Two recent Guernsey cases[i] remind us (not that we should need a reminder) that on a change of trusteeship, the outgoing trustee (T1) has a duty to give its successor (T2) all the papers in its possession pertaining to the trust and which T2 needs to maintain due administration.
This principle derives from a 1950s English case called Tiger v Barclays Bank,[ii] where it was held T1 had to deliver up all records, books and other papers relating to the trust, including the minutes of meetings and internal memoranda of a corporate trustee, and correspondence files. The reason should be obvious; if T2 is to replace T1, T2 needs so far as possible to be in the same position,[iii] as otherwise T1 and the beneficiaries stand to suffer. Similarly, the provision of information is essential for T2 to investigate the trust’s affairs, secure the assets and if necessary, take remedial action against T1. Hence, “..if the retiring trustee has information or documents about the administration of a trust, he must normally make these available to the incoming trustee”.[iv] Furthermore, T2 may inspect and copy documents not belonging to but concerning the trust in T1’s possession,[v] and ask reasonable questions of T1.[vi] T1 must ensure the information or documents it provides are accurate.[vii]
The Tiger duty therefore obliges T1 to deliver up, or answer questions, by reference to what it has in its possession concerning the trust’s administration. It does not give T2 a right to information per se or oblige T1 to secure things it does not possess. As we shall see, that distinction is important when the documents relate to companies owned by the trust. Note that the information or documents will “normally” be available; the court retains discretion to decide whether documents or information should be supplied in any given case, or whether questions asked of T1 are reasonable.[viii]
The duty’s importance is apparent from cases where courts have awarded indemnity costs against those in breach.[ix] It is also a regulatory failing not to deal expeditiously with transfers of business.[x] Above all, (emphasis added) “On the transfer of a trusteeship the outgoing trustee is under a duty to co-operate fully and actively in the transfer by making all relevant documents and correspondence available promptly to the incoming trustee and by providing any explanation to questions reasonably raised by the incoming trustee.”[xi] In practice, however, the duty is still often disregarded, resisted or partially performed, causing delays and additional costs for T2 and the beneficiaries.
This article considers some of the objections raised to providing information, and how to answer them, to show how in reality Tiger remains very much alive.
The information or documents belong to T1, not the trust
This can be resolved by establishing whether the trust paid for the documents or information, as if it did, they belong to the trust and should be delivered up. One controversial issue is whether Know Your Customer (KYC) information is disclosable. Ordinarily T2 will need to undertake its own due diligence before it accepts its appointment, and T1 will claim the information as its own. However, if T1 has KYC information that would assist T2 in its own enquires and which, for whatever reason, T2 cannot obtain itself, it would seem unreasonable for T1 to withhold or refuse inspection of it, if its absence prevents T2 from assuming office.[xii] Finally, in one of the two recent Guernsey cases, Fort Trustees Limited & anr v ITG Limited & Bayeux Limited, it was held (albeit with some caution) that WIP records belonged to T1 and should therefore not ordinarily be disclosed.[xiii]
The document or information is irrelevant
It is hard for T1 to argue anything within its records of the trust in its possession is irrelevant. In cases of genuine uncertainty, the test is likely to be that deployed by the court when deciding whether to order delivery up, i.e. whether the information or document would in fact assist T2 in administering the trust. That is, however, something T2, not T1, is best placed to decide and only on seeing the document or information in question.[xiv]
There is too much information
In general, this will not be a valid objection, although to avoid information dumps or duplication of information (where T2 already has it) it may be possible for T2 to provide T1 with a list specifying what it has and what it wants to see by reference to the type of information or document.[xv] Equally T1 could be ordered to depose to what it has allowing T2 to take its pick.
To the extent T1 performs its duty to deliver up the information or documents, it should be entitled to its costs as it is in the interests of the trust that it does so. Conversely, expenses incurred by T1 solely for its own benefit, such as where it wants copies or reviews a file to extract documents belonging to it, are most unlikely to be recoverable.
The information mentions matters besides the trust
This argument was unsuccessfully raised in the second recent Guernsey case, Sherborne Corporate Services Limited & anr. v The Public Trustee. The obligation was not to deliver up only documents or information which related solely to the trust, but to provide documents and information relevant to the trust and its administration, whether or not also relevant to some other matter. Where T1 had acted in another capacity in relation to the trust, the obligation might extend to information T1 received in that capacity, if relevant to the trust.[xvi] In any event, the court could order redaction or otherwise limit the scope of disclosure.[xvii]
The information is legally privileged
Again, this is no objection. In the Sherborne case, the Guernsey Court of Appeal referred to the Bird Trusts case in Jersey, where it was made clear that “..whilst legal advice obtained at the cost of the trust is often disclosable to a beneficiary, “it is likely to be even more relevant for an incoming trustee to see legal advice obtained by a previous trustee as it may well be relevant for the future administration of the trust”.[xviii] Even where the issues to which the advice relates are closed, T2 may still obtain it to establish whether T1 (and the trust) paid a reasonable price for it.[xix]
The information is held by our nominee or representative
In Sherborne, the Court of Appeal ordered that even information held by T1’s nominees or representatives (such as law firms or accountants) could be obtained, by having T1 direct them to provide it.[xx] This striking development reflects the breadth of the Guernsey Court’s jurisdiction over trusts, although the case had a history of non-compliance with previous orders.
The information relates to a company owned by the trust so is the company’s property
The Tiger duty extends to the corporate records of a company wholly-owned by the trust (C) (or a company wholly-owned by C)[xxi] with similar consequences for breach,[xxii] as “…….a retiring trustee should undoubtedly provide full information about [C] …. So often the underlying valuable assets are held in companies owned by a trust and it would be nonsensical if a trustee could absolve itself of its responsibility to give or pass over full information by saying that it has passed over the information about the trust but not about [C] ….”.[xxiii] At first blush, this seems surprising as the information will often belong to C even where C is wholly-owned, and shareholders have limited rights to company papers. It is important, however, to remember that Tiger obliges T1 to deliver up what it has in its possession which is relevant. It does not enable T2 to secure information about C through T1 to which a shareholder would not ordinarily have access. If in practice T1 has used C’s papers to administer the trust with indifference to C’s separate identity, T1 can hardly refuse T2 information about C on the basis it belongs to C. The position may of course be very different where the company is not wholly-owned.
The points made above show the Tiger duty is not extinct. Far from it, and when we assist in distressed trust cases, we often rely on it in order to start the process of tasking whatever remedial steps are necessary.
[i] Fort Trustees Limited & anr v ITG Limited & Bayeux Limited  GRC015, and Sherborne Corporate Services Limited & anr. v The Public Trustee  GCA024. See also in Re K Trust  GLR 433, .
[ii]  1 All ER 85, CA.
[iii] Ogier Trustee (Jersey) Ltd v CI Law Trustees Ltd  JRC158, ; In Re Bird Charitable Trust and the Bird Purpose Trust  JRC006, .
[iv] Ogier case Ibid.
[v] Bird Trusts case [supra], .
[vi] Ogier case, .
[vii] Mond v Hyde  BPIR 250.
[viii] Tiger, [supra],  and see Bird Trusts case [supra], .
[ix] Ogier case, ; followed in In re Representation of Capita Trustees Limited as Trustee of the Dunlop Settlement  JRC138,  – .
[x] See the Jersey Financial Services Commission’s Trust Company Business Code of Practice - 1 January 2021, para. 2.5; Guernsey Fiduciary Services Commission, The Fiduciary Rules and Guidance, 2021 - rule 3.2 (e).
[xi] Ogier case, , approved eg in Bird Trusts case, .
[xii] Compare Lewin on Trusts, 20th Edn., para 54-084.
[xiii]  GRC015, .
[xiv] Tiger, .
[xv] Sherborne Corporate Services Limited & anr. v The Public Trustee [supra], .
[xvi] Ibid, .
[xvii] Ibid, .
[xviii] [Ibid], .
[xix] Bird Trusts case,  – .
[xx] [Ibid], .
[xxi] Ogier case, and Volaw v Trustcorp  JRC028, , but only for the period in which C was owned by the trust.
[xxii] Compare Sovereign Trust International Limited v WJB Chilterns Trust Company  JRC004 - request by T1 to former administrator of company.
[xxiii] Ogier case, .
Paul qualified as a solicitor of the Supreme Court of England & Wales in 1995, since then he has worked in London and Guernsey specialising in contentious trust and pensions work. Prior to joining Trust Corporation International, Paul was a group partner with two leading Guernsey law firms and in house legal counsel at a Guernsey utility. On the trust side, Paul specialises in managing complex disputes, having previously advised on a number of the most significant trust cases in Guernsey in recent years. Paul also works on contentious pension matters, having acted, before joining Trust Corporation, in a number of major pension disputes in Guernsey. Paul has over twenty years’ experience in structuring and establishing complex trusts and pension schemes, and working with their trustees and advisors. As well as his trust and pensions work, Paul is also a prolific writer and has published numerous articles on trust and pensions law in practitioners’ and academic journals and has contributed chapters to a number of books.