Hartigan Nominees and Another v Rydge Held: A memorandum of wishes provided by the instigator of a discretionary discretionary trust for the use of the trustees in exercising their powers is not a document which the trustees were obliged to disclose to a beneciary on request if the memorandum was provided on a condential basis The trustee may, in exercising exercising his discretion discretion in relation relation to the trust, trust, take take into account any any such memorandum of wishes he may consult beneciaries to provide support for a conclusion he has reached as to the exercise of the discretionary power or in order appropriately to inform himself, but he need not do so! "pecial cases apart he is not bound to inform a beneciary apt to be a#ected of his or the settlor$s views in any particular case! %acts: •
&orman 'arreel settled ()* on +urmon &ominees and Hartigan &ominees to be held by them upon trusts set forth in the deed executed by them! Trustees acquired nine of the ten shares in nbeear -ty .td! "ir &orman died, +urmol &ominees retired as a trustee and /i0quoit -ty .td was appointed as a trustee in his place! The plainti# 1ichard 1ydge is a grandson of the late "ir &orman! +r 1ydge invited the trustees to exercise their power to make certain payments to him but they had not done so! They referred to a memorandum signed by "ir &orman indicating his preferences and wishes as to what T should do! +r 1ydge commenced proceedings to inspect the memorandum and that the defendants cannot take into account +emorandum of wishes
2ssues: )3 whether a discretiona discretionary ry beneciary having having a contingent contingent or possible possible interest interest in trust funds funds is entitled to see the statement of wishes given T by the instigator of the trust 43 whether T, in exercisi exercising ng their discretions, discretions, are entitled entitled to take into account account that statement of wishes 1uling:
The interest of Mr Rydge in the trust fund The interest interest of ' may be relevant to obligations obligations of of T! T! -ower T has in relation relation to ' may be be bare power which he may or may not exercise or a power which T is obliged to exercise! A person who is one of a number of potential ' dependent upon how a discretionary power is exercised does not have the same rights in respect of these matters as a beneciary who has an interest vested in interest! T is ordinarily obliged to give due consideration to the exercise of a power to appoint among possible beneciaries beneciaries and to determine whether and in whose favour the power is to be exercised! A possible beneciary under such a power may, depending on the terms of the power, be entitled to sue to ensure that proper consideration is given to the exercise of the power! The interest which +r 1ydge has is su5cient to support the claim he now has! 6nclear whether there is at present a nominated beneciary or who that beneciary is! +r 1ydge has an interest in the trust of one or many kinds! He has in respect of the capital an interest vested in interest but not in possession! He has a contingent interest in income vested in interest but postponed to any nominated beneciary and sub7ect to the exercise by the trustees of their discretionary powers!
May the trustees take into account the wishes of Sir Norman Rydge as expressed in the memorandum? • •
memorandum not produced! %or discretionary power: power must be exercised by T, he must exercise in proper way and must exercise it by reference to proper consderations! +ust not abdicate discretion to another
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T must not merely give e#ect to memorandum but also to the wishes there expressed! He must consider the instant exercise of the power and make his own decision! The discretion must be within limits which the law allows! 8iscretion must be exercised bona de, to give e#ect to the purposes for which the power was given and reasonably! T not obliged to notify the possible beneciaries of his intention to use the power or give them the opportunity to make representations to him! 9here there are many possible beneciaries and their circumstances are various, it would be impossible to enter upon an examination of the individual needs of each and ordinarily such an examination would not have been contemplated by the settlor or instigator of the trust! 9ishes of a settlor may be taken into account! Those wishes outside the terms of he trust must not be inconsistent with the purposes of the trust as appearing from its term! 2t is strange if the trustee could not have regard to such matters! Trustee is not bound to consult beneciaries or to ascertain their views! He may do so in order to provide support for the conclusion he has reached as to the exercise of the discretionary power or in order appropriately to inform himself but he need not do so! And special cases apart, he is therefore not bound to inform a beneciary apt to be a#ected of the views of himself or of the settlor as to what should be done in the particular case! Thus can take into account memorandum
The right of the plainti to inspect the memorandum in general, T is not obliged to volunteer documents or information to beneciaries or possible beneciaries! However, if a beneciary requests it, a trustee, is in general obliged to provide documents and information to the beneciary, at his cost, in relation to the trust property and to provide an accounting in respect of the administration of it in general there is a right but there are limits to what the trustee must show or say to a beneciary: doubt that it is the trustee$s duty to inform all persons who may possibly take under a discretionary power of the nature and extent of that possibility! A class of possible beneciaries under a discretionary trust mat be wide and capable! &ot duty of trustee to seek out such persons and inform them of the possibility of their rights right to request inspection is limited to documents and information which is relevant to the property of the trust! 2t does not extend to documents or information as to which a beneciary, he has no proprietary interest! !g! right does not extend to notes made for or by T of discussions with other ' or with the settlor there are documents that are condential! 9here settlor has been given information in condence in relation to the exercise of discretionary powers, another beneciary is not entitled, by the exercise of his right to see and be informed, to see such documents and receive such information! !g! settlor may communicate condential information to beneciary as a reason for not exercising a discretionary power in his favour need not disclosed if the result of disclosure will be to make known the reasons why a discretionary power has been exercised in circumstances where the disclosure is not required and has not been made by the trustee! Therefore, cannot inspect condential documents if memorandum is condential A beneciary may not, be alleging merely that a document contains a settlor$s wishes, • seek discovery to ascertain whether the document contains wishes which should not be taken into account! A beneciary may support a case by discovery but may not use the process to ascertain whether a case exists! •
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