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Supreme Court: disclosure denied to beneficiary in billion-dollar Erceg case

The Supreme Court has dismissed Ivan Erceg’s appeal, refusing his application for an order to disclose trust documents.

Background

The case is the culmination of a long-standing family feud involving two trusts set up by Michael Erceg, a wealthy businessman who died 10 years ago in a helicopter accident. Ivan Erceg, the brother of the deceased, was a beneficiary of both trusts, but received nothing when the trusts were wound up in 2010. Analysts had put the value of the trusts at $1.2 billion in 2006.

Application for disclosure of trust documents

Ivan Erceg had sought disclosure of a number of trust documents, including the trust deeds and financial statements for both trusts. He was not a named beneficiary but was one of a class of discretionary beneficiaries and also one of a class of final beneficiaries (of both trusts).

Useful guidance on the principles involved in disclosure applications

The Court noted that the matters that need to be evaluated in disclosure applications include:

* the nature of the documents sought (in particular, whether confidentiality issues arise and whether disclosure will require disclosure of the reasons of the trustees for decisions made by them);
* the context of the request;
* the reason for which the beneficiary seeks disclosure;
* the nature of the requesting beneficiary’s interests;
* any practical difficulties in providing the information;
* whether there are issues of personal or commercial confidentiality;
* the likely impact of disclosure on the trustees, the other beneficiaries, the settlor and third parties; and
* whether measures can be taken to protect confidentiality of disclosed documents and to ensure they are used only for the purpose for which they were disclosed.

In Mr Ercegs’ case, although a primary discretionary beneficiary would “normally have a good case for disclosure of the trust deed and financial statements relating to the trust” his conduct gave the court genuine reason for concern as to what he would do with the information if he received it. Noting that the risk of harassment by Mr Erceg in relation to the other beneficiaries was “significant”, the Court said the benefits of disclosure were outweighed by the potential detriment.

Did Ivan Erceg have standing to bring the case?

The Supreme Court ruled that despite losing the appeal, Mr Erceg did have standing to bring the case to court and that his bankrupt status did not affect this.

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