Disappointed
beneficiary Ivan Erceg failed in a Supreme Court action demanding access to
trust documents from his late brother’s family trusts. Michael Erceg’s family trusts were wound up
in 2010 distributing profits from their sale of Independent Liquor for a rumoured
$1.3 billion with Ivan receiving no payout.
Discretionary beneficiaries have only a qualified right of access to
trust details, the Supreme Court ruled.
Michael Erceg left a
valuable liquor distribution business on his death in 2005 in a helicopter
crash. Ivan received a $95 million
inheritance from Michael Erceg’s estate but was himself bankrupted in February
2010 following the collapse of Sensation Yachts, a luxury boat building
business based on Auckland’s upper harbour.
Ivan sued trustees
Lynne Erceg and Darryl Gregory demanding copies of trust deeds and financial
records for two family trusts set up by his late brother. They refused access, stating that Michael
Erceg had made it clear in his lifetime that he did not want Ivan to have any
involvement in the trusts. The trustees
expressed concern Ivan was likely to use information about trust distributions
to harass beneficiaries paid out. Ivan
Erceg is not a named beneficiary in his brother’s family trusts; he is one of a
class of relatives who might receive benefits.
The Supreme Court was
asked to rule on the narrow legal issue of a discretionary beneficiary’s right
to access trust records. As a matter of
principle, any beneficiary has the right to seek information to ensure a trust
is run properly for the benefit of all beneficiaries, it said. But this right is qualified: it depends on
the information sought, the reason disclosure is sought and the status of the
beneficiary. Requests for information by
a larger number of beneficiaries will be viewed more favourably than a request
by one beneficiary.
Ivan Erceg’s request
for disclosure was refused. Past threats
to disclose confidential trust information and potential harassment of other
beneficiaries counted against disclosure.
One 2009 email to Lynne Erceg threatened: “when my story has been told,
the need to continue life’s journey will no longer be required. The blood and death that will flow will stain
both Darryl [Gregory] and Lynne [Erceg].
The costs will be greater than can be imagined at this time”.
The Supreme Court
pointed out that any distribution to Ivan Erceg from the family trusts in 2010
when these trusts were wound up would have been seized by the Official Assignee
for the benefit of Ivan Erceg’s creditors – he was bankrupt at the time.
Erceg
v. Erceg – Supreme Court (8.03.16)
17.022