Lakhani, no doubt, is very serious about legal rights and always asserts that rights per se be enforced by the administration of justice. He was, however, a bit apprehensive about enforcement of rights of individuals emerging from a trust.
I brought to his notice the landmark case of Murphy Junior v John Murphy Senior, 2 OFLR (ITELR) 125: A son, being a beneficiary in a trust, sued his father to disclose identity of trustees as he (plaintiff) was named as a potential beneficiary of discretionary trust. A bit unusual though, the litigation started and the court was confronted with the following issues:
-- Does the plaintiff's case justify invoking the equity jurisdiction?
-- Whether or not circumstances exist to exercise discretionary powers of the court?
-- Is it a fit case for application of discovery jurisdiction?
-- Whether or not plaintiff has the right of seeking disclosure of identity of current trustees to the plaintiff who is a named, potential beneficiary of discretionary trust?
-- Circumstances where courts will order disclosure form a third party?
In order to provide relief to the plaintiff (a person with whom wrong took place), the court took into consideration a number of precedents for invoking the rule of equity, justice and fair play. These precedents include -
-- Norwich Pharmacal Co v Customs and Excise Commissioners [1974] AC 133, "If through no fault of his own, a person gets mixed up in the tortuous acts of others so as to facilitate their wrongdoing, he may incur no personal liability but he comes under a duty to assist the person, who has been wronged by giving his full information and disclosing the identity of the wrongdoers...Justice requires that he should co-operate in righting the wrong if he unwittingly facilitate its perpetrator."
-- Hall V-C in Orr v Diaper 4 ChD 92 at 96:
"In this case, the plaintiffs do not know, and cannot discover, who the persons are who have invaded their rights, and who may be said to have abstracted their property. Their proceedings have come to a deadlock, and it would be a denial of justice if means could not be found in this court to assist the plaintiffs."
-- Supreme Court of Massachusetts, Post v Toledo, Cincinnati and St. Louis Railroad Co (1887) 11 NE Rep 540, "It is clear that courts do not compel discovery from persons, who sustain no other relation to the contemplated litigation, or to the object of the suit, and that of witnesses; and it is also clear that a bill for discovery cannot be used to enable a plaintiff to fish for information of any causes of action he may have against other persons than the defendant... But when a plaintiff has a cause of action against persons who are defined ... by their relations to property ... by the management of which the plaintiff has suffered an injury, and the names and residences of these persons are unknown to him, it is not clear that there may not be such a state of facts as court ought to compel a 'The Court would have to decide whether in all the circumstances it was right to make an order. In so deciding, it would no doubt consider such matters as the strength of the applicant's case against the unknown alleged wrongdoer, the relation subsisting between the alleged wrongdoer and the respondent, whether the information could be obtained from another source, and whether the giving of the information would put the respondent to trouble, which could not be compensated by the payment of all expenses by the applicant."
-- A and another v C and another [1981] 1 QB
"...there is good authority that the court may make orders with the purpose of ascertaining the whereabouts of the missing trust fund..."
-- Mediterrania Raffineria Siciliana Petroli SpA v Mabanaft GmbH (unreported), "A sweeping order, requiring directors 'and an employee of the defendant company, to make full disclosure of certain specified facts."
-- Bankers Trusts Co v Shapira [1980] 1 WLR 1274. At 1281F-H, "In order to enable justice to be done - in order to enable these funds to be traced - it is a very important part of the court's armoury to be able to order discovery. The powers in this regard, and the extent to which they have gone, were exemplified in Norwich Pharmacal..."
The court came to the conclusion that in the circumstances of the case, invoking of equitable jurisdiction was justified. First, I will dilate upon the nature of equity jurisdiction. In its ordinary acceptation, as distinguished on the side from the general power to decide matters at all, and on the other form the jurisdiction "at law" or "common-law jurisdiction," is the power to hear certain kinds and classes of civil causes according to the principles of the method and procedure adopted by the court of chancery, and to decide them in accordance with the doctrines and rules of equity jurisprudence, which decision my involve either the determination of the equitable rights, estates, and interests of remedies. In order that a cause may come within the scope of the equity jurisdiction, one of two alternatives is essential; either the primacy right, estate, or interest to cause of action, must be equitable rather than legal; or the remedy granted must be in its nature purely equitable, or if it be a remedy, which may also be given by a court of law, it must be one which, under the facts and circumstances of the case, can only be made complete and adequate through the equitable modes of procedure. [Norback v. Board of Directors of Church Extension Soc., 84 Utah 506,37P.2d 339.]
The court observed that there can be no trust over the exercise of which the court will not assume a control'. Such an observation must not be taken out of context; nor should it be invoked to justify the court doing whatever it likes. However, it does serve to emphasise the wide jurisdiction of the Court when it comes to trusts. The 'control' in the present case involves ordering something to be done so as to enable the trustees to exercise their functions as described in Manisty and in Chaine-Nickson, or, to put it another way, to enable the plaintiff to exercise his rights as a potential beneficiary, with a view to applying to the court if, but only if, those rights have been infringed.
In so far as the plaintiff's claim involves extending the principle in A v C, such an extension is not, a judgement, impermissible. The principle laid down in Norwich Pharmacal was fairly recently extended by Sir Richard Scott VC in P v T Ltd [1997] 1 WLR 1309, on exceptional facts, to enable the plaintiff to obtain discovery against a defendant, not on the basis of an actual tort, but to see if a tort (sc Defamation) had been committed against him and what the precise nature of the tort was, as well as to identify the tortfeasor (if any). The fact that the discovery jurisdiction can be, and has recently been, extended (albeit for rather different reasons) gives a little assistance and comfort in reaching the conclusion in the present case. As in P v T Ltd, the plaintiff wishes to find out certain facts, in this case in relation to a trust of which he is a potential beneficiary.
If all the discretionary beneficiaries wished for good reasons to know the identity of the trustees of a settlement, and the settler (who reserved the power of appointment of trustees) refused to tell them, it would be surprising, indeed, it is suggested, remarkable, if the court had no power to compel him to do so. Similarly, if all but one or two of the beneficiaries wished to know, particularly if the one or two were receiving all the income. If that is right, it would seem to follow that one would expect the court at least to have jurisdiction to require a settler in such circumstances to give the information to a single discretionary beneficiary.
It appears on the plaintiff's evidence (not denied by the defendant in his affidavit) that there is a settlement with assets, in respect of which the plaintiff is within the class of discretionary beneficiaries. The plaintiff says, through his counsel, that he is seeking both to find out what has happened to the trust funds, and to make out a case as to why he should receive some of those funds. His bona fides is not challenged in this regard. While there is no question of any wrongdoing so far as the defendant or the trustees of his 1965 settlement are concerned, in the light of the above discussions, court requires authority or established principle to support the proposition that a discretionary beneficiary was never entitled to seek such information.
The question which, therefore, has to be considered in relation to the defendant's 1965 settlement is whether it is appropriate to grant the relief sought by the plaintiff in all the circumstances. In this connection, it should be emphasised that the mere fact that the court has jurisdiction to make the order cannot mean that the court has no discretion as to whether to make such an order. The very reasoning, which leads me to the conclusion that there is power to make such an order, namely the wide and flexible jurisdiction of the court of equity, must carry with it a broad discretion. Furthermore, although concerned with a different jurisdiction to achieve the same end it appears that the observations of the House of Lords in Norwich Pharmacal as to the discretionary exercise of the discovery jurisdiction are, at least in broad terms, applicable to the equitable jurisdiction. Discovery jurisdiction is concerned in the ascertainment of that which was previously unknown; the disclosure or coming to light of what was previously hidden; the acquisition of notice or knowledge of given acts or facts; as, in regard to the "discovery" of fraud, affecting the running of the statute of limitations, or the granting of a new trial for newly "discovered" evidence. Ronald Dawarkin in his well known book: "Law 's Empire", proposes that it is the duty of judges to invent law in order to settle the issues in a case.
Keeping in view the said factors, the learned judge in the case under review allowed request of the plaintiff with regards to two settlements of 1965 and disallowed his appeal with regard to later settlements. It was the court's view that a bill for discovery cannot be used to enable the plaintiff to fish for information for any cause of action he may have against other persons other that the defendant.
It was held that to protect the rights of a person who has suffered due to other's wrong court would invoke.
-- Equity jurisdiction and the same is inherent with the courts in relation to trusts
-- Exercise of equity jurisdiction will lead to discovery jurisdiction
-- Application of equity jurisdiction will lead to discovery jurisdiction as is suggested in Norwich Pharmacal Co's case (supra) in order to find out the cheat, cheaters and cheated interests:
-- Plaintiff has a right to seek disclosure of information with regards to two settlements created in 1965
-- Where trustees failed to abide by their duties as discussed in Manisty case (supra), the court would allow aggrieved persons request on the basis of equity while taking into consideration the existence of conflict and policy as suggested in Norwich Pharmacal's case. (supra) (The writer is an advocate and is currently working as an associate with Azim ud Din Law Associates Karachi)
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