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Trustee’s obligations regarding Trust records: A recent Court update

Under the Trustee Act 1936 (SA), a Trustee has an obligation to keep records relating to the management of the Trust and to:

  1. Produce those records for inspection; and
  2. Allow copies of those records to be made.

For example, if a beneficiary under a Trust makes a request for records held by the Trust, then the Trustee must do the above. This issue was discussed in the recent decision of T.G. Bullen Nominees v Bullen & Anor [2024] SASC 95 by the Supreme Court.

The purpose of this article is, in light of the above decision, to discuss the obligations of a Trustee to make Trust records available for inspection where the Trustee claims legal professional privilege (LPP) over the records, or where the Trustee claims that the records are not Trust records.

The Decision at First Instance

On 31 August 2023, a Judge of the Supreme Court made orders requiring the Trustee in Bullen to produce certain records. The Judge also made orders requiring the Trustee to give the Court and the beneficiaries a list of documents held by the Trustee.

The Trustee then appealed those orders, arguing that the orders:

  • Denied the Trustee a reasonable opportunity to argue whether it could refuse to provide the records because they were subject to LPP and that some of the records were not Trust records; and
  • Inappropriately pre-determined issues that were in dispute between the Trustee and the beneficiaries, which would normally be determined at a trial.

The Decision on Appeal

On appeal, the Court of Appeal agreed with the Trustee, stating that the orders of the earlier Judge “denied [the Trustee] a trial of all the issues that it wished to raise in respect of certain records” and were effectively attempting to “pre-empt the trial of whether [the records] …are Trust records at all”.

The Court also held that it has the power to “supervise trusts and order production of trust records”. The exercise of this power is in the Court’s discretion. The decision helps clarify the scope of the Court’s power to ensure Trustees comply with their obligations under the Act.

The decision also clarifies on how a Trustee might refuse provision of certain records. The Court in Bullen cited Rouse & Ors v IOOF Australia Limited (1999) 73 SASR 484, in which it was held:

“… on occasions the reconciliation of these interests may entitle a trustee to decline to provide information to particular beneficiaries, when the trustee has reasonable grounds for considering that to do so will not be in the interests of the beneficiaries as a whole, and will be prejudicial to the ability of the trustee to discharge its obligations under the trust.” (Emphasis added)

This means that in some cases, a Trustee can refuse to provide records to beneficiaries, where the Trustee thinks that providing the records will not be in the interests of the other beneficiaries of the Trust, and where it would negatively impact the Trustee’s ability to discharge the Trustee’s obligations under the Trust.

In refusing to provide records on the basis of a claim of LPP, the Court held that a Trustee would need to accurately describe the legal advice it says is subject to privilege and explain why any assertion of privilege is ultimately in the interests of the beneficiaries of the Trust.

This means that while a Trustee may be entitled to claim privilege over Trust records, it should, in addition to obtaining legal advice, give some careful consideration to the records it says are subject to LPP, and consider why its claim of privilege is in interests of the beneficiaries of the Trust.

Key Takeaways

  • Trustees have a number of obligations with which they need to comply under the Act, which includes maintaining Trust records, and allowing these records to be inspected and copied when requested;
  • Apart from the Act, the Courts have the power to supervise and regulate Trusts, ensuring a Trustee’s compliance with the law;
  • Trustees can refuse to make Trust records available, but must have a good reasons for doing so, and those reasons must be in the interests of the beneficiaries of the Trust;
  • Any Trustee refusing to make Trust records available on the basis of LPP must be able to accurately identify the records which are said to be subject to privilege, and explain why disclosure is not in the interests of the beneficiaries of the Trust;

If you are a Trustee or beneficiary under a Trust and require legal advice, please contact Peter Charatsis, Brenton Priestley, Ashlee Provis or Clairissa Hewitt for more information.

The above is general in nature and is not intended to, and does not, constitute professional advice.