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Trustee Survival Guide: Beneficiary Rights to Information - Navigating the Evolving Landscape part 2

Insight

survival

Data protection legislation and the Dawson-Damer litigation has undoubtedly caused concerns to trustees and their advisers. When we wrote about this topic last year we noted that the position may not be as stark as had been suggested in the commentary about this case.   

In the most recent decision of the English High Court in the case, the Court has now confirmed that UK data protection law cannot be used to circumvent restrictions placed on a beneficiary’s access to information which are imposed by the laws governing the trust.

This is a relatively complex judgment, and its meaning has already been debated. Now that the dust has settled, we set out a summary of the judgment and why, in our view, the current position gives cause for cautious optimism.

Key Takeaways

  1. A beneficiary cannot “pierce” a claim to Legal Advice Privilege by invoking his or her status as a beneficiary unless that would be allowed by the governing law of the trust.
  2. Given that many other jurisdictions have restrictions on disclosure to beneficiaries we would not expect such “piercing” to be possible in most cases.
  3. UK data protection legislation does not therefore provide beneficiaries with a route around restrictions on access to information, as had previously been the concern.

Dawson-Damer v Taylor Wessing: key background points

Mrs Ashley Dawson-Damer is a beneficiary of a number of Bahamian trusts which hold wealth derived from the will of a Scottish industrialist who died in 1917. In late 2013, Mrs Dawson-Damer learnt that the trustee of one of the trusts, the Glenfinnan Settlement (“the Trust”), had appointed over $400m to be held for the benefit of other family members, leaving under $10m in the Trust.

Mrs Dawson-Damer’s position is that the trustees’ decision was motivated by dislike of her and her sons. Between the summer of 2014 and the spring of 2015 Mrs Dawson-Damer made Data Subject Access Requests (“DSARs”) under the Data Protection Act 1998 (“DPA 1998”) against the Trustees’ London advisers, law firm Taylor Wessing (“the Advisers”), and challenged the validity of the appointments in the Bahamas.

Mrs Dawson-Damer’s Claim in relation to the DSARs

The Advisers refused to comply with the DSARs on the basis that the documents they held in relation to the Trust were subject to an exception for documents subject to legal professional privilege (“LPP”) (and for other reasons, which are not examined here). Mrs Dawson-Damer applied to Court seeking orders requiring the Trustees to comply.  

Before we turn to the history of the litigation regarding this issue, it should be noted that:

  1. Under the DPA 1998 (and now the DPA 2018) a “data subject” such as Mrs Dawson-Damer is entitled to access the “personal data” which is held by a “data controller”.
  2. The right to access personal data is not absolute. For example, a data controller may refuse to provide personal data to a data subject if a claim to LPP could be “maintained in legal proceedings” in relation to that data (“the LPP Exception”).
  3. The terms of Bahamian trust law were also relevant to this case. Section 83 of the Bahamian Trustee Act 1998 (“Section 83”) provides that no trustee can be compelled to disclose to any beneficiary or the Bahamian Courts a variety of documents, including legal advice relating to the exercise of trustee discretions. 

The Dawson-Damer litigation: background

Mrs Dawson-Damer’s claim was initially dismissed by a judge in the High Court, but this judgment was overturned by the Court of Appeal. The Court of Appeal found (among other things) that the LPP Exception is limited to documents which are exempt from disclosure (under English civil procedure rules) in the course of litigation, not documents which a trustee can withhold from a beneficiary as a matter of trust law. We expand upon this point below.  

The Court of Appeal then remitted the case back to the High Court to resolve a number of other issues. In the meantime, the appeal judgment caused concerns that UK data protection legislation could be used by beneficiaries to obtain wide-ranging disclosure of trust information, including privileged advice, where otherwise this would not be possible. Further analysis of this judgment, and reflection upon these concerns, can be found in our August 2018 briefing.

The latest judgment 

The case was remitted to Mr Andrew Hochhauser QC, sitting as a Deputy Judge of the Chancery Division of the English High Court. One of the issues for the deputy judge to determine was the extent to which the Advisers could refuse to disclose particular documents on the basis of the LPP Exception. 

Under English law there are two types of LPP: (a) legal advice privilege which attaches to legal advice provided by legal advisers to their clients, and (b) litigation privilege, which attaches to advice provided and communications made in the course of  actual or anticipated litigation. The Advisers had reviewed their files and analysed which documents were subject to these types of privilege. They then filed evidence setting out a list of the documents containing the Claimants’ personal data. 

The Advisers’ evidence was that: (a) some documents were subject to litigation privilege as they contained advice about the Bahamian validity claim, (b) some were subject to legal advice privilege as they contained legal advice to the Trustees, and (c) others were not subject to LPP at all. The deputy judge then examined whether the Trustees could refuse to provide Mrs Dawson-Damer with data falling into each of these categories of documents.

(a) Could the Advisers refuse to disclose personal data which was subject to litigation privilege?

 Yes. Personal data contained within documents which were subject to litigation privilege fell within the LPP Exception and did not have to be disclosed.

(b) Could the Advisers refuse to disclose personal data which was subject to legal advice privilege?

 Yes.

The Advisers could refuse disclosure of any personal data contained within confidential communications between the Advisers and the Trustees for the purpose of giving or receiving legal advice (ie documents subject to legal advice privilege). This LPP belongs to the Trustees, who had not waived it for the purpose of the DSAR.

The Court then had to determine whether Mrs Dawson-Damer could “pierce” that privilege by virtue of her status as a beneficiary of the Trust. Readers may be familiar with the longstanding principle that where advice has been sought in relation to the administration of the trust and paid for by the trust fund, then – even though the advice may well be privileged as against third parties – it will not be privileged as against the beneficiaries.

Mrs Dawson-Damer argued that this meant the Advisers could not rely on the LPP Exemption in order to refuse to provide personal data which was subject to legal advice privilege.

Mr Hochhauser QC disagreed. Mrs Dawson-Damer’s argument was based upon her position as a beneficiary of the Trust. Under Bahamian trust law, a beneficiary has no automatic right to see the legal advice to a trustee, and no proprietary right to documents containing that advice, and so no “joint privilege” arises.

Mrs Dawson Damer did not, therefore, have any trust law rights (as a matter of Bahamian law) that “cut across, limit or qualify” the Trustees' claim to LPP. The legal advice privilege in relation to certain documents was not “pierced” by Mrs Dawson-Damer’s rights as a beneficiary under Bahamian law. 

Following this judgment, a beneficiary cannot “pierce” a claim to LPP by invoking his or her status as a beneficiary unless that would be allowed by the governing law of the trust. Given that many other jurisdictions have restrictions on disclosure to beneficiaries (and in some cases specific DSAR exemptions for trustees) we would not expect such “piercing” to be possible in most cases.

(c) Could the LPP Exception apply to any other personal data?

Finally, for completeness, the Advisers had argued that Section 83 gave rise to a type of privilege and therefore the LPP Exception should apply, in effect, to all of the documents held within their files. The Court of Appeal and Mr Hochhauser QC did not agree with this argument and confirmed that the LPP Exception only applies if under English law the relevant document is privileged.

Conclusions

  1. UK data protection legislation enables beneficiaries to obtain the personal data which is held in relation to them by “data controllers” who are subject to UK data protection laws.
  2. Any data contained within a document which would ordinarily be subject to LPP as a matter of English law is likely to fall within the LPP exemption, and a data controller therefore will not be obliged to provide that data to a beneficiary making a DSAR. This includes documents which are subject to legal advice privilege, as well as litigation privilege, which is for the sole benefit of the trustees. 
  3. As matters stand, a beneficiary will not be able to “pierce” the privilege  belonging to the trustees in relation to legal advice by reference to his/her position as a beneficiary if, under the governing law of the relevant trust, he/she does not have any rights which “cut across, limit or qualify the trustees” claim to LPP. This is likely often to be the case.
  4. Finally, Mrs Dawson-Damer’s DSARs were made under the DPA 1998. Since then the DPA 2018 has taken effect. The DPA 2018 (a) includes an exemption for data in respect of which a duty of confidentiality is owed by a professional legal adviser to a client – this is wider than the previous exemption which only applied if the information could also be said to be subject to LPP, and (b) states that a data controller is not obliged to disclose personal data if doing so would involve disclosing information relating to another identifiable individual (which is likely to be highly relevant in trust contexts) if that individual does not consent. 

In summary, UK data protection legislation does not provide beneficiaries with an easy route around restrictions on access to information under the laws controlling the trust, as had previously been the concern. This judgment may give cause for cautious optimism as trustees and their UK advisers return from their summer breaks.

If you require further information about anything covered in this briefing, please contact Ian De Freitas or Adam Carvalho, or your usual contact at the firm on +44 (0)20 3375 7000.

This publication is a general summary of the law. It should not replace legal advice tailored to your specific circumstances.

© Farrer & Co LLP, August 2019

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About the authors

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Ian De Freitas

Partner

Ian has over thirty years' experience as a commercial litigator. He specialises in disputes involving data, technology and intellectual property. Ian leads the firm’s Data, IP and Technology Disputes team. 

Ian has over thirty years' experience as a commercial litigator. He specialises in disputes involving data, technology and intellectual property. Ian leads the firm’s Data, IP and Technology Disputes team. 

Email Ian +44 (0)20 3375 7471

Key Takeaways
  1. A beneficiary cannot “pierce” a claim to Legal Advice Privilege by invoking his or her status as a beneficiary unless that would be allowed by the governing law of the trust.
  2. Given that many other jurisdictions have restrictions on disclosure to beneficiaries we would not expect such “piercing” to be possible in most cases.
  3. UK data protection legislation does not therefore provide beneficiaries with a route around restrictions on access to information, as had previously been the concern.

Dawson-Damer v Taylor Wessing: key background points

Mrs Ashley Dawson-Damer is a beneficiary of a number of Bahamian trusts which hold wealth derived from the will of a Scottish industrialist who died in 1917. In late 2013, Mrs Dawson-Damer learnt that the trustee of one of the trusts, the Glenfinnan Settlement (“the Trust”), had appointed over $400m to be held for the benefit of other family members, leaving under $10m in the Trust.

Mrs Dawson-Damer’s position is that the trustees’ decision was motivated by dislike of her and her sons. Between the summer of 2014 and the spring of 2015 Mrs Dawson-Damer made Data Subject Access Requests (“DSARs”) under the Data Protection Act 1998 (“DPA 1998”) against the Trustees’ London advisers, law firm Taylor Wessing (“the Advisers”), and challenged the validity of the appointments in the Bahamas.

Mrs Dawson-Damer’s Claim in relation to the DSARs

The Advisers refused to comply with the DSARs on the basis that the documents they held in relation to the Trust were subject to an exception for documents subject to legal professional privilege (“LPP”) (and for other reasons, which are not examined here). Mrs Dawson-Damer applied to Court seeking orders requiring the Trustees to comply.  

Before we turn to the history of the litigation regarding this issue, it should be noted that:

  1. Under the DPA 1998 (and now the DPA 2018) a “data subject” such as Mrs Dawson-Damer is entitled to access the “personal data” which is held by a “data controller”.
  2. The right to access personal data is not absolute. For example, a data controller may refuse to provide personal data to a data subject if a claim to LPP could be “maintained in legal proceedings” in relation to that data (“the LPP Exception”).
  3. The terms of Bahamian trust law were also relevant to this case. Section 83 of the Bahamian Trustee Act 1998 (“Section 83”) provides that no trustee can be compelled to disclose to any beneficiary or the Bahamian Courts a variety of documents, including legal advice relating to the exercise of trustee discretions. 

The Dawson-Damer litigation: background

Mrs Dawson-Damer’s claim was initially dismissed by a judge in the High Court, but this judgment was overturned by the Court of Appeal. The Court of Appeal found (among other things) that the LPP Exception is limited to documents which are exempt from disclosure (under English civil procedure rules) in the course of litigation, not documents which a trustee can withhold from a beneficiary as a matter of trust law. We expand upon this point below.  

The Court of Appeal then remitted the case back to the High Court to resolve a number of other issues. In the meantime, the appeal judgment caused concerns that UK data protection legislation could be used by beneficiaries to obtain wide-ranging disclosure of trust information, including privileged advice, where otherwise this would not be possible. Further analysis of this judgment, and reflection upon these concerns, can be found in our August 2018 briefing.

The latest judgment 

The case was remitted to Mr Andrew Hochhauser QC, sitting as a Deputy Judge of the Chancery Division of the English High Court. One of the issues for the deputy judge to determine was the extent to which the Advisers could refuse to disclose particular documents on the basis of the LPP Exception. 

Under English law there are two types of LPP: (a) legal advice privilege which attaches to legal advice provided by legal advisers to their clients, and (b) litigation privilege, which attaches to advice provided and communications made in the course of  actual or anticipated litigation. The Advisers had reviewed their files and analysed which documents were subject to these types of privilege. They then filed evidence setting out a list of the documents containing the Claimants’ personal data. 

The Advisers’ evidence was that: (a) some documents were subject to litigation privilege as they contained advice about the Bahamian validity claim, (b) some were subject to legal advice privilege as they contained legal advice to the Trustees, and (c) others were not subject to LPP at all. The deputy judge then examined whether the Trustees could refuse to provide Mrs Dawson-Damer with data falling into each of these categories of documents.

(a) Could the Advisers refuse to disclose personal data which was subject to litigation privilege?

 Yes. Personal data contained within documents which were subject to litigation privilege fell within the LPP Exception and did not have to be disclosed.

(b) Could the Advisers refuse to disclose personal data which was subject to legal advice privilege?

 Yes.

The Advisers could refuse disclosure of any personal data contained within confidential communications between the Advisers and the Trustees for the purpose of giving or receiving legal advice (ie documents subject to legal advice privilege). This LPP belongs to the Trustees, who had not waived it for the purpose of the DSAR.

The Court then had to determine whether Mrs Dawson-Damer could “pierce” that privilege by virtue of her status as a beneficiary of the Trust. Readers may be familiar with the longstanding principle that where advice has been sought in relation to the administration of the trust and paid for by the trust fund, then – even though the advice may well be privileged as against third parties – it will not be privileged as against the beneficiaries.

Mrs Dawson-Damer argued that this meant the Advisers could not rely on the LPP Exemption in order to refuse to provide personal data which was subject to legal advice privilege.

Mr Hochhauser QC disagreed. Mrs Dawson-Damer’s argument was based upon her position as a beneficiary of the Trust. Under Bahamian trust law, a beneficiary has no automatic right to see the legal advice to a trustee, and no proprietary right to documents containing that advice, and so no “joint privilege” arises.

Mrs Dawson Damer did not, therefore, have any trust law rights (as a matter of Bahamian law) that “cut across, limit or qualify” the Trustees' claim to LPP. The legal advice privilege in relation to certain documents was not “pierced” by Mrs Dawson-Damer’s rights as a beneficiary under Bahamian law. 

Following this judgment, a beneficiary cannot “pierce” a claim to LPP by invoking his or her status as a beneficiary unless that would be allowed by the governing law of the trust. Given that many other jurisdictions have restrictions on disclosure to beneficiaries (and in some cases specific DSAR exemptions for trustees) we would not expect such “piercing” to be possible in most cases.

(c) Could the LPP Exception apply to any other personal data?

Finally, for completeness, the Advisers had argued that Section 83 gave rise to a type of privilege and therefore the LPP Exception should apply, in effect, to all of the documents held within their files. The Court of Appeal and Mr Hochhauser QC did not agree with this argument and confirmed that the LPP Exception only applies if under English law the relevant document is privileged.

Conclusions

  1. UK data protection legislation enables beneficiaries to obtain the personal data which is held in relation to them by “data controllers” who are subject to UK data protection laws.
  2. Any data contained within a document which would ordinarily be subject to LPP as a matter of English law is likely to fall within the LPP exemption, and a data controller therefore will not be obliged to provide that data to a beneficiary making a DSAR. This includes documents which are subject to legal advice privilege, as well as litigation privilege, which is for the sole benefit of the trustees. 
  3. As matters stand, a beneficiary will not be able to “pierce” the privilege  belonging to the trustees in relation to legal advice by reference to his/her position as a beneficiary if, under the governing law of the relevant trust, he/she does not have any rights which “cut across, limit or qualify the trustees” claim to LPP. This is likely often to be the case.
  4. Finally, Mrs Dawson-Damer’s DSARs were made under the DPA 1998. Since then the DPA 2018 has taken effect. The DPA 2018 (a) includes an exemption for data in respect of which a duty of confidentiality is owed by a professional legal adviser to a client – this is wider than the previous exemption which only applied if the information could also be said to be subject to LPP, and (b) states that a data controller is not obliged to disclose personal data if doing so would involve disclosing information relating to another identifiable individual (which is likely to be highly relevant in trust contexts) if that individual does not consent. 

In summary, UK data protection legislation does not provide beneficiaries with an easy route around restrictions on access to information under the laws controlling the trust, as had previously been the concern. This judgment may give cause for cautious optimism as trustees and their UK advisers return from their summer breaks.

If you require further information about anything covered in this briefing, please contact Ian De Freitas or Adam Carvalho, or your usual contact at the firm on +44 (0)20 3375 7000.

This publication is a general summary of the law. It should not replace legal advice tailored to your specific circumstances.

© Farrer & Co LLP, August 2019

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