8/9/2019 Hartigan Nominees and Another v Rydge

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Hartigan Nominees and Another v Rydge

Held: A memorandum of wishes provided by the instigator of a discretionary trust for the use ofthe trustees in exercising their powers is not a document which the trustees were obliged todisclose to a beneciary on request if the memorandum was provided on a condential basis

The trustee may, in exercising his discretion in relation to the trust, take into account any suchmemorandum of wishes he may consult beneciaries to provide support for a conclusion he hasreached as to the exercise of the discretionary power or in order appropriately to inform himself,but he need not do so! "pecial cases apart he is not bound to inform a beneciary apt to bea#ected of his or the settlor$s views in any particular case!

%acts:

&orman 'arreel settled ()* on +urmon &ominees and Hartigan &ominees to be held bythem upon trusts set forth in the deed executed by them! Trustees acquired nine of theten shares in nbeear -ty .td! "ir &orman died, +urmol &ominees retired as a trustee and/i0quoit -ty .td was appointed as a trustee in his place! The plainti# 1ichard 1ydge is agrandson of the late "ir &orman! +r 1ydge invited the trustees to exercise their power tomake certain payments to him but they had not done so! They referred to a memorandumsigned by "ir &orman indicating his preferences and wishes as to what T should do! +r1ydge commenced proceedings to inspect the memorandum and that the defendantscannot take into account +emorandum of wishes

2ssues:

)3 whether a discretionary beneciary having a contingent or possible interest in trust fundsis entitled to see the statement of wishes given T by the instigator of the trust

43 whether T, in exercising their discretions, are entitled to take into account that statementof wishes

1uling:

The interest of Mr Rydge in the trust fund

The interest of ' may be relevant to obligations of T! -ower T has in relation to ' may be barepower which he may or may not exercise or a power which T is obliged to exercise! A person whois one of a number of potential ' dependent upon how a discretionary power is exercised doesnot have the same rights in respect of these matters as a beneciary who has an interest vestedin interest! T is ordinarily obliged to give due consideration to the exercise of a power to appointamong possible beneciaries and to determine whether and in whose favour the power is to beexercised! A possible beneciary under such a power may, depending on the terms of the power,be entitled to sue to ensure that proper consideration is given to the exercise of the power! Theinterest which +r 1ydge has is su5cient to support the claim he now has!6nclear whether there is at present a nominated beneciary or who that beneciary is! +r 1ydge

has an interest in the trust of one or many kinds! He has in respect of the capital an interestvested in interest but not in possession! He has a contingent interest in income vested in interestbut postponed to any nominated beneciary and sub7ect to the exercise by the trustees of theirdiscretionary powers!

May the trustees take into account the wishes of Sir Norman Rydge as expressed inthe memorandum?

memorandum not produced!

%or discretionary power: power must be exercised by T, he must exercise in proper way

and must exercise it by reference to proper consderations! +ust not abdicate discretion toanother

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T must not merely give e#ect to memorandum but also to the wishes there expressed! He

must consider the instant exercise of the power and make his own decision! The discretionmust be within limits which the law allows!

8iscretion must be exercised bona de, to give e#ect to the purposes for which the power

was given and reasonably!

T not obliged to notify the possible beneciaries of his intention to use the power or give

them the opportunity to make representations to him! 9here there are many possiblebeneciaries and their circumstances are various, it would be impossible to enter upon an

examination of the individual needs of each and ordinarily such an examination would nothave been contemplated by the settlor or instigator of the trust!

9ishes of a settlor may be taken into account! Those wishes outside the terms of he trust

must not be inconsistent with the purposes of the trust as appearing from its term! 2t isstrange if the trustee could not have regard to such matters!

Trustee is not bound to consult beneciaries or to ascertain their views! He may do so in

order to provide support for the conclusion he has reached as to the exercise of thediscretionary power or in order appropriately to inform himself but he need not do so! Andspecial cases apart, he is therefore not bound to inform a beneciary apt to be a#ected ofthe views of himself or of the settlor as to what should be done in the particular case!

Thus can take into account memorandum

The right of the plainti to inspect the memorandum

in general, T is not obliged to volunteer documents or information to beneciaries or

possible beneciaries! However, if a beneciary requests it, a trustee, is in general obligedto provide documents and information to the beneciary, at his cost, in relation to thetrust property and to provide an accounting in respect of the administration of it

in general there is a right but there are limits to what the trustee must show or say to a

beneciary: doubt that it is the trustee$s duty to inform all persons who may possibly take under a

discretionary power of the nature and extent of that possibility! A class of possiblebeneciaries under a discretionary trust mat be wide and capable! &ot duty of trustee toseek out such persons and inform them of the possibility of their rights

right to request inspection is limited to documents and information which is relevant tothe property of the trust! 2t does not extend to documents or information as to which abeneciary, he has no proprietary interest! !g! right does not extend to notes made for orby T of discussions with other ' or with the settlor

there are documents that are condential! 9here settlor has been given information in

condence in relation to the exercise of discretionary powers, another beneciary is notentitled, by the exercise of his right to see and be informed, to see such documents andreceive such information! !g! settlor may communicate condential information tobeneciary as a reason for not exercising a discretionary power in his favour

need not disclosed if the result of disclosure will be to make known the reasons why a

discretionary power has been exercised in circumstances where the disclosure is not

required and has not been made by the trustee! Therefore, cannot inspect condential documents if memorandum is condential

A beneciary may not, be alleging merely that a document contains a settlor$s wishes,

seek discovery to ascertain whether the document contains wishes which should not betaken into account! A beneciary may support a case by discovery but may not use theprocess to ascertain whether a case exists!