The common grounds for challenging trustees’ decisions are:
In some cases, a beneficiary may be able to claim that steps taken to implement a decision were not authorised by the terms of the trust. Such a challenge would involve an examination of the trust documents to determine the scope of the trustees’ powers and analysis of whether the trustees’ acts were permitted by those powers. If an act by trustees' is not within their powers, it will be invalid.
A beneficiary who wishes to challenge trustees’ decisions may face difficulties in obtaining the necessary evidence. This is because beneficiaries are not entitled to all trust documents as of right.
In a recent New Zealand case, Erceg v Erceg, the scope of a beneficiary’s rights to information was in issue. The Court of Appeal recognised that trustees have discretion with regards to disclosure of information. This discretion must be exercised in accordance with trustees’ fiduciary duties, and be balanced against the interest beneficiaries have in the proper administration of a trust and ensuring that the settlor’s wishes are met.
Beneficiaries are likely to have a right to ‘core’ trust documents like the trust deed and general information on assets and liabilities. However, documents which contain commercially sensitive or personal information about others may be withheld or redacted. This position could change in the near future with significant changes proposed by the terms of the Trusts Bill.
We have considerable experience in acting for beneficiaries who challenge trustees’ decisions, and also for trustees' responding to such challenges.