Disclosure is a live matter in the context of discretionary trusts during the transition from the current position (at the discretion of the trustee with no presumption for or against) to what the position will be when the Trusts Act 2019 applies from 30 January 2021.
Addleman v Lambie Trustee Limited (see Disclosure request declined – 24 years a leap too far for a beneficiary who had already received 25%) addresses the intervening period with a compelling narrative that invites sympathy for the beneficiary Ms Jamieson who suffered a spinal injury at a young age.
Mrs Addleman, by contrast appears to be the lucky recipient of the generous distribution from the trustees of more than $4m. The trustees advised Ms Addleman that the distribution represented “… the full distribution of funds that will be coming to [her] from Lambie Trust.”
Mrs Addleman was curious as to the circumstances of the Lambie Trust and sought further information. Her initial claim was unsuccessful and no order for disclosure was made for the following reasons:
(a) The Trust was settled for the primary purpose of ensuring Ms Jamieson’s welfare and financial security. The cost of her care is extraordinarily high and will continue throughout her life. These costs are currently AUD 250,000 per annum but are likely to increase. By contrast, all four children, Mrs Addleman, Ms Jamieson, Anthony and Meredith are beneficiaries of a separate family trust, the AJ Trust, settled in 1978, which has no connection with the Lambie Trust.
(b) Mrs Addleman was only included as a beneficiary of the Trust on a contingent basis in case Ms Jamieson died at an early age.
(c) The Trust was settled with Ms Jamieson’s compensation payment and earnings thereon.
(d) Mrs Addleman has already received what was said to be a final distribution of NZD 4.257 million in 2002, calculated as 25 per cent of the Trust’s net funds at that time. This was in accordance with Mr Jamieson’s memorandum of wishes. The Judge considered there was no real prospect of Mrs Addleman receiving any further distribution.
(e) The extent of disclosure already provided, including the statement from Mr Palmer dated 14 November 2014 confirming the source of the funds transferred to the Trust and the letter from Mr Kemps to Mr Jamieson in 2000 recording Mr Jamieson’s wishes as to the distribution of funds from the Trust.
(f) The real prospect of further intra-familial discord and litigation if the orders requiring disclosure were made.
(g) There was no suggestion of a breach of trust or fiduciary duty in the administration of the Trust. The Trust Deed was drafted by lawyers, and lawyers and accountants were said to be regularly involved in its affairs with tax returns being filed annually. The Judge found that the application was directed to finding a basis for challenging the trustee’s actions rather than being based on a particular concern about the administration of the Trust. The Judge considered this was a major factor favouring dismissal of the application.
Mrs Addleman appealed.
In the High Court there was concern regarding the breadth of disclosure that was sought, which was considered “… unduly burdensome and far beyond the minimum necessary for Mrs Addleman to confirm the proper administration of the Trust.”
On appeal it was conceded that the initial request was over-broad and that the information subsequently sought was confined in the first instance to “the Trust’s accounts, minutes of trustee meetings (with reasons for decisions redacted) and any legal advice or opinions paid for by the Trust.”
Importantly, the Court of Appeal discounted the over-reach from the initial disclosure request due to the period of over 12 years that Mrs Addleman was not made aware of her position as a discretionary beneficiary.
The conclusion reached by the court at  summarises the position and highlights the reality that it is difficult and increasingly disingenuous to deny beneficiaries access to basis trust information for the reasons set out by the Court of Appeal as set out at :
“For the reasons given, we consider the appeal should be allowed to the extent of the more narrowly confined disclosure now sought. In summary, Mrs Addleman falls into the category of a close beneficiary of the Trust. Unless disclosure of basic Trust documents including the accounts is made to her, there is effectively no one who can hold the trustees to account. Taking account of the further evidence available to us, we are far from persuaded that the Trust was funded solely from Ms Jamieson’s compensation payment. Even if it was, the Trust cannot properly be regarded as a “sole purpose trust” or “essentially [Ms Jamieson’s] trust”. In our assessment, the course most consistent with the proper administration of the Trust and the interests of the beneficiaries overall is to order disclosure of these basic trust records.”
In Addleman v Lambie Trustee Limited the Court of Appeal highlights the practical reality that beneficiary rights to information cannot be obfuscated by a compelling narrative. The need to ensure the due administration of any trust can be expected to prevail.