In Jacomb v Jacomb Cooke J provides a considered assessment of disclosure in the context of a troubled and disenfranchised beneficiary. The case highlights the need for careful analysis of facts when seeking disclosure, the relevant principles, and importantly given that the Trusts Act 2019 will come into full force and effect on 30 January 2021, that “… it is likely that
the decision of the Supreme Court in Erceg v Erceg, and of the Court of Appeal in Addleman v Lambie Trustee are likely to be highly relevant to the application of the statutory provisions [of the Trusts Act] when they into effect.”
In favour of disclosure Cooke J observed that:
- the plaintiff had a direct and legitimate interest in the trust as a discretionary and final beneficiary and it follows that she has a very direct interest in the administration of the Trust
- the estrangement between the plaintiff and her parents mean that there are legitimate reasons to question whether she will receive beneficial entitlements as a consequence of the exercise of powers by the trustees.
- given the plaintiff’s issues with addiction she is a person who is potentially in need of help
- where trustees have not complied with the terms of a trust deed, this can buttress a claim for access to trust documentation in order to assess whether the trustees have acted in accordance with the terms of the trust.
Militating against disclosure were concerns:
- that disclosure would be used for improper purposes, which would be inconsistent with the best interests of the Trust and the beneficiaries
- that providing disclosure would encourage a continuation of the acrimonious relationship that has been the plaintiff and the settlors, which would be detrimental to the beneficiaries of the Trust
- that based on previous experience, providing disclosure would undermine the Trust
- regarding the adverse impact on the family
The decision of the court was that disclosure should not be required as disclosure would lead to further abusive communications, and to the misuse of information so disclosed including for potentially dishonest and even criminal activities. See .
Importantly, regarding the decision about making disclosure, as noted at  by reference to the Supreme Court decision in Erceg v Erceg at :
” … 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.”
Another facet of the decision in Jacomb v Jacomb related to a period of time where the third trustee was a company of which the settlors (who were trustees personally) were the sole directors and shareholders. This was relevant as the terms of the trust provided that:
- THE number of Trustees shall be kept up to at least two (2) (at least
one of whom shall at all times be a person or body who/which is not a Discretionary Beneficiary and is not a relative (within the meaning of Section 2 Income Tax Act 1976) of any Discretionary Beneficiary) in number and all decisions or actions of the Trustees pursuant to this Deed shall be valid and effectual if agreed to unanimously by the Trustees or in the case of there being no unanimity by a majority of Trustees, which majority must include at least one such Trustee who/which is not a Discretionary Beneficiary nor a relative of any Discretionary Beneficiary.
While on the face of this does not exclude a company of which beneficiaries are directors and shareholders, the court was not satisfied that the provisions of clause 15 were met where there was no voice independent of the settlor / trustee/ beneficiaries. As stated at :
“… In my view the third defendant could not act as a third trustee whilst it was owned and controlled by the other two trustees. It was incapable of providing a third voice. I doubt that it could perform the role as an additional trustee at all in those circumstances. There is no doubt that a corporate body can be a trustee, but it must be capable of performing the functions and duties of a trustee. For example it must be able to attend meetings and make decisions. Here the third defendant was indistinguishable from Mr and Mrs Jacomb. When it attended meetings of the trustees to make decisions it could only reflect the will of the other two trustees. It could only agree with what they had both decided, and could not break any deadlock if there was disagreement between them. It could certainly not introduce the independence required by cl 15. The agent or representative of a discretionary beneficiary must also be treated as a discretionary beneficiary for the purposes of cl 15.”
Memoranda of wishes
Moving forward, while historically memoranda of wishes may have properly been classified as documents that are private between a settlor and trustees, these views may need to be reconsidered. As noted at  in Jacomb v Jacomb “For example the financial information, and documents concerning the settlor’s wishes, can be seen as documents that are rudimentary in order for a beneficiary to understand the nature of the Trust, and their interest in it.”
- Jacomb v Jacomb  NZHC 1764
- Erceg v Erceg  NZSC 28
- Addleman v Lambie  NZCA 480
- Andrew Butler (ed) Equity on Trusts in New Zealand (2nd ed, Thompson Reuters, Wellington, (2009) at 4.1.2 (1) and (2)