Breakspear & Ors v Ackland & Anor

A settlor’s wish letter concerning a family discretionary trust is ordinarily confidential because it facilitates the trustees’ inherently confidential exercise of dispositive powers. Beneficiaries have no entitlement to disclosure as of right. Trustees must decide whether disclosure serves the beneficiaries’ interests and the sound administration of the trust, and the court retains a supervisory discretion to intervene. The Re Londonderry’s Settlement principle remains good law, notwithstanding the supervisory jurisdiction recognised in Schmidt v Rosewood Trust Ltd. Disclosure may nevertheless become necessary in litigation or when trustees seek the court’s sanction for a proposed distribution. A contractual or express confidentiality restriction cannot improperly fetter trustees’ fiduciary judgment. A broadly construed power authorising trustees to enter transactions concerning the trust fund may disapply the self-dealing rule to dispositive appointments.

The claimants were beneficiaries under the Amport Account settlement. They sought disclosure of the de facto settlor’s written and oral wishes, setting aside of the addition of Patricia as a beneficiary and setting aside of an appointment of income to her. The trustees resisted disclosure on confidentiality grounds and contended that the March 1995 appointments were protected by the settlement’s power permitting self-dealing.

The central questions were whether disclosure of the wish letter was governed by a proprietary entitlement or by discretionary supervisory principles, whether the confidentiality principle in Re Londonderry’s Settlement remained applicable, and whether paragraph 9 of the First Schedule disapplied the self-dealing rule.

1. Disclosure of wish letters. The court held that a beneficiary’s claim to information is an aspect of the court’s inherent jurisdiction to supervise trusts, not an absolute proprietary right. The court’s jurisdiction is discretionary and may involve limits, redaction or safeguards.
2. The principle in Re Londonderry’s Settlement remains good law. The exercise of dispositive discretionary powers by trustees is an essentially confidential process, confidentiality being maintained for the benefit of beneficiaries and the sound administration of the trust. Schmidt v Rosewood Trust Ltd did not disapprove that principle.
3. A wish letter created principally to assist that confidential decision-making process is ordinarily confidential to substantially the same extent as the process itself. Trustees may maintain, relax or abandon confidentiality according to their fiduciary judgment, without being bound by the settlor’s subsequent consent or refusal. They need not give reasons merely because a beneficiary requests disclosure.
4. The court identified three contexts: a request to trustees; a court application concerning disclosure alone; and disclosure sought in existing litigation. In the third context, ordinary relevance and necessity govern. If trustees seek sanction for a proposed distribution, they must make full disclosure to the court and the confidentiality protection will largely be displaced.
5. On the facts, the trustees’ refusal was honest, fair and rational. The claimants’ challenge to that decision failed. Nevertheless, the trustees’ stated intention to seek the court’s sanction for the final distribution made disclosure necessary and outweighed the risk of family discord. Disclosure was therefore ordered, subject to further submissions concerning the trustees’ opportunity to reconsider that intention.
6. Self-dealing. Paragraph 9 of the First Schedule, properly construed in the context of the settlement and its purposes, covered the addition of Patricia as a beneficiary and the subsequent appointment of income to her. The independent trustees approved the transactions, so the self-dealing rule was disapplied. The March 1995 appointments were not voidable on that ground.
7. The alternative arguments that Patricia had not participated, that the three deeds should be treated as one transaction in a different chronological order, and that the deeds should be rectified were rejected or unnecessary. Rectification could not be used to rewrite the intended sequence of events.

First-instance decision of the High Court (Chancery Division). No prior appellate decision is stated in the judgment.