Disclosure of Trust information by trustees to beneficiaries is fundamental in permitting beneficiaries to assert their right to hold trustees to account in the administration of a trust. In parallel, the EU has decided that disclosure of trust information is crucial in the fight against money laundering and terrorist financing. Therefore, two questions arise about the interaction of the two regimes regarding disclosure of trust information: can a beneficiary still obtain trust information where the trustees have decided not to disclose that information, and perhaps a court has agreed with them? And are trustees required to disclose trust information to non-beneficiaries?
In the UK, a beneficiary could use a subject access request (SAR), pursuant to s7 of the Data Protection Act 1998 (DPA), to obtain disclosure against either the trustee (if resident in the UK) or, more importantly for trustees resident in the Crown Dependencies (CD trustees), legal advisors resident in the UK and holding trust information as part of their instructions. The latter was confirmed by the English Court of Appeal case of Dawson-Damer v Taylor Wessing LLP. This case may have consequences for any non-UK resident trustee who instructs the services of UK lawyers.
CD trustees might instruct UK resident lawyers to advise on, for example, a transaction involving London realty. As part of those instructions, CD trustees are likely to provide the legal advisor with copies of trust documentation, including, perhaps, trustees’ minutes and other information that might not otherwise be disclosable to beneficiaries. Pursuant to the aforementioned case, that trust information held by the legal advisor could be exposed to disclosure pursuant to a SAR.
But hang on – the DPA contains a specific exemption from a SAR for legal advice and proceedings. Although this is true, and was argued by Taylor Wessing in Dawson-Damer, the Court of Appeal held that this exemption should be narrowly construed and applied to documentation that could be withheld as a matter of English law. The trust was governed by Bahamian law and the Court of Appeal rejected the argument that the exemption should extend to restrictions under foreign-law principles. The DPA does not contain an exemption mirroring applicable trust-law principles on disclosure, and the Court of Appeal made it clear that parliament would need to include such an exemption if that was the intention. In this regard, the Court of Appeal knew that the purpose of the SAR was for the beneficiary to obtain information to use in Bahamian litigation against the trustee, but held that this was not a ground to prevent compliance with the SAR. Therefore, a SAR under the DPA can circumvent well-established trust-law principles, including the disclosure of trustees’ deliberations not ordinarily disclosable, if held by the legal advisors. Consequently, ‘ﬁshing’ SARs could be used as a litigation tactic.
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