of a wide range of factors.12
[38] The purpose of the statutory disclosure regime is to provide beneficiaries with information that will enable them to hold trustees to account. The Kain siblings maintain the distribution deed sought had the effect of terminating their interest in the Trust. Ordinarily this would provide a strong reason for them to view a document that had the effect of ending any chance of a residual entitlement to share in the Trust assets that may have remained as a result of the possibility of Mrs Hutton predeceasing WAX Couper.
[39] That no doubt may have been the position in 2008 when the Public Trust exercised its discretion to bring the distribution date forward and may have remained the position until the death of WAX Couper some 11 years later. However, the issue must now be examined at the time of the siblings’ application, or at least when they first sought the information in August 2020.
10 Erceg v Erceg [2017] NZSC 28, [2017] 1 NZLR 320 at [56].
11 Erceg v Erceg, above n 9, at [51].
12 At [68].
Nature of the interest in the trust held by the beneficiary
[40] While no distinction is to be drawn by the Act between discretionary beneficiaries and beneficiaries who have a proprietary interest in a trust, the nature of the interest of the beneficiary making the request is a factor a trustee should take into account when assessing whether the presumption to give the beneficiary trust information applies. The nature and proximity of the beneficiary’s interest and the likelihood of the beneficiary benefitting from the trust are relevant considerations. The more proximate the beneficiary’s interest the more likely it will be that the presumption in favour of disclosure ought not be displaced.13
[41] In the present case, the Kain siblings’ expectation as members of a particular class of beneficiary was contingent upon Mrs Hutton predeceasing WAX Couper or perhaps even the original distribution date of 21 December 2022. The distribution deed effectively brought their interest, such as it was after the appointment of the Trust capital to Mrs Hutton, to an end. I have already accepted that for the purpose of bringing this application, the Kain siblings’ status as a class of capital beneficiaries remains intact. It is to be acknowledged also that, notwithstanding the apparent displacement of that contingent benefit, the strength of their standing to view Trust information may have survived and indeed may, for a time, have been enhanced given the alteration of their position as a result of the distribution deed. However, as I have also noted, their position must now be examined on the basis of the current situation which has changed.
[42] No explanation has been put forward regarding the timing of the Kain siblings’ request to the trustee to disclose the distribution deed and their subsequent application to this Court. As a result of that delay, there may well be limitation issues regarding any prospective litigation. However, it was emphasised on behalf of the siblings in oral argument that care is required not to draw parallels with the approach to be taken to pre-commencement discovery, which I accept must be the case. The question of a trustee providing information to a beneficiary involves different principles and was governed by a different common law framework which is now reflected in the Act. However, events subsequent to the making of the distribution deed are significant
13 Erceg v Erceg, above n 9; Jacomb v Jacomb [2020] NZHC 1764.
because it is not apparent the Kain siblings realistically have any remaining basis upon which to call the trustee to account.
[43] The survival of Mrs Hutton beyond the original distribution date of 21 December 2022 effectively renders the effect or status of the distribution deed near redundant. Even had the deed failed in its purpose, its validity does not bear on the appointment of the capital by WAX Couper in favour of Mrs Hutton. The suggestion of the siblings having an interest in the income of the Trust between the date of WAX Couper’s death and the original distribution date in 2022 tends to ignore that the Trust asset has been managed by Mrs Hutton’s trust for well over a decade and that the original distribution date of 21 December 2022 has now passed. It is difficult to envisage, having regard to the passage of so many years, that any deficiency in the deed of distribution would alter the current status quo or would be of any practical effect.
Confidentiality
[44] Confidentiality was raised in the notices of opposition but not greatly pursued in oral argument. Recognition should be given to the need to protect the confidentiality of personal and commercial matters and to the existence of any confidentiality clause in a trust document. Concerns regarding commercial confidentiality and the potential breach of a confidentiality clause were material considerations in Erceg v Erceg, particularly as a result of the appellant’s threats to breach the clause and harass beneficiaries.14
[45] In Addleman v Lambie Trustee Ltd there was no confidentiality clause in the trust deed. However, the settlors were described as very private people who had operated the trust with the utmost confidentiality.15 Mrs Addleman, who was effectively the only beneficiary, was not informed about the trust until 12 years after it was settled. She sought information about the trust but was only given the deed. It was argued that other information would reveal personal information. Notwithstanding that concern and an acknowledgement that it weighed against
14 Erceg v Erceg, above n 9, at [56].
15 Addleman v Lambie Trustee Ltd [2019] NZCA 480.
disclosure, it was held that trustees could not escape their obligations to account to beneficiaries by asserting personal preferences for privacy and confidentiality.16 In another case where the question of confidentiality was a material issue, McGuire v Earl, the settlor had included a confidentiality clause but this, in the circumstances of that case, did not prevent disclosure.17
[46] In the present situation Mrs Hutton has asserted that confidentiality should be respected. The Kain siblings submit it is unclear what confidential information the deed would contain that they are not already privy to. I accept the ground for resisting disclosure based on confidentiality appears tenuous. No indication has been given of what type of information could possibly be considered confidential is contained in the document. I accept this is not a persuasive factor.
Proposed inspection by counsel
[47] There are two other contested considerations. The first is Mrs Hutton’s offer, through her counsel, to permit a copy of the distribution deed to be confidentially inspected by the Kain siblings’ counsel. In her affidavit, Mrs Hutton affirmed the deed did close the class of beneficiaries as at its date of execution and that she is prepared to allow the siblings’ counsel to inspect the deed on a “counsel only” basis. It was submitted the only issue raised in respect of the validity of the deed appears to relate to the claimed requirement of cl 4 which is argued can only be progressed by the siblings taking legal advice. It was argued there was therefore no utility in having the document viewed by them personally which cannot be otherwise achieved by their counsel inspecting the deed. This, it was submitted, would be a reasonable and efficient way of dispelling any lingering doubts regarding the deed’s validity if such are genuinely held by the siblings.
[48] I acknowledge that such a compromise appears to offer a practical outcome that would avoid unnecessary costs. However, I accept the Kain siblings are entitled to at least insist on viewing the deed themselves as beneficiaries and to have the issue determined in accordance with the statutory disclosure framework. It was argued that
16 At [51].
17 McGuire v Earl [2020] NZHC 3083.
beneficiaries should be able to rely on the Act’s requirements without having to engage lawyers in order to view trust information to which they are otherwise entitled. I accept that is self-evident from the disclosure scheme provided by the Act. However, the fact remains both parties are legally represented. That said, I do not consider the fact such an offer has been made can materially bear on whether in the circumstances the trustee was able to reasonably consider the presumption in favour of providing the information did not apply and could reasonably refuse the Kain siblings’ request.
History of litigation
[49] The second matter raised relates to Mrs Hutton’s articulated concerns about what is described as the “unhappy history” of more than two decades of litigation and her lack of confidence the present application is based on any genuine concern regarding Public Trust’s administration of the Trust or the 2008 decision that resulted in the distribution deed. I have already noted the delay by the Kain siblings in making their request of the trustee. That factor may bring into question their possible motivation for raising this issue at this time. However, the siblings dispute any allegation they have been the cause of what undoubtedly has been very lengthy and complex litigation or that they have been the predominate instigators of past proceedings.
[50] This limited proceeding is not an appropriate vehicle to review the merits or otherwise of the parties’ approaches to past litigation, nor would such an exercise greatly advance the issue of disclosure. The application before the Court relates to the disclosure of a single document. Mrs Hutton may well have reservations as to whether this will provide a seed for further litigation and a repetition of what has gone before, but I accept that is speculative. Moreover, I am simply not placed to judge assertions and denials regarding the wider background to allow it to materially influence my assessment of the disclosure application.
Decision
[51] The case for disclosure in favour of a beneficiary will be compelling if it is intended to provide for the meaningful monitoring of a trustee’s adherence to the terms
of the trust and its administration.18 The siblings have argued that because the distribution deed had the effect of terminating their interests they have the right to see it. I consider that would have been a strong argument some 15 years ago, but it is not apparent how disclosure of the document will practically benefit the useful oversight of the Public Trust’s adherence to the trust deed. The siblings’ delay in seeking this information after having at the time, in 2008, been formally advised of the trustee’s decision and indeed provided reasons why the distribution date was being advanced, significantly detracts from their application. Any residual interest that would ordinarily justify beneficiaries having access to such a document has all but perished in the intervening period. Their connection with the Trust is now a significantly distant one.
[52] On balance, in the unusual circumstances of this case I am not satisfied that disclosure is reasonably necessary to enable the beneficiaries to enforce the Trust. With the passage of time, it is not apparent there is any interest left to enforce. The basis for the siblings’ enquiry is at best speculative. Further, it is not apparent that any possible vindication of suspected alleged invalidity would result in a change to the parties’ present position. There is no apparent basis to suggest invalidity, and the information provided at the time by Public Trust only endorses that view. If the siblings’ interest did not cease as at 21 July 2008, it did as at 21 December 2022. I am not satisfied there is any potential or possible argument that some residual interest would be revived should the distribution deed be found to have fault. I do not consider that speculative interest (after a delay of such a long period of time) results in the distribution deed being information that is reasonably necessary for the beneficiaries to have to enable the Trust to be enforced.
[53] In the circumstances of this case it has not been shown the requested information is required to be disclosed to give effect to the objective of trustee accountability. That being the case, I am not satisfied the beneficiaries need this document to enforce the Trust and that it should therefore be disclosed by the trustee. I do not consider such a course of action is necessary to the purpose of achieving the proper administration of the Trust.
18 Erceg v Erceg, above n 9, at [56].
Result
[54]The application is dismissed.
Costs
[55] Mrs Hutton is entitled to costs as the successful party, as is Public Trust to the point it took no further active part in the proceeding.
Solicitors:
Izard Weston, Wellington Wilson Harle, Auckland
Duncan Cotterill, Christchurch
5
0