Hartigan Nominees and Another v Rydge

Held: A memorandum of wishes provided by the instigator of a discretionary trust for the use of
the trustees in exercising their powers is not a document which the trustees were obliged to
disclose to a beneficiary on request if the memorandum was provided on a confidential basis
The trustee may, in exercising his discretion in relation to the trust, take into account any such
memorandum of wishes; he may consult beneficiaries to provide support for a conclusion he has
reached as to the exercise of the discretionary power or in order appropriately to inform himself,
but he need not do so. Special cases apart he is not bound to inform a beneficiary apt to be
affected of his or the settlors views in any particular case.
Facts:

Norman Barreel settled $10 on Murmon Nominees and Hartigan Nominees to be held by
them upon trusts set forth in the deed executed by them. Trustees acquired nine of the
ten shares in Enbeear Pty Ltd. Sir Norman died, Murmol Nominees retired as a trustee and
Kizquoit Pty Ltd was appointed as a trustee in his place. The plaintiff Richard Rydge is a
grandson of the late Sir Norman. Mr Rydge invited the trustees to exercise their power to
make certain payments to him but they had not done so. They referred to a memorandum
signed by Sir Norman indicating his preferences and wishes as to what T should do. Mr
Rydge commenced proceedings to inspect the memorandum and that the defendants
cannot take into account Memorandum of wishes

Issues:
1) whether a discretionary beneficiary having a contingent or possible interest in trust funds
is entitled to see the statement of wishes given T by the instigator of the trust
2) whether T, in exercising their discretions, are entitled to take into account that statement
of wishes
Ruling:
The interest of Mr Rydge in the trust fund
The interest of B may be relevant to obligations of T. Power T has in relation to B may be bare
power which he may or may not exercise or a power which T is obliged to exercise. A person who
is one of a number of potential B dependent upon how a discretionary power is exercised does
not have the same rights in respect of these matters as a beneficiary who has an interest vested
in interest. T is ordinarily obliged to give due consideration to the exercise of a power to appoint
among possible beneficiaries and to determine whether and in whose favour the power is to be
exercised. A possible beneficiary under such a power may, depending on the terms of the power,
be entitled to sue to ensure that proper consideration is given to the exercise of the power. The
interest which Mr Rydge has is sufficient to support the claim he now has.
Unclear whether there is at present a nominated beneficiary or who that beneficiary is. Mr Rydge
has an interest in the trust of one or many kinds. He has in respect of the capital an interest
vested in interest but not in possession. He has a contingent interest in income vested in interest
but postponed to any nominated beneficiary and subject to the exercise by the trustees of their
discretionary powers.
May the trustees take into account the wishes of Sir Norman Rydge as expressed in
the memorandum?

memorandum not produced.

For discretionary power: power must be exercised by T, he must exercise in proper way
and must exercise it by reference to proper consderations. Must not abdicate discretion to
another

T must not merely give effect to memorandum but also to the wishes there expressed. He
must consider the instant exercise of the power and make his own decision. The discretion
must be within limits which the law allows.
Discretion must be exercised bona fide, to give effect to the purposes for which the power
was given and reasonably.
T not obliged to notify the possible beneficiaries of his intention to use the power or give
them the opportunity to make representations to him. Where there are many possible
beneficiaries and their circumstances are various, it would be impossible to enter upon an
examination of the individual needs of each and ordinarily such an examination would not
have been contemplated by the settlor or instigator of the trust.
Wishes of a settlor may be taken into account. Those wishes outside the terms of he trust
must not be inconsistent with the purposes of the trust as appearing from its term. It is
strange if the trustee could not have regard to such matters.
Trustee is not bound to consult beneficiaries or to ascertain their views. He may do so in
order to provide support for the conclusion he has reached as to the exercise of the
discretionary power or in order appropriately to inform himself but he need not do so. And
special cases apart, he is therefore not bound to inform a beneficiary apt to be affected of
the views of himself or of the settlor as to what should be done in the particular case.
Thus can take into account memorandum

The right of the plaintiff to inspect the memorandum

in general, T is not obliged to volunteer documents or information to beneficiaries or

possible beneficiaries. However, if a beneficiary requests it, a 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
in general there is a right but there are limits to what the trustee must show or say to a
beneficiary:
doubt that it is the trustees duty to inform all persons who may possibly take under a
discretionary power of the nature and extent of that possibility. A class of possible
beneficiaries under a discretionary trust mat be wide and capable. Not duty of trustee to
seek out such persons and inform them of the possibility of their rights
right to request inspection is limited to documents and information which is relevant to
the property of the trust. It does not extend to documents or information as to which a
beneficiary, he has no proprietary interest. E.g. right does not extend to notes made for or
by T of discussions with other B or with the settlor
there are documents that are confidential. Where settlor has been given information in
confidence in relation to the exercise of discretionary powers, another beneficiary is not
entitled, by the exercise of his right to see and be informed, to see such documents and
receive such information. E.g. settlor may communicate confidential information to
beneficiary as a reason for not exercising a discretionary power in his favour
need not disclosed if the result of disclosure will be to make known the reasons why a
discretionary power has been exercised in circumstances where the disclosure is not
required and has not been made by the trustee.
Therefore, cannot inspect confidential documents if memorandum is confidential
A beneficiary may not, be alleging merely that a document contains a settlors wishes,
seek discovery to ascertain whether the document contains wishes which should not be
taken into account. A beneficiary may support a case by discovery but may not use the
process to ascertain whether a case exists.