Re Londonderry's Settlement
Trustees of a discretionary trust are not obliged to disclose to beneficiaries the reasons for their decisions or documents revealing their deliberations.
Facts
The trustees of a settlement had power, with the consent of certain people, to appoint capital among a class of beneficiaries. They decided to end the settlement and distribute the capital. One of the beneficiaries, Lady Helen Walsh, the settlor's daughter, was unhappy with the amount she was to receive, and asked to see the minutes of the trustees' meetings and correspondence about the decision.
Legal principle
The Court of Appeal held that the trustees did not have to disclose the documents. Harman LJ said that trustees exercising a discretionary power are not bound to disclose to the beneficiaries the reasons for their decisions, and that documents revealing their deliberations, such as minutes and agendas, are not trust documents that beneficiaries are entitled to see. Otherwise, it would be difficult for trustees to exercise their discretion freely, and family disputes would be encouraged. The approach to disclosure was later reconsidered in Schmidt v Rosewood Trust.
Related cases on certainty of objects and discretionary trusts
- Re Baden's Deed Trusts (No 2) [1973] Ch 9
- Re Barlow's Will Trusts [1979] 1 WLR 278
- Breakspear v Ackland [2008] EWHC 220 (Ch), [2009] Ch 32
- Re Gulbenkian's Settlements [1970] AC 508
- Re Hay's Settlement Trusts [1982] 1 WLR 202
- IRC v Broadway Cottages Trust [1955] Ch 20
- Re Manisty's Settlement [1974] Ch 17
- McPhail v Doulton [1971] AC 424
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