Channel Islands firms (especially trustees) should ensure that information relating to their deliberations and the exercise of their discretion (including any legal advice they seek) remains in Jersey/Guernsey (Channel Islands).  Where overseas (outside the channel islands) advisers are used (e.g., the UK) there is a danger that such information may be disclosed under the data protection legislation of the jurisdiction of that adviser.

The Case – Background

The claimant was Mrs Dawson-Damer, who together with her children, were beneficiaries of Bahamian trusts.

The trustees of those trusts had, in the past, made certain significant appointments to other beneficiaries and Mrs Dawson-Damer was challenging the validity of those appointments in litigation in the Bahamas.

Taylor Wessing had acted as the adviser to the trusts and, as such, may have advised the trust about those distributions. Given the nature of the trustee’s likely considerations, it was highly likely that the trustees would have considered (and sought advice on) Mrs Dawson-Damer’s potential interest under the trusts.

The Case – The statutory right to personal information

Under data protection laws, individuals generally have a right to request personal information held about them, which includes: “… any expression of opinion about the individual and any indication of the intentions of the data controller or any other person in respect of the individual” (Section 1(1) of the Data Protection Act 1998 (the English DP Act)).

This is also replicated under the Data Protection laws in the Channel Islands (the CI DP Laws).

That description should resonate with trustees. Their decision making process on distributions is likely to involve the creation of such information about beneficiaries and will be recorded in formal records and minutes. It may also have been the subject of advice from their lawyers about more significant decisions.

As a matter of trust law, that type of information goes to the exercise of the trustees’ discretion and would not be information that a discretionary beneficiary would ordinarily be entitled to receive.  See the now well established principles set out in

• Schmidt v Rosewood Trust Ltd (Isle of Man) [2003] UKPC 26, and in
• In Re Londonderry’s Settlement [1965] Ch 918.

The Case – SAR

In this case, Dawson-Damer served an SAR under section 7(2) of the English DP Act. An identical SAR regime also exists in the CI DP Law, which follows the English Act closely.

The SAR was served on Taylor Wessing as, being based in England, they were subject to the English DP Act.

An SAR obliges a data controller to provide the requestor with the personal information which it holds about them and which is caught by the SAR.

There are various statutory exceptions under the data protection legislation to the need to provide certain categories of data in response to an SAR.

One such exception is where the data in question is subject to legal professional privilege (this exception is found at Schedule 7 para 10 of the English DP Act and is replicated identically in the CI DP Law) (the LPP exemption).

The Case – The Court of Appeal’s judgment

Taylor Wessing’s argument was that the LPP exemption should be interpreted widely to include any documents which the trustee could refuse to disclose to the beneficiaries under Bahamian trust law.

The wide interpretation of the LPP exemption was rejected by the Court of Appeal.

The judgment confirms two important principles:

• Firstly, that English law firms are not exempt from the scope of the English DP Act and, when faced with an SAR, English lawyers must comply the request by disclosing any personal information held that is not privileged. This is a reality check on the limitations that exist to the private nature of the communications between lawyer and client.

• Secondly, and arguably most importantly for trustees, the question of the interplay between the English DP Act and the beneficiaries’ rights to information as a matter of trust law has been firmly resolved in favour of the statutory entitlement to information created by the English DP Act. This is, therefore, a ‘data subject’ friendly outcome and would seem to follow an ongoing trend in the courts to redress the rights and protections afforded to individuals.

CONCLUDING REMARKS

1. This CASE may result in A NEW ROUTE by which beneficiaries could attempt to seek information about their interests in a trust where information on the trustee’s deliberations is held onshore AND.
2. This route may be argued to override the restrictions on access to information by beneficiaries as a matter of trust law – thereby catching the detail of the trustee’s decision making process and the exercise of its discretion.