Open justice versus privacy of trust

19 July 2018

News stories about data security breaches at financial institutions, law firms and trust and corporate services providers are increasingly commonplace these days. Most notable include the infamous 'Panama' and 'Paradise' Papers incidents, which have renewed the discussion about the appropriate level of transparency of trusts and other private wealth structures.

One aspect of this discussion hinges on how much information should be reported by the courts when trustees apply for directions as to the administration of a trust. Should they be reported in an anonymised manner to preserve privacy of the trust and those connected to it? While this has been the traditional approach in many jurisdictions, it is now being challenged by calls for a greater emphasis to be placed on full and open publication of judgments.

The judgment in HSBC Trustee (CI) Ltd v Kwong and others provides helpful guidance on the approach the Jersey courts take in such applications.

The case concerned an application by the trustee, HSBC Trustees (CI) Ltd, for the Royal Court’s approval of a momentous decision by the trustee to divide certain specified assets held by four family trusts between trusts established for the family branches of the settlor’s three sons.

The application, which was heard in private, was approved by the Royal Court. However, one issue which remained was whether the judgment should be published and, if so, whether it should be anonymised in any way.

The court took the view that there must be good reason for it to depart from the principles of open justice and, on the particular facts of this case, there were no such reasons, particularly as the essential features of the case were already in the public domain.

It also accepted that full publication would be the most effective way to remedy one of the main concerns of the beneficiary who did not want publication, namely, inaccurate overseas press reports. Most of the adult beneficiaries (with their respective families) were in favour of publication of the main judgment.

In light of the above factors, the court concluded that the judgment should be published in full, without anonymisation, with only some minor details omitted. These findings are important in endorsing underlying trust law principles pertaining to privacy and transparency, and provide clarification on the circumstances in which deviation from the principle of open justice will be permissible.

Beneficiaries, trustees and their advisors should ensure that careful consideration is given, in consultation with their lawyers and in advance of court proceedings, to issues concerning privacy of those proceedings and the anonymisation of any judgment.

 

About Mourant

Mourant is a law firm-led, professional services business with over 60 years' experience in the financial services sector. We advise on the laws of the British Virgin Islands, the Cayman Islands, Guernsey, Jersey and Luxembourg and provide specialist entity management, governance, regulatory and consulting services.

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