McGuire v Earl
[2020] NZHC 3083
•20 November 2020
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE
CIV-2020-409-278
[2020] NZHC 3083
UNDER the Trustee Act 1956 BETWEEN
CHRISTOPHER ALAN LESLIE McGUIRE
Applicant
AND
CHRISTOPHER KNOX EARL, ERROL MANNERING BARNES and GEOFFREY WILLIAM JAMES ROCHESTER BASHER
as trustees of the DENNIS PATRICK McGUIRE TRUST
Respondents
Hearing: 2 November 2020 Appearances:
J R Pullar and M P Davis for the Applicant
G A Cooper and M L Rhodes for the Respondents
Judgment:
20 November 2020
Reissued:
23 November 2020
JUDGMENT OF ASSOCIATE JUDGE LESTER
This judgment was delivered by me on 20 November 2020 at 3.00 pm pursuant to Rule 11.5 of the High Court Rules
Registrar/Deputy Registrar 20 November 2020
Note: Judgment re-issued to correct the surname of Mr Pullar in para [41] under the Slip Rule.
McGUIRE v EARL [2020] NZHC 3083 [20 November 2020]
[1] The applicant, Christopher McGuire (Christopher), applies for summary judgment seeking orders that the defendant trustees disclose the information listed below in relation to the Dennis Patrick McGuire Trust (the Trust) established by Christopher’s late father, Dennis Patrick McGuire (Dennis).
[2]Christopher seeks:
(i)statements of accounts;
(ii)copies of all Minutes and Resolutions;
(iii)any documents pertaining to any distributions;
(iv)all documents pertaining to any gifting or debt incurred; and
(v)bank statements for all bank accounts.
[3] The Trust was settled by Dennis on 19 December 2011. Dennis died on 17 October 2012. At the time of Dennis’ death, Christopher was 18 years old.
[4] Christopher is one of only two living discretionary beneficiaries of the Trust, the other being Christopher Knox Earl (Mr Earl), who is also one of the trustees. It is clear that Mr Earl was a close friend of the settlor (Dennis) – Mr Earl being described in the Trust Deed as “a close, lifelong friend and foster brother to the Settlor”.
[5] The evidence is, at least for the purposes of a summary judgment application, that Christopher’s relationship with his father was, to say the least, difficult.
[6] Affidavits filed by the trustees state that the relationship between Christopher and Dennis deteriorated significantly in the later stage of Dennis’ life. Dennis is reported as having told Mr Earl that Christopher had abused him and that he was not pleased with Christopher’s lifestyle which involved drug use.
[7] Mr Barnes’ evidence is that Christopher had a history of drug abuse and violence towards Dennis. Mr Barnes says that at one point he found Dennis with deep
bruising which Dennis reported had been caused by Christopher because Dennis had refused to give Christopher money for drugs. The evidence of Mr Basher is to a similar effect.
[8] As I will refer to later in this Judgment, both Mr Basher in his affidavit, and Mr Rhodes, counsel for the trustees, during his submissions, referred to what they called “Christopher’s propensity for violence”. That is notwithstanding there is no evidence of violence by Christopher since his father’s death over eight years ago.
Principles applicable to a request for information from trustees
[9] I adopt the summary of Cooke J in Jacomb v Jacomb as an appropriate summary of the principles which reflect the approach taken by counsel in this case:1
[7] The first point is that, whilst it is initially for the trustees to make a decision on whether to provide disclosure to beneficiaries, an application to the Court requires the Court to exercise its own judgment, and make its own decision on whether disclosure should be made. As the Supreme Court in Erceg held:
[18] We consider the correct position is that the Court’s jurisdiction on an application for the exercise of the supervisory jurisdiction is not limited to the grounds of review of a discretionary decision by the trustees. Rather, the Court must exercise its jurisdiction as a court of equity, exercising its own judgment as to whether disclosure ought to be made at all and, if so, to what extent and on what conditions.
[19] The supervisory jurisdiction is an inherent jurisdiction of the Court. It is complementary to the Court’s statutory jurisdiction under the Trustee Act 1956.2
[8] The Supreme Court also addressed, in some detail, the approach that should be adopted in relation to disclosure applications. It held as follows:
[51] We see the starting point as being 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.
…
1 Jacomb v Jacomb [2020] NZHC 1764.
2 The present case relates only to the inherent jurisdiction and we do not express any view about the statutory jurisdiction under the Trustee Act 1956.
[53] However, it must be borne in mind that there will normally be a number of beneficiaries and the underlying principle in deciding whether disclosure will be made will be identifying the course of action which is most consistent with the proper administration of the trust and the interests of the beneficiaries, not just the beneficiary requesting disclosure.
…
[56] Drawing these threads together, we consider the matters that need to be evaluated in relation to an application for disclosure of trust documents include the following:
(a)The documents that are sought. Where a number of documents are sought, each document (or class of document) may need to be evaluated separately, given that different considerations may apply to basic documents such as the trust deed and more remote documents such as the settlor’s memorandum of wishes.
(b)The context for the request and the objective of the beneficiary in making the request. The case for disclosure will be compelling if meaningful monitoring of the trustee’s compliance with the trust deed in the administration of the trust could not otherwise occur. In this regard, it may be relevant that disclosure has been made to other beneficiaries. However, assuming no improper motive on the part of the beneficiary seeking information, the fact that disclosure has previously been made to other beneficiaries will rarely be a decisive factor against disclosure.
(c)The nature of the interests held by the beneficiary seeking access. The degree of proximity of the beneficiary to the trust (or likelihood of the requesting beneficiary or others in the same class of beneficiaries benefitting from the trust) will also be a relevant factor.
(d)Whether there are issues of personal or commercial confidentiality. Recognition should be given to the need to protect confidential matters of a personal or commercial nature. The Court should also take into account any indications in the trust deed itself about the need for confidentiality in relation to commercial dealings or private matters in relation to particular beneficiaries.
(e)Whether there is any practical difficulty in providing the information. If the information sought by the person requesting the information would be difficult or expensive to generate or collate, that may be a factor against requiring its disclosure.
(f)Whether the documents sought disclose the trustee’s reasons for decisions made by the trustees. It would not normally be appropriate to require disclosure of the trustees’ reasons for particular decisions.
(g)The likely impact on the trustee and the other beneficiaries if disclosure is made. In particular, would disclosure have an adverse impact [on] the beneficiaries as a whole that would outweigh the benefit of disclosure to the requesting beneficiary? In the case of a family trust, this may include the possibility that disclosure would embitter family feelings and the relationship between the trustees and beneficiaries to the detriment of the beneficiaries as a whole. However, on the other hand, non-disclosure may have a similar effect.3
(h)The likely impact on the settlor and third parties if disclosure is made. The impact that disclosure will have on the settlor and/or on third parties will need to be considered.
(i)Whether disclosure can be made while still protecting confidentiality. This may require that copies of documents supplied to a beneficiary are redacted to ensure non-disclosure of confidential information.
(j)Whether safeguards can be imposed on the use of the trust documentation. Examples would include undertakings and inspection by professional advisers only and other safeguards to ensure the documentation is used only for the purpose for which it was disclosed.
…
[60] As noted earlier, the starting point is the obligation of trustees to administer the trust in accordance with the trust deed and their duty to account to beneficiaries. So the strongest case for disclosure would be a case involving a request from a close beneficiary for disclosure of the trust deed and the trust accounts, which would be the minimum needed to scrutinise the trustees’ actions in order to hold them to account.
[9] In circumstances described as “unusual” the Court ultimately held in that case that even the basic documents such as the trust deed and financial statements should not be disclosed.4 The Court concluded that the risk of harassment by the applicant was significant and the benefits of disclosure were outweighed by the potential detriment.
3 As Potter J noted in Foreman v Kingstone [2004] 1 NZLR 841 (HC).
4 Erceg v Erceg [2017] NZSC 28, [2017] 1 NZLR 320 at [101].
[10] These principles were subsequently applied by the Court of Appeal in Addleman v Lambie Trustee Ltd.5 In that case the applicant, who was also estranged from her family, was granted disclosure of information. The Court said:
[28] One of a trustee’s fundamental duties is to maintain proper accounts in respect of trust property and have these available for inspection by beneficiaries. This is a necessary incident of a trustee’s fiduciary duty to account to the beneficiaries. Failure to keep such accounts is a breach of trust. While a beneficiary does not have an absolute right to the accounts, the circumstances in which such accounts may properly be withheld from a close beneficiary are likely to be limited.6 As the Supreme Court observed in Erceg, “the strongest case for disclosure would be a case involving a request from a close beneficiary for disclosure of the trust deed and the trust accounts, which would be the minimum needed to scrutinise the trustees’ actions in order to hold them to account”.7
[11] In my view it is of assistance when applying these principles to bear in mind their purpose. As the above passage illustrates, the reason why beneficiaries are normally entitled to information is that such disclosure can operate as a means by which the trustees’ performance of the terms of the relevant trust are checked, and the objects of the trust ultimately promoted. This is in the best interests of the trust and its beneficiaries, including the beneficiary seeking information. That also explains the exception to the principle. If particular disclosure would likely result in the objects of the trust being adversely affected then a basis to withhold disclosure arises. Disclosure to one beneficiary may be adverse to the interests of the wider beneficiaries because of such ramifications. It seems to me, therefore, that ultimately the Court is considering what is in the best interests of the trust and its beneficiaries.
[10] The applicant, Christopher, first sought information about the Trust at the end of 2018. Initially, there were relatively informal requests through Christopher’s solicitors by way of text messages to Mr Earl, seeking a copy of Dennis’ Will and the most recent financial accounts for Dennis’ estate. These early requests were met with advice that the trustees were changing solicitors. Eventually, in mid-2019, the current solicitors for the trustees advised they had been instructed and would reply in short order. Around three weeks later, the trustees’ solicitors replied to Christopher’s solicitors advising Christopher was not a beneficiary under the Will and that the Trust had been settled by Dennis during his lifetime, into which Dennis had gifted the majority of the assets. The letter advised that Christopher was a discretionary beneficiary under the Trust.
5 Addleman v Lambie Trustee Ltd [2019] NZCA 480.
6 Foreman v Kingstone [2004] 1 NZLR 841 (HC) at [88].
7 Erceg v Erceg, above n 4, at [60].
[11] On 18 July 2019, Christopher’s solicitors wrote to the trustees requesting the information that is at issue in this proceeding, along with a copy of Dennis’ Will, a Codicil to that Will and the Trust Deed.
[12] There were further delays on the part of the trustees and eventually in August 2019, the trustees’ solicitors advised they preferred to provide the Trust documents at a meeting with Christopher and his solicitors present. Christopher’s solicitors replied saying they preferred to have the information prior to any meeting.
[13] By September 2019, Christopher’s solicitors advised they had been instructed to file proceedings in the absence of any of the information requested being forthcoming.
[14] In October 2019, the trustees’ solicitors provided a copy of the Trust Deed, a Deed of Appointment of Trustees and a copy of the financial statements for the year ended 31 March 2018. The trustees’ solicitors referred to having a Memoranda of Wishes which Dennis wanted to be kept confidential. The trustees wished to meet with Christopher to discuss how they saw their role in assisting Christopher in his future.
[15] Christopher’s solicitors replied, acknowledging receipt of the documents and renewed the request for a copy of Dennis’ Will, the Codicil and the documents at issue in this proceeding.
[16] The trustees’ solicitors wrote back advising no further information would be disclosed unless Christopher agreed to meet with the trustees.
[17] It was not until May 2020 that Christopher’s solicitors again wrote to the trustees’ solicitors advising that unless the requested information was provided, these proceedings would follow. These proceedings were filed on 15 June 2020.
[18] Accordingly, prior to the issuing of these proceedings, Christopher had been provided with a copy of the Trust Deed, a Deed of Appointment of Trustee and a copy of the financial accounts for the year ending 31 March 2018, and nothing else.
[19] Probate had not been obtained of Dennis’ Will as the value of the Estate did not require that step to be taken.
[20] With the issuing of these proceedings, some further documents were provided, including Dennis’ Will, but the trustees maintained they had provided sufficient information to Christopher to permit him to determine whether the trustees had acted in accordance with the Trust Deed. In addition to the claim the trustees had met their disclosure obligations, they also relied on the information sought as being confidential.
[21] In Erceg v Erceg, the Supreme Court considered the documents sought in that case against four categories.8 Category 1, described as “basic documents for which the strongest case for disclosure can be made”,9 includes the Trust Deed itself and any Deed of Variation and financial statements. Notwithstanding that financial statements are in Category 1, the trustees only provided financial statements for the years prior to March 2018 on the day Christopher’s submissions for the summary judgment hearing were due to be filed. The financial statements have now been provided for the years ending 31 March 2013 to 31 March 2020.
[22] In the financial accounts for the year ended 31 March 2014, under the heading “Trust Capital”, there is a debit of $181,996 with the narration “Estate D McGuire Distributions”. In round numbers this represented approximately 40 per cent of the funds in the Trust. Christopher’s solicitors raised a number of questions about the financial accounts, including an explanation in respect of the item listed as “estate distribution”. The letter in reply advised as follows:
7.2We have sought instruction from the Trust accountant as to the distribution titled “Estate of D McGuire”. That entry relates to a number of transactions which balanced to result in a net debit from the Trust’s accounts, and include:
7.2.1Receipt of sale proceeds for vehicles;
7.2.2A refund for legal fees;
7.2.3Distributions to beneficiaries;
8 Erceg v Erceg, above n 4, at [73].
9 At [73].
7.2.4A donation to the Ruth Spearing Cancer Research Trust (Dennis McGuire’s specialist); and
7.2.5Payment of tax.
7.3The transactions were made in accordance with the deceased’s wishes. The trustees are under obligations of confidence in relation to a number of the transactions within that figure.
[23] What attracted the immediate attention of counsel for Christopher is that the Ruth Spearing Cancer Research Trust (the Research Trust) is not a beneficiary of the Trust, nor is it possible to determine from the financial accounts, or from the information as set out above, what is covered by item 7.2.3 or the value of each of the transactions that net out to the $181,996.00.
[24] Counsel for the trustees had to acknowledge the distribution to the Research Trust was to an entity that is not a beneficiary under the Trust.
[25] Mr Rhodes, counsel for the trustees, who said everything that could be said on behalf of the trustees, sought to rely on powers conferred on the trustees to add to the class of discretionary beneficiaries. As para 7.3 of the trustees’ response set out at [22] above suggests, Mr Rhodes explained the payment to the Research Trust was made in accordance with a Memoranda of Wishes of Dennis.
[26] A Memoranda of Wishes does not override the terms of the Trust Deed. The starting position is the trustees made an unauthorised distribution of a substantial portion of the Trust assets, albeit it cannot be said at this point in the proceedings how much of the distribution was unauthorised, given the lack of detail provided by the trustees.
[27] On any view of the principles governing disclosure of trust information, the trustees will need to provide the fullest and frankest disclosure in respect of the transactions that made up the Estate Distributions entry. The description transaction/s in the financial accounts “Estate D McGuire Distributions” is misleading. The Will of Dennis did make six small bequests of around $1,000 each, but the printout from the trust account ledger of the solicitors acting for the Estate suggests that almost all of these were made from funds that were in the Estate. It is largely the documents
in relation to the Estate Distribution which are the subject of the application. The financial accounts show no further distributions from the Trust, other than an annual distribution to Christopher of $1,000, or in one year $1,500. The financial accounts record a loan of $40,000 to Mr Earl that seems to have been repaid.
[28]I now turn to each of the categories sought in the application.
Financial statements and statements of accounts
[29] As noted, these have now been provided. The fact they have been disclosed is relevant to the other categories, as I will touch on below.
Minutes and Resolutions
[30] Christopher accepts he is not entitled to disclosure of the trustees’ reasons for exercising their discretion but I accept the submission that this is not a basis for the trustees’ blanket withholding of the Minutes and Resolutions of the Trust. Minutes and Resolutions are classified by the Supreme Court in Erceg as similar to Category 1.
[31] The trustees assert that the majority of documentation sought by Christopher would reveal the trustees’ reasons for their decision-making. They submit the redactions are to protect confidentiality, that the reasons for their decision would make the documents worthless, and that almost the whole document would need to be redacted.
[32] The redactions should be the minimum required to protect personal information which is truly confidential, commercially confidential information, the reasons relating to the exercise of the trustees’ discretion, and possibly information which would cause family disharmony. Where Christopher is the only non-trustee living beneficiary of the Trust, I do not see the last factor as having significance. Nor does it seem to me that commercial factors have any relevance given the Trust Fund is in cash. It is common ground that the reasons for the trustees exercising their discretion can be redacted. That leaves personal matters that are truly confidential.
[33] As I will be making orders for disclosure, the trustees may redact the documents to be disclosed. If there is an issue as to the number of redactions, Christopher is permitted to, by memorandum of counsel, require unredacted copies to be provided to me to vet the redactions.
[34] The other ground that runs through the trustees’ reasons for not providing the documents sought, is confidentiality. This has at least two limbs.
[35] The first is that Dennis’ Memoranda of Wishes contains a directive to the trustees to keep its contents confidential. Secondly, the trustees have concerns as to how Christopher would react to information which reveals Dennis’ guidance to them.
[36] The trustees say, as the Memoranda of Wishes directed them as to how the settlor (Dennis) wished the Trust to be distributed, almost all of the documentation Christopher seeks would breach their obligation of confidence.
[37] Assuming the Memoranda of Wishes does impose an obligation of confidence on the trustees, I do not consider that obligation sufficient to permit the trustees to resist the disclosure application. Firstly, in respect of the disclosure concerning the
$181,996, given the wholly inadequate treatment of this in the financial accounts and the less than fulsome explanation set out at [22] above, full details as to where this money went and why, with all surrounding material, is at the heart of the trustees’ disclosure obligations.
[38]As the Court of Appeal held in Addleman v Lambie Trustee Ltd:10
The case for disclosure will inevitably be stronger if the beneficiary is able to demonstrate misconduct based on the information already available.
However, this cannot be a precondition to an order requiring disclosure …
[39] The disclosure in the financial accounts in respect of the entry “Estate D McGuire Distributions” was not accurate (as Mr Rhodes responsibly acknowledged) and the response from the trustees’ solicitors was incomplete.
10 Addleman v Lambie Trustee Ltd, above n 5, at [34].
[40]In Foreman v Kingstone, this Court said:11
The fundamental duty of the trustees is to be accountable to all beneficiaries. That cannot be compromised by a settlor’s desire for confidentiality in relation to his and the trust’s personal and financial affairs unless there exist exceptional circumstances that outweigh the right of the beneficiaries to be informed.
[41] In short, Dennis’ desire for confidentiality expressed, in this case in the Memoranda of Wishes and not in the Trust Deed, cannot justify the trustees withholding information relating to what, as I have said, is prima facie an invalid distribution to a non-beneficiary. Further, the circumstances surrounding the balance of the $181,000 requires explanation. It was not acceptable for a number of transactions – debits and credits – to be netted into a single entry. Nor am I persuaded that the trustees’ concerns about an adverse reaction from Christopher are warranted. I accept the submission of Mr Pullar, counsel for Christopher, that there is an inconsistency in the trustees’ response on this issue. The trustees say they have concerns about the consequences of full disclosure, in particular, if they should have to reveal the Memoranda of Wishes. The trustees submit these concerns arise from evidence of physical abuse by Christopher against one of the trustees and the conduct of Christopher in the later stages of Dennis’ life.
[42] As I have noted, Mr Rhodes’ submissions referred to Christopher having a “propensity for violence”, including evidence of direct verbal abuse against Mr Barnes. I am satisfied this point is not made out. I acknowledge the evidence provided by the trustees as to Christopher’s drug use and the claims that he physically abused Dennis, are not disputed by Christopher.
[43] Accordingly, and being mindful this is a summary judgment application, I proceed on the basis that there is a reasonably arguable factual basis for the trustees’ assertions of violence by Christopher towards Dennis and of drug use by Dennis. However, this relates to conduct when Christopher was 18 or 19 years old – eight years ago. There is no evidence of any similar conduct by Christopher since that time. Further, when the evidence is examined to identify to what extent, if any, the conduct complained of was directed at the trustees, it is minimal.
11 Foreman v Kingstone, above n 3, at [93].
[44] Mr Barnes refers to having to assist Dennis issue a trespass notice against Christopher in around August 2012. Having served Christopher with a trespass notice requiring him to leave his home, Mr Barnes reports that Christopher responded “with a short burst of personal abuse”. Mr Barnes says he maintained his composure and Christopher left the premises within 20 minutes. On the strength of that exchange, Mr Barnes asserts that he has been fearful of the consequences of Christopher knowing how the trustees had been directed by Dennis to administer the Trust.
[45] Mr Basher recounts what Dennis told him about Christopher’s violence towards Dennis but he does not recount any direct violence or abuse towards himself. Notwithstanding that, Mr Basher says he is concerned “given Christopher’s lifestyle and propensity for violence, he may become violent towards the trustees or relatives if he is told what Dennis’ wishes were…”.
[46] Mr Earl’s evidence is to a similar effect, that is, that Dennis told him he had been assaulted by Christopher. Mr Earl does not claim to have been subject to violence or verbal abuse from Christopher.
[47] Mr Earl’s evidence is the trustees had a meeting with Christopher soon after Dennis’ passing, where the trustees outlined how the Trust was to operate, why it was set up by Dennis and the trustees’ expectations of Christopher going forward. At that meeting Christopher was given a cheque for $1,000. Mr Earl says that on the way out, Christopher put the cheque back on the table and said, “I don’t want any of Dad’s money”. This is shortly after the alleged violent actions by Christopher towards Dennis. Christopher’s apparently mild reaction at that meeting is hardly consistent with the trustees’ having a reasonable belief that eight or more years later Christopher would react violently if given the disclosure he now seeks.
[48] Nor are the trustees’ present protestations about the risk of violence consistent with the fact that Mr Earl says he spoke with Christopher on an annual basis, apparently without any issues arising.
[49] As I noted earlier, the trustees’ position was that they would not provide documentation without there being a meeting. Christopher’s evidence is that on
several occasions the trustees have said to him that they want to have a meeting with him without solicitors present.
[50] While the evidence is that Christopher’s relationship with Dennis was troubled, or at least there is reasonably arguable evidence to that effect, none of the conduct alleged by the trustees against Christopher, other than a short burst of verbal abuse, comes close to a reasonable foundation for them wanting to maintain confidentiality because of the risk of how Christopher would react to disclosure.
[51] Accordingly, I do not accept that confidentiality either because of Dennis’ wishes or the claimed concern about how Christopher would react is relevant to the issue of disclosure of the Minutes and Resolutions or the other categories of documents sought.
Documents pertaining to distributions
[52] The trustees resisted disclosure of documents concerning distributions on the ground that it would be unnecessary following the provision of the financial statements. This was the position of Mr Earl in his affidavit in opposition to summary judgment. Given what I have said about the accuracy of the financial statements, I do not accept this assertion. As I have said, Mr Rhodes properly accepted the description in the financial statements that the distribution of the $181,996 was not accurate. The trustees’ basis for resisting disclosing documents relating to distributions, gifting or debt incurred, on the grounds the accounts can be relied on, falls away.
Bank statements
[53] I am satisfied that the disclosure of bank statements relating to all bank accounts operated by the Trust should be disclosed to Christopher. If the financial statements that have been disclosed are accurate, then the bank statements will not provide anything new. If the financial accounts are not accurate, as has been accepted in respect of one important aspect, then it is appropriate that the source documents be disclosed.
[54] No issues of commercial confidentiality are relied on in respect of the bank statements, which is not surprising given the Trust assets are essentially cash held on term deposit.
Conclusion
[55] In terms of the relevant factors from Erceg set out at [9] above, I am satisfied that Christopher’s objective in seeking the documents subject to this application means the application is a compelling one. It is appropriate that the trustees’ compliance with the Trust Deed be subject to a proper review given the unsatisfactory state of affairs around the “Estate D McGuire Distributions” entry. As Christopher is one of only two living discretionary beneficiaries, and the only non-trustee beneficiary, I am satisfied that he is, in terms of Erceg, a close beneficiary. He has a high degree of proximity to the Trust. I also note Christopher’s children (if he has any), will be the final beneficiaries and I consider he is entitled to also look to their interests.
[56] The matter of confidentiality I have discussed above. There is no suggestion of any practical difficulty in providing the information. Whether the documents will disclose the trustees’ reasons for decisions being made by the trustees, I have also discussed. Redactions aimed at this issue, and this issue alone, are appropriate as Christopher’s counsel accepts. The likely impact of disclosure on the trustees is a matter I have discussed above when considering the trustees’ concerns about any adverse reaction from Christopher. As I have said, I do not consider this a relevant factor. Nor was there any suggestion that disclosure would impact on third parties – the settlor (Dennis) having passed on.
[57] As to the need to protect confidentiality, I have concluded the trustees must give comprehensive disclosure in relation to all transactions that make up the “Estate D McGuire Distributions”. The disclosure is to include the instructions given to the trustees’ accountants, any drafts of the accounts for the year ended 31 March 2014, all correspondence between the trustees relating to the accounts, and between them and their accountants.
[58] As I have said, the reality is that since the entry “Estate D McGuire Distributions” in the financial accounts for the year ended 31 March 2014, there
appears to have been very little activity in the Trust. The documents to be disclosed from that point should be limited. That said, redactions may be necessary in respect of the trustees’ decision to distribute to Christopher $1,000 or thereabouts for each year since the death of Dennis, but the thoroughly unsatisfactory way in which the distribution of the $181,996 is recorded in the financial accounts and the inadequacies of the explanation already provided, as set out at [22] above, mean that I am satisfied Christopher has established that the trustees do not have a reasonably arguable defence to this application. In short, Christopher has demonstrated that the disclosure provided by the trustees to date is insufficient to allow the trustees administration of the Trust in accordance with the Trust Deed to be verified.
[59] As confirmed in Erceg, the court must exercise its jurisdiction as a court of equity and exercise its own judgment as to whether the disclosure sought ought to be made and on what conditions.12
[60] Accordingly, the application for summary judgment is granted. Orders are made in terms of paras A(ii), (iii), (iv) and (v) of the prayer for relief in the statement of claim.
[61] The trustees should be left in no doubt that full and comprehensive disclosure is required which, for the avoidance of doubt, is to include disclosure referred to at
[57] above.
[62] Leave is reserved for Christopher to apply to the Court if issues arise in respect of the extent of disclosure or of any redactions made. The disclosure is to be provided with 15 working days of the date of this judgment.
[63] Costs are reserved and will follow the event. If not agreed, Christopher’s submissions are to be filed within 10 working days and not more than five pages in length. Any reply is to be filed within a further 10 working days, again not more than five pages.
12 Erceg v Erceg, above n 4, at [18].
[64] Counsel are to address who should bear Christopher’s costs, and at what level, and whether the trustees should have their costs paid from the Trust fund.
Associate Judge Lester
Solicitors:
Taylor Shaw, Christchurch Cavell Leitch, Christchurch
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