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21st June 2017

A new route to obtaining disclosure of Trust documents?

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The principles applying to a beneficiary’s right to disclosure of Trust documents and information were set down by the Privy Council in the case of Schmidt –v- Rosewood [2003] 2 AC 709. That case confirmed that no beneficiary has a proprietary right or absolute entitlement to information concerning a Trust and that the right to seek disclosure of Trust documents should be regarded as part of the Court’s inherent jurisdiction to supervise the administration of Trusts. However, in a recent, and perhaps surprising, decision, the Court of Appeal has clarified the extent to which the Data Protection Act 1998 (“the DPA”) can be used as an alternative, and potentially wider, route to obtaining disclosure of Trust documents. The case was Dawson-Damer –v- Taylor Wessing [2017] EWCA Civ 74 and the Court of Appeal were asked to grapple with the issue of whether beneficiaries under a Trust should be able to use the DPA to obtain disclosure of documents which they would otherwise not be entitled to under Trust law principles.

Under the DPA a person is able to make a subject access request (“SAR”) for any “personal data” which is in the possession of a “data controller”. Personal data is any data relating to an individual who can be identified by it, including expressions of opinion and any indications of the intentions of the data controller in respect of that individual. Once received, an SAR should be complied with within 40 days and a failure to do so can result in an Order to comply from the Court. In this case the Claimants were the beneficiaries of a number of Bahamian Trusts. Taylor Wessing acted for the Trustees and was the data controller.

Taylor Wessing refused to comply with an SAR made by the Claimants on the grounds that this would involve “disproportionate effort”, that the purpose of the request was to obtain information to use in ongoing litigation relating to the Trusts and that the documents were subject to legal professional privilege. Handing down her judgment, Lady Justice Arden dismissed all three of Taylor Wessing’s arguments and held that they should be ordered to comply with the SAR for the following reasons:

Although a party would be exempt from compliance with an SAR if this would involve “disproportionate effort” this was a high hurdle. A data controller would need to produce evidence to show actual steps which would need to be taken to justify a refusal to comply. Secondly, an individual’s motivation for making an SAR, or the existence of a collateral purpose, will not usually be a relevant consideration unless it points to an abuse of process.

Third and finally, legal professional privilege will not necessarily apply to all documents held by a legal advisor in their Trust files. Although legal advice provided to a Trustee will be exempt, documents such as Letters of Wishes and records of Trustees’ deliberations regarding the exercise of their discretions will probably not attract privilege and will need to be disclosed if an SAR is made.

While there are limitations to the DPA which will still apply, this decision clearly has wide-ranging consequences and the potential to open up the categories of documents which Trustees may have to disclose to beneficiaries. It is not yet clear how this decision will be put into practice but it certainly appears that the Court of Appeal have widened the opportunity to obtain Trust information in cases where a dispute has arisen in relation to the exercise of Trustees’ discretion.

If you would like advice in relation to Trust disputes then please contact Kate Harris on 01223 532762 or email Kate here. We can also advise in relation to Data Protection Issues. Please contact Hannah Postle on 01223 532737 or email Hannah here.