Do beneficiaries have a right to the trust deed?

In Queensland, the statutory rights and obligations of Trustees are contained in the Trusts Act 1973 (Qld)(Trust Act).  The role of the Trustee is fiduciary in nature and as such, there is a duty to act in accordance with both the terms of the deed of trust (Trust Deed) and the common law and statutory duties.  However, the Trust Act does not contain an express provision for a Trustee of a trust to provide a Trust Deed to beneficiaries. As a result, common law provides beneficiaries the right to make such requests to the Trustee.  This article will discuss the common law right of beneficiaries to access a Trust Deed upon request to the Trustee.

Must a Trustee produce the Trust Deed on request by a beneficiary?

A prima facie right of a beneficiary to inspect trust documents and accounts arises from common law principles and the fiduciary nature of a Trustee’s role. This prima facie right can be explained as follows:

  • trust documents in equity are the property of the beneficiaries and because of this they are their property and as a result they have an absolute right to access them[1]; and
  • the fiduciary duty to keep the beneficiaries informed [2] and the liability of Trustees to account to beneficiaries gives rise to a beneficiary’s right to the trust documents.[3]

The case law cited above provides the basis which has led to the development of the term “Trusts Documents Rule”.

What is the Trust Documents Rule?

The Trust Documents Rule provides that a beneficiary of a Trust has a prima facie right to inspect what’s referred to as the “trust documents” (Trust Documents).  The seminal case on the meaning of “Trust Documents” is Re Londonderry’s Settlement [1965] Ch 918, where it was said by Lord Salmon that Trust Documents contained the following features:

  • “they are documents in the possession of trustee qua trustee;
  • they contain information about the trust which the beneficiaries are entitled to know; and
  • the beneficiaries have a proprietary interest in the document and are accordingly entitled to see them”.

 Therefore, the Trust Deed and the accounts of a trading trust would appear to have these features and subsequently fall within the definition of being a Trust Document.  That said, there is authority to suggest that the Trust Deed itself may contain provisions which govern disclosure of different classes of documents and may limit what the Trustee has to disclose.

What Trust Documents is a beneficiary not entitled to?

The case law provides that a beneficiary is not entitled to reasons for decisions of the Trustee,[4] however, if they do provide those reasons, their soundness may be considered by a Court.[5]  The exception was said to be where the exercise of the discretion involved ‘bad faith’.

What are a beneficiary’s rights pursuant to the Trusts Act 1973 (Qld)?

A beneficiary may apply to the Court to review the acts and/or decisions of the Trustee if they refuse to disclose the relevant Trust Documents pursuant to section 8 of the Trusts Act.  An application can also be made by a beneficiary under section 94(3) of the Trusts Act for the Court to make orders in relation to a beneficiary’s entitlement pursuant to the Trust Deed when it is “difficult or impractical to effect the disposition or transaction without the assistance of the Court”.[6]

Does the Trust Act address a beneficiary’s right to the trust deed?

While a beneficiary may apply to the Court pursuant to the Trust Act, their right to the Trust Deed is founded on common law principles.  The Queensland Law Reform Commission recommended that the Trusts Act be amended to include a beneficiary’s right to request Trust Documents in their Report and Interim Report in 2013. The purpose of this would be to remove any uncertainty in relation to the rights of a beneficiary to request Trust Documents.  The Queensland Law Society stated in the Interim Report:[7]

“the Act should impose an absolute duty on all trustees to produce accounts, upon request, to beneficiaries and persons in a discretionary trust who are ‘specifically named, or identified by specific description’, ‘have already been made beneficiaries by objective evidence’, or to whom ‘there has been a discretionary appointment of income or capital’. In respect of other documents, ‘such as trustee minutes and resolutions, correspondence to and from the trustees, external reports and so on”.

The Queensland Law Society further clarified that the Act should either remain silent to allow case law to prevail or to have a general provision that allows such requests being made.[8]

Queensland’s affirmation of the common law principles

The “general rule” provided by Mahoney J in Hartigan Nominees Pty Ltd v Rydge[9] is:

 “In general a trustee is not obliged to volunteer documents or information to beneficiaries or possible beneficiaries. However, if a beneficiary requests it, a trustee is in general obliged to provide documents and information to the beneficiary, at his cost, in relation to the trust property, and to provide an accounting in respect of the administration of it.”[10]

This general rule was cited with approval in the Queensland Supreme Court case of Colston v McMullen [2010] QSC 292 [45].  While this case concerned a discretionary trust in relation to a deceased’s estate, the principles and application of the “general rule” is likely to be applicable in other circumstances.  When concluding the orders (which were in relation to an originating application and costs), his Honour stated that the beneficiary, upon request, could obtain Trust Documents from the Trustee as a general right.

Takeaways

The fundamental role of a Trustee is to act in, and for, the best interests of the beneficiaries; they must account for their actions.  A Trustee should consider these principles and the subsequent prospect of litigation if they choose to refuse the requests of a beneficiary for disclosure of Trust Documents.  Knowing your rights as a beneficiary to request Trust Documents is paramount in circumstances where the Trustee is refusing to disclose the Trust Deed.  Any party concerned about their rights and obligations in a trust should seek legal advice to avoid costs mistakes.

Further references:

Legislation

Trusts Act 1973 (Qld)

Queensland Law Reform Commission, A Review of the Trusts Act 1973 (Qld), Interim Report No 71 (2013)

Queensland Law Reform Commission, A Review of the Trusts Act 1973 (Qld), Report No 71 (2013)

Articles by Dundas Lawyers

Resettlement of Trusts – towards a definitive test

Is your trust deed still not bamford compliant?

Cases

Marigold Pty Ltd v Belswan (Mandurah) Pty Ltd [2001] WASC 209 (10 August 2001)

Colston v McMullen [2010] QSC 292

[1] O’Rourke v Darbishire [1920] AC 581.

[2] Hartigan Nominees Pty Ltd v Rydge (1992) 29 NSWLR.

[3] Blackwell v Bray (1992) 35 FCR 584.

[4] Marigold Pty Ltd v Belswan (Mandurah) Pty Ltd [2001] WASC 209

[5] Re Londonderry’s Settlement [1965] Ch 918

[6] Trusts Act 1973 (Qld) s 194(1).

[7] Queensland Law Reform Commission, A Review of the Trusts Act 1973 (Qld), Interim Report No 71 (2013) 272 [6.247].

[8] Ibid.

[9] (1992) 29 NSWLR 405.

[10] Ibid, 421.

Disclaimer

This article is not legal advice.  It is general comment only.  You are instructed not to rely on the commentary unless you have consulted one of our Lawyers to ascertain how the law applies to your particular circumstances.

Further information

If you need assistance regarding an equity holder dispute or accessing information from a Trustee, please telephone me for an obligation free and confidential discussion.

Brisbane Lawyers
Malcolm Burrows B.Bus.,MBA.,LL.B.,LL.M.,MQLS.
Legal Practice Director
Telephone: (07) 3221 0013 | Mobile: 0419 726 535
e: mburrows@dundaslawyers.com.au

Dundas Lawyers
Street Address Suite 12, Level 9, 320 Adelaide Street Brisbane QLD 4001

Tel: 07 3221 0013

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