A recent BVI decision highlights the need for trustees to think carefully before refusing information requests by beneficiaries.
In Re the Tchenguiz Family Trust (BVIHCM 2017/00026) the Swiss trustee of a BVI trust was ordered by the BVI Commercial Court to provide information to a discretionary beneficiary relating to claims made by the trustee in various liquidations. The trustee had refused, partly on the basis that the beneficiary may use the information for a collateral purpose, which could cause harm to the trust. The court held that:
To the extent that it is necessary to weigh [the beneficiary's] purpose against any potential harm to the [trust], the balance falls firmly in favour of disclosure. [The beneficiary] has a real purpose in seeing the documents in his capacity as beneficiary, but the [trustee] has not exhibited any real prospect of damage.
Another point made in the decision was that the trustee had insisted that the claim was served on it out of the jurisdiction via Hague Convention channels, resulting in substantial delays. The judge was critical of this approach; the trustee of a BVI trust is subject to the supervisory jurisdiction of the BVI courts and:
delaying or allowing to be delayed the timely determination by the Court of a question turning on the trustee's own conduct, is a matter of concern to the Court and legitimate concern to the beneficiary seeking to hold the trustee to account.
Trustees should think carefully and, if in doubt, take advice before refusing an information request from a beneficiary. The consequences of getting this wrong (not least in potential personal cost exposure for the trustee) can be severe. From a beneficiary's perspective, the door to disclosure may have been opened slightly wider, so the decision is to be welcomed from that perspective.
For further information on this topic please contact Vicky Lord at Harney Westwood & Riegels' Hong Kong office by telephone (+852 5806 7800) or email ([email protected]). Alternatively, contact Jonathan Addo at Harneys' Tortola office by telephone (+1 284 494 2233) or email ([email protected]). The Harneys website can be accessed at www.harneys.com.
