ADDLEMAN v LAMBIE TRUSTEE LTD [2019] NZCA 480

ADDLEMAN v LAMBIE TRUSTEE LTD [2019] NZCA 480 [4 October 2019]IN THE COURT OF APPEAL OF NEW ZEALANDI TE KŌTI PĪRA O AOTEAROACA545/2017[2019] NZCA 480BETWEEN PRUDENCE ANNE ADDLEMANAppellantAND LAMBIE TRUSTEE LIMITEDRespondentHearing: 19 March 2019Court: Cooper, Clifford and Gilbert JJCounsel: A S Ross QC and R A Rose for AppellantD A T Chambers QC and I F Williams for RespondentJudgment: 4 October 2019 at 10 amJUDGMENT OF THE COURTA The application to adduce further evidence is granted.B The appeal is allowed.C The judgment of the High Court is set aside.D Within 30 working days of the date of this judgment the respondent is toprovide the appellant with all documents in its possession or power relatingto the Lambie Trust in the following categories:(i) financial statements;(ii) minutes of meetings; and(iii) any legal opinions and other advice obtained by the trustees andfunded by the Trust.E Leave is reserved to apply to the High Court for further directions in the caseof any disagreement as to any redaction made in the documents provided inaccordance with these orders.F To the extent any documents in these categories are no longer available,the respondent is to serve on the appellant within the same 30-day periodan affidavit from a person having the relevant knowledge explaining whatefforts have been made to locate the missing documents and what is thoughtto have become of them and when.G The respondent is to pay the appellant's costs for a standard appeal ona band A basis and usual disbursements. We certify for second counsel.____________________________________________________________________REASONS OF THE COURT(Given by Gilbert J)Table of ContentsIntroduction [1]Lambie Trust [2]Distribution to Mrs Addleman [7]Mrs Addleman's requests for Trust documents [8]Proceedings [12]High Court judgment [16]Appeal [18]Applicable principles [20]Did the High Court err in applying these principles? [24]Documents sought [25]Context for and objective of request [32]Nature of Mrs Addleman's interests [36]Confidentiality [50]Practical difficulty in providing the information [52]Whether the documents sought disclose reasons for trustees'decisions [53]Likely impact of disclosure on trustee and other beneficiaries [54]Likely impact of disclosure on settlor and third parties [58]Whether disclosure can be made while protecting confidentiality [59]Conclusion [60]Result [61]Introduction[1] This is an appeal against a judgment of the High Court refusing an applicationby a beneficiary for disclosure of trust documents.1Lambie Trust[2] The appellant, Prudence Addleman, and her younger sister, Annette Jamieson,now aged 70 and 66, are the only two people named as both discretionary and finalbeneficiaries of a trust known as the Lambie Trust (the Trust) established by a Deedof Trust dated 19 March 1990 (Trust Deed). The named settlor was Robert Palmer,their cousin. The original trustees were: their father, Alexander Jamieson; theirbrother, Anthony Jamieson; Mr Palmer; and Wayne Hanna, an accountant.The respondent, Lambie Trustee Ltd, has been the sole trustee of the Trust sinceApril 2006.2 Ms Jamieson is the sole director and shareholder of Lambie Trustee Ltd.[3] Apart from Mrs Addleman and Ms Jamieson, the only other final beneficiariesof the Trust are two companies controlled by Ms Jamieson, Edmonton Company LtdSA, a company incorporated in Australia, and Mercadeo E Inversiones Gil SA,a company incorporated in Panama. The discretionary beneficiaries of the Trust are:the final beneficiaries; any child or remoter issue of any of the final beneficiaries;any wife, husband, widow or widower of any final beneficiary; and any lawfulcharitable object. Neither Mrs Addleman nor Ms Jamieson have children.Ms Jamieson has never married. Thus, Ms Jamieson and Mrs Addleman are the onlyliving final beneficiaries, and they and Mrs Addleman's husband, Martin Addleman,are the only living discretionary beneficiaries of the Trust.[4] The Trust fund is defined in the Trust Deed as: the sum of NZD 10.00;any property transferred by the settlor to the trustees; any property acquired by1 Addleman v Lambie Trustee Ltd [2017] NZHC 2054 [High Court judgment].2 Mr Hanna resigned as a trustee on 4 August 1992. Mr Palmer was removed as a trustee on22 September 1992. Anthony Jamieson, the brother, was removed as a trustee on 13 September1993 and replaced by Donald Hargrave, an accountant, and Peter Kemps, a solicitor. Mr Jamiesonsenior retired as a trustee on 1 May 2000 and was replaced by Ms Jamieson. Ms Jamieson andMessrs Hargrave and Kemps retired as trustees on 20 April 2006 and were replaced bythe respondent, Lambie Trustee Ltd.the trustees for the purposes of the Trust; any monies and investments representingthis property; and any income generated.[5] On the vesting day, the trustees are to hold the remainder of the Trust fund ontrust for such of the final beneficiaries then living and the corporate final beneficiariesstill registered as tenants in common in equal shares, if more than one. The vestingday is defined as the day before the final day of the perpetuity period, being 80 yearsfrom the date of the Trust Deed.[6] The Trust is a discretionary trust. The Trust Deed does not differentiatebetween the discretionary beneficiaries in any way. Until the vesting day, the trusteesmay in their absolute discretion pay or apply the Trust fund or any part of it towardsthe support, maintenance and benefit of all or any of the living discretionarybeneficiaries and towards the benefit of any corporate discretionary beneficiary.Similarly, the rights of final beneficiaries are equal as between them.Distribution to Mrs Addleman[7] Mrs Addleman, who lives in England, and Ms Jamieson, who lives in Australia,have been estranged for over 20 years. Mrs Addleman was not even aware ofthe Trust's existence until around the time of her father's death in late 2001. She didnot find out that she was a beneficiary of the Trust until November 2002 when shereceived a letter from Peter Kemps, a solicitor who was then one of the trustees ofthe Trust, advising that a distribution of NZD 4.257 million was to be made to her.Mr Kemps' letter dated 20 November 2002 explained:As you know, I am one of the Trustees of the Lambie Trust established inNew Zealand in March 1990. The other Trustees are Don Hargrave and yoursister, [Ms Jamieson].The Trust is a discretionary Trust and you are named as one ofthe discretionary beneficiaries. The Trustees in their discretion have decidedto make a distribution of part of the Trust fund to you. While it had beenintended that this distribution would not take place until the passing of yourmother, the Trustees have decided to bring the distribution forward so that youcan be in a position to make your own financial decisions regarding thesefunds and can use the funds to meet your own expenditure.The sum that will be distributed to you is NZ$4,257,000.00 and representsthe full distribution of funds that will be coming to you from Lambie Trust.Please note that this distribution bears no relationship to the estate of your latefather. Neither Don nor I act in your late father's estate nor in respect of anyother of his affairs or those of your mother.Mrs Addleman's requests for Trust documents[8] Mrs Addleman was curious to know more about the Trust, its assets andincome. In March 2003, she wrote through her solicitors to Mr Kemps enquiring aboutthe assets of the Trust and whether she still had a beneficial interest in any Trustproperty. She asked for a copy of the Trust Deed, the Trust's accounts and other Trustdocuments. The trustees were reluctant to provide any information about the Trust toMrs Addleman. However, Mrs Addleman persisted with her requests and Mr Kempswrote to her solicitors in December 2003 saying he was obtaining independent legaladvice as to the trustees' obligations. Following further unanswered correspondencefrom Mrs Addleman's solicitors, Mr Kemps wrote on 19 April 2004 enclosing a copyof the Trust Deed and documents showing the appointment and removal of trustees.Mr Kemps advised:We are able to assure your client that the distribution that has been made toher is proper and that the Trustees have at all times acted honestly and havefulfilled all of their duties required by law.We are also able to advise that the Trust is a discretionary trust established bydeed dated 19 March 1990 so the question of your clients "entitlement" isentirely a matter for the discretion of the Trustees.We have been ascertaining the Trustees legal duties which are not entirelyclear given the state of the law. The law is clearly evolving in respect totrustees duties of disclosure of information.It does appear however that your client is entitled to the Trust Deed anddocuments altering trustees and I enclose a copy of the original Trust Deedand the documents dealing with the appointment of trustees and I confirm thatthe current Trustees are Annette Merryl Jamieson, Donald Boyd Hargrave andthe writer.Given the discretionary nature of the Trust, there is no further question to beanswered with regard to your client's entitlement.[9] Mrs Addleman did not pursue the matter further until 24 September 2014 whenshe wrote again through her solicitors seeking comprehensive information aboutthe Trust including copies of all financial statements dating back to its inception.Mr Kemps responded on 3 October 2014 advising that the three trustees to whomthe letter had been addressed, himself, Ms Jamieson and Mr Hargrave, were no longertrustees, having been replaced some years ago. Mr Kemps said that since the earliercorrespondence, "we have also established clearly that Lambie Trust was seededexclusively from funds which arose from an accident settlement forAnnette Jamieson". Mr Kemps said he would take instructions from Ms Jamiesonwho would be likely to require specialist trust advice before responding tothe "extraordinary request for information".[10] On 19 November 2014, Mr Kemps wrote again to Mrs Addleman's solicitorsin the following terms:We refer to your letter of 7 November and respond:1. We act for the Trust. The current Trustee is Lambie Trustee Limited.2. Mr Robert Palmer was nominally the settlor. Following ourcommunications to you in 2004 we were made aware by Mr Palmerthat the trust was funded from Annette Jamieson's accident settlement.A signed statement from Mr Palmer is attached.3. Records for the entire 24 year history of the Trust do not exist. We areascertaining what records do exist.4. We have authority to accept service of proceedings.5. We will be responding more fully when we know what records thereare in existence.[11] The signed statement from Mr Palmer attached to this letter is dated14 November 2014 and reads:1. I am the Settlor and a Trustee in the Trust deed of the Lambie Trust("Lambie Trust") dated the 19th day of March 1990.2. Lambie Trust was established at the initiative of my uncle AlexanderJamieson an Australian resident who had commenced a propertydevelopment business in New Zealand in 1986.3. I ran the property development business for my uncle from 1986 untillate 1992. The business was operated through a company calledHowick Parklands Limited ("HPL"), a company formed on19th September 1986.4. The shares of HPL were initially held by me, as to 99 shares. I heldthe shares in trust and had no personal ownership interest inthe business.5. On several occasions my uncle Alexander Jamieson told me thatLambie Trust and the property development business operatedthrough HPL was funded by monies belonging to his daughter AnnetteMerryl Jamieson. I did not personally settle assets or funds on LambieTrust.6. Annette had suffered serious permanent injuries after diving intoa public swimming pool in North Sydney Australia when she was inher teens. As a result of a Court case brought by her father onAnnette's behalf against the local authority which operatedthe swimming pool, Annette received a substantial sum in settlementof her claim. Mr. Jamieson told me he had invested the settlementfunds for Annette for some years but that the settlement funds andearnings were the monies used to fund the HPL business.Mr Jamieson told me on many occasions that he had to be morediligent with these funds than his own because they were Annette's.7. I believe Annette's accident settlement funds were initially introducedto New Zealand to purchase a block of land of 42 hectares known asSomerville Estate Farm in 1986.8. When the documentation for Lambie Trust was drawn up, in additionto Annette's name, Annette's sister Prudence Addleman was added asa beneficiary of Lambie Trust at the suggestion of Annette, so that, ifAnnette died, there would be another named family member asa beneficiary.9. On several occasions from the time I was first involved in HPL andLambie Trust, my uncle Alexander Jamieson told me that LambieTrust and the ongoing property business operated through HPL wouldbe for the benefit of his daughter Annette. Annette is a quadriplegic.Because of her permanent injuries and the special needs she has whichwere clearly going to be long term, Mr Jamieson was concerned thather funds be invested in a way that would provide good long termgrowth.10. Annette's ability to control HPL was further strengthened bya resolution of shareholders passed on 14th January 1987 appointingher as a Director of HPL. Mr Jamieson wanted Annette to have a morehands on interest in HPL and the business here.Proceedings[12] In June 2015, Mrs Addleman commenced proceedings in the High Court atAuckland seeking orders requiring the respondent to provide comprehensive financialand other documents relating to the Trust. In its statement of defence, the respondentdenied it had an obligation to disclose any further Trust documents. It pleaded by wayof an affirmative defence that the 2002 distribution to Mrs Addleman was made interms of a resolution by the trustees pursuant to a "Memorandum of Wishes of Mr andMrs Jamieson as Settlors, whereby 25% of the value of the Trust's net asset value wasdistributed to [Mrs Addleman] as a full and final settlement". The respondent claimedthat Mrs Addleman's acceptance of the distribution meant that the trustees legitimatelytreated her as having relinquished "all future beneficial rights" and that, in any event,she "has only a theoretical possibility of receiving a further distribution".The respondent pleaded that there are "strong reasons" for preferring Ms Jamiesonand the Memorandum of Wishes confirms that Mrs Addleman "should receivethe 25% portion given to her".[13] The so-called memorandum of wishes is a letter from Mr Kemps to Mr andMrs Jamieson dated 9 May 2000. Because of the reliance placed on this letter, we setit out:Thank you very much for your hospitality during our recent visit.[Mr Hargrave] and I were well satisfied with the progress we were able tomake during our visit and appreciated your assistance.I wanted to summarise the understanding [Mr Hargrave] and I had ofMr Jamieson's wishes for ultimate distribution of Lambie Trust funds.Apart from the allowance to be paid to Mrs Jamieson's relatives, the ultimatedistribution of the Trust fund is to be as follows:1. A fund of NZ$2,000,000 to be set aside to provide income forAnthony and his children during their lifetimes.2. Of the balance of the Lambie Trust fund 40% but not more thanNZ$10,000,000 to be set aside for the Paraplegic and QuadriplegicOrganisation and other charities.3. Of the balance 50% to be paid to [Ms Jamieson] and 25% each toMeredith3 and [Mrs Addleman].Your instructions are that Anthony's fund is to be administered on his behalfduring his lifetime and income and capital made available to him and hisfamily at the discretion of the Trustees.[Mr Hargrave] and I are dealing with [Ms Jamieson] on a number of othermatters including the funding of further land purchases by Lambie Trust andthe development of those properties by Mr Noma.[14] The respondent filed an amended statement of defence on 13 June 2017,shortly prior to the hearing in the High Court. The main change was to add a pleadingto the effect that the Trust had been funded exclusively by the compensation payment3 Meredith is the youngest of the four children in the Jamieson family, Prudence, Annette andAnthony being older.Ms Jamieson received in 1981 of AUD 1,029,000. The respondent asserted that thesefunds found their way to the Trust in the following manner:a) In 1972 Annette Jamieson had an accident at a public swimming pool.She became a quadriplegic.b) [Ms Jamieson] successfully sued the Warringah Shire Council.In 1979 she received a settlement sum of just over AUD 1,029,000.4c) [Ms Jamieson] placed this sum with her father Alexander Jamiesonwho found investment opportunities for her to consider and managedher investments. Alexander consulted [Ms Jamieson] and [she]ultimately made all investment decisions. Alexander held the sum andearnings from the sum on trust for [Ms Jamieson] (the funds).d) In the mid 1980s with [Ms Jamieson's] agreement the funds were usedto provide a loan to Robert Palmer. Also, following extensivediscussions with [Ms Jamieson] and with [her] agreement, Alexanderinvested the funds in a business opportunity in New Zealand providedby Robert.e) To protect [Ms Jamieson's] funds, Alexander instigated the settlementof the Lambie Trust. Alexander was the instigator and a de factosettlor of the Lambie Trust.f) Alexander instigated the transfer of the funds he held on trust for[Ms Jamieson] to the Lambie Trust. The source of funds forthe Lambie Trust was therefore [Ms Jamieson's] accident settlementfunds. [Ms Jamieson] is also a de facto settlor of the Lambie Trust.[15] The proceeding was heard over three days following the filing of affidavits byMrs Addleman, Ms Jamieson and Mr Palmer, each of whom was cross-examined.High Court judgment[16] Woolford J dismissed Mrs Addleman's disclosure claim in its entirety forreasons given in his judgment delivered on 25 August 2017. The Judge consideredthere should be no order for disclosure of any documents for seven principal reasons:5(a) The Trust was settled for the primary purpose of ensuringMs Jamieson's welfare and financial security. The cost of her care isextraordinarily high and will continue throughout her life. These costs4 Ms Jamieson obtained the award in 1979 but, because of an appeal, she did not receive the fundsuntil 1981.5 High Court judgment, above n 1, at [65]–[71].are currently AUD 250,000 per annum but are likely to increase.By contrast, all four children, Mrs Addleman, Ms Jamieson, Anthonyand Meredith are beneficiaries of a separate family trust, the AJ Trust,settled in 1978, which has no connection with the Lambie Trust.(b) Mrs Addleman was only included as a beneficiary of the Trust ona contingent basis in case Ms Jamieson died at an early age.(c) The Trust was settled with Ms Jamieson's compensation payment andearnings thereon.(d) Mrs Addleman has already received what was said to be a finaldistribution of NZD 4.257 million in 2002, calculated as 25 per cent ofthe Trust's net funds at that time. This was in accordance withMr Jamieson's memorandum of wishes. The Judge considered therewas no real prospect of Mrs Addleman receiving any furtherdistribution.6(e) The extent of disclosure already provided, including the statement fromMr Palmer dated 14 November 2014 confirming the source of the fundstransferred to the Trust and the letter from Mr Kemps to Mr Jamiesonin 2000 recording Mr Jamieson's wishes as to the distribution of fundsfrom the Trust.(f) The real prospect of further intra-familial discord and litigation ifthe orders requiring disclosure were made.(g) There was no suggestion of a breach of trust or fiduciary duty inthe administration of the Trust. The Trust Deed was drafted by lawyers,and lawyers and accountants were said to be regularly involved in itsaffairs with tax returns being filed annually. The Judge found thatthe application was directed to finding a basis for challengingthe trustee's actions rather than being based on a particular concern6 At [74].about the administration of the Trust. The Judge considered this wasa major factor favouring dismissal of the application.[17] In addition to these major factors, the Judge identified two minor factors thatneeded to be weighed in the balance. The first was that there were no financial recordsavailable for the years ended prior to 31 March 1999. As a result, there would be eitherno documentation, or incomplete documentation, relating to the Howick subdivisionand Howick Parklands Ltd. Secondly, "as a sole purpose trust in effect", the Trust hadalways been administered on a strictly confidential basis and, absent any evidence ofa breach of trust or fiduciary duty, there was no reason to disclose its private dealings.7Appeal[18] Mrs Addleman contends on appeal that the High Court erred in three principalrespects:(a) The Court misapplied the principles governing these types ofapplications, as recently clarified by the Supreme Court in Erceg vErceg.8(b) The Court allowed itself to be distracted by wide-ranging,unsubstantiated and self-serving evidence led by the respondent atthe expense of determining the largely legal issue of whetherMrs Addleman was entitled to disclosure.(c) There was, in any event, no sound evidential foundation for the keyfactual findings made by the Judge. Mrs Addleman seeks to adducefurther evidence in support of the appeal which she contendsdemonstrates that these findings were incorrect. This evidencecomprises documents obtained from archived public records.[19] Ultimately, Mrs Addleman submits that the reasons given by the High Courtfor declining the application in its entirety were wrong in fact or law. The respondent7 At [73].8 Erceg v Erceg [2017] NZSC 28, [2017] 1 NZLR 320.supports the Judge's reasoning which largely reflected her submissions at the trial.It will therefore be convenient to address the appeal by examining each of the Judge'sreasons for declining to order any disclosure. Before doing so, we briefly summarisethe applicable principles.Applicable principles[20] A decision whether to order disclosure to a beneficiary requires assessment andjudgment upon which reasonable minds might disagree. Such a decision does notinvolve the exercise of a discretion. The appeal standard is therefore as directed bythe Supreme Court in Austin, Nichols & Co Inc v Stichting Lodestar.9 That meansMrs Addleman is entitled to this Court's view as to whether disclosure ought to havebeen ordered, unconstrained by the limitations on appeals against the exercise ofa discretion as set out in May v May.10 This approach was confirmed bythe Supreme Court in Erceg.11[21] There is no dispute about the applicable principles. These were recentlyreviewed by the Supreme Court in Erceg. Trustees have fundamental duties toadminister the trust in accordance with the trust deed and to account to beneficiaries.The Court has jurisdiction to supervise the administration of trusts and intervenewhere appropriate. A beneficiary seeking to hold trustees to account may need accessto documents to assess whether the trustees have acted in accordance with theirobligations. The underlying principle is to identify the course of action mostconsistent with the proper administration of the trust and the interests of beneficiariesgenerally, not just the beneficiary seeking disclosure.12 Interests of confidentialitymust be considered.13 Trustees are not required to disclose to discretionarybeneficiaries their reasons for exercising their discretion in the manner they did.14[22] The Supreme Court set out a non-exhaustive list of the matters to be consideredon an application for disclosure of trust documents:159 Austin, Nichols & Co Inc v Stichting Lodestar [2007] NZSC 103, [2008] 2 NZLR 141.10 May v May (1982) 1 NZFLR 165 (CA) at 169–170.11 Erceg v Erceg, above n 8, at [68]–[70].12 At [53].13 At [54].14 At [55].15 At [56].(a) The nature of the documents sought — whether basic such as the trustdeed or more remote such as the settlor's memorandum of wishes.(b) The context for the request and the beneficiary's objective in making it.(c) The proximity of the beneficiary's interest to the trust.(d) The need to protect confidential information of a personal orcommercial nature.(e) Any practical difficulty in providing the information.(f) Whether the disclosure concerns the trustees' reasons for makingparticular decisions.(g) Whether disclosure would have an adverse impact on the beneficiariesoverall, outweighing the benefit of disclosure to the requestingbeneficiary.(h) The likely impact of disclosure on the settlor or third parties.(i) Whether disclosure can be ordered while still protecting confidentiality.(j) Whether safeguards can be imposed to guard against misuse of trustdocumentation.[23] The Supreme Court considered "the strongest case for disclosure would bea case involving a request from a close beneficiary for disclosure of the trust deed andthe trust accounts, which would be the minimum needed to scrutinise the trustees'actions in order to hold them to account".16 The Court expected that trustees wouldnormally provide to close beneficiaries on request, if not proactively, trust accountsand other documents showing how the trust had been administered and what hadbecome of the trust property.1716 At [60].17 At [62].Did the High Court err in applying these principles?[24] The Judge followed the Supreme Court's guidance in Erceg and consideredeach of the relevant factors identified in that judgment. Having completed thatexercise, the Judge undertook his analysis by identifying seven major and two minorfactors (several overlapping or at least interlinked) which he considered weighedagainst granting the application. These were a subset of the Erceg factors the Judgehad already considered. The issue on appeal comes down to whether we agree withthe Judge's assessment of these factors.Documents sought[25] The Judge was concerned about the breadth of the disclosure requested.He considered that an order in the terms sought would be unduly burdensome andfar beyond the minimum necessary for Mrs Addleman to confirm the properadministration of the Trust.18 The Judge noted that Mrs Addleman had alreadyreceived a copy of the Trust Deed, documents evidencing changes of trustees,the statement from Mr Palmer dated 14 November 2014 as to the source of fundstransferred to the Trust, and a copy of the letter from Mr Kemps to Mr Jamieson in2000 confirming his wishes as to the distribution of funds from the Trust. The Judgecommented that a memorandum of wishes is often regarded as highly confidential andyet the trustee had been willing to disclose it to Mrs Addleman.19[26] We consider the Judge was justified in expressing concern about the breadth ofthe disclosure sought by Mrs Addleman in her claim. Mr Ross QC, who was notcounsel for Mrs Addleman in the High Court, responsibly acknowledged at the outsetof the hearing of the appeal that the request was over-broad. He advised thatthe request is now confined, at least in the first instance, to the Trust's accounts,minutes of trustee meetings (with reasons for decisions redacted) and any legal adviceor opinions paid for by the Trust. Nevertheless, given that the trustees kept fromMrs Addleman that she was a beneficiary of the Trust for over 12 years and theirsustained refusal thereafter to divulge any documents revealing the Trust's assets and18 High Court judgment, above n 1, at [35].19 At [69].how these have been administered, it is understandable that Mrs Addleman cast herapplication for disclosure as widely as she did, possibly anticipating that this wouldbe her final opportunity to obtain any further information about the Trust. We do notsee this as a disqualifying factor. The Court still needed to determine whether any ofthe documents sought should be disclosed, including for example core documents suchas the Trust's accounts.[27] While we do not endorse the test posited by the Judge — the minimumnecessary to confirm the proper administration of the Trust — at least some furtherdisclosure would be required to satisfy even that test. Mrs Addleman has no means ofassessing whether the Trust has been administered properly if she does not receive anyfinancial information concerning its assets and how these have been dealt with.The limited disclosure provided to date — confined to the Trust Deed and the identityof the trustees from time to time — effectively leaves her in the position of having toaccept the type of assurance Mr Kemps gave in his letter on 19 April 2004 thatthe distribution was "proper" and the trustees "have fulfilled all of their duties requiredby law".[28] One of a trustee's fundamental duties is to maintain proper accounts in respectof trust property and have these available for inspection by beneficiaries. This isa necessary incident of a trustee's fiduciary duty to account to the beneficiaries.Failure to keep such accounts is a breach of trust. While a beneficiary does not havean absolute right to the accounts, the circumstances in which such accounts mayproperly be withheld from a close beneficiary are likely to be limited.20As the Supreme Court observed in Erceg, "the strongest case for disclosure would bea case involving a request from a close beneficiary for disclosure of the trust deed andthe trust accounts, which would be the minimum needed to scrutinise the trustees'actions in order to hold them to account".21[29] On the face of the Trust Deed, Mrs Addleman would have to be regarded asclose beneficiary for these purposes. As noted, she is one of only two living20 Foreman v Kingstone [2004] 1 NZLR 841 (HC) at [88].21 Erceg v Erceg, above n 8, at [60].discretionary and final beneficiaries and the trustees considered it appropriate to makea substantial distribution to her in accordance with Mr Jamieson's wishes.[30] The Judge was also concerned that some of the documents sought may beprotected by solicitor/client privilege because the request included legal opinions,advice and other communications between trustees and their advisors.22 That some ofthe documents covered by the request may have attracted solicitor/client privilege, isobviously not a good reason for declining to give any disclosure, nor did the Judgesuggest otherwise. However, legal advice or opinions obtained by trustees to guidethem in the discharge of their duties as trustees and paid for out of trust funds are trustdocuments created for the benefit of the beneficiaries. The privilege attaching to suchcommunications may be asserted against third parties but not by the trustees againstthe beneficiaries.23 We consider this aspect of the Judge's concern about the nature ofthe documents requested was misplaced. To the extent that these documents mightreveal the reasons for the trustees' decisions or confidential information abouta beneficiary, this concern can be addressed in other ways, for example by way ofredaction.[31] Ms Jamieson is not only a beneficiary, she controls the sole trustee and the twocorporate beneficiaries. The only other beneficiaries are Mrs Addleman and herhusband. There is no one else who can scrutinise the administration of the Trust andhold the trustees to account. It follows that unless basic Trust documents are disclosedto Mrs Addleman, the trustees' administration of the Trust will remain secret andbeyond scrutiny. In these circumstances, in the absence of some very good reason tothe contrary, we consider the more narrowly confined categories of Trust documentsnow sought should be disclosed to Mrs Addleman. Applying the underlying principleidentified by the Supreme Court — the course of action most consistent withthe proper administration of the trust and the interests of beneficiaries generally —disclosure of sufficient documents to enable Mrs Addleman to scrutinise whetherthe Trust has been administered properly should be made. As we explain below,22 High Court judgment, above n 1, at [33].23 Lynton Tucker, Nicholas Le Poidevin and James Brightwell Lewin on Trusts (19th ed, Sweet &Maxwell, London, 2015), at [23-048].the other criteria also support our conclusion that these documents should bedisclosed.Context for and objective of request[32] The Judge accepted that a discretionary beneficiary is entitled to have a trustadministered lawfully and properly and an order for disclosure of trust documents maybe necessary to enforce that right.24 However, the Judge observed that there wasno suggestion of any breach of trust or fiduciary duty in this case. The Judgeconsidered this was a major factor weighing against making any order.25[33] Trustees are fiduciaries and beneficiaries are entitled to hold them to account.Without basic trust documents including the accounts, they cannot do so. It shouldnot be necessary for a beneficiary to demonstrate a breach of trust before being entitledto disclosure. Kirby P explained why this must be so in Hartigan Nominees Pty Ltd vRydge:26To accept, as a principle for entitlement to access that a beneficiary should beable to show misconduct or wrongdoing on the part of a trustee is to imposean unreasonably high barrier to the effective supervision by the court ofthe actions of trustees ostensibly subject to that supervision. The actions oftrustees have validity only in so far as they further the purposes of the trustand are lawful. It should not be necessary for things to have reached sucha sorry pass, that misconduct or breach of trust can properly be alleged, forthe beneficiaries effectively to invoke the protective scrutiny and supervisionof the court. There are professional limitations upon the pleading of fraud andmisconduct. They may not be alleged without a proper foundation in fact.Effectively then, the imposition of that requirement unduly impedesthe court's protection to extreme cases. Yet there may be many other cases,falling short of fraud or misconduct, which justify rendering the trusteeaccountable to the law.[34] The case for disclosure will inevitably be stronger if the beneficiary is able todemonstrate misconduct based on the information already available. However, thiscannot be a precondition to an order requiring disclosure for the reasons explained byKirby P. It is merely one factor to consider. So, for example, if trustees decline toprovide any form of disclosure to beneficiaries, not even the accounts,24 High Court judgment, above n 1, at [36].25 At [71].26 Hartigan Nominees Pty Ltd v Rydge (1992) 29 NSWLR 405 (CA) at 419.the beneficiaries will have no means of holding them to account. The beneficiaries'ability to obtain an order for disclosure in such a case cannot depend on them beingable to demonstrate misconduct in the absence of such disclosure, placing them ina catch-22 situation.[35] We are satisfied that Mrs Addleman has shown she has a legitimate basis forenquiring further into the administration of the Trust. It appears that Ms Jamiesonconsiders she is entitled to administer the Trust assets and income for her sole benefitwithout regard to the position of any other beneficiary because it is essentially hertrust. This is contrary to the express terms of the Trust Deed. We discuss this issuefurther below when examining the "sole purpose trust" finding, which provedthe decisive factor in refusing disclosure in the High Court.Nature of Mrs Addleman's interests[36] The Judge considered that although Mrs Addleman was one of the two livingfinal beneficiaries and one of the three living discretionary beneficiaries (the thirdbeing her husband), the Trust was settled with Ms Jamieson's compensation paymentand accrued earnings for the primary purpose of ensuring Ms Jamieson's welfare andfinancial security.27 The Trust was "essentially her trust".28 The Judge acceptedMs Jamieson's evidence that Mrs Addleman was not intended to be a close beneficiaryand was only added as a "back stop".29 The Judge concluded the Trust was in effect"a sole purpose trust".30[37] There is no support for these conclusions in the Trust Deed. The first recitalsimply records that the settlor "wishes to provide for the persons described asbeneficiaries and to create the trusts in this Deed". As noted at [6] above, the TrustDeed does not differentiate between the discretionary beneficiaries or the finalbeneficiaries. There is no indication in the Trust Deed that Mrs Addleman was namedas a discretionary and final beneficiary merely as a back stop in case Ms Jamiesondied. There would be no need for Mrs Addleman to be included as a beneficiary at all27 High Court judgment, above n 1, at [46] and [67].28 At [33].29 At [47].30 At [73].if that were the only purpose because the Trust Deed provides for other back stops tomeet this prospect, including "[a]ny lawful charitable object" qualifying asa discretionary beneficiary and the two corporate final beneficiaries. The back stop,sole purpose trust theory is also not consistent with Mr Jamieson's wish thatMrs Addleman should receive 25 per cent of the balance of the Trust fund, half that ofMs Jamieson but still a substantial sum.[38] We consider Mrs Addleman must be regarded as a close beneficiary in termsof Erceg given she is one of only two living persons named as both a discretionary anda final beneficiary in the Trust Deed. The trustees are obliged to administer the Trustin accordance with the Trust Deed. They cannot disregard the express terms ofthe Trust Deed and treat Ms Jamieson as the primary beneficiary and Mrs Addlemanas nothing more than a backstop beneficiary whose interests need not be consideredwhile Ms Jamieson is alive. For the reasons summarised below, we do not acceptthe Trust can be regarded as "a sole purpose trust" such that the trustees' obligationsunder the clear terms of the Trust Deed are modified or displaced.[39] First, if Mr Jamieson held Ms Jamieson's compensation payment on trustsolely for her, it seems odd that he would subsequently settle the proceeds on the Trustnot only for her benefit, but potentially for the benefit of numerous others. This isparticularly so when one considers the comparatively modest compensation amountcompared with the high annual cost of Ms Jamieson's care, which will only increaseover her lifetime.[40] Secondly, if the assets settled on the Trust were entirely sourced fromMs Jamieson's compensation payment and the Trust was established for the primarypurpose of providing for her life-long needs, it might be expected that this would havebeen recorded in the Trust Deed and her entitlement prioritised over the otherbeneficiaries.[41] Thirdly, if the assets settled on the Trust by Mr Jamieson as the de facto settlorwere seeded entirely from Ms Jamieson's compensation payment and the Trust wasprimarily intended to provide for her lifetime care needs, it seems odd that followingconsultation with Mr Kemps and Mr Hargrave, Mr Jamieson's instructions were thatsubstantial benefits should be provided to persons who were not beneficiaries ofthe Trust, namely relatives of Mrs Jamieson who were not specified, plus Anthony andhis children, and Meredith. It is also surprising that Mr Jamieson requested the trusteesto set aside part of the Trust assets to provide income for Anthony and his childrenduring their lifetimes but made no similar request for assets to be set aside to provideincome for Ms Jamieson during her lifetime.[42] Fourthly, if assets settled on the Trust were all beneficially owned byMs Jamieson and were intended primarily for her benefit — "the sole purpose trust"thesis accepted by the Judge — it is surprising Mr Kemps, who remains the Trust'ssolicitor, did not find out about this until sometime between April 2004 and November2014 (likely around the time of Mr Palmer's statement dated 14 November 2014).It will be recalled that Mr Kemps wrote to Mrs Addleman's solicitors on 19 November2014 stating that "[f]ollowing our communications to you in 2004 we were madeaware by Mr Palmer that the trust was funded from [Ms Jamieson's] accidentsettlement". Mr Kemps and Mr Hargrave commenced serving alongside Mr Jamiesonas trustees of the Trust in September 1993. Mr Jamieson did not retire as a trusteeuntil 1 May 2000. If Mr Palmer's belief about the source of the Trust funds as set outin his 14 November 2014 statement is correct, it is hard to understand whyMr Jamieson would not have mentioned this to Mr Kemps or Mr Hargrave at any timeduring the nearly seven-year period they served together as trustees of this trust.Ms Jamieson replaced Mr Jamieson as a trustee from 1 May 2000 and was involvedin this capacity with Mr Kemps and Mr Hargrave until 20 April 2006 when they werereplaced by Lambie Trustee Ltd as the sole trustee. As noted, Ms Jamieson is the soledirector and shareholder of Lambie Trustee Ltd. If the assets settled on the Trust werebeneficially owned by her having come from her compensation payment, one mighthave thought she too would have mentioned this to Mr Kemps at some stage beforeMr Palmer came forward with the information in 2014.[43] Fifthly, there is reason to doubt that the AUD 1 million compensation paymentcould have been the only source of the Trust's assets given Mr Jamieson's wishes, asrecorded in Mr Kemps' letter in May 2000. We explore this issue further below inthe context of Mrs Addleman's application to adduce further evidence. However,on the assumption that the payment of NZD 4.257 million to Mrs Addlemanrepresented 25 per cent of the Trust's assets, that suggests total assets exceededNZD 17 million in November 2002. This does not take account of any distributionsto Ms Jamieson over the 12-year period of the Trust to that point. Nor does it takeaccount of the NZD 2 million Mr Jamieson wished to be set aside to provide incomefor Anthony and his children during their lifetimes, or the 40 per cent of the balance,up to NZD 10 million, to be set aside for charities. In terms of Mr Jamieson's wishes,Ms Jamieson's share was to be only 50 per cent of the balance remaining after theseamounts were set aside. Mrs Addleman's and Meredith's distributions were to be halfof that.[44] Sixthly, the contention in the statement of defence that the distribution madeto Mrs Addleman was final and by accepting it she relinquished all future beneficialrights is incorrect and indicates that the trustees have misapprehended theirobligations. This may explain why they did not consider it appropriate to giveMrs Addleman a copy of the Trust Deed when she requested it. As now seems to beaccepted, Mrs Addleman remains a discretionary beneficiary and a final beneficiaryof the Trust. The distribution made to her did not change her status and her positioncannot be disregarded as if she had been written out of the Trust Deed.[45] Because Mrs Addleman has received no Trust documents showing the Trust'sassets and how these have been administered, she has been at a considerabledisadvantage in her ability to contest the respondent's claims that the Trust was fundedexclusively from Ms Jamieson's compensation payment. No contemporaneousrecords or documents were produced to support this claim. Following the hearing inthe High Court, Mrs Addleman's solicitors have been able to locate some officialrecords that provide some assistance on the topic, including records held byArchives New Zealand and the Overseas Investment Office. We are prepared toreceive these documents. While this evidence is not fresh, the records are plainlycredible and cogent. Pieced together with the other evidence, the following pictureemerges.[46] Ms Jamieson received AUD 1,029,000 compensation in 1981. These werethe only funds she had at that time. Apart from meeting her day-to-day living and carecosts, Ms Jamieson used these funds to purchase a flat in Wimbledon for GBP 300,000(AUD 472,000) in late 1981 and a house in the United States for USD 267,000(AUD 296,000) in 1987. Ms Jamieson also made an unspecified loan to Mr Palmerafter he got into financial difficulty in about 1986. According to Mr Palmer,the property development business operated through Howick Parklands Ltd was alsofunded by Ms Jamieson's compensation payment. There is reason to doubt this giventhat this purchase was made in late 1986 for NZD 4 million of which NZD 2 millionwas paid on settlement in cash.[47] Records obtained from the archived files of the Overseas InvestmentCommission show that Chapman Tripp wrote to the Commission in July 1986 seekingapproval on behalf of Recibo Shipping SA (Recibo) (a company incorporated inPanama in 1976) to purchase from a Mr Somerville a 42-hectare block of undevelopedland near Howick in Auckland. The purchase price was NZD 4 million, payable as toNZD 2 million in cash and NZD 2 million over two years (NZD 1 million payable inAugust 1987 and the balance in August 1988). The land was to be acquired forthe purposes of carrying out a residential subdivision. It was anticipated thatthe proposed activity would result in NZD 4 million being introduced to coverthe initial part of the purchase price and to fund the development. Chapman Trippadvised that Recibo was directed by Mr Jamieson, but day-to-day management andadministration would be undertaken by his nephew, Mr Palmer.[48] In a further letter dated 21 August 1986, Chapman Tripp attached a balancesheet for Recibo certified by Mr Jamieson as the corporation's attorney. This showsthat as at 31 March 1986, Recibo had no liabilities and assets worth in excess ofNZD 12 million comprising industrial property in Australia valued at AUD 3 millionplus bank deposits in three denominations, AUD 900,000, DM 3,700,000 andUSD 950,000. The Commission duly gave consent in September 1986 and settlementof the purchase occurred. Title to the land was initially taken in the name ofMr Palmer in November 1986 but transferred to Howick Parklands Ltd a year later, inNovember 1987. At that time, Mr Palmer held 99 of the 100 shares in HowickParklands Ltd but, according to a letter from Chapman Tripp to the Commission inFebruary 1987, the beneficial owner of Howick Parklands Ltd was Lake Real EstateSA, another company incorporated in Panama. As with Recibo, Lake Real Estate SAwas said to be controlled by one of Mr Jamieson's family trusts. This cannot havebeen the Lambie Trust because it had not been established at this stage.[49] These contemporaneous records are not readily reconcilable with the evidenceMs Jamieson and Mr Palmer gave in the High Court as to the source of the fundingfor the Howick development. Given the significant purchases made by Ms Jamiesonfollowing receipt of her compensation payment, it seems unlikely there would havebeen sufficient available to fund the purchase and development of the Howick land.Rather, it appears that Recibo had substantial funds on hand and would not haveneeded recourse to what remained of Ms Jamieson's compensation payment for thispurpose. There is no mention of Ms Jamieson being the true intending purchaser asthe beneficial owner of Howick Parklands Ltd through Recibo, Lake Real Estate orotherwise.Confidentiality[50] The Judge found that Mr Jamieson was a "very private man" who "kept thingsclose to his chest" and Ms Jamieson is also "a very private individual".31 The Judgeobserved that from inception the Trust has been operated with absolute confidentialityreflecting their wishes.32 While acknowledging that a settlor's desire forconfidentiality would not ordinarily justify refusing to disclose basic informationabout the Trust, the Judge accepted that disclosure of the information sought byMrs Addleman would result in disclosure of information personal and private toMs Jamieson.33 The Judge concluded that the "absolute confidentiality of the Trust"weighed against disclosure.34[51] Trustees cannot escape their obligations to account to beneficiaries, includingthrough disclosure of core trust documents, by asserting personal preferences forprivacy and confidentiality. There is no confidentiality or other provision in the TrustDeed to justify such an approach.35 It is also not clear to us why core Trust documents,31 At [48].32 At [49].33 At [50].34 At [51].35 Compare Erceg v Erceg, above n 8, at [87].such as the financial statements, minutes of trustee meetings and legal advice paid forby the Trust, would be likely to contain detailed information of a personal and privatenature concerning Ms Jamieson such that disclosure would "lay her whole life bare"as the Judge accepted.36 If these documents do contain information personal andprivate to Ms Jamieson, this should be able to be dealt with by appropriate redactionsbeing made.Practical difficulty in providing the information[52] The Judge accepted Ms Jamieson's evidence that the earliest available financialstatements for the Trust are for the year ended 31 March 1999 and any order requiringdisclosure of transactions involving Howick Parklands Ltd could not be complied withbecause that company was incorporated in 1986, subsequently liquidated, andremoved from the Companies Register in 2009. This is not an impediment tothe disclosure now sought, which must be limited to Trust documents within the poweror control of the respondent.Whether the documents sought disclose reasons for trustees' decisions[53] This issue has fallen away. Mrs Addleman accepts she is not entitled tothis information.Likely impact of disclosure on trustee and other beneficiaries[54] The Judge was concerned about the prospect of Mrs Addleman pursuinga claim against the trustees if extensive disclosure of Trust documents was ordered:[45] I regret to say that I have come to the conclusion that[Mrs Addleman's] previous complaints and proceedings are an indication forme that if extensive disclosure of the Trust's affairs was made to[Mrs Addleman] she would not rest but in all likelihood would undertakefurther litigation.[57] [Mrs Addleman] threatened proceedings against their father's estateand did in fact institute proceedings against their mother's estate. Given thathistory there is a real danger that providing further information, however36 High Court judgment, above n 1, at [58].innocuous, may provide the basis for further litigation and associateddisintegration of familial relationships.[55] There is no suggestion that the proceedings Mrs Addleman brought against hermother's estate were improper or an abuse of the court's process. It should not countagainst Mrs Addleman that she has previously, on one occasion, sought access tothe courts to vindicate her rights. The possibility that Mrs Addleman might pursuea claim against the trustees alleging a failure to discharge their duties cannot justifydeclining to order disclosure of any Trust documents to her, including the minimumnecessary to enable her to assess with her legal advisors whether the Trust has beenadministered properly. Assuming the Trust has been administered properly, thatshould be the end of the matter. We see no reason for concern on the evidence thatMrs Addleman would be inclined to misuse the disclosure for the purposes of pursuinga meritless and vexatious claim against the trustees, contrary to responsible legaladvice.[56] The Judge was understandably concerned about the potential impact of furtherlitigation on Ms Jamieson as a highly vulnerable person. Working from the premisethat the Trust was "essentially her trust", for "her support and the vehicle forthe investment of her accident funds" the Judge considered disclosure of documentsin the first category sought, "finances and accounts" would "in effect lay[Ms Jamieson's] whole life bare". The Judge considered Ms Jamieson was "entitled toprivacy in order to cope with the burden of quadriplegia and her everyday struggles".37[57] As noted, there is no realistic prospect of independent scrutiny of whetherthe Trust has been administered properly unless the accounts are disclosed. In anyevent, to the extent that the documents contain confidential information of a personalnature concerning Ms Jamieson, these concerns can be addressed by appropriateredactions.Likely impact of disclosure on settlor and third parties[58] This was not a factor weighing against disclosure in the High Court.We consider it has no relevance to the present application.37 At [33] and [58].Whether disclosure can be made while protecting confidentiality[59] We do not see why legitimate concerns about confidentiality, particularlyprivate and confidential information personal to Ms Jamieson, cannot be addressed byappropriate redactions to the extent this information is set out in the accounts, minutesor legal advice. In our view, any such concern is more appropriately addressed in thisway rather than by declining to make an order for disclosure of core Trust documents.Conclusion[60] For the reasons given, we consider the appeal should be allowed to the extentof the more narrowly confined disclosure now sought. In summary, Mrs Addlemanfalls into the category of a close beneficiary of the Trust. Unless disclosure of basicTrust documents including the accounts is made to her, there is effectively no one whocan hold the trustees to account. Taking account of the further evidence available tous, we are far from persuaded that the Trust was funded solely from Ms Jamieson'scompensation payment. Even if it was, the Trust cannot properly be regarded asa "sole purpose trust" or "essentially [Ms Jamieson's] trust". In our assessment,the course most consistent with the proper administration of the Trust and the interestsof the beneficiaries overall is to order disclosure of these basic trust records.Result[61] The application to adduce further evidence is granted.[62] The appeal is allowed.[63] The judgment of the High Court is set aside.[64] Within 30 working days of the date of this judgment, the respondent is toprovide the appellant with all documents in its possession or power relating tothe Lambie Trust in the following categories:(a) financial statements;(b) minutes of meetings; and(c) any legal opinions and other advice obtained by the trustees and fundedby the Trust.[65] Leave is reserved to apply to the High Court for further directions in the caseof any disagreement as to any redaction made in the documents provided in accordancewith these orders.[66] To the extent any documents in these categories are no longer available,the respondent is to serve on the appellant within the same 30-day period an affidavitfrom a person having the relevant knowledge explaining what efforts have been madeto locate the missing documents and what is thought to have become of them andwhen.[67] The respondent is to pay the appellant's costs for a standard appeal on a band Abasis and usual disbursements. We certify for second counsel.Solicitors:Belly Gully, Auckland for AppellantKemps Weir Lawyers, Auckland for Respondent