Legal Rights of Members and Beneficiaries

A most fundamental right of the Members and Beneficiaries is the right to have access to the terms of the trust as originally declared and witnessed by the founding Trust Deed and all amendments to the terms of the trust as witnessed by Deeds of Variation (and Acts of Parliament).

It is for this reason that Regulation 35 required the original deeds to be deposited at the head office of the Company and be made available for inspection and for certified copies be sent to the branch offices.

When the Commonwealth Government made superannuation compulsory additional statutory provisions were added to the general law requirements to provide access to the founding Trust Deed and Deeds of Variation.

Subsection 1017C(5) of the Corporations Act 2001 and Regulation 7.9.45 of the Corporations Regulations 2001 requires that a Trustee provides copies of the Trust Deed and Deed of Variation (or allow photocopies to be taken) to a Member or Beneficiary (a “concerned person“) upon the lodgement of a written request.

It is an indictable offence (Item 297B) if Responsible Officers of a Trustee contravene subsection 1017C(5) of the Corporations Act 2001.

Members and Beneficiaries also have a right to have access to the audited accounts and auditors reports as well as to the periodic actuarial reports.

There is a limited category of documents that Trustees are not obliged to disclose to Members and Beneficiaries which is proscribed under subsection 1017C(4) of the Corporations Act 2001.

Since the trust was declared in South Australia the Governing Law is that of the State of South Australia and the provisions of the Trustee Act 1936 (SA) also apply in addition to Commonwealth legislation. Section 84B requires a Trustee to keep certain prescribed records and to ma ke these available to the beneficiaries of the trust. The Trustee Regulation 2011 prescribes the documents to be made available for inspection by the Trustee.

As well as the strict duty to act honestly and in good faith the duty to keep and render a proper account of the administration of the trust must also be a core duty.

Powell J in Spellson v George (1987) 11 NSWLR 300 at 315 “It is,so it seems to me, a necessary corollary of the existence of that obligation that the trustee is liable to account to the person, or group of persons for whose benefit he holds trust property {See Manning v Federal Commissioner of Taxation (1928) 40 CLR 506 at 509 Knox CJ) and that being so, the trustee is obliged not only to keep proper accounts and allow the cestui que trust (beneficiary) to inspect them, but he must also on demand give a cestui que trust information and explanations as to the investment of, and dealings with, the trust property: See eg re Tillott; Ford & Lee, Principles of the Law of Trusts (1983) at 404 et seq, Jacobs op cit pars 1713 et seq; at 391 et seq; Pettit, Equity and the Law of Trusts, 3rd ed (1974) at 330 et seq.

This being the essential nature of the position of a trustee, and the liability to account being an essential ingredient in it, it seems to me that it is inescapable that the cestuis que trust, or any one of the cestuis que trust, have, or has,  a correlative right to approach the Court for its assistance in enforcing the personal obligation of the trustee, and, in particular, in enforcing the trustee’s obligations to account. Since that right is, as it seems to me, a fundamental right of the cestuis que trust, it seems to me that it is not correct to say that its enforcement by the court is dependent upon the cestuis que trust, or the cestui trust in question, first raising an allegation or establishing a prima facie case of fraud or some other like breach of trust. On the contrary, so it seems to me, where the court’s assistance n enforcing the trustee’s obligation to account is invoked, the court in enforcing the trustee’s obligations,they being, first, whether the plaintiffs are, or the plaintiff is one of the, cestuis que trust, and second, whether the defendant trustee has failed to observe his obligation to account.”

A Trustee who declines to furnish the required information as request by a beneficiary or beneficiaries will be personally liable for the costs of proceedings instituted to obtain it {Kemp v Burn (1863) 4 Giff 348; 66 ER 740; Re Holston’s Settlement Trusts; Holston v Holston (1918) 88 LJ Ch 444; 119 LT 304; Collyer v Dudley (1823) Turn & R 421 [37 ER 1163]; Jeffreys v Marshell (1870) 23 LT 548 (Ch); Re Page [1892] 1 Ch 304}.

A trustee who fails to account may also be subject to an order to account on wilful default {Perpetual Executors, Trustees & Agency Co (WA) Ltd v West Australian Trustee, Executor & Agency Co Ltd (1942) 44 WALR 29; Re Morish [1939] SASR 305} or in severe cases, removal from office {Hackett v Hackett [1922] NZLR 242 (SC); Re Whitehouse [1982] Qd R 196}.

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This tab updated on 22 July 2015