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(October-2003) Private and confidential: does a trustee have to reveal all?
The decision in Crowe v Stevedoring Employees Retirement Fund Pty Ltd (No. 8648/2002) has been handed down by the Victorian Supreme Court.
The case relates to the obligation of a superannuation trustee to provide trust documents and other information to beneficiaries under the general law. More specifically, the central issue distilled down to whether the information sought by the beneficiary fell within the concept of “internal working document” as articulated in the case of Re Londonderry's Settlement (1965, 1 Ch 918).
The beneficiary in question sought information concerning a benefit enhancement effected by the trustee.
Two legal principles were discussed. The first is the general rule that a trustee must allow a beneficiary to inspect trust accounts and provide information relating to its dealings in trust property (Spellson v George, 1987, 11 NSWLR 300) and in another formulation, that a trustee is generally obliged to provide documents and information to the beneficiary in relation to trust property and provide an accounting in respect of its administration (Hartigan Nominees Pty Ltd v Rydge).
The second principle is, of course, the main exception to the first principle which is that “trustees exercising a discretionary power are not bound to disclose to the beneficiaries their reasons for exercising that power, and accordingly are not bound to disclose agendas, minutes and other documents prepared for their meetings” (as expounded in Re Londonderry’s Settlement).
There follows in the case a lengthy analysis of whether the principle in Re Londonderry’s Settlement applies to superannuation trusts. The discussion traverses a substantial number of cases including Tierney v King (1983, 2 Qd R 580) where the principle was applied to superannuation trustees and Hartigan Nominees v Rydge (1992, 29 NSWLR 405) where there was some discussion of whether the Tierney v King stance should be endorsed. The discussion, naturally enough, extends to the principle that trustees need not give reasons for their decisions, citing comments in Telstra Super Pty Ltd v Flegeltaub (2000, 2VR276) and Dillon v Burns Philp Finance Ltd (unreported, 20 July 1988) as revealing some judicial inclination to separate superannuation trustees from the benefit of the protection afforded by the Re Londonderry’s principle.
At the end of the day, Her Honour Balmford J found that there was too much judicial momentum endorsing the application of the Re Londonderry’s principle to superannuation trustees; that is, a trustee generally does not need to release materials which disclose reasons for the trustee’s decision.
Accordingly, her Honour determined that the question to be considered in this case was whether production of the material by the trustee was prohibited by Re Londonderry. She found that it was not. The decision represents a marked departure from established wisdom in a number of key aspects and is currently under appeal by the trustee.
— Michael Vrisakis and Mag Girgis are superannuation partners, Blake Dawson Waldron.
AUTHOR
Zilla Efrat
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