Trustee Responsibilities

Disclosure of trust information to beneficiaries is commonly considered. However, what of disclosure to the trustees? In the case of Daniel v Cundall Mr Daniel and Mr Cundall were the trustees of a trust. Mr Daniel, a lawyer, said that he left the day-to-day trust administration to Mr Cundall.

After a long period of time Mr Daniel decided he should be more actively involved with the affairs of the trust. He requested copies of the trust’s financial records from his co-trustee, orally in the first instance, then in writing and then by lawyer. When no information was provided he filed proceedings. Once served with legal proceedings his co-trustee took legal advice and the requested trust information was provided.

However this was not the end of the matter. Mr Daniel had incurred legal costs of $18,088, which he sought to recover from Mr Cundall. Mr Cundall suggested that Mr Daniel meet his own costs as Mr Daniel had disregarded his responsibility as a trustee for many years.

From the court’s perspective the matter was unclear. While proceedings by beneficiaries against trustees to obtain trust documents are not unusual, a proceeding by one trustee against another trustee to obtain trust documents appears relatively uncommon.

In deciding the matter, the court (perhaps surprisingly) did not apply any discount for Mr Daniel’s prolonged absence as a trustee. Rather the court found that Mr Cundall “Undoubtedly, breached his duty in not providing trust records to Mr Daniel when asked.”

The result was an order that Mr Daniel’s costs be met from the trust fund.

While the facts of this case may seem unusual they are an important reminder of the need for trustees to all have access to trust information, to act properly and consistently as trustees, and to ensure timely provision of information between trustees.

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