Mandie & Mandie v Memart Nominees Pty Ltd [2014] VSC 290

The case concerned a discretionary trust and the trustee’s duty to provide beneficiaries with accurate information concerning the administration of the trust. Ultimately, it was held that trustees are entitled to “stand mute” and rest upon their entitlement not to give reasons for their decisions.

The plaintiffs, Edward and Nicholas Mandie, were cousins and general beneficiaries of a discretionary family trust. The trustee and defendant in the proceeding, Memart Nominees Pty Ltd, had not made any distribution of the capital or income of the trust in favour of either plaintiff since the mid 1990s.

The plaintiffs sought an order that the defendant provide information about the administration of the trust and the basis for the defendant’s action. The defendant argued that it was not bound to disclose the information sought and that a beneficiary could not initiate an investigation into a trustee’s exercise of its discretion and powers. The defendant also relied upon the protection of confidentiality.

The plaintiffs argued that they were not seeking the trustee’s reasons for not making any distributions. They said they were only seeking ‘information’ anterior to its decision; that is, information available to the trustee as the basis upon which it could make its decision. Alternatively, the plaintiffs alleged that the trustee had waived its immunity by volunteering its reasons previously.

The plaintiffs argued that by not making available the information which may alert them to a breach of trust, their right to obtain relief for a breach of trust action would be undermined.

Ultimately, the Court held that the information requested by the plaintiffs was protected from disclosure by the trustee’s immunity from having to give reasons. Further, the Court stated that the defendant’s had not volunteered information that would allow the Court to examine its reasons or potential basis for exercise of its absolute and unfettered discretion.

The case is a reminder that trustees will remain protected from having to disclose reasons in relation to a discretionary trust and this should always be kept in mind when forming a trust under a will.