This is the case of Smorgon v ES Group Operations Pty Ltd & Ors [2021] VSC 608.

Introduction

1 The plaintiff, Samantha Smorgon (‘Ms Smorgon’) is the daughter of the late Robert Smorgon. Robert Smorgon was the son of the late Eric Smorgon. Robert Smorgon passed away on 23 September 2019.

2 Ms Smorgon was born to Robert Smorgon’s first wife, Michelle. Ms Smorgon has been told she was conceived by artificial insemination. Ms Smorgon’s birth certificate names Robert Smorgon as her father. However, Robert Smorgon’s will describes Ms Smorgon as his stepchild and states that he had no biological children.

3 In this proceeding, Ms Smorgon seeks orders that the defendants, each a trustee of one or more discretionary trusts, produce various categories of documents for her inspection. There are 18 trusts in total. Each trustee is a member of the Escor Group founded by Eric Smorgon. The directors of each trust include members of the Smorgon family. The relevant trusts are:

 

(a) The ES Group Operating Trust No. 1 (the trustee of which is ES Group Operations Pty Ltd ACN 069 851 305);

(b) The ES Group Operating Trust No. 2 (the trustee of which is ES Group Holdings (OPS) Pty Ltd ACN 069 851 314);

(c) The Escor Property (Yanchep) Trust (the trustee of which is Escor Property (Yanchep) Pty Ltd ACN 108 438 731);

(d) The Escor Opportunity Trust No. 1 (the trustee of which is Escor Opportunity Pty Ltd ACN 106 395 322);

(e) The ES (Baeckea) Trust (the trustee of which is Baeckea Pty Limited ACN 005 304 610);

(f) The Escor Reserve Trust No. 5 (the trustee of which is Escor Opportunity Pty Ltd ACN 106 395 322);

(g) The Escor Reserve Trust No. 6 (the trustee of which is Escor Opportunity Pty Ltd ACN 106 395 322);

(h) The ES Group Reserve Trust 1 (the trustee of which is Escor Opportunity Pty Ltd ACN 106 395 322);

(i) The ES Group Reserve Trust 2 (the trustee of which is Escor Opportunity Pty Ltd ACN 106 395 322);

(j) The ES Group Reserve Trust 3 (the trustee of which is Escor Opportunity Pty Ltd ACN 106 395 322);

(k) The Escor Family Art Trust (the trustee of which is Escor Family Art Pty Ltd ACN 114 773 143);

(l) The ES Group Development Trust[1] (the trustee of which is ESCOR Property Investments Pty Ltd ACN 081 842 944);

(m) The Escor Reserve Trust No. 7 (the trustee of which is ES Reserve Shelf No. 2 Pty Ltd ACN 115 092 272);

(n) The Escor Reserve Trust No. 8 (the trustee of which is ES Reserve Shelf No. 2 Pty Ltd ACN 115 092 272);

(o) The Eric Smorgon (1977) Family Trust (the trustee of which is Leiby Pty Ltd ACN 005 792 941);

(p) The ES Group Finance Trust (the trustee of which is ES Group Finance Pty Ltd ACN 080 815 345);

(q) The ES Group Investments Trust No. 1 (the trustee of which is ES Group Investments Pty Ltd ACN 069 851 234);

(r) The ES Group Investments Trust No. 2 (the trustee of which is ES Group Holdings (INV) Pty Ltd ACN 069 851 252);

(collectively, ‘the Trusts’; their trustee entities, ‘the Trustees’).

4 Ms Smorgon seeks the following categories of documents, for the preceding seven financial years to the date of the Court’s order:

 

(a) tax returns and financial statements including profit and loss statements, balance sheets and bank statements for the Trusts;

(b) documents relating to the administration and management of the funds of the Trusts;

(c) meeting minutes by which the Trustees have made determinations about the administration of the Trusts and the distribution of trust funds (as distinct from any written reasons of the Trustees for the distribution decisions they have made, which are expressly not sought); and

(d) any other documents in the possession of the Trustees which a beneficiary has a right to inspect

(collectively, ‘the documents’).

5 Each of the Trusts was established by a separate deed of settlement. Each is a discretionary trust.

6 Ms Smorgon is one of a number of discretionary objects under each Trust.

7 Ms Smorgon’s entitlement to the documents, if any, flows from her status as a beneficiary of the Trusts. Her status as Robert Smorgon’s daughter has no direct relevance to her claim, save to the extent that it renders her a beneficiary under certain of the deeds.

8 Under the ES (Baeckea) Trust deed, dated 1 July 1977, she is named as an ‘Income Beneficiary’; as an Income Beneficiary she falls within the definition of ‘General Beneficiary’. Under the Eric Smorgon (1977) Family Trust, created by deed dated 30 June 1977 she is named as a ‘Primary Beneficiary’. Under the 16 remaining Trusts, which were settled after 1977 (for convenience, ‘the 16 Trusts’), she falls among a wide class of ‘General Beneficiaries’.

Background to the application

9 Ms Smorgon relies upon two affidavits in support of her application: an affidavit sworn 28 August 2020 (‘the first Smorgon affidavit’) and an affidavit sworn 4 December 2020 (‘the second Smorgon affidavit’).

10 The Trustees rely upon two affidavits to oppose the application: an affidavit of Michael John Meehan sworn 11 November 2020 (‘the Meehan affidavit’), Chief Financial Officer of the Escor Group; and an affidavit of the Trustees’ solicitor exhibiting pre-litigation correspondence between Ms Smorgon’s solicitors, KCL Law (‘KCL’) and the previous solicitors for the Trustees, Riordan & Riordan (‘Riordans’).

11 On 24 January 2020, KCL wrote to Jack Smorgon and Norman Smorgon[2] requesting the following documents in relation to Robert Smorgon’s estate:

 

(a) Robert Smorgon’s tax returns for the previous even years;

(b) trust deeds for all trusts in which Robert Smorgon held an interest or was an officeholder and in which Ms Smorgon fell within the class of beneficiaries;

(c) evidence of all loan accounts in favour of Robert Smorgon;

(d) tax returns, profit and loss statements, balance sheets and bank statements for:

 

(i) any company in which Robert Smorgon was a shareholder or director;

(ii) any trust in which Robert Smorgon held an interest whether discretionary or fixed;

(iii) any entity in which Robert Smorgon had an interest; and

(iv) any superannuation fund in which Robert Smorgon had an interest;

in the seven years preceding his death;

 

(e) evidence of any superannuation entitlements including copies of any trust deeds (including any deeds of variation and nominations made by Robert Smorgon);

(f) evidence of any employee entitlements, director’s payments, dividends, fees or director’s loans; and

(g) evidence of the balance of any accounts, bonds, or investments, as well as any assets owned by Robert Smorgon.

12 In the letter, the entitlement to this information was said to arise by reason of s 91A of the Administration and Probate Act 1958 (Vic) (‘APA’), and by reason of Ms Smorgon’s status as a beneficiary of certain trusts.

13 The letter attached a copy of an email sent by KCL to the late Robert Smorgon’s wife, Vicki Smorgon. In that email, KCL notified Vicki Smorgon that Ms Smorgon intended to commence a family provision claim against Robert Smorgon’s estate pursuant to s 91A of the APA.

14 On 6 February 2020, Riordans responded by email on behalf of Jack Smorgon and Norman Smorgon. They rejected the request for the documents, among other things noting that even if Ms Smorgon was a beneficiary of any relevant trust that status alone would not entitle her to the documents.

15 On 27 February 2020, KCL advised Riordans by letter that Ms Smorgon had a proprietary right to be provided with trust documents. KCL stated that this was ‘a right well-recognised at common law statute and usually within each trust deed itself’. The letter referred to Re Fairbairn[3] to support the proposition that beneficiaries are entitled to inspect documents in which they have a proprietary and beneficial interest. The letter notified Riordans that, in the event that it became necessary for Ms Smorgon to commence proceedings to obtain the requested documents, Ms Smorgon would seek indemnity costs against the trusts, against Riordans, or against their clients.[4]

16 On 12 March 2020, Riordans responded to KCL, contesting the summary of the law in the KCL letter of 27 February 2020. Riordans advised that copies of all trust deeds for trusts of which Ms Smorgon may be a beneficiary had been provided to Vicki Smorgon as executrix of Robert Smorgon’s estate, and suggested that Ms Smorgon seek copies of those deeds from her.

17 On 25 March 2020, KCL by email reiterated their claim that the trustees were obliged to provide Ms Smorgon with the requested information, in accordance with her rights as a beneficiary under the trusts. KCL asserted that the information should be provided without objection or diversion, and reiterated Ms Smorgon’s intention to apply for indemnity costs (now expressed to be against either the trusts or Riordans’ clients) in the event that an application to the Court became necessary.

18 On 27 March 2020, Riordans responded by email, advising that copies of the relevant trust deeds and any deeds of variation would be provided to KCL.

19 On 28 April 2020, KCL by email acknowledged receipt of the trust deeds for the Trusts (and, where applicable, of any deeds of variation or amendment). Further, KCL requested confirmation that there were no other relevant deeds in the Trustees’ possession.

20 In addition, KCL requested for each of the Trusts copies of the tax returns and financial statements and notes thereto including balance sheets and profit and loss statements for the preceding seven years.

21 By email of 3 July 2020, KCL reiterated its requests for copies of, for each of the Trusts:

 

(a) tax returns and financial statements and notes thereto, including balance sheets and profit and loss statements for the preceding seven years; and

(b) minutes of meetings and resolutions signed by the relevant trustees for the preceding seven years.

The letter continued, ‘to be clear, the trust documents must be provided without delay and without exception’ and reiterated Ms Smorgon’s intention to seek a personal costs order (now expressed to be against Riordans or its clients) on an indemnity basis in the event that an application to the Court became necessary.

22 On 16 July 2020, KCL wrote to Riordans again contending that the law was clear regarding Ms Smorgon’s entitlement to the documents. The letter asserted that Ms Smorgon was entitled to the documents pursuant to her status as a beneficial object of the Trusts, independently of whether she had ever received distributions. The letter referenced Schmidt v Rosewood Trust (‘Schmidt’)[5] in support.

23 Also on 16 July 2020 Riordans responded, advising that the Trustees’ position remained unchanged. Riordans accepted the relevance of Schmidt, referring to Lord Walker’s reasons in that case:[6]

 

However, the recent cases also confirm (as had been stated as long ago as In re Cowin [1886] UKLawRpCh 13833 Ch D 179 in 1886) that no beneficiary (and least of all a discretionary object) has any entitlement as of right to disclosure of anything which can plausibly be described as a trust document. Especially when there are issues as to personal or commercial confidentiality, the court may have to balance the competing interests of different beneficiaries, the trustees themselves, and third parties. Disclosure may have to be limited and safeguards may have to be put in place. Evaluation of the claims of a beneficiary (and especially of a discretionary object) may be an important part of the balancing exercise which the court has to perform on the materials placed before it. In many cases the court may have no difficulty in concluding that an applicant with no more than a theoretical possibility of benefit ought not to be granted any relief.

24 On 31 August 2020, Ms Smorgon commenced this proceeding by originating motion.

25 In the first Smorgon affidavit, Ms Smorgon deposed to her belief that her father was a man who controlled substantial wealth. Helpfully, she summarised in tabular form the identity of each Trustee, its directors, the Trust it held and its primary beneficiaries.[7]

 

TrustTrusteeDirectorsPrimary Beneficiary/iesDate of Trust
The ES Group Operating Trust No 1

ES Group Operations Pty Ltd

ACN 069 851 305

Michael James Smorgon, Jack Smorgon, Anthony Charles Smorgon, Andrew Wayne Blode, Norman Anthony Smorgon and Stephen Jesse Smorgon

The children of Eric Smorgon (deceased) as to 40% in equal shares; and

The grandchildren of Eric Smorgon (deceased) as to 60% in equal shares

12 July 1995

The ES Group

Operating Trust No. 2

ES Group Holdings

(OPS) Pty Ltd ACN 069 851 314

Michael James

Smorgon, Jack Smorgon, Anthony Charles Smorgon, Andrew Wayne Blade, Norman Anthony Smorgon and Stephen Jesse Smorgon

The children of Eric Smorgon as to 40% in equal shares; and

The grandchildren of Eric Smorgon (deceased) as to 60% in equal shares

12 July 1995

The Escor Property

(Yanchep) Trust

Escor Property (Yanchep) Pty Ltd

ACN 108 438 731

Michael James Smorgon, Jack Smorgon, Anthony Charles Smorgon, Andrew Wayne Blade, Norman Anthony Smorgon and Stephen Jesse SmorgonThe children and grandchildren of Eric Smorgon (deceased)4 May 2004
The Escor Opportunity Trust No. 1

Escor Opportunity Pty

Ltd

ACN 106 395 322

Michael James Smorgon, Jack Smorgon, Anthony Charles Smorgon, Andrew Wayne Blade, Norman Anthony Smorgon and Stephen Jesse SmorgonThe children and grandchildren of Eric Smorgon (deceased)26 April 2005
The E.S. (Baeckea) Trust

Baeckea Pty Limited

ACN 005 304 610

Jack Smorgon and Norman Anthony SmorgonAll the children of Eric and Annie Smorgon (both deceased)1 July 1977

The Escor Reserve

Trust No. 5

Escor Opportunity Pty

Ltd

ACN 106 395 322

Michael James Smorgon, Jack Smorgon, Anthony Charles Smorgon, Andrew Wayne Blade, Norman Anthony Smorgon and Stephen Jesse Smorgon

The children, grandchildren and great grandchildren of Eric

Smorgon (deceased)

26 April 2005

The Escor Reserve

Trust No. 6

Escor Opportunity Pty

Ltd

ACN 106 395 322

Michael James Smorgon, Jack Smorgon, Anthony Charles Smorgon, Andrew Wayne Blade, Norman Anthony Smorgon and Stephen Jesse SmorgonThe children, grandchildren and great grandchildren of Eric Smorgon (deceased)26 April 2005

The ES Group

Reserve Trust 1

Escor Opportunity Pty

Ltd

ACN 106 395 322

Michael James Smorgon, Jack Smorgon, Anthony Charles Smorgon, Andrew Wayne Blade, Norman Anthony Smorgon and Stephen Jesse Smorgon

The children of Eric Smorgon (deceased) as to 40% in equal shares; and

The grandchildren of Eric Smorgon (deceased) as to 60% in equal shares

24 September 2003

The ES Group

Reserve Trust 2

Escor Opportunity Pty

Ltd

ACN 106 395 322

Michael James Smorgon, Jack Smorgon, Anthony Charles Smorgon, Andrew Wayne Blade, Norman Anthony Smorgon and Stephen Jesse Smorgon

The children of Eric Smorgon (deceased) as to 40% in equal shares; and

The grandchildren of Eric Smorgon (deceased) as to 60% in equal shares

24 September 2003

The ES Group

Reserve Trust 3

Escor Opportunity Pty

Ltd

ACN 106 395 322

Michael James Smorgon, Jack Smorgon, Anthony Charles Smorgon, Andrew Wayne Blade, Norman Anthony Smorgon and Stephen Jesse Smorgon

The children of Eric Smorgon (deceased)as to 40% in equal shares; and

The grandchildren of Eric Smorgon (deceased) as to 60% in equal shares

24 September 2003

The Escor Family

Art Trust

Escor Family Art Pty Ltd

ACN 114 773 143

Michael James Smorgon, Jack Smorgon, Anthony Charles Smorgon, Andrew Wayne Blade, Norman Anthony Smorgon and Stephen Jesse SmorgonThe children, grandchildren and great grandchildren of Eric Smorgon (deceased)1 July 2005
The ES Group Development Trust (now known as the Escor Property Investment Trust)

ESCOR Property Investments Pty Ltd

ACN 081 842 944

Michael James Smorgon, Jack Smorgon, Anthony Charles Smorgon, Andrew Wayne Blade, Norman Anthony Smorgon and Stephen Jesse Smorgon

The children of Eric Smorgon (deceased) as to 40% in equal shares; and

The grandchildren of Eric Smorgon (deceased) as to 60% in equal shares

3 March 1998

The Escor Reserve

Trust No. 7

ES Reserve Shelf No. 2 Pty Ltd ACN 115 092 272Jack Smorgon and Norman SmorgonThe children, grandchildren and great grandchildren of Eric Smorgon (deceased)28 July 2008

The Escor Reserve

Trust No. 8

ES Reserve Shelf No. 2 Pty Ltd ACN 115 092 272Jack Smorgon and Norman SmorgonThe children, grandchildren and great grandchildren of Eric Smorgon (deceased)28 July 2008
The Eric Smorgon (1977) Family TrustLeiby Pty Ltd ACN 005 792 941Jack Smorgon and Norman SmorgonJack Smorgon, Valerie Smorgon, Norman Anthony Smorgon, Lisa Jane Smorgon, Anthony Charles Smorgon, Michael James Smorgon, Robert Smorgon, Michele Smorgon, Ms Smorgon, and the spouses and the future children, grandchildren and great grandchildren of such persons30 June 1977

The ES Group

Finance Trust

ES Group Finance Pty Ltd

ACN 080 815 345

Michael James

Smorgon, Jack Smorgon, Anthony Charles Smorgon, Andrew Wayne Blade, Norman Anthony Smorgon and Stephen Jesse Smorgon

The children of Eric Smorgon (deceased) as to 40% in equal shares; and

The grandchildren of Eric Smorgon (deceased) as to 60% in equal shares

14 May 1999
The ES Group Investments Trust No. 1

ES Group Investments

Pty Ltd

ACN 069 851 234

Michael James Smorgon, Jack Smorgon, Anthony Charles Smorgon, Andrew Wayne Blade, Norman Anthony Smorgon and Stephen

Jesse Smorgon

The children of Eric Smorgon (deceased) as to 40% in equal shares; and

The grandchildren of

Eric Smorgon (deceased) as to 60% in equal shares

12 July 1995

The ES Group

Investments Trust

No. 2

ES Group Holdings (INV) Pty Ltd

ACN 069 851 252

Michael James

Smorgon, Jack Smorgon, Anthony Charles Smorgon, Andrew Wayne Blode, Norman Anthony Smorgon and Stephen Jesse Smorgon

The children of Eric Smorgon (deceased) as to 40% in equal shares; and

The grandchildren of Eric Smorgon (deceased) as to 60% in equal shares

12 July 1995

26 Ms Smorgon further deposed that she was a beneficial object of each of the 16 Trusts as she was one of the General Beneficiaries, falling within the definition of a ‘relative of a Primary Beneficiary’.

27 Ms Smorgon further deposed that she was a ‘named discretionary Income Beneficiary’ and a General Beneficiary of the ES (Baeckea) Trust; and a Primary Beneficiary of the Eric Smorgon (1977) Family Trust.

28 Ms Smorgon deposed that she had never:

 

(a) received any information about the assets held in any of the Trusts;

(b) received any information from the Trustees about the administration of the Trusts;

(c) been told by any of the Trustees that they were making a decision about distributions of either capital or income of the Trusts;

(d) been asked by any of the Trustees of the Trusts for information about herself; and

(e) to her knowledge, received an income or capital distribution from any of the Trusts.

29 She deposed to a belief that each of the Trusts held substantial assets, inferred from her beliefs that:

 

(a) Robert Smorgon was a businessman with valuable interests in companies and businesses;

(b) the Smorgon family had for many years held interests in various businesses in the meat, paper, chemicals, plastics, electronics and steel industries; and

(c) on or around 1995 the family decided to restructure those businesses, with Robert Smorgon and his brother Jack receiving a portion of the family interests and leaving the larger Smorgon consolidated group to form the Eric Smorgon Corporation (or Escor Group).

30 As noted above, the Trustees relied upon the Meehan affidavit. Mr Meehan deposed that the nature and activities of the Trusts varied.

31 In particular, the ES (Baeckea) Trust and the Escor Family Art Trust are ‘passive trusts’, in the sense that they hold assets but are not engaged in business activities (together ‘the Passive Trusts’). Moreover, Mr Meehan deposed that the assets of the Escor Family Art Trust are not income producing, and the trust does not make distributions of income or capital to beneficiaries.

32 Mr Meehan further deposed that seven of the Trusts are ‘dormant trusts’, in that they have never traded; hold nominal capital; do not prepare financial accounts; do not have bank accounts; and do not make distributions of income or capital to beneficiaries. Those Trusts are as follows:

 

(a) The ES Group Reserve Trust 1;

(b) The ES Group Reserve Trust 2;

(c) The ES Group Reserve Trust 3;

(d) The Escor Reserve Trust No 5;

(e) The Escor Reserve Trust No 6;

(f) The Escor Reserve Trust No 7; and

(g) The Escor Reserve Trust No 8

(together ‘the Dormant Trusts’).

33 Mr Meehan deposed that the remaining Trusts were ‘active trusts’, in the sense that, broadly speaking, they were engaged in business activities, either directly or through holdings in companies or other trusts. Those Trusts are as follows:

 

(a) ES Group Operating Trust No 1;

(b) ES Group Operating Trust No 2;

(c) Escor Property (Yanchep) Trust;

(d) Escor Opportunity Trust No 1;

(e) ES Group Development Trust;

(f) Eric Smorgon (1977) Family Trust;

(g) ES Group Finance Trust;

(h) ES Group Investments Trust No 1; and

(i) ES Group Investments Trust No 2

(together ‘the Active Trusts’).

34 Mr Meehan deposed that the business activities of the Active Trusts include investments in securities and real property. As part of their investments, some of the Active Trusts are party to joint ventures and other business relationships involving third parties.

35 Mr Meehan deposed that for the Dormant Trusts there are no documents falling within the categories sought for the preceding seven financial years.

36 Mr Meehan deposed that to disclose the tax returns of the remaining Trusts (that is, the Active Trusts and the Passive Trusts) would reveal information which was commercially sensitive and confidential; namely:

 

(a) the income, losses, and deductions of the Trusts;

(b) the name and details of the Trusts’ tax agents;

(c) the tax file number of the Trusts;

(d) the assets and liabilities of the Trusts; and

(e) for those Trusts that make distributions of income, the names, tax file numbers, residential addresses, dates of birth of the beneficiaries of the Trusts, and the amounts of any distributions made to them.

37 Mr Meehan further deposed that the disclosure of profit and loss statements for those Trusts would disclose commercially sensitive and commercial information; namely:

 

(a) the total income distribution;

(b) any foreign and domestic interest received;

(c) any capital gains and losses;

(d) any interest paid;

(e) the gross profit and net profit;

(f) any income relating to third parties, including shares of joint venture profits or losses;

(g) any dividends from private company investments; and

(h) for those Trusts that make distributions of income, the amounts of distributions made to beneficiaries of the Trusts and their names.

38 Mr Meehan likewise deposed that disclosure of the balance sheets for those Trusts would reveal commercially sensitive and confidential information; namely:

 

(a) the total current assets and details of those current assets;

(b) any investments or group investments, including third party investments;

(c) the purchase price or cost of any investments, including joint venture interests;

(d) the total private equity investments of each Trust;

(e) any details of relevant loans including loan balances;

(f) the balance of any unpaid entitlements and the names of entitled beneficiaries;

(g) the net assets of the Trusts; and

(h) the trust capital of the Trusts.

39 Related objections were made in relation to provision of bank statements for the Trusts.

40 Mr Meehan deposed to his belief that the category ‘documents relating to the administration and management of the Trusts’ was broad and uncertain, appearing to encompass every document held by the Trustees relating to the administration and management and investments of the Trusts; and for the Active Trusts, to their business activities.

41 Further, in relation to the Active Trusts and the ES (Baeckea) Trust, Mr Meehan deposed that disclosure of the documents sought would reveal further commercially sensitive and confidential information; namely:

 

(a) any joint venture agreements;

(b) any shareholder agreements in relation to private company investments;

(c) any external finance loan agreements;

(d) any deliberations of the Trustees about the way in which the Trustees have exercised their discretions, powers or authorities;

(e) any deliberations of the Trustees about business decisions, including decisions concerning joint ventures and other business activities;

(f) the reasons for the exercise by the Trustees of a discretion, power or authority in a particular way;

(g) the reasons for the Trustees’ business decisions, including decisions concerning joint ventures and other business activities;

(h) the material on which the deliberations or reasons of the Trustees might have been based when exercising a discretion or power;

(i) the material on which the Trustees’ business decisions were made, including material on which decisions concerning joint ventures and other business activities were made; and

(j) commercially sensitive information concerning business decisions and ventures, including purchase prices or costs of investments, transaction costs, debt funding, and profit shares.

42 Further, Mr Meehan deposed that disclosure of any minutes for meetings at which the Trustees had made determinations as to the administration of the Trusts and the distribution of trust funds would, even if written reasons of the Trustees for their distribution decisions were excluded, require the disclosure of commercially sensitive and confidential information; namely:

 

(a) the amounts of distributions made to beneficiaries of the Trusts, and the names of those beneficiaries;

(b) deliberations of the Trustees about the way in which they have exercised their discretions, powers or authorities;

(c) the material on which the deliberations or reasons of the Trustees when exercising a discretion, exercise or power were or might have been based.

43 Mr Meehan also adverted to the practical difficulty in collating the relevant documents. Having regard to their breadth and uncertainty – particularly in relation to the category of documents noted in paragraph [40] above – Mr Meehan deposed that collation of the documents sought would be difficult, time-consuming and expensive; and as such the application for production of those documents was oppressive.

44 Mr Meehan further deposed that for each of the 16 Trusts (but not for the ES (Baeckea) Trust and the Eric Smorgon (1977) Family Trust), the trust deeds contained a specific clause restricting disclosure to a beneficiary. Clause 5.18 of the deeds of each of the 16 Trusts provides:

 

5.18 Restriction on disclosure of documents

In addition to any right of the Trustee under general law to refuse disclosure of a document, the Trustee cannot be required to disclose to a beneficiary or to any other person:

(a) a document which discloses deliberations of the Trustee about the way in which the Trustee exercises any discretion, power or authority or discloses the reasons for exercise of a discretion, power or authority in a particular way or discloses the material on which the reasons are or might have been based; or

(b) any other document relating to the exercise or proposed exercise by the Trustee of a discretion, power or authority given by this Deed or under law.

45 In the second Smorgon affidavit, sworn in response to the Meehan affidavit and the solicitor’s affidavit, Ms Smorgon noted that she had never been the recipient of a request by the Trustees that she give a confidentiality undertaking as a condition for providing a relevant document.

46 She noted that, in addition to not seeking written reasons of the Trustees for the distribution decisions they have made, she did not presently seek any deliberations as to how the Trustees came to their decisions. Instead, Ms Smorgon deposed that she sought documents ‘in order to know how the trust money is invested and administered’.

47 Ms Smorgon concludes her second affidavit by deposing that she has never been asked to attend any shareholders meetings or other meetings for any of the Trusts or relayed business entities; that she has never been asked by the Trustee of any of the Trusts about her personal or financial circumstances; and that she has no social contact with any of the Trustees or their controllers.

Important provisions of the trust deeds

48 Before proceeding to consider Ms Smorgon’s submissions in greater detail, it is useful to set out some key provisions of the trust deeds. The deeds for all the 16 Trusts (but not the ES (Baeckea) Trust and the Eric Smorgon (1977) Family Trust) are relevantly identical in form.[8] The provisions of the trust deeds set out immediately below relate to those of the 16 Trusts; the provisions of the ES (Baeckea) Trust and the Eric Smorgon (1977) Family Trust are dealt with later in paragraphs [162] to [197].

49 The trust deed for the ES Group Operating Trust No 1 provides a useful example of the provisions pertaining to the 16 Trusts.[9] The trust deed is dated 12 July 1995. The parties to the deed are the settlor, Pamela Joy Fradken, and the trustee, ES Group Operations Pty Ltd.[10] The guardian and appointor under the trust is Kallena Downs Pty Ltd. It is convenient to summarise the following provisions and parts of the deed in broad terms:[11]

 

(a) Clause 2.1 provides that the Trustee will stand possessed of the Trust Fund and its income on the trusts, with and subject to the powers and provisions of the deed.

(b) Clause 3.1 provides that the Trustee shall determine the income of the trust fund for each Accounting Period.[12]

(c) Clause 3.2 provides that:

 

(i) the Trustee may in its discretion determine whether any receipt, profit, gain or outgoing or any sum of money or investment is to be regarded as being on account of capital or income or partly of one or partly of the other; and

(ii) in determining the income of the trust fund for any Accounting Period the Trustee may exercise the powers conferred on it under sub-cl 3.2 so as to minimise the liability to income and capital gains tax of the beneficiaries and of itself as trustee of the trust fund.

 

(d) Clauses 3.5 and 3.6 provide that the Trustee shall in each Accounting Period retain such income in the trust fund as it determines, or pay, apply, or set aside the whole or such part of the income for the beneficiaries as it sees fit.

(e) Clause 3.7 provides that the Income not paid, applied, or set aside under cl 3.3 be held on trust for the Primary Beneficiaries, or where a Primary Beneficiary is deceased, their children as tenants in common in equal shares for the proportion that Primary Beneficiary would have taken had they been living.

(f) Clause 4.1 obliges the trustee to keep a register of all assets which are ‘Constituent Assets’[13] and to keep specified particulars in relation to each asset.

(g) Clauses 4.2 and 4.3 empowers the Trustee to manage and administer the trust fund and gives the Trustee wide powers to do so.

(h) Clause 5.1 provides, among other things, that the Trustee’s powers or authorities under the deed must be exercised bona fide; are absolute and uncontrolled; and exercisable at the trustee’s absolute and uncontrolled discretion. Clause 5.1(e) further provides that where a Guardian is named in the schedule the trustee must not, among other things, exercise the power under cl 3.3(a) in relation to any General Beneficiary other than a Primary Beneficiary without the Guardian’s consent.[14]

(i) Clause 5.2 sets out various Trustee’s covenants, including a covenant on the part of the Trustee to use all reasonable endeavours to carry on and conduct the trust fund in a proper and efficient manner; and a covenant to exercise due diligence and care in preserving and maintaining the trust fund and in protecting the rights of beneficiaries.

(j) Clause 5.5 confers indemnities on the Trustee for costs, disbursements, liabilities and expenses incurred in exercise or otherwise of its powers, in prosecuting or defending actions in respect of the Trust, or in obtaining advisory opinions in relation to legal proceedings or in interpretation or construction of the deed.

(k) Clause 5.6 provides that the Trustee is not liable to anyone – including a beneficiary – in any way for, among other things, any act or default done or omitted in the exercise or bona fide intended or purported exercise of its powers and discretions.

(l) Clause 5.7 provides that nothing in cls 5.5 or 5.6 (that is, the Trustee’s indemnities and immunities) limits the trustee’s obligations under cl 5.2 (that is, in respect of the Trustee’s covenants), or prevents or restricts any determination as to whether there has been a breach of trust; nor do those clauses affect any legislation prescribing the circumstances under which the Trustee may obtain relief from breach of trust.

(m) Clause 5.16 entitles the Trustee to charge and be paid a reasonable commission not exceeding the commission which could be charged by a trustee company under the Trustee Companies Act 1958 (Vic)[15] if the Trustee Company were the only Trustee.

(n) Clause 5.18 headed ‘Restriction on Disclosure of Documents’ is set out at [44] above.

(o) Clause 5.19 entitles the Trustee to require a beneficiary to provide the Trustee with any information which the Trustee determines is necessary or desirable for the Trustee to perform any of its duties or obligations or to exercise any of its powers or discretions.

(p) Clause 5.20 provides that the Trustee must make a copy of the trust deed and any supplemental deeds available to beneficiaries for inspection.

(q) Clauses 6.1 and 6.2 require the trustee to ensure that the books of the trust fund are kept at its office and to prepare or procure preparation of accounts of the trust fund at the end of each Accounting Period, in accordance with generally accepted accounting principles.

(r) Clauses 7.1 and 7.2 provide for the Appointor to remove the Trustee and appoint a new or additional Trustee; and that where there is no Appointer then the right to remove and appoint a Trustee may be exercised successively by the Guardian, the Trustee, the last surviving Trustee, or the legal representative or the liquidator of the last surviving Trustee.

(s) Clause 7.6 provides for automatic disqualification of the Trustee in circumstances of insolvency, or in the case of a natural person where the trustee is not Eric Smorgon or a relative of Eric Smorgon; or in the case of a body corporate where one-fifth or more of the directors of that corporation are not Eric Smorgon or relatives of Eric Smorgon.

(t) Clause 8.1 provides that the trust fund must vest on the ‘Termination Date’, defined earlier in the deed as the 80th anniversary of the date of the instrument.

(u) Clause 8.7 provides that on the ‘Termination Date’, in the absence of any supplemental deed appointing other final beneficiaries, the property of the Trusts is to be held on trust for the Primary Beneficiaries as tenants in common in the proportion specified in the schedule, or where a Primary Beneficiary is deceased:

 

(i) for their all the grandchildren of Eric Smorgon if the Primary Beneficiary was a child of Eric Smorgon; or

(ii) for that Primary Beneficiary’s issue on a per stirpes basis, if the Primary Beneficiary was a grandchild of Eric Smorgon.

 

(v) Clause 9.7 obliges the Trustee to keep proper minutes of any proceedings and resolutions.

50 The schedule to the trust deed identifies the Primary Beneficiaries as comprising the children of Eric Smorgon as to 40% in equal shares and the grandchildren of Eric Smorgon as to 60% in equal shares.

51 The schedule further identifies Eric and Annie Smorgon and various other corporate entities as ‘Additional General Beneficiaries’ (in many instances in their capacity as trustee of various of the other trusts the subject of this proceeding). The Additional General Beneficiaries also comprise any other persons or entities nominated by the Appointor in writing, subject to the Trustee’s consent.

52 ‘General Beneficiary’ is defined as follows:

 

‘General Beneficiaries’, … means persons who are or fall within any of the following classes of persons:

(a) a Primary Beneficiary;

(b) a relative of a Primary Beneficiary, except a corporation which is a trustee of a settlement, and the relatives of the relative;

(c) a member for the time being of a Primary Beneficiary that is a corporation, except a corporation which is a trustee of a settlement, and the relatives of the member;

(d) a person for the time being having an interest in a settlement of which the Primary Beneficiary is trustee, and the relatives of the person;

(e) the trustee of an eligible trust;

(f) an eligible corporation;

(g) a legal person at least one share or other interest in which is beneficially owned or held by a beneficiary including, without limitation, an eligible corporation and the trustees of an eligible trust;

(h) an employee of:

 

(i) the Trustee;

(ii) an associate of the Trustee;

(iii) a sub-contractor of the Trustee;

(iv) a sub-contractor of an associate of the Trustee;

(v) a beneficiary;

(vi) an associate of a beneficiary;

(vii) a sub-contractor of a beneficiary; or

(viii) a sub-contractor of an associate of a beneficiary, and the relatives of the employee;

 

(i) a charity;

(j) the persons, if any, named, described or defined in the Schedule as additional general beneficiary.

53 ‘Primary Beneficiary’ is defined as:

 

a person named, described or defined as such in the Schedule and includes persons who from time to time until the Termination Date come or fall within any description or definition of Primary Beneficiaries in the Schedule although those persons are not yet alive or in existence or do not now come or fall within any description or definition of Primary Beneficiaries in the Schedule and, in the case of trustees, although the trusts or settlements of which they are trustees have not yet been established or do not now come or fall within any description or definition of Primary Beneficiaries in the Schedule.

54 ‘Relative’ is defined as:

 

(a) in relation to a natural person … :

 

(i) the parent, grandparent or remoter ancestor, child, grandchild or remoter issue, brother, sister, uncle, aunt, nephew, niece, first cousin of any degree, second cousin of any degree or third cousin of any degree of the person or of the spouse of the person, whether the relationship is of the whole blood or half-blood or by affinity although the relationship is traced through or to a person of illegitimate birth or a person born by means of artificial insemination, in vitro fertilisation or a similar procedure and although the relationship depends on the adoption of a person; and

(ii) the spouse of the person or of a person referred to in subparagraph (i).

55 Importantly for the issues in this case is the definition of ‘child’, which:

 

… in relation to a person (‘relevant person’) includes a person of illegitimate birth born to the relevant person, but does not, except in the definition of ‘relative’, include a person:

(a) born by means of artificial insemination, in vitro fertilisation or a similar procedure if the relevant person is not one of the biological (DNA matched) parents of the person; or

(b) legally adopted by the relevant person,

and:

(c) ‘grandchild’ and ‘issue’ and cognate expressions have, in relation to the relevant person, a corresponding meaning; and

(d) except in the definition of ‘relative’, Ms Smorgon Jane Smorgon is deemed not to be a child of or in relation to Robert Smorgon or to be a grandchild of or in relation to Eric Smorgon.

(underline added)

56 Ms Smorgon asserts that she is ‘named as a discretionary object’ for each of the 16 Trusts. This is true in a literal sense: Ms Smorgon’s name appears in each of the trust deeds and that she is an object of each of the Trusts. However, the manner in which Ms Smorgon is named in the deeds is significant. Ms Smorgon is named specifically to deem her not to be a child of or in relation to Robert Smorgon or to be a grandchild of or in relation to Eric Smorgon; save for the purposes of the definition of ‘relative’.

57 This is significant. Unlike all other grandchildren of Eric Smorgon, Ms Smorgon is not a Primary Beneficiary. Consequently, Ms Smorgon, unlike all other children and grandchildren of Eric Smorgon, is not a beneficiary who stands to receive such part of the trust fund as has not been distributed on the Termination Date.[16]

58 Relevantly, Ms Smorgon is a General Beneficiary because she is a ‘relative’ of a Primary Beneficiary. The trust deed affords Ms Smorgon a commensurate status with all other General Beneficiaries (who are not also Primary Beneficiaries). When establishing the 16 Trusts, each settlor did so on a basis which differentiated Ms Smorgon from all other children of Robert Smorgon and all other grandchildren of Eric Smorgon, and did so on a different basis to the approach taken by the respective settlors under the earlier established ES (Baeckea) Trust and the Eric Smorgon (1977) Family Trust.

59 The persons who comprise the class of General Beneficiaries is vast. It extends not merely to employees of the Trustee, but to an employee of a subcontractor to the Trustee, and to the relatives of that employee. ‘Employee’ too is defined widely, and includes former employees.[17]

60 As has been seen above, the definition of ‘relative’ is also wide. It extends not only to parents, grandparents or remoter ancestors, children, grandchildren, brothers, sisters and the like, but further to second cousins of any degree and third cousins of any degree.

61 Thus, the class of General Beneficiaries would extend to such persons as relatives (and necessarily a relative as distant as a third cousin) of a past employee of the Trustee or the third cousin of a past employee of a subcontractor to the Trustee. Under each of the 16 Trusts, Ms Smorgon enjoys the same status as those persons.

The parties’ submissions

62 The parties agree that there are two bases on which a beneficiary may inspect a trust document. On the first basis, the so-called ‘proprietary approach’, a beneficiary who has a vested proprietary interest in the trust fund itself is considered to have a proprietary interest in the trust documents, and thus a prima facie entitlement to inspect and copy all trust documents.[18]

63 On the second basis, the so-called ‘discretionary approach’ is derived from the exercise by the Court of its inherent supervisory jurisdiction over the administration of the trust and is not contingent upon the proprietary rights of any beneficiary.[19]

64 There is some debate as to the respective merits of each approach. In Australia, some judges have followed the proprietary approach; in New South Wales, notably Mahoney JA in Hartigan Nominees Pty Ltd v Rydge (‘Hartigan Nominees’).[20] Importantly, in Victoria Hargrave J applied the proprietary approach in Deutsch v Trumble (‘Deutsch’).[21]

65 Recently, in Chan v Valmorbida Custodians Pty Ltd (‘Chan’),[22] Delany J held that he was bound to apply the proprietary approach (though he applied the discretionary approach in the case at hand, as the moving party did not have a proprietary interest in the trust). His Honour could not conclude that the reasoning of Hargrave J in Deutsch was obviously wrong, despite a trend in favour of the discretionary approach.

66 Other judges have followed the discretionary approach. For example, Gzell J of the Supreme Court of New South Wales in Avanes v Marshall;[23] Bergin CJ in Equity of the Supreme Court of New South Wales in AIT Investment Group Pty Ltd v Markham Property Fund (No 2) Pty Ltd;[24] and Beach J of the Federal Court of Australia in Webster (Trustee) v Murray Goulburn Cooperative Co Ltd (No 3).[25]

67 In the present case, Ms Smorgon concedes that she does not have a vested proprietary interest in the trust fund, and that as a consequence she cannot rely upon the proprietary approach in her application.

68 Instead, Ms Smorgon argues that she is entitled, as a discretionary object of the Trusts, to approach the Court for an order compelling disclosure of the relevant documents; such order to be granted pursuant to the discretionary approach. That application is made in the Court’s inherent supervisory jurisdiction over the administration of trusts. The Trustees do not dispute this.

69 The classic statement of the discretionary approach is found in the judgment of Walker LJ delivered on behalf of the Privy Council in Schmidt. His Lordship wrote:[26]

 

Their Lordships consider that the more principled and correct approach is to regard the right to seek disclosure of trust documents as one aspect of the Court’s inherent jurisdiction to supervise, and if necessary to intervene in, the administration of trusts. The right to seek the Court’s intervention does not depend on entitlement to a fixed and transmissible beneficial interest. The object of a discretion (including a mere power) may also be entitled to protection from the court of equity, although the circumstances in which he may seek protection, and the nature of the protection he may expect to obtain, will depend in the Court’s discretion.

70 Relevantly, his Lordship identified three areas in which the Court may have to form a discretionary judgment:[27]

 

(a) Whether a discretionary object (or some other beneficiary with only a remote or wholly defeasible interest) should be granted relief at all;

(b) What classes of document should be disclosed, either completely or in a redacted form; and

(c) What safeguard should be imposed (whether by undertakings to the Court, arrangements for a professional inspection, or otherwise) to limit the use which may be made of documents or information disclosed under the order of the court.

(list added; the ‘first’, ‘second’, and ‘third discretionary factors’ in that order)

71 His Lordship further wrote:[28]

 

However, the recent cases also confirm (as had been stated long ago as In re Cowin [1886] UKLawRpCh 13833 Ch D 179, in 1886) that no beneficiary (and least of all the discretionary object) has any entitlement as of right to disclosure of anything which can plausibly be described as a trust document. Especially when there are issues as to personal or commercial confidentiality, the Court may have to balance the competing interests of different beneficiaries, the trustees themselves, and third parties. Disclosure may have to be limited and safeguards may have to be put in place. Evaluation of the claims of a beneficiary (and especially of a discretionary object) may be an important part of the balancing exercise which the Court has to perform on the materials placed before it. In many cases the Court may have no difficulty in concluding that an applicant with no more than a theoretical possibility of benefit will not be granted any relief.

72 Whilst the parties agree that the discretionary approach is appropriate in the circumstances of this case, they differ as to the starting point of the discretionary approach and as to its proper application.

73 Accordingly, it is necessary to set out Ms Smorgon’s submissions in greater detail.

Summary of Ms Smorgon’s submissions

74 Ms Smorgon relies on the Court’s inherent supervisory jurisdiction over the administration of trusts. She submits that this jurisdiction exists, among other reasons, to ensure the trustees are held accountable to the beneficiaries on whose behalf they hold the asset.

75 Ms Smorgon argues that beneficiaries have a prima facie right to call upon the Trustees for accurate information as to the state of the trust; as well as a correlative right to inspect documents relating to the trust. Ms Smorgon accepts that the right is not absolute. However, she notes that even under the proprietary approach, the Court might exclude certain categories of documents from production, such as the reasons of the Trustee for its decisions.

76 Ms Smorgon submits that the law on the discretionary approach is correctly stated in Jacobs’ Law of Trusts in Australia (‘Jacobs’):[29]

 

Where the beneficiaries wanting information are not beneficiaries of a strict trust, but are merely potential objects of the exercise of a discretionary power of appointment over a trust fund, whether it be a bare power or a trust power, appeals to proprietary rights cannot exist, because they have none. It has been held, however, that they have more than the right to ensure that due consideration is given to the exercise of a power and to complain of mala fide exercises of it. Since the trustees are obliged to hold and deal with the trust property for the benefit of the class of potential beneficiaries, and to account to the class for their stewardship, they must allow inspection of trust accounts and give information about the trustee’s management of the trust funds, whether or not breach of trust is alleged. Here too there may be a distinction between documents which are used by the trustees in administering the trust, but which are their property and not that of the trust. And here too the exceptions based on confidentiality apply.

(emphasis added, citations omitted).

77 Thus, Ms Smorgon argues that, irrespective of which approach is followed, the practical application of the two approaches is likely to be the same. In either case there might be a basis to exclude certain categories of document.

78 Ms Smorgon argues that under the discretionary approach the question of disclosure is ‘an issue of enforcement of the trust, thereby ensuring the trustee’s accountability’,[30] but one which is subject to a ‘balancing exercise’[31] to determine the extent of the trustee’s obligation.

79 In relation to the first discretionary factor identified by Lord Walker in Schmidt (whether a discretionary object ought be granted relief at all), Ms Smorgon in written submission contented that as a beneficial object of each of the Trusts she has a prima facie entitlement to inspect trust documents. In oral submission Ms Smorgon advanced this point in more nuanced terms, contending that as a beneficial object she holds, in words again drawn from the case of Erceg v Erceg,[32] an ‘expectation of disclosure’[33] capable of being displaced in certain (rare) circumstances.

80 In relation to the second discretion (the scope of documents to be provided), Ms Smorgon’s submissions returned to the oft-criticised[34] formulation of Salmon LJ in Re Londonderry’s Settlement; Peat v Walsh (‘Re Londonderrys Settlement’);[35] namely that she is entitled to inspect ‘trust documents’, being documents which the beneficiaries are entitled to inspect.[36]

81 In relation to the third discretion, Ms Smorgon submits that the documents that have been requested by her are documents of a type which ought be kept by the trustees as a matter of course, and that the context of her request is the core function of ascertaining the assets and administration of the trust.

82 Ms Smorgon also relies on the following statement in  Lewin on Trusts  (‘Lewin’):[37]

 

But if the beneficiary seeks disclosure for a purpose, or partly or apparently for a purpose, which is contrary to the interests of the beneficiaries as a whole, particularly where the purpose or apparent purpose involves an attack on the trust or trust property, the trustees will, rightly, be cautious in making disclosure of trust accounts and the exercise of the discretion becomes of real importance. Even in this context however there is a strong presumption in favour of disclosure. Normally concerns of the trustees or the Court will be adequately met by the imposition of appropriate confidentiality undertakings restricting the disclosure of trust accounts to third parties or their use in other proceedings.

(underline added; citations omitted)

83 Similarly, Lewin also states:[38]

 

Although a beneficiary does not have an absolute right to disclosure of information about the state of the trust, in the absence of circumstances showing why such information should not be disclosed, or should not be made to the beneficiaries seeking disclosure having regard to the nature of his rights as such, and subject to safeguards for the protection of information of a confidential nature, the trustee should normally make disclosure in the courts with the following principles. A beneficiary ordinarily has the right to call upon the trustee for accurate information as to the state of the trust, and a trustee may be called upon to give information to a stranger with whom the beneficiary is proposing to deal. Hence, in a trust for sale and payment of debts, the party entitled to the trust may say to the trustee: what estates to be sold? what is the amount of money raised? what debts have been paid? A trustee should give the beneficiaries proper information as to the investment of the trust estate. A beneficiary is normally entitled to inspect trustee’s vouchers for their expenditure. Likewise, it is not sufficient for the trustee merely to say ‘I have invested the trust money on a mortgage’, but he must normally produce the mortgage deeds, and where trust money is invested in gilts a beneficiary is entitled to authority from the trustee to enable him to see if there are any charging or stop orders. Ordinarily a beneficiary may seek reasonable information and supporting documents about transactions concerning the trust property and property owned by companies owned by the trust entered into by or with the authority of the trustee.

(underline added; citations omitted)

84 Likewise, Lewin states that:[39]

 

Ordinarily a beneficiary may see reasonable breakdowns and supporting documents in relation to fees and expenses of the trustees including fees and expenses charged to companies owned by the trust.

(citations omitted)

Summary of the Trustees’ submissions

85 The Trustees recognise Ms Smorgon’s right, as a discretionary object of the Trusts, to approach the Court in its supervisory jurisdiction over the administration of the trusts. However, they contend that on the evidence before the Court there is no proper basis to intervene in the administration of the Trusts.

86 The Trustees submit that Ms Smorgon’s approach fundamentally misstates the law. They contend that Ms Smorgon’s submission is premised on a prima facie entitlement to inspect trust documents, notwithstanding her apparently contradictory acceptance that she holds no vested proprietary interest in the Trusts.

87 The Trustees draw particular attention to two matters in the Court’s exercise of its discretion.

88 First, the Trustees argue that Ms Smorgon’s degree of proximity to the Trusts and her likelihood of benefitting from the Trusts is remote. They note that she is one of a large number of potential beneficiaries, all of whom have no entitlement to any interest in each trust fund unless and until the Trustees exercise a discretion in their favour. Further, they emphasise that she is not a Primary Beneficiary of any of the 16 Trusts, and nor has she ever received a distribution from any of the Trusts.

89 Secondly, the Trustees note that Ms Smorgon makes no complaint as to administration of each of the Trusts.

90 Thirdly, the Trustees submit that the Court should have regard to the various discretionary factors set out by the Supreme Court of New Zealand in Erceg (‘the Erceg factors’),[40] in much the same way as Delany J approached the question of disclosure to beneficiaries in Chan.

91 Ms Smorgon accepts that the Court should consider the Erceg factors. However, she submits that on proper analysis Erceg is supportive of her approach. She contends that Erceg is authority for a presumption of disclosure to beneficiary, absent unusual circumstances (such as those present in Erceg).

92 Ultimately, both parties agree that each case must turn on its own facts, and that care must be taken in relying upon statements made in particular cases and applying those statements generally, without regard to the particular circumstances of the case at hand.

Overview of the authorities

93 Having regard to the differences in approach (or more accurately, the difference in emphasis) which arises in the parties’ agreed application of the discretionary approach, it is necessary to submit each party’s submissions to closer scrutiny with reference to the authorities.

94 It is convenient to commence an analysis of Ms Smorgon’s submissions in returning to the statement in Jacobs referred to above at paragraph [76]. The highlighted parts of the cited extract reference by footnote three cases in support: Chaine-Nickson v Bank of Ireland (‘Chaine-Nickson’);[41] Spellson v George (‘Spellson’);[42] and Murphy v Murphy (‘Murphy’).[43] The extract also states in a footnote that the proposition it asserts was questioned by Mahoney JA in Hartigan Nominees.[44] It is necessary therefore to touch upon each of those cases. Further, I will consider the key authorities on the discretionary approach and how they relate to the present issue: Schmidt,[45] Foreman v Kingston (‘Foreman’),[46] Wright v Stevens (‘Wright’),[47] and Erceg.[48]

Chaine-Nickson

95 In Chaine-Nickson, the plaintiff was the son of the settlor and one of the objects of a discretionary trust.[49] The trust had been established by the plaintiff’s father for the benefit of his family and any future spouses or children of his daughter and son (the plaintiff).[50] The plaintiff had previously received distributions under the trust.[51] The trustees invested the trust funds in equity in a private company that did not pay dividends, and in real property.[52] The plaintiff sought the trust accounts, particularly the details of the equity investment and the real property investments.[53]

96 Kenny J of the High Court of Ireland considered Re Londonderry’s Settlement and concluded that the two matters in that case did not concern discretionary objects under a trust.[54] Ultimately, Kenny J relied on the Irish case of Moore v McGlynn,[55] and ordered the defendant trustees to furnish the plaintiff with the trust accounts, as well as the balance sheets and profit and loss accounts of the private company in which the trust funds had been invested.[56] Further, the court ordered the trustees to inform the plaintiff of the names of persons residing on any land purchased by the trustees, and details of any associated outgoings paid out of the trust funds.[57]

Spellson

97 In Spellson, Powell J of the Supreme Court of New South Wales considered an application for inspection of trust documents by a discretionary object.

98 In 1967, the plaintiff, James Thomas Spellson, had married Dianne Spellson (née George).[58] In 1969, they had their first child, a son.[59] Subsequently, a discretionary trust was established by Thomas George, the settlor and a relative of Dianne Spellson.[60] The objects of the discretionary trust were Dianne Spellson’s children, her grandchildren, the spouses of her children or grandchildren, Dianne Spellson herself, as well as James Thomas Spellson (the plaintiff).[61] Some two and a half years later Dianne George and the plaintiff had another son.[62] In 1983, the marriage between the plaintiff and Dianne George was dissolved by decree made in the Family Court of Australia.[63] The decree notwithstanding, no orders relating to the custody or guardianship of the two children of the marriage had been made.[64] Following the dissolution of the marriage, the plaintiff’s solicitors sought from the defendants and their solicitors documents and information relating to the various trusts.[65]

99 Turning to the question of whether a discretionary object has a right to obtain information from a trustee, his Honour commenced his analysis with the proposition that one of the essential elements of a private trust, discretionary or otherwise, is that the trustee is subject to a personal obligation to hold and to deal with the trust property.[66] A necessary corollary of that obligation is that the trustee is liable to account to the beneficiaries of the trust; that being so, the trustee was obliged not only to keep proper accounts and allow a beneficiary to inspect them, but also on demand to give the beneficiary information and explanations as to its dealings with the trust property.[67]

100 Accordingly, his Honour determined that the object of a discretionary trust, even before the exercise of the trustee’s discretion in his favour, had rights against the trustee; both the right to have the trustee consider in good faith whether or not to exercise its discretion in the plaintiff discretionary object’s favour and the right to have the trust property properly managed and to have the trustee account for his management.[68] His Honour considered that a similar view appeared to have been shared by Kenny J in Chaine-Nickson.[69]

101 Ultimately, his Honour recorded that a potential object of the exercise of a discretionary power of appointment in respect of a trust fund has the right to seek and obtain from the trustee information concerning the trustee’s management of the trust fund.[70] The exercise of that right does not require allegations that the trustee has, in the course of his management of that trust fund, been guilty of fraud or other breach of trust.[71]

Murphy

102 In Murphy, Neuberger J sitting in the Chancery Division considered an application by the plaintiff, the son of the defendant, for orders that the defendant disclose the identities of trustees of various trusts which the defendant had settled. The facts were unusual; prior to the creation of the first trust, the defendant, his wife, and their two sons (which included the plaintiff) each had shareholdings in a family company.[72] In 1968 and 1970 the plaintiff settled the remainder of his shares on discretionary trusts, with entities in the Isle of Man as trustees; allegedly at the defendant’s direction.[73] The terms of 1968 and 1970 settlements deliberately excluded the plaintiff himself, the defendant (his father), and any wife of either from the class of potential beneficiaries.[74] The plaintiff maintained that the shares of the 1968 and 1970 settlements were subsequently settled again on further discretionary trusts by the trustee companies; and that the plaintiff was likely to be an object of the those subsequently settled trusts.[75] The plaintiff maintained that this unusual procedure was part of a structure to organise the tax liabilities of the plaintiff and the defendant.

103 The plaintiff was a director of the family company until 1987, when he fell out with the defendant.[76] In 1994, the plaintiff issued proceedings against two trustee companies asserting that he retained beneficial ownership of all the shares the subject of 1968 and 1970 settlements.[77] In response, the defendant trustees pleaded that the plaintiff had parted with his beneficial interest in the family company by executing the 1968 and 1970 settlements; and that further relief should be refused by reason of his acquiescence and laches.[78]

104 In 1997 the plaintiff issued the originating summons, seeking an order that the defendant disclose the names and addresses of the trustees of each of the 1968 and 1970 settlements affecting shares in the family company.[79] The plaintiff relied on his status as an object of the discretionary trust settled in 1965.[80] The plaintiff sought to communicate with the present trustees of the subsequently settled trusts so as to bring his circumstances to their attention, to note his status as a potential beneficiary, and for the purposes of a foreshadowed claim to set aside the 1968 and 1970 settlements.[81]

105 His Honour held that the Court had jurisdiction to order a third party to disclose the identity of the trustees to a potential beneficiary (such as the plaintiff) even though there was no suggestion of any wrongdoing by the trustees.[82] His Honour noted the jurisdiction to supervise the administration of trusts carried with it a broad discretion, and that since the plaintiff’s desire was to communicate to the trustees his circumstances and claims so as to be considered as a potential beneficiary and to know what had happened to the trust assets, it would impose no unfair burden on the defendant or the trustees to make such an order.[83]

106 In the context of the disposition of that unusual application, His Honour took the view that as the plaintiff was merely within the class of discretionary beneficiaries and there was no question of wrongdoing on the part of the trustees was a factor going to the exercise of the discretion, rather than a factor going to whether the discretion existed at all.[84] Of some importance in the context of the present application, his Honour also noted that:[85]

 

… it is not as if the plaintiff is, as it were, something of a remote beneficiary, or one beneficiary among a great many. The number of potential discretionary beneficiaries is pretty limited, and, at least if one looks at the order in which the potential beneficiaries are identified in the defendant’s 1965 settlement, the plaintiff … could be said to come at the top of what is a fairly short list.

(underline added)

Hartigan Nominees

107 In Hartigan Nominees, Mahoney JA of the Court of Appeal of the Supreme Court of New South Wales expressly followed Re Londonderry’s Settlement, the classic statement of the proprietary approach.[86]

108 Re Londonderry’s Settlement recognised that a beneficiary’s entitlement to trust documents is curtailed by the principle that documents evidencing a trustee’s exercise of discretion will remain confidential.[87] In Re Londonderry’s Settlement, Harman LJ adopted the dictum of Wrenbury LJ in O’Rourke v Derbyshire; there his Lordship stated:[88]

 

If the plaintiff is right in saying that he is a beneficiary, and if the documents are documents belonging to the executors as executors, he has a right to access to the documents which he desires to inspect upon what has been called in the judgments in this case a proprietary right. The beneficiary is entitled to see all trust documents because they are trust documents and because he is a beneficiary. They are in a sense his own. Action or no action, he is entitled to access to them.

109 Hartigan Nominees involved an application by an object of a discretionary trust for access to a memorandum of the wishes of the instigator of the trust, the terms of which the trustees had regard when performing their obligations under the trust.[89] The applicant was a grandchild of the instigator.[90] The primary judge allowed the applicant access to the memorandum of wishes.[91]

110 On appeal, the Court refused access to the memorandum. Mahoney JA expressly followed Re Londonderry’s Settlement; however, he held that the memorandum ought not be disclosed to the plaintiff on confidentiality grounds.[92] Sheller JA was critical of the proprietary approach in Re Londonderry’s Settlement,[93] but nevertheless accepted the reasoning concerning the right of a trustee to refuse to produce documents disclosing the reasons for exercising a discretionary power or information provided to a trustee in confidence.[94]

111 Kirby P in dissent stated that he did not consider that the proprietary approach represented the law in Australia and would have ordered disclosure.[95]

112 Importantly for the issues in this case, Mahoney JA stated:[96]

 

However, if a beneficiary requests it, the trustee is in general obliged to provide documents and information to the beneficiary, at his cost, in relation to the trust property and to provide an accounting in respect of the administration of it. These principles have been long recognised: see eg Walker v Symonds [1818] EngR 592(1818) 3 Swans 1; 36 ER 751. A number of the decided cases are reviewed in Re Fairbairn, (deceased) [1967] VicRp 72[1967] VR 633, 636 et seq. A beneficiary may make such request even though his interest be only contingent: Re Dartnell; Sawyer v Goddard [1895] UKLawRpCh 24[1895] 1 Ch 474. Notwithstanding cases such. Notwithstanding cases such as Chaine-Nickson v Bank of Ireland [1976] IR 393 it may be that such a right does not exist where the request is made by a person who is only a possible beneficiary under a discretionary trust.

At least, I would reserve the question whether one of a large number of possible beneficiaries may make such a request. In many cases, the class of possible beneficiaries may be extensive and, to an extent, the persons who are or may be a member of the class may not be clearly defined. In the present case, the definition of eligible beneficiaries includes not merely several groups of persons but, in addition, persons who are nominated in writing to the trustees by the father, his legal personal representatives, or the trustees themselves. As at present advised, I doubt that a person whose interest lies not in property but in possibility and is in respect of part but not all of the trust property may demand such information. However, the present plaintiff is an eligible beneficiary within the description and the trust document and I shall accept for the purposes of this appeal that he is possessed, in general, of such a right.

(underline added)

Schmidt

113 Subsequently, the Privy Council handed down its decision in Schmidt, expressing a clear preference for the discretionary approach and relying upon parts of Kirby P’s dissent in Hartigan Nominees.

114 The key considerations identified by Lord Walker as relevant to the court’s discretion to order disclosure of trust information have been set out above. Of importance to the present case is Walker LJ’s statement that:[97]

 

… no beneficiary (and least of all the discretionary object) has any entitlement as of right to disclosure of anything which can plausibly be described as a trust document. Especially when there are issues as to personal or commercial confidentiality, the Court may have to balance the competing interests of different beneficiaries, the trustees themselves, and third parties. Disclosure may have to be limited and safeguards may have to be put in place. Evaluation of the claims of a beneficiary (and especially of a discretionary object) may be an important part of the balancing exercise which the court has to perform on the materials placed before it. In many cases the Court may have no difficulty in concluding that an applicant with no more than a theoretical possibility of benefit ought not be granted any relief.

(underline added)

Foreman v Kingstone (‘Foreman’)

115 Support for Ms Smorgon’s submission is also derived from the decision of Potter J of the High Court of New Zealand in Foreman v Kingstone.

116 In Foreman, the plaintiffs were the children of the first marriage of Mr Bill Foreman.[98] Mr Foreman had by deed settled a trust dated 26 March 1959 (‘the 1959 Trust’).[99] The assets of the 1959 trust were later resettled by Mr Foreman and his third and then-wife on another trust dated 26 February 1999 (‘the 1999 Trust’); this trust had an expanded class of beneficiaries.[100] Additionally, a third trust with separate assets was settled by Mr Foreman’s second wife, Mary Pat Foreman, (‘the MP Foreman Trust’) who had died in 1987, before Bill Foreman’s marriage to his third and current wife;[101] Mary Pat Foreman’s estate was also held on trust by the defendant trustees.[102] The MP Foreman Trust was wound up in 1996.[103] Each trust held shares in a company which carried on a very successful and substantial business originally founded by Mr Foreman and subsequently sold by him.[104]

117 The plaintiffs alleged that the winding up of the MP Foreman Trust, the resettling of the 1959 Trust property in the 1999 Trust, and certain income distributions to Bill Foreman were invalid. The plaintiffs sought, among other things, financial statements relating to each of the three trusts; the basis upon which the decision was made to resettle the assets of the 1959 Trust on the 1999 Trust; full details of the winding up of the MP Foreman Trust; as well as copies of all letters, memoranda of wishes or any other communications by the settlors of each of the trusts to the trustees.[105]

118 The trustees supplied to the plaintiffs copies of each of the trust instruments and advised that they would further supply copies of the accounts in the estate of MP Foreman to which the plaintiffs were entitled, but otherwise submitted that they were not obliged to furnish the plaintiffs with the other documents or information the subject of the request.[106]

119 The Court accepted that plaintiffs’ interests under the trusts were as objects of a discretionary power.[107]

120 The Court conducted a detailed analysis of the relevant authorities, including SchmidtHartiganChaine-NicksonSpellson and Murphy,[108] before turning to the parties’ submissions. The plaintiffs submitted that as discretionary beneficiaries of the trust they were entitled ‘as of right to the documents they seek’.[109] By contrast, the defendants submitted that beneficiaries have no absolute right to disclosure of any documents held by trustees, but that where a trustee refuses to provide documents the Court may, in the exercise of its general power to supervise the administration of trusts, require the trustees to disclose such documents as the Court determines.[110] The defendants submitted that there were a number of factors necessary to be considered in the exercise of the Court’s discretion which militated against disclosure:[111]

 

(a) first, the nature of the trusts as personal family trusts established by a parent using their own assets;

(b) secondly, the nature of the beneficiaries’ interest under the trusts as objects of a power, which the defendants submitted was the weakest possible interest in the trust fund;

(c) thirdly, that the plaintiffs sought disclosure in order to find some basis upon which to challenge various exercises of discretion by the trustees in circumstances where there was no pleading or evidence to support any suggestion of bad faith;

(d) fourthly, that the request in part sought documents the majority of which related to the reasons for various discretionary decisions by the trustees;

(e) fifthly, that the plaintiffs are the only beneficiaries to seek disclosure from the trustees and that their requests for disclosure were not supported by the other beneficiaries, who were named as primary and secondary objects of the trust by specific provisions of the deed and so had higher claims to the exercise of the trustee’s discretion in their favour;

(f) sixthly, the defendants submitted that there was a potential for family conflict resulting from the disclosure of the documents sought.

121 Her Honour allowed the application, concluding as follows:[112]

 

Beneficiaries are entitled to receive information which will enable them to ensure the accountability of the trustees in terms of the trust deed. They are entitled to have the trust property properly managed and to have the trustees account for their management. They are entitled to receive trust accounts (Spellson v George … and Chaine-Nickson v Bank of Ireland). This goes well beyond the right to be ‘considered’ by the trustees which, in the defendants’ submission, is the extent of entitlement of a discretionary beneficiary.

These are fundamental rights of beneficiaries. They are not absolute rights which arise from documents or information being categorised as ‘core trust documentation’. They will be subject to the discretion of the Court in its supervisory jurisdiction and trustees seek directions, or beneficiaries seek relief against refusals by trustees to disclose.

Beneficiaries are not entitled to the reasons for the exercise by the trustees of their discretions. They are obliged to respect the autonomy of the trustees pursuant to broad discretions vested in them by the trust deed.

In this case, I conclude that there are no circumstances which would persuade the Court to override the fundamental rights of the plaintiffs as beneficiaries to the extent of the orders made to disclose.

122 Her Honour also considered a situation where the request for information came from a person more removed from the trust, such as a charity (charities fell within the class of discretionary beneficiaries under the trusts).[113] Her Honour doubted that an application by a charity for disclosure would be made or ordered based on any absolute right to core trust documentation; nor was such an applicant likely persuade the trustees or the Court to grant disclosure in its supervisory jurisdiction.[114] Ultimately, Her Honour did not consider that the plaintiffs (unlike a charity) held ‘the weakest possible interest in the trust funds’, noting that:[115]

 

Schmidt has confirmed their position as carrying, with other beneficiaries, more than a right merely to receive consideration. At this preliminary question stage of the proceedings, it is premature to attempt assessment of the strength of their claims under the second, third and fourth causes of action, beyond observing the wide discretion of the trustees under the trust deed. But that does not cut across the trustees’ duty to be accountable to the beneficiaries.

Wright

123 In Wright, Hallen J in Equity of the Supreme Court of New South Wales considered an application by a potential object of the exercise of a discretionary power for orders directing the trustee to disclose information and permit inspection of trust documents.

124 Like MurphyWright was a somewhat unusual case; the trust had been settled for the purpose of benefiting those persons, trustees of trusts, companies and charities residing in or otherwise carrying on business in Dorrigo, New South Wales.[116] The settlor of the trust had lived in Dorrigo and was a well-known Dorrigo identity; he had never married and, so far as was known, had no children.[117]

125 The plaintiff was not a specifically named beneficiary of the trust, but was a person residing in the Dorrigo postcode, where he had lived for many years.[118] Hallen J held that the plaintiff was a person with a genuine, legitimate expectation of benefiting from the trust.[119]

126 The plaintiff was concerned at the administration of the trust assets.[120] Despite the plaintiff’s request, the defendant trustee did not provide the plaintiff with a statement of the assets and liabilities of the estate.[121]

127 There was evidence that, following an invitation for submissions for grants, the trust had made grants from the trust funds to various entities in Dorrigo;[122] however, some of the recipient entities were not registered as a company or association, or as a proprietor of a business name or company in the Dorrigo area.[123] Further, there was no evidence of any appointment in writing by the trustee of any person as beneficiary, despite grants having been made; this was conceded by the defendant.[124] The plaintiff contended that as a result, the distributions were irregular and that this was evidence that the trust was not being properly administered.[125]

128 In making orders for disclosure, the primary judge held that the plaintiff, as a potential object of the trust, had a right to commence legal proceedings to prevent the appointment as a beneficiary of persons who do not fall within the scope of the trust.[126] Further, he held that this right implied a corollary right to inspect trust documents, as long as their production was for that purpose and did not extend to any reasons for the exercise of discretions and powers by the trustee.[127] His Honour considered that the power of the Court to order inspection was discretionary in the sense that it involved the Court’s assessment and judgment.[128]

129 Ultimately, his Honour held that the defendant trustee should not be entitled to carry on the administration of the trust ‘in secret’, in the sense of doing so without supervision or without accountability.[129] His Honour regarded it as significant that the trustee had failed to disclose in affidavit any non-confidential matters of significance concerning the trust (which could not be confidential), nor to whom distributions had been, the manner of their making and whether each of the recipients had been appointed as a beneficiary as required by the trust deed.[130]

Erceg

130 In Erceg, O’Regan J delivering the judgment of the Supreme Court of New Zealand (‘the Supreme Court’) conducted a detailed review of the relevant authorities, including Chaine-NicksonHartiganMurphy v MurphySpellsonSchmidt and Foreman.

131 The facts in Erceg were also unusual. The settlor, Michael Erceg, settled two discretionary trusts with multiple classes of beneficiaries.[131] His brother Ivan, the plaintiff in the suit, was one of the discretionary beneficiaries and was identified as a final beneficiary.[132] Michael owned a successful business, the shares in which were transferred to the trust.[133] Michael died in an accident in 2005 and Ivan received a substantial direct bequest under the will.[134] In 2006, the trustees sold the shares in the business.[135] Some years later Ivan was adjudicated bankrupt.[136] While Ivan was still bankrupt, the trusts were wound up.[137] Upon his discharge from bankruptcy some years later, Ivan filed a statement of claim seeking, among other things, an order requiring the trustees to provide him with an extensive list of documents relating to the management of the trust and the actions of the trustee.[138] His bankruptcy had been discharged, but not annulled, at the time of the proceeding.[139]

132 The primary judge had held that a beneficiary’s right to access documents was a species of property which had vested in the Official Trustee on Ivan’s bankruptcy and had not revested in Ivan upon his discharge from bankruptcy; accordingly, he held that Ivan had no standing to seek disclosure.[140] The Court of Appeal overturned that finding, but agreed that the Court’s discretion should not be exercised in favour of disclosure.[141]

133 The Supreme Court, sitting as the final appellate court, concluded that the Court’s jurisdiction on an application for the exercise of the supervisory jurisdiction is not limited to the grounds of review of a discretionary decision by trustees.[142] Rather, the Court was obliged to exercise its jurisdiction as a court of equity, exercising its own judgment as to whether disclosure ought to be made at all, and if so, to what extent and on what conditions.[143]

134 The Supreme Court accepted that the starting point was the obligation of a trustee to administer the trust in accordance with the trust deed and to account to beneficiaries.[144] It accepted that a beneficiary who seeks an account may access such documentation necessary to assess whether the trustee has acted in accordance with the trust deed.[145]

135 However, the Supreme Court went on to state that given the wide variety of situations that may present themselves which call for a Court to exercise its supervisory jurisdiction, ‘it is hard to articulate any hard and fast rules’.[146] Importantly, the Supreme Court stated:[147]

 

However, it must be borne in mind that there will normally be a number of beneficiaries and the underlying principle in deciding whether disclosure will be made will be identifying the course of action which is most consistent with the proper administration of the trust in the interests of the beneficiaries, not just the beneficiary requesting disclosure.

136 The Supreme Court expressed approval of the list of factors considered in Foreman, stating they were a helpful guide in the exercise of the jurisdiction. [148] However, it stepped away from any proposition in Foreman that there was a presumption that a discretionary beneficiary is entitled to be provided with information absent exceptional circumstances; rather, the Supreme Court stated:[149]

 

In the normal run of things, trustees will provide these [trust documents] to close beneficiaries on request or proactively, without the need for a request. If they refuse, a court will be likely to require disclosure unless, to use Potter J’s formulation, there are ‘exceptional circumstances’. This is the so-called ‘presumption’ of disclosure, noted earlier. We see it more as an expectation that basic trust information will be disclosed to a close beneficiary who wants it. But there may be room for debate about who is a close beneficiary and the request for disclosure may go beyond such basic information. The greater the scope of the request and the remoter the interest of the beneficiary, the more room there will be for argument about the appropriateness of disclosure.

(underline added)

137 The Supreme Court then undertook its evaluation of the application for disclosure by considering the following factors:[150]

 

(a) the documents that are sought;

(b) the context for the request and the objective of the beneficiary in making the request;

(c) the nature of the interests held by the beneficiary seeking access;

(d) whether there are issues of personal or commercial confidentiality;

(e) whether there is any practical difficulty in providing the information;

(f) whether the documents sought disclose the trustee’s reasons for decisions made by the trustee;

(g) the likely impact on the trustee and the other beneficiaries if disclosure is made;

(h) the likely impact on the settlor and the third parties if disclosure is made;

(i) whether disclosure can be made while still protecting confidentiality; and

(j) whether safeguards can be imposed on the use of the trust documentation.

138 The Supreme Court applied these factors in exercising its discretion and ultimately held that, for reasons including that the plaintiff had improperly harassed the trustees and threatened to release documents to the media, the unusual circumstances meant that disclosure should not be ordered.[151]

Is Ms Smorgon entitled to a presumption in favour of disclosure (or are the circumstances such that there is an expectation of disclosure)?

139 I do not accept that there is a presumption in favour of disclosure or an expectation of disclosure, as those concepts have been referred to in Spellson, adverted to in Hartigan Nominees, and arguably derived from Foreman.

140 First, to approach the discretion with a presumption of disclosure finds limited if no support in Schmidt;the seminal authority in respect of the discretionary approach which was decided after Spellson and Hartigan Nominees (and for that matter after Chaine-Nickson and Murphy)A presumption of disclosure also obscures or at the very least fetters Lord Walker’s first discretionary matter from Schmidt; that is, whether disclosure should be made at all. Alternatively, if there is such a presumption or ‘an expectation of disclosure’, that presumption or expectation is limited to disclosure to close beneficiaries, and is further confined to basic trust documents such as the trust deed and deeds of variation, financial statements, and possibly minutes and resolutions of the trust deed. It was in this sense that the Supreme Court in Erceg considered expectation of disclosure applied.[152]

141 In the case of the 16 Trusts, Ms Smorgon is not what I would regard as a close beneficiary. The phrase ‘close beneficiary’ does not permit precise definition. In my view, it must be taken to mean ‘someone who can be expected to either receive distributions from the trust or, at the least, to be a strong candidate to do so’.[153] The identification of those who stand in that position will in the first (and primary) instance be informed by the provisions of the relevant trust deed, as it is the trust deed which reveals the settlor’s intention.[154]

142 Ms Smorgon is not a Primary Beneficiary as that term appears in the trust deeds for the 16 Trusts. The Primary Beneficiaries of each of the 16 Trusts are the children and grandchildren[155] of Eric Smorgon.[156] Further, whilst the Court in Erceg referred to a named beneficiary as an instance of a person who might expect to receive distributions (a close beneficiary), and though trust deeds for the 16 Trusts name Ms Smorgon, this fact does not advance her application. Rather, Ms Smorgon was named specifically so as to clarify that she was not a Primary Beneficiary. The settlor took the deliberate course upon the establishment of each of the 16 Trusts of naming Ms Smorgon to ensure that she would be no more than a General Beneficiary; a class whose breadth extends to enormous lengths. Nor is Ms Smorgon’s position assisted by events subsequent to the establishment of the trusts; as she complains, she has never received distributions or any information concerning the Trusts.

143 Secondly, Ms Smorgon’s request goes beyond ‘basic trust documents’. She seeks every document that has come into existence pursuant to the affairs of each of the Trusts for the previous seven years.

144 Accordingly, Ms Smorgon obtains no assistance from any presumption or expectation of disclosure.

145 Rather, the Court is to consider Ms Smorgon’s application by reference to whether, in exercising its inherent jurisdiction as a Court of Equity to administer trusts, it determines that it is appropriate to intervene in the particular circumstances at hand. Exercise of that jurisdiction requires careful consideration of the Erceg factors identified above.

146 The Meehan affidavit set out uncontradicted evidence in respect of each of the Erceg factors.

147 Whilst I have had regard to all of the Erceg factors referred to, I consider the first factor (the nature of the documents sought), the second factor (the context for the request and the objective of the beneficiary in making the request), the third factor (the nature of the interest of the beneficiary seeking access), and the fourth factor (whether there are issues of personal or commercial confidentiality) to be of particular significance.

148 The third factor (the nature of the interest held by the beneficiary seeking access) is of clear import, particularly in light of the nature of the documents sought and Ms Smorgon’s stated purpose for seeking access. In Erceg, the Supreme Court observed that the degree of proximity of the beneficiary to the trust (or the likelihood of the requesting beneficiary or others in the same class of beneficiaries benefiting from the trust) would be a relevant factor.[157] In Chan, Delany J described the degree of proximity of the plaintiffs as beneficiaries to the trust in that case as ‘critical’.[158] As I have stated, I do not consider that Ms Smorgon is a close beneficiary of any of the 16 Trusts.

149 Ms Smorgon grounds her application to inspect the documents on a desire to ‘know how the trust money is invested and administered’ and to ‘demonstrate how the assets of the trust are invested, including the assets and liabilities of the Trusts and documents which support the investments and the liabilities’.

150 Thus, Ms Smorgon, a distant beneficiary of the 16 Trusts, seeks a substantial body of documentation[159] for the sole purpose of sating a curiosity on her part as to the investment and administration of trust funds of the 16 Trusts; trusts in respect of which she has never received a distribution, never attended any meeting or meetings, and never been the subject of enquiry or communication from the trustees prior to the commencement of this proceeding.

151 Of course, there is no requirement for a discretionary object to show of a particular set of circumstances, such as an allegation of a breach of trust, to establish standing to seek the intervention of a Court of Equity in its supervisory jurisdiction over the administration of trusts; nonetheless, the circumstances and background to the request are material to the Court’s exercise of its discretion.

152 In the cases canvassed above where disclosure was ordered, the applicant was able to point to factors which justified the Court’s intervention, beyond its mere curiosity as to the asset position of the trust. Leaving Spellson aside, any exceptions to this were cases where the applicant was a close beneficiary; with the possible exception of Spellson.

 

(a) In Chaine-Nickson, thoughthere was no suggestion of a breach of trust or of any other actuating circumstance of note prior to the beneficiary’s request, the beneficiary was clearly a close beneficiary and had received distributions from the trust.

(b) In Hartigan Nominees, the information sought was confined to a memorandum of wishes of the settlor, sought by a grandchild of the settlor. In the context of the narrow category of information sought, the applicant would in all likelihood have been regarded as a close beneficiary. Importantly, Mahoney JA (who applied the proprietary approach but who nevertheless refused access on confidentiality grounds) specifically distinguished the applicant’s position from that of the wider class of beneficiaries.[160]

(c) Murphy involved an unusual set of circumstances. The plaintiff sought the names of the trustees of a trust so that he could alert the trustees to his existence and communicate to them matters that might cause the trustees to exercise their discretions in his favour. There was no suggestion of an antecedent breach; however, the judge evidently did not regard the plaintiff as a remote beneficiary, or at the least not one of many.

(d) In Schmidt, the plaintiff was the only child of the settlor and thus was clearly a close beneficiary. Moreover, the plaintiff was one of 3 beneficiaries of his father’s estate and there was evidence that his father specifically wished his son to benefit from at least two of the trusts.[161]

(e) In Wright, there was evidence of payments made to those who were not beneficiaries, and having regard to the unusual nature of the trust, the plaintiff, a resident of Dorrigo, was as close a beneficiary as any other eligible beneficiary.

(f) In Chan, disclosure was sought by a person in close proximity to the trust and against the background of allegations of breach of trust.

(g) In Spellson, there was no suggestion of any antecedent breach of trust, and the proximity of the beneficiary’s interest may have been open to debate. The request for information appears to have arisen in the context of unresolved matrimonial property settlement issues between the plaintiff and his former wife. The former wife was clearly a close beneficiary of the trust, which had been settled by her immediate family; whether the plaintiff remained a close beneficiary in circumstances where he was apparently estranged from the settlor’s family is more difficult to discern. However, it was not yet resolved which parent would have custody of the children, and the children were themselves beneficial objects of the trust. Nonetheless, I acknowledge that Spellson is of some assistance to Ms Smorgon.

153 In the present case, Ms Smorgon is not a close beneficiary of any of the 16 Trusts. This distinguishes her from the applicants in Chaine-Nickson; Hartigan Nominees; arguably MurphySchmidtWright; and Chan. Nor does Ms Smorgon seek a narrow category of documents, such as those sought in Hartigan Nominees, Murphy or Wright.

154 Similarly, unlike the applicants in Wright or Chan,Ms Smorgon cannot point to any circumstance of note antecedent to her request, beyond her mere curiosityMs Smorgon’s request is made by a remote beneficiary for a large body of documentation that is ‘in the air’, in the sense in which Salmon LJ used that phrase in Re Londonderry’s Settlement:[162]

 

The position is quite different where the beneficiary seeks disclosure of documents from the trustees in the air, as in this case, from the position where the beneficiary seeks discovery of documents in an action in which allegations are being made against the bona fides of the trustees.

155 In that context, having rejected any presumptive right or prima facie expectation of disclosure on the part of Ms Smorgon, it is difficult to discern any basis for the Court to exercise its discretion so as to intervene in the administration of the trusts. That is all the more so where each of the trust deeds for the 16 Trusts contain a clause restricting disclosure to a beneficiary. As Mahoney JA stated in Hartigan:[163]

 

In deciding questions of disclosure, it is important in my opinion to have regard to the essential nature of such discretionary trusts. Such a trust is not a mere commercial document in which the public may have an interest. It is a private transaction, a disposition by the settlor of his own property, ordinarily voluntarily, in the manner which he is entitled to choose. Special cases apart, it is proper that his wishes and his privacy be respected.

156 To similar effect Campbell J of the Supreme Court of New South Wales writing extra-judicially explained[164] that ‘in deciding who is entitled to receive some degree of explanation of the affairs of the trust, the court is deciding a matter of the settlor’s likely intention’[165] because ‘it is only insofar as the trust documentation is silent that the general law has a role to play’.[166] Thus:[167]

 

… courts need to decide, construing each trust deed individually in its context, whether faithful performance of the intention of the settlor of that particular trust deed requires information of the type that a court is considering to be disclosed to the relevant class of beneficiary, to be kept secret from the relevant class of beneficiary, or to be disclosed or not as the trustee thinks best.

157 In addition, and of relevance to the seventh Erceg factor, it is not in my view possible to bracket the circumstances that led to the present application. The request arose in the context of the death of Robert Smorgon and the subsequent grant of probate over his will, and there is clearly an apprehension on Ms Smorgon’s behalf that she has been insufficiently provided for by her late father. Whilst I accept Ms Smorgon’s uncontradicted evidence as to her motivations for requesting the documents, appropriately and carefully she deposes that she does not presently seek documents which reveal the deliberations of the Trustees in reaching their decisions or distributions in administration of the Trusts.

158 There is a distinct possibility that disclosure of the documents sought may give rise to the potential for family discord; if not between Ms Smorgon and the recipients, then possibly between recipients or between other Primary Beneficiaries some of whom may have received distributions and some of whom may not. The documents sought expressly condescend to naming the recipients of distributions under the Trusts.

159 Of course, the potential for such discord is an inevitable consequence of discretionary trust arrangements.[168] Nonetheless, as Erceg acknowledges, the likelihood of such discord is an appropriate factor for a Court to have regard when exercising its discretion.

160 The need for documentation evidencing the identity of recipients of distributions is not apparent given that Ms Smorgon’s request for access has been made in order to ‘assist in demonstrating how the assets of the trust are invested, including the assets and liabilities of the trusts and documents which support the investments and the liabilities’. The identity of those to whom previous distributions have been made is not necessary to advance such understanding, certainly not to an extent sufficient to warrant the discretionary intervention of a Court of Equity in the administration of the trusts.

161 For the reasons above, I do not consider that is an appropriate exercise of the Court’s discretion to make the orders sought with respect to the 16 Trusts.

The ES (Baeckea) Trust and the Eric Smorgon (1977) Family Trust

162 It is necessary to consider the position of the ES (Baeckea Trust) and the Eric Smorgon (1977) Family Trust separately. In both trusts there is no clause in the trust deed restricting disclosure. Moreover, in both trusts Ms Smorgon’s status as a beneficiary differs from the rather remote position she occupies in relation to the 16 Trusts.

163 The ES (Baeckea) Trust was established by deed of settlement dated 1 July 1977, between Lionel K Congold as settlor and Baeckea Pty Ltd as trustee. It provides that:

 

(a) The Primary Beneficiaries are all the children of Eric Smorgon and Annie Smorgon, namely Jack Smorgon and Robert Smorgon (Ms Smorgon’s father).

(b) The General Beneficiaries named in the schedule comprise Eric Smorgon and Annie Smorgon.

(c) The Income Beneficiaries comprise Eric Smorgon; Annie Smorgon; Jack Smorgon; Valerie Smorgon; Robert Smorgon and Michelle Smorgon and all their children namely Ms Smorgon, Jane Smorgon; Norman Smorgon; Lisa Smorgon; Anthony Smorgon; Michael Smorgon, and/or any other children[169] born after the date of the deed.

(d) The vesting day, as varied by a subsequent deed, is 30 June 2050.

164 ‘General Beneficiaries’ is defined to mean, among others, the brothers, sisters, and children of the Primary Beneficiaries, and their children in turn; as well as those persons named as General Beneficiaries.

165 ‘Beneficiary’ or ‘beneficiaries’ is defined to mean any of the Income Beneficiaries, Primary Beneficiaries, or General Beneficiaries.

166 Clause 3(1) provides that the Trustee shall from time to time put aside such of the net income during the Accounting Period as he or she thinks fit for a charitable purpose or for the benefit of all or any one or more of the Income Beneficiaries, in his or her absolute discretion.

167 Clause 3(3) provides that on the Vesting Day any income not paid, applied, or set aside under clause 3(1) is to be held on trust for the Primary Beneficiaries still living on trust as tenants in common in equal shares, or if a Primary Beneficiary has died, for their children as tenants in common in equal shares for the proportion that Primary Beneficiary would have taken had they been living.

168 Clause 4 provides that on the Vesting Day the Trustee shall stand possessed of the trust fund for the Primary Beneficiaries still living on trust as tenants in common in equal shares, or if a Primary Beneficiary has died, for their children as tenants in common in equal shares for the proportion that Primary Beneficiary would have taken had they been living; of for such charitable purposes or beneficiaries appointed in writing by the Trustee prior to the Vesting Day.

169 Clause 6 entitles the trustee at its absolute discretion to pay amounts out of the capital of the trust to any of the general beneficiaries prior to the vesting day.

170 Clause 7 of the trust deed gives the trustee wide powers of investment to be exercised in its absolute discretion.

171 Thus, Ms Smorgon’s status under the trust deed is that of an Income Beneficiary, and by that status she is also a General Beneficiary. Further, although the class of General Beneficiaries extends beyond the family members of the Primary Beneficiary,[170] it is considerably narrower than the definition of General Beneficiary for the 16 Trusts.

172 Moreover, as the daughter of a Primary Beneficiary (that is, as the daughter of Robert Smorgon), Ms Smorgon will derive a vested interest as a tenant in common of the undistributed part of the trust fund on the vesting day.

173 As such, Ms Smorgon is considerably closer to the ES (Baeckea) Trust than to the 16 Trusts.

174 In my view, and notwithstanding that Ms Smorgon has not to this point received any distributions or information from the ES (Baeckea) Trust, she can be regarded as a close beneficiary of that trust.

175 In addition, and as noted above, there is no clause in the trust deed for the ES (Baeckea) Trust restricting disclosure to the beneficiaries.

176 However, as with the 16 Trusts, Ms Smorgon requests a large body of documents, and does so in a context where she does not point to any circumstance antecedent to that request beyond her curiosity to ‘know how the trust money is invested and administered’ and to demonstrate ‘how the assets of the trust are invested, including the assets and liabilities of the trusts and documents which support the investments and the liability’.

177 In Erceg, the Supreme Court categorised the types of documents sought by the applicant. In ‘Category 1’, the Court placed the trust deed, deeds of variation, and financial statements; describing such documents as ‘basic documents for which the strongest case for disclosure can be made’.[171] In ‘Category 2’, the Court placed the minutes and resolutions of the trustee; describing them as ‘similar to Category 1 save for the fact that disclosure without redactions may reveal the reasons for the trustees for the distributions made by them’.[172]

178 Further, the Court noted that ‘a primary discretionary beneficiary would normally have a good case for disclosure of the trust deed and financial statements relating to the trust’.[173]

179 In my opinion, as Ms Smorgon is a named Income Beneficiary, as well as the child of a Primary Beneficiary, she is akin to a Primary Beneficiary. Accordingly, Ms Smorgon has a reasonably strong case for disclosure of Category 1 information.

180 That case for disclosure, however, must nevertheless be subject to a consideration of the other discretionary factors considered in Erceg. Confining myself at this stage to the basic trust documents, namely the trust deeds and deeds of variation (which have already been provided) and the financial statements, I consider that the practical difficulty in providing the financial statements can largely be put to one side.

181 However, I remain concerned at the potential for discord in the event that the documents provided disclose the identity of income beneficiaries who have received distributions from the Trust. Further, noting that the Trustee’s power to make such distributions is a matter for its absolute discretion and that Ms Smorgon has made no complaint to date as to the manner in which the Trust has been administered, I can see no basis for the exercise of an equitable jurisdiction to intervene in the administration of the trust in a way which discloses such information, particularly having regard to the purpose for which the information is sought.[174]

182 In Erceg, the Supreme Court considered the possibility of redactions to ameliorate that concern, but concluded that such redactions would render useless the information sought by the plaintiff.[175] Further, the Supreme Court took the view that disclosure was generally inappropriate in the somewhat unusual circumstances of that case.[176]

183 However, in the present case I note that Ms Smorgon’s deposed basis for the request is to enable her to ‘know how the trust money is invested and administered’ and to demonstrate ‘how the assets of the trust are invested, including the assets and liabilities of the trusts and documents which support the investments and the liability’. It appears to me that this motivation is assisted, or at the very least it is not rendered useless, by the disclosure of financial statements that have been redacted to preserve the privacy of income beneficiaries who have received distributions. Disclosure of the financial statements will enable Ms Smorgon, as a close beneficiary to the trust, to ‘know how the trust money is invested and administered’ (though not, of course, to whom it has been distributed) and will demonstrate to her ‘how the assets of the trust are invested including the assets and liabilities of the Trusts’.

184 Those documents which support the investments and the liabilities raise different questions and are considered separately below.

185 There remains the question of whether disclosure of the financial statements would be an impermissible disclosure of commercially sensitive and confidential information. Mr Meehan deposed that the disclosure of the balance sheets and the profit and loss statements would disclose commercially sensitive and commercial information in respect of, among others:

 

(a) the total current assets and details of those current assets;

(b) the income, losses and deductions of the trusts;

(c) the total income distribution;

(d) any foreign and domestic interest received and paid;

(e) any capital gains or losses;

(f) the gross profit and net profit;

(g) any income relating to third parties including shares of joint venture profits/losses;

(h) any dividends from private company investments; and

(i) for those trusts that make distributions of income, the amounts of distribution made to beneficiaries of the trust and the name of those beneficiaries.

186 Putting aside those entries which identify beneficiaries to whom distributions have been paid or to whom unpaid entitlements are owed, I am not persuaded that disclosure of information in those limited categories would amount to a disclosure of commercially sensitive and confidential information. Any legitimate concerns could be subject to a confidentiality undertaking.

187 Therefore, the financial statements of the ES (Baeckea) Trust should be disclosed to Ms Smorgon; subject to Ms Smorgon entering into appropriate confidentially arrangements (or providing undertakings), and subject to the Trustee redacting from the financial statements the names of those beneficiaries who have received distributions from the Trust and who are owed unpaid entitlements, disclosure of the financial statements of the ES (Baeckea) Trust to Ms Smorgon should be provided.

188 I will not order the provision of further documents by the Trustee. To do so would not be in the best interests of the Trust as a whole; it would not be appropriate exercise of my discretion in supervising the administration of the Trust. The provision of further documents, such as the underlying commercial documentation supporting the entries in the financial statements has a far greater potential to compromise legitimate privacy or confidentiality concerns, and will give rise to the concerns as to the scope of the documentation sought adverted to by Mr Meehan. The Trustee is not obliged to provide reasons for its decisions (including decisions as to particular investment opportunities), and they have absolute and wide discretionary powers to effect such investments under the relevant trust deeds. Noting that, and given the limited purpose for which Ms Smorgon seeks the information, there is no need for the Court to order disclosure of the minutes or of underlying documents of the breadth sought by Ms Smorgon. Disclosure of such a vast body of documentation is unnecessary for Ms Smorgon’s purposes, and is subject to the legitimate concerns advanced by Mr Meehan and discussed at paragraphs [40] to [43] above.

189 The underlined portions of the extract from Lewin at paragraph [83] above cite Clarke v Earl of Ormonde,[177] White v Lady Lincoln,[178] Nouillan v Nouillan’s Executors,[179] Re Tillott[180] and Wingate v Butterfield Trust (Bermuda) Ltd.[181]Those cases do not all concern discretionary trusts; but they do apply the discretionary approach, which is good law in England. The cases do not support the proposition that a discretionary object (however close) is entitled to disclosure where the body of information sought is as vast as that sought by Ms Smorgon in the present case. In particular:

 

(a) Clarke v Earl of Ormonde concerned estates settled on trust to be sold for the payment of debts. In a brief judgment, Lord Eldon stated that the beneficiary (who was not a discretionary object) was entitled to be informed of the value of the trust property, the amount of monies raised on sale of the trust property, and the status of the remaining debts and encumbrances; as well as to inspect vouchers for the trustees’ expenditure.[182]

(b) White v Lady Lincoln concerned a solicitor, who was variously agent and trustee for the Duke of Newcastle, and whose estate claimed a debt against the estate of the Duke.[183] The amount owing was in dispute; the solicitor and the Duke had had a relationship of trust, with the solicitor closely managing the Duke’s financial affairs.[184] The executors of the solicitor’s estate had made up the sum of the alleged debt from ‘memorandum books and papers to a very voluminous extent’,[185] but, in the words of Lord Eldon, ‘furnished nothing that could claim the character of an account of any of his transactions from his first connection with the [agent] until his death.’[186] There was a suggestion that only documents favouring the solicitor had been disclosed by the executors for the solicitor.[187] His Lordship ordered that all bills by the solicitor against the estate of the Duke ought to be presumed paid, in circumstances where the solicitor could not produce the appropriate vouchers. White v Lady Lincoln is very different from the present case: it is not strictly a case about a beneficiary’s right to trust documents, and it involves allegations of impropriety.

(c) Nouillan v Nouillan’s Executors concerned a unanimous request by children under their father’s will for vouchers supporting accounts already provided to the beneficiaries.[188] Lord Clyde noted that the defendant trustee had provided no reasons for not producing the vouchers, and that in the absence of such reasons the plaintiffs were unable to satisfy themselves as to the proper administration of the trusts.[189] Lord Clyde said that the actions of the trustee in resisting production ‘might well invite a sinister inference’.[190] Nouillan v Nouillan’s Executors is markedly different from the present case: all the direct beneficiaries were being denied information, and in circumstances where his Lordship clearly believed there was a reasonable suspicion cast on the trustee.

(d) Re Tillott concerned a discrete request by a beneficiary who was not a discretionary object for information from the trustee confirming that the trust property, comprising British Consols, was not encumbered.[191] Proof of unencumbered title to a single class of trust asset is to be contrasted with the broad swathe of documents sought by Ms Smorgon in the instant case.

(e) Wingate v Butterfield Trust (Bermuda) Ltd concerned a family trust. The plaintiff was one of a small group of income and capital beneficiaries.[192] The plaintiff was already in possession of some of the trust accounts, however some information was missing and the plaintiff was concerned as to certain aspects of the trustee’s management disclosed by the accounts in his possession. He sought, and was granted:

 

(i) disclosure of the trustee’s fees, which there was some evidence may have been excessive;[193]

(ii) information concerning distributions which had not been properly accounted for in the accounts;[194]

(iii) information concerning transactions which may amount to distributions but had not been accounted for as such;[195]

(iv) information concerning a company held by the trust whose assets had allegedly been stripped from it.[196]

Puisne Judge Bell of the Supreme Court of Bermuda ordered production of these categories of documents in circumstances where there were allegations of, and evidence of, genuine concerns of the trustee as to whether the trust assets were being managed appropriately; in the present case, there is nothing on the evidence that could give rise to suspicion that the Trusts are being mismanaged.

 

Further, unlike in the above cases, here no reason for the disclosure is proffered save for idle curiosity.

190 In any event, the matters raised by Mr Meehan have significant weight given the breadth of the information sought.

191 The Eric Smorgon (1977) Family Trust confers a similar status on Ms Smorgon. She is one of 11 named Primary Beneficiaries, which class also extends to the spouses and the future children, grandchildren and great-grandchildren of such persons. The class is therefore confined to Smorgon family members. Importantly, it does not extend to the reaches of the class of General Beneficiaries under the 16 Trusts.

192 The class of General Beneficiaries comprises the Primary Beneficiaries (of which Ms Smorgon is one), together with Eric Smorgon and Annie Smorgon (described as ’Additional members of the class of General Beneficiaries’).

193 By a deed of variation made 22 August 1985, the class of General Beneficiaries was expanded significantly. It now extends to a class of similar breadth to the class of General Beneficiaries under the 16 Trusts. However, Ms Smorgon remains a Primary Beneficiary.

194 The provisions of the Eric Smorgon (1977) Family Trust deed permit distributions of income prior to the Vesting Day by the Trustee as the Trustee shall think fit, for such charitable purposes, or for the benefit of all or any one or more the General Beneficiaries, or both.

195 The deed further provides that in default of distributions made prior to the vesting day, the Trustee shall on the Vesting Day stand possessed of the trust fund upon trust for such of the Primary Beneficiaries or their children as are living as tenants in common in equal shares.

196 Thus, as is similar to the ES (Baeckea) Trust, Ms Smorgon is a discretionary object in respect of whom the Trustee may at its discretion choose to distribute during the income of the Trust, and further is a residuary beneficiary who will stand possessed of a share of the trust fund at the Vesting Day as tenant in common along with the other Primary Beneficiaries.

197 For substantially the same reasons as in my analysis of the ES (Baeckea) Trust, and subject to the receipt of appropriate confidentiality arrangements or undertakings from Ms Smorgon and redactions by the Trustee, I consider that it is appropriate to order the disclosure of financial statements (the profit and loss statements and balance sheets) for the Eric Smorgon (1977) Family Trust to Ms Smorgon.

Disposition

198 In conclusion, subject to the entry into of suitable confidentiality arrangements (whether by deed or by undertakings to the Court) to the effect that Ms Smorgon will not disclose the content of the profit and loss statements and balance sheets for the ES (Baeckea) Trust and the Eric Smorgon (1977) Trust (save to her legal and accounting advisers or as otherwise required by law); and subject to the Trustee of each of those Trusts having an opportunity to redact the names of any beneficiaries shown to have received distributions or to hold unpaid entitlements, the fifth defendant, Baeckea Pty Ltd, as trustee for the ES (Baeckea) Trust, and the fifteenth defendant, Leiby Pty Ltd, as trustee for the Eric Smorgon (1977) Family Trust, shall provide to Ms Smorgon copies of the profit and loss statements and balance sheets for each of the respective trusts. Ms Smorgon’s claims will otherwise be dismissed.

199 I shall hear the parties as to the precise form of order and as to the question of costs, including the costs of providing the information pursuant to my orders.