Law Firm Disclosure Ruling On Trustee Docs Has Limits

A recent Court of Appeal ruling that a trustee can’t use privilege to withhold documents requested by a beneficiary will have a limited impact due to a 2018 update to the U.K.’s data protection law, lawyers told Law360.

That revision, which implements the European Union’s General Data Protection Regulation in U.K. law, now includes an exemption from disclosure for “information in respect of which a duty of confidentiality is owed by a professional legal adviser to a client of the adviser.”

Much of the information held by a legal adviser will fall under that confidentiality exemption, providing an additional protection against the so-called “subject access requests” allowable under the GDPR, said Mark Lindley, a partner with Boodle Hatfield LLP.

As a result, the March 11 ruling that Taylor Wessing couldn’t shield documents because legal privilege extends to a trust’s beneficiary, may have less relevance for requests made under the 2018 update.

“The reference to the duty of confidentiality in the 2018 act goes beyond legal professional privilege and may still provide scope for refusing disclosure in certain circumstances where privilege cannot be relied upon,” Lindley said.

The additional exemption puts another potential roadblock before beneficiaries seeking to obtain copies of trust documents, said Burges Salmon LLP senior associate Edward Hayes, who serves as the chair of the data protection working group for STEP, an association of trusts and estates practitioners.

Hayes called the latest Dawson-Damer judgment noteworthy in clarifying the scope of the legal professional privilege exemption, but pointed out the updated data protection legislation created broader exemptions for trustees and their lawyers.

“In practice this means that a beneficiary will now find it very difficult to obtain disclosure of any trust documents or information from a trustee’s legal advisers in the U.K,” he said.

The appellate court ruling in the closely watched case reversed the decision of a lower court that Taylor Wessing LLP was entitled to rely on the exemption and refuse to provide information requested by family members who sued a trustee the law firm represents.

Taylor Wessing had maintained that a beneficiary has no automatic right under English trust law to see the trustees’ privileged documents. But the court disagreed, finding that the legal privilege extended to claimant Ashley Dawson-Damer as a beneficiary of a 1992 discretionary trust.

Reynolds Porter Chamberlain LLP partner David Cran said although the Taylor Wessing decision made “quite a narrow, specific point,” beneficiaries will still welcome the recognition that they hold a joint privilege with the trustees.

The trust at the center of the dispute derives from the riches racked up more than a century ago by a Scottish shipping tycoon, George Skelton Yuill.

In 1973, a Bahamian settlement was established for the benefit of descendants of Skelton’s grandson, including his two sons. One of those sons, John Dawson-Damer, died in 2000, and while his wife Ashley is a beneficiary, his adopted children, Piers and Adelicia, were left out. The trust was restructured and divided in 1992, but once again, only “legitimate” children of the two great-grandsons were named as beneficiaries, according to the court’s ruling.

The trustee overseeing the Dawson-Damer trust is Grampian Trust Co. Ltd., which has long been represented by Taylor Wessing.

Prior to taking legal action, Ashley and her children made the document requests under England’s 1998 Data Protection Act. Under data protection law, individuals can demand access for all personal information a business holds on them.

In a second conclusion in the Feb. 11 decision, the Court of Appeal sided with Taylor Wessing in finding that the dozens of paper files the law firm held related to the trust do not qualify as a “relevant filing system” under the DPA and thus cannot be required to be searched for documents requested by the Dawson-Damer claimants. The majority of requested information, however, is stored in Taylor Wessing’s electronic files.

While almost all trust companies and their advisers now file documents electronically, the ruling could block beneficiaries trying to get their hands on older, historic files or information from trusts administered by individuals who are not professional trustees.

This part of the judgment is likely to remain relevant under the U.K.’s 2018 data protection law update, Lindley said.

The 2018 act does not use the words “readily accessible” although the new wording “accessible according to specific criteria” may in time be held to have materially the same meaning, the Boodle Hatfield partner said.

Nonetheless, “over time and given the increased digitization of client files (including historic files) it seems more likely that advisers will be holding data generally in a ‘Filing System’ within the meaning of the 2018 act,” Lindley said.

This article first appeared in Law360 on 19 March 2020.