I. Introduction

The recent judgment in Mustaq Ahmad v Providentia Wealth Management Ltd and others [2023] SGHCF 52 (Mustaq), the novel issue of whether a beneficiary of a trust has any right to disclosure of communications between the trustee and other beneficiaries was discussed. Below are some key takeaways:

1. Under the Singapore laws, beneficiaries have limited and conditional rights to disclosure within the context of trust law, with no statutory provisions explicitly addressing disclosure to beneficiaries.
2. A beneficiary’s right to seek disclosure of trust documents and communications is viewed as part of the court’s inherent jurisdiction to supervise trust administration.
3. Beneficiaries must specify the interests at stake and provide persuasive reasons in seeking disclosure of unilateral communications between trustees/administrators and other beneficiaries.
4. Beneficiaries claiming bad faith or impropriety in unilateral communications must substantiate their claims with detailed evidence. Additionally, they must demonstrate specific prejudice resulting from non-disclosure, with the burden of proof lying on the applicant.

In this client alert, we will explore the relevant background facts of this significant case adjudicated by the Singapore High Court (Family Division). We aim to discuss the Court’s findings, and highlight the key takeaways concerning a beneficiary’s right to information from the trustee and the nature of such rights.

II. Background facts

In Mustaq, the legal proceedings revolve around the estate of Mr Mustafa s/o Majid Khan’s (the Estate) who died intestate. An application for disclosure of communications was made by one Mustaq Ahmad (the Applicant), against Providentia Wealth Management (Providentia), the administrator of the Estate. The Applicant, together with the 2^nd to 6^th Respondents, were Mr Mustafa’s children, and they were all beneficiaries of the Estate. The mother of the 2^nd to 6^th Respondents, Mdm Asia, was the 7^th Respondent and was similarly a beneficiary of the Estate.

Following Mr Mustafa’s passing intestate, the 2^nd to 7^th Respondents commenced a minority oppression action and probate action against the Applicant, alleging that he was conducting the affairs of a family company prejudicially to the Estate’s interest, and that he was in breach of his administrator duties, respectively.

The Court ultimately ruled in favour of the 2^nd to 7^th Respondents. Notably, the Court gave judgment for the 2^nd to 7^th Respondents and held, among other things, that the letter of administration in relation to the Estate should be granted to a professional third-party administrator rather than the Applicant. This role fell to Providentia.

After Providentia took over, it transpired that there had been unilateral communications between Providentia and the 2^nd to 7^th Respondents and/or their solicitors regarding the Estate’s administration.¹ The Applicant thus brought the present application on the basis that the unilateral communications had given rise to concerns as to why the 2^nd to 7^th Respondents chose Providentia as the third-party administrator, and that the communications should have involved the Applicant given his interest in them as beneficiary.²

Regarding the legal basis for the application, the Applicant argued that a beneficiary of an estate is entitled to apply for disclosure of trust documents and to inspect communications between the administrator and other beneficiaries.³ In support of this proposition, the Applicant relied on the English case of Schmidt v Rosewood Trust Ltd [2003] 2 AC 709 (Rosewood),⁴ and cited the factors for deciding if disclosure should be ordered as set out in the New Zealand Supreme Court’s decision in Erceg v Erceg [2017] 1 NZLR 320 (Erceg),⁵ which includes, among others, the nature of the documents sought, the context for the request and the beneficiary’s objective in making said request.

III. Court’s findings

The SGHCF first acknowledged the lack of local authority which addresses specifically the issue of whether a beneficiary of a trust has any right to disclosure of communications between the trustee and other beneficiaries. While the Court noted the Applicant’s reliance on Rosewood as the legal basis for its entitlement to the communications in question, it disagreed with the Applicant’s interpretation of Rosewood to support its position.⁶

The Court clarified that Rosewood did not establish a direct entitlement for beneficiaries to access trust documents. In Rosewood, the Privy Council (PC) had disagreed with the reasoning that the beneficiary’s right to disclosure of trust documents was founded on a proprietary right (the proprietary right approach).⁷ Instead, the PC held that the more principled approach is to regard the beneficiary’s right to inspect trust documents as one aspect of the court’s inherent jurisdiction to supervise, and if necessary, to intervene in the administration of trusts.⁸ Beneficiaries do not have any entitlement as of right to disclosure of anything which can be described as a trust document – it is for the courts to exercise its discretion whether to disclose, taking into account the need to balance the competing interests of different beneficiaries, the trustees and third parties.⁹

Pursuant to the above findings, the Court thus observed that the starting point is that the Applicant lacked any entitlement as of right to disclosure of communications between Providentia and the 2^nd to 7^th Respondents. The Applicant had to satisfy the Court that there was basis for the Court to intervene and to exercise its discretion to order disclosure of the requested communications.¹⁰ In that regard, the Applicant failed to specifically outline the interests for the Court to consider in the course of its balancing exercise.¹¹

Further, the Court cited several factors that militated against it exercising its inherent jurisdiction to order disclosure of communications between the trustee and the beneficiaries. First, unlike trust documents at large, unilateral communications between beneficiaries and trustees were more likely to involve sensitive or confidential information and not appropriate for disclosure.¹² Second, preserving the confidentiality of unilateral communications helps promote transparency and candour between beneficiaries and trustees/ administrators.¹³ Third, trustees or administrators should not be further burdened with onerous obligations that impede their ability to administer the trust or estate.¹⁴

Other factors that led to the Court’s dismissal of the application was that (i) the Applicant failed to substantiate his claim that the unilateral communications in question were made in bad faith or had involved impropriety; (ii) Providentia, the trustee, had previously disclosed the broad contents of past unilateral communications, none of which hinted of any impropriety; and (iii) the Applicant failed to demonstrate how the lack of access to future communications between Providentia and the 2^nd to 7^th Respondents would prejudice his interests as a beneficiary.¹⁵

Therefore, considering these factors collectively, the Court held that the application for disclosure of unilateral communications should be dismissed.

IV. Key takeaways and observations

The ruling in Mustaq is pivotal as it highlights the limited and conditional nature of a beneficiary’s rights to disclosure within the context of trust law in Singapore.

To recapitulate, the Singapore courts have now expressly endorsed and applied the approach in Rosewood, that a beneficiary’s right to seek disclosure of trust documents, and communications between trustee and beneficiaries, should be regarded as one aspect of the court’s inherent jurisdiction to supervise, and if necessary, to intervene in the administration of trusts.

Mustaq also illustrates the complexities that beneficiaries face when seeking disclosure of unilateral communications between trustees/administrators and other beneficiaries. Beneficiaries should recognise that they do not have any entitlement as of right to disclosure of information from trustees, and this applies all the more to trustees’ communications with other beneficiaries, which are often of a highly sensitive nature. Beneficiaries who wish to make an application should specify to the Court the interests at stake and provide persuasive reasons for ordering a disclosure of communications in their favour.

Furthermore, it is imperative for beneficiaries to provide detailed and substantial evidence when claiming that unilateral communications were made in bad faith or with impropriety.¹⁶ The burden of proof is on the applicant to demonstrate specific prejudice resulting from non-disclosure.¹⁷ Failure to do so may result in the claims being dismissed as unsubstantiated allegations.¹⁸

In conclusion, Mustaq marks a critical development given the absence of statutory provisions directly addressing this particular issue and therefore sets a precedent which may shape future trust and estate litigation in Singapore. It would be unsurprising to see an evolution in the standards and expectations arounds trust document accessibility and the rights of beneficiaries in subsequent cases to come.

Please feel free to reach out to any of our key contacts should you have any questions or concerns.

1. Mustaq Ahmad v Providentia Wealth Management Ltd [2023] SGHCF 52 at [14].↩
2. Mustaq Ahmad v Providentia Wealth Management Ltd [2023] SGHCF 52 at [23].↩
3. Mustaq Ahmad v Providentia Wealth Management Ltd [2023] SGHCF 52 at [21].↩
4. Schmidt v Rosewood Trust Ltd [2003] 2 AC 709.↩
5. Erceg v Erceg [2017] 1 NZLR 320 at [56].↩
6. Mustaq Ahmad v Providentia Wealth Management Ltd [2023] SGHCF 52 at [32].]↩
7. Mustaq Ahmad v Providentia Wealth Management Ltd [2023] SGHCF 52 at [33].↩
8. Mustaq Ahmad v Providentia Wealth Management Ltd [2023] SGHCF 52 at [34].↩
9. Mustaq Ahmad v Providentia Wealth Management Ltd [2023] SGHCF 52 at [35].↩
10. Mustaq Ahmad v Providentia Wealth Management Ltd [2023] SGHCF 52 at [36].↩
11. Mustaq Ahmad v Providentia Wealth Management Ltd [2023] SGHCF 52 at [37].↩
12. Schmidt v Rosewood Trust Ltd [2003] 2 AC 709, at [67].↩
13. Mustaq Ahmad v Providentia Wealth Management Ltd [2023] SGHCF 52 at [39].↩
14. Mustaq Ahmad v Providentia Wealth Management Ltd [2023] SGHCF 52 at [40].↩
15. Mustaq Ahmad v Providentia Wealth Management Ltd [2023] SGHCF 52 at [45].↩
16. Mustaq Ahmad v Providentia Wealth Management Ltd [2023] SGHCF 52 at [41].↩
17. Mustaq Ahmad v Providentia Wealth Management Ltd [2023] SGHCF 52 at [45].↩
18. Mustaq Ahmad v Providentia Wealth Management Ltd [2023] SGHCF 52 at [42].↩