March 29 2012 Directions for disclosure: rules under trust law and in civil proceedings Ogier | Private Client & Offshore Services - Jersey Private Client & Offshore Services FactsDirectionsCommentThe Royal Court recently ruled on In the Matter of HHH Trust and in the Matter of the A Fund and in the Matter of Article 51 of the Trusts (Jersey) Law 1984 ( JRC 235). The directions given in this case provide guidance on the approach that the court will take to a beneficiary's request for disclosure of information.Facts The representor's French advocate sought extensive disclosure of documents from both the settlor and trustee, as trustee of the HHH Trust (an employee benefit trust) and the sub-trusts thereunder - including the sub-trust in respect of which the representor was a beneficiary - for the purpose of, among other things, advising the representor in relation to tax.On April 13 2011 the representation came before the court. While a six-week stay was granted, the court indicated that if agreement could not be reached between the parties, then as far as the representor's request for disclosure of information was concerned, it was important that the amended representation set out "clearly and with particularity, what information is sought, the purpose for which it is being sought and the basis upon which disclosure should be ordered by the Court". Furthermore, it should:"address the issue of confidentiality in so far as other beneficiaries not convened are concerned… In so far as the purpose for seeking disclosure relates to tax matters, then I would expect the application to be supported by the advice of tax counsel."When the matter came before the court again on November 30 2011 for directions, the court made the following observations.There is a distinction between disclosure under trust law and disclosure under civil proceedings. In relation to the former, trust beneficiaries have a right to seek information regarding the trustees' stewardship of the trust property generally, not just in relation to matters in dispute. In respect of the latter, disclosure relates only to matters at issue in those proceedings.The court would need to consider the extent to which a beneficiary can seek disclosure from a settlor of a trust.It should be possible for a beneficiary of a sub-trust to seek disclosure of documents held by the trustee of that sub-trust; subject to any legitimate objections and to the extent that such a request will involve considerable work by the trustee, the beneficiary should be asked to pay the likely costs (as estimated by the trustee) in advance.If a beneficiary seeks disclosure of documents relating to other sub-trusts of which he or she is not a beneficiary, the circumstances in which he or she can properly ask to see such documentation is likely to be very limited and consideration must be given as to whether and how the views of the beneficiaries of those other sub-trusts should be heard.In relation to an employee benefit trust, which has a large class of beneficiaries, while a beneficiary is entitled to seek disclosure of documents, it is not unreasonable to require the beneficiary to set out clearly the information sought and the documents or categories of document that he or she requires to see.Directions In relation to the disclosure of documents requested, the court gave the following directions.If the representor wished to have copies of all documents held by the trustee of the sub-trust of which he or she is a beneficiary, then subject to issues of confidentiality and it not being detrimental to the beneficiaries of that sub-trust as a whole, such disclosure should be made without delay on the basis that the representor has paid the costs in advance.The representor should file a list of the documents or categories of documents being sought from the trustee in relation to the HHH Trust. Within 28 days, the trustee should file a list identifying which of the documents or categories of document requested it holds, and identifying those (if any) which it objects to disclosing and the grounds for such objection. Where there is no objection, the documents should be disclosed without delay and without further intervention from the court.The court would hear arguments as to whether the settlor of the HHH Trust is under an obligation to make disclosure to the representor and, if so, what the extent of that obligation might be. The representor was asked to file with the court and the settlor, in advance of the hearing, the categories of documents being sought from the settlor.To the extent that the representor wished to pursue his application for disclosure of documents relating to the other sub-trusts, the court would hear arguments as to the representor's right to such disclosure, and if there was such a right, whether and how the views of the other persons interested should be heard.Comment The directions illustrate the importance for a beneficiary seeking disclosure to set out clearly what information he or she is seeking, the purpose for which it is being sought and the basis on which disclosure should be ordered by the court.For further information on this topic please contact Jane Wycherley at Ogier by telephone (+44 1534 504 000), fax (+44 1534 504 444) or email ([email protected]).