I act for a beneficiary seeking Schmidt disclosure. Trust is discretionary and my client is one of settlor’s children and has received distributions in past. The trustees say that they are prepared to provide disclosure, but advise that the trust instrument contains following provision, requiring written consent of protector:
“Subject to the provisions of clause 24 below and except to the extent that the Trustees (with the prior written consent of the Protector) in their discretion otherwise determine no person or persons shall be provided with or have any claim right or entitlement during the Trust period to or in respect of accounts (whether audited or otherwise) or any information of any nature in relation to the Trust Fund or the income thereof or otherwise in relation to the Trust or the trusts powers or provisions thereof (and whether from the Trustees or otherwise)”.
The protector has not provided written consent and refuses to give reasons, and says there are no limits on this power. My client has difficult relationship with protector, but doesn’t want to seek removal. If protector’s correct, and power is unlimited, then effectively the irreducible core of valid trust - accountability - is absent. Protector rejects this - saying that she’s policing trustee. Do forum users have any thoughts on whether this gives rise to a validity issue, and whether court might order Schmidt disclosure in absence of protector consent?
In RE AN APPLICATION FOR INFORMATION ABOUT A TRUST  SC (Bda) 16 Civ, (2013) 16 ITELR 85 Kawaley CJ considered the effect of a provision in a trust deed permitting the Trustees to give information to the protector but forbidding the provision of information to anyone else without the protector’s consent. Kawaley CJ did not think that this provision invalidated the trust or violated the irreducible core content requirement, although he did consider that such an express provision meant that the court’s jurisdiction to intervene could not be as broad as it would be if the trust deed were silent on access to information. Nevertheless he did not consider that it precluded the Court from exercising its inherent jurisdiction under Schmidt, whatever the attitude of the protector, and I would have thought that the same ought to follow here.
It would seem to me that the extent of clause 24 be known to render a competent opinion.
Does the Protector control the Trustee or just oversee the Trustee’s administration of the Trust?
Based on the wording of the lead post above it seems as though the former scenario is in effect.
What information is the Beneficiary seeking and how does it affect their standing as a Beneficiary?
A further review of the duties and rights of the parties involved might shed more light on this.
The draftsman in Re…A Trust had clearly gone to great lengths to try to prevent precisely the result that the Bermuda Court came to. For myself, I don’t think that (private purpose trusts apart) a protector with power to police the trustee can cure what would otherwise be an unenforceable trust, even more so if the protector’s powers are explicitly personal. I think most courts faced with the same or a similar problem would agree that the Schmidt jurisdiction cannot be ousted by the terms of the trust instrument, at least without invalidating the “trust”.
What I find harder to understand from the Bermuda decision is what practical effect, if any, the information control provisions had on the result. the Court stressed that it should have regard to the terms of the trust and the clear intention to limit disclosure (which as I recall the applicant beneficiary had explicitly agreed to). What more might have been ordered to be disclosed in that case had there been no attempt to fetter the trustee’s duty/beneficiary’s right ?
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