Tuesday, May 17, 2022

(Nothing) challenging** a trustee's decision

Previous posts have considered the key aspects of the Ioppolo decision.

One aspect of the decision, which is potentially very relevant for advisers and clients alike, relates to the plaintiff's argument that the trustee (being effectively the surviving husband) had not exercised his discretion in paying the entirety of his deceased wife's death benefit to himself in a 'bona fide' (or in good faith) manner, and therefore, should have been forced to repay the benefit to the fund.

In addressing this issue, the court specifically commented as follows:
  1. The husband had sought specialist advice in relation to his rights and obligations as the trustee;
  2. The husband deliberately waived his right to confidentiality (or privilege) in relation to this advice;
  3. The court on reviewing the advice agreed with the conclusion given, that being that the husband was able to make the payment to himself;
  4. Where a trustee is acting on advice of a specialist, it will be generally very difficult to successfully argue that the trustee lacked good faith in making a decision;
  5. Even whereas here, there was a provision of the deceased’s will that contradicted the decision ultimately made by the husband, this of itself did not automatically mean that the husband was acting without good faith, particularly when there was no other evidence to support the allegation; and
  6. Ultimately, a court will only review the way in which the discretion of a trustee is exercised in very limited circumstances.
Next week’s post will provide commentary on the outcome of an appeal of the original decision.

As usual, please contact me if you would like access to any of the content mentioned in this post.

** for the trainspotters, the title today is riffed from the James song ‘Ring the bells’.

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