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Tutorial Question Solution

Trustees have a duty to distribute trust property to beneficiaries according to the trust instrument. They are responsible for ensuring the correct beneficiaries receive the proper amounts. Trustees also have a duty to provide beneficiaries information about the trust and allow inspection of trust documents, as beneficiaries have an equitable interest. However, there are exceptions - beneficiaries do not have access to documents they have no interest in, or those containing the trustee's reasons for decisions. Trustees must also keep accurate accounts of the trust management and property, but they can appoint agents and are not required to audit accounts unless the trust instrument specifies it.

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112 views

Tutorial Question Solution

Trustees have a duty to distribute trust property to beneficiaries according to the trust instrument. They are responsible for ensuring the correct beneficiaries receive the proper amounts. Trustees also have a duty to provide beneficiaries information about the trust and allow inspection of trust documents, as beneficiaries have an equitable interest. However, there are exceptions - beneficiaries do not have access to documents they have no interest in, or those containing the trustee's reasons for decisions. Trustees must also keep accurate accounts of the trust management and property, but they can appoint agents and are not required to audit accounts unless the trust instrument specifies it.

Uploaded by

Nabila Liaw
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Solution.

Initially, trustees have a duty to distribute the trust property to those entitled to receive them as provided by

trust instrument. Trustees are responsible for ensuring that trust assets are distributed to the correct

beneficiaries and in correct amounts. Trustees may have the discretion to distribute the property wherein the

trust instrument permits. In the case of Re Gulbenkians Settlement Trust [No.1] [1968], the discretion was on

the trustees whether or not to pay income to certain beneficiaries. The court will not review their decision where

it finds that trustees have decided in good faith and at appropriate times to give nothing from the income to any

of the beneficiaries.

Additionally, trustees are also under a duty to provide information in relation to the trust fund to the

beneficiaries and allow them to inspect trust documents. Since beneficiaries are beneficial owners or the trust

property, they are also equitable owners of relevant trust documents. This is illustrated in ORourke v.

Darbishire where it was held inter alia that a beneficiary has the right to access documents in which he desires

because they are beneficiaries to the trust. Income beneficiaries are entitled to examine the full set of accounts

whereas capital beneficiaries are restricted to accounts relating to capital transactions.

The characteristics of trust documents are laid down by his Lordship Salmon in the case of Re Londonderrys

Settlement as (i) documents which are in possession of the trustees whom are trustees (ii) documents containing

information about the trust which the beneficiaries are entitled to know (iii) The beneficiaries have a proprietary

interest in the documents and accordingly entitled to see them (iv) any part of a document that lacked the

second characteristic would automatically be excluded from the document in its character as a trust document.

However, there are exceptions in regards to the duty to provide information. Firstly, the right does not extend

to documents which the beneficiary has no beneficial interest in. Secondly, it does not apply to documents which

does not belong to trustees or documents which contains the reasons for the decisions made by the trustees.

Hence, while the beneficiaries have the right to access to see the decisions of the trustees, they may not be

given access to documents that records reasons for the decision made by the trustees especially where

discretionary trusts comes into the picture. Based on the case of Re Marques of Londonberrys Settlement, the

trustees were to distribute the trust fund in such proportions as they think fit but one of the recipients

complained that she received too little and therefore wanted to inspect all the documents which would have
indicated the reason which led the trustees to do as they did however the court refuses to allow the beneficiaries

to inspect the reasons behind those decisions.

In Hartigan Nominees Pty Ltd v. Rydge, Mahoney JA declared that beneficiaries do not have access to

confidential documents. He found that there are documents whereby information are given to the trustee upon

the basis that they would be treated as confidential, not every aspect of confidentiality needed to be examined.

For example, a settlor may communicate confidential information about a beneficiary as a reason for not

exercising a discretionary power in his favour, a beneficiary may communicate to the trustee information as to

his assets which he desires to keep confidential, information communicated in the context of personal family

affairs the disclosure of which would be abrasive or distressing.

Consequently, a trustee has a duty to keep accounts. The general rule is that a trustee is under a duty to provide

his beneficiaries with a full and accurate record of his stewardship and management of the trust property, from

which the beneficiaries can see whether the trustee has obeyed the provisions of the trust instrument and the

manner he has done so. According to Pearse v. Green, a trustee is required to keep and render proper, clear

and accurate financial accounts. He must allow the beneficiaries or his solicitors to inspect those accounts when

he is requested to do so. In Re Page, a trustee must be able, at the request of the beneficiary to give the latter

full and accurate information on the state and value of the trust fund. The statutory provision available is section

28 of the Trustee Act which gives power to the trustee to employ agents in respect of maintaining accounts. In

fulfilling this duty, a trustee may appoint an agent in good faith and exercising his active mental capacity. Section

27 (4) supports this contention by stating that trustees maycause the accounts of the trust property to be

examined or audited by an independent accountant.

In application of the matter at hand, Tham and the other trustees have a duty to distribute the property, to keep

accounts and also to provide information to Ruby and other beneficiaries. Where the trust instrument provides

for the discretion of the trustee, according to Re Gulbenkians Settlement Trust, trustees may distribute property

as they please as long as it is done in good faith. The courts will not interfere with their decisions. As such, the

distribution of income to Violet, Jade and Ruby must not be done in bona fide.

In other respects, Tham has a duty to provide information to Ruby in respects of the trust document to counter

her feelings of being treated differently. Tham may provide an explanation to her however, she cannot be given
records which states the reason behind Thams reasons for giving her 20% of the income of the trust as

illustrated in the case of Re Marques of Londonberrys Settlement. Although she may be the beneficial owner of

the trust, some documents are meant to be kept confidential as stated by his Lordship Mahone in Hartigan

Nominees Pty Ltd v. Rydge.

Furthermore, Ruby is allowed to have access to the trust accounts. Tham is under the duty to provide her with

the full and accurate record of his management of the trust property. Ruby contended that trustees have

breached their duty by not auditing the accounts for the last two years. Section 27 and 28 of the Trustees Act

provides power to trustees to employ agents. There is no duty for them to have the accounts audited unless

there is a specific requirement under the trust instrument. Arguably, Tham and his associates have not breached

any duty in this aspect.

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