Duty to inform the beneficiaries

The expression “object” in relation to trusts for persons refers to a beneficiary under the trust.

A “beneficiary”, in ordinary language is a person for whose benefit a trust is to be administered and who is entitled to enforce the trust according to its terms (Kafataris v Deputy Commissioner of Taxation (2008) 172 FCR 242; [2008] FCA 1454 at [42]).

Ford and Lee state in The Laws of Trusts at [9.4610]:

“In the case of beneficiaries of strict trusts the trustee has a duty to inform all beneficiaries of full age and capacity of their rights” {Hawkesly v May [1956] 1 QB 304; 3 WLR 569}.

Palmer J in Chang  v Tjiong & Ors [2009] NSWSC 122 stated at [45]:

“ It is the duty of a trustee to ensure that beneficiaries are made aware of their rights: see In re Emmet’s Estate (1881) 17 Ch D 142, at 149; Hawkesley v May [1956] 1 QB 304, at 322. A trustee can hardly comply with this duty unless he or she keeps the terms of the trust readily available so that they may be explained, or produced, to beneficiaries and made known to successor trustees: see Ford & Lee Principles of the Law of Trusts [9150].”

An entitlement under a trust is valid notwithstanding that the beneficiary has had no knowledge of it (Vegners v Federal Commissioner of Taxation (1991) 91 ATC 4213 at 4215).

In SAS Trustee Corporation v Arthur Cox [2011] NSWCA 408 considered the due of a Trustee of a statutory superannuation trust to advice members of their rights under the the superannuation trust.

In SAS Trustee Corporation v Arthur Cox [2011] NSWCA 408 the court made reference to a trustee’s general law obligations at [95]:

These correspond substantially with a trustee’s general law obligations: J D Heydon and M J Leeming, Jacobs’ Law of Trusts in Australia , 7 th ed (2006) LexisNexis Butterworths (at [2920] – [2922]); Invensys Australia Superannuation Fund Pty Ltd v Austrac Investments Ltd [2006] VSC 112(2006) 15 VR 87 (at [102] – [107]) per Byrne J; see also Manglicmot v Commonwealth Bank Officers Superannuation Corp Pty Ltd [2011] NSWCA 204(2011) 282 ALR 167 (at [110] – [122]) per Giles JA (Young and Whealy JJA agreeing).

The Court continued at [103]:

As the High Court said in Finch v Telstra Super Pty Ltd (at [33]), “[d]ifferent criteria might be thought to apply to the operation of a superannuation fund from those which apply to discretionary decisions made by a trustee holding a power of appointment under a non-superannuation trust”; see also Lock v Westpac Banking Corporation (1991) 25 NSWLR 593 (at 601) per Waddell CJ in Eq.

The Court in making reference to the fact that members make contributions to the scheme stated at [110]:

The fact of such contributions has been said to “make it even more important that the trustees should exercise their powers in the best interests of the beneficiaries”: Cowan v Scargill [1985] Ch 270 (at 290) per Sir Robert Megarry V-C; see also Asea Brown Boveri Superannuation Fund No 1 Pty Ltd v Asea Brown Boveri Pty Ltd, McKeown, Gray & ABB Properties (Vic) Pty Ltd [1999] 1 VR 144 (at [57] [59]) per Beach J. The significance of employees’ contributions was also emphasised in Finch (at [33]).

The Court stated at [117]:

Hawkesley v May Hartigan Nominees (per Mahoney JA) and Scally support the proposition that a trustee and/or an employer is obliged to advise persons with actual entitlements to benefits of their rights in this respect – even if ( Scally ) those rights are recorded in public documents.

 

 

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