The Trustee’s Duty of Disclosure to Beneficiaries

February 9, 2007 Hull & Hull LLP Executors and Trustees Tags: , , , 0 Comments

Last week the Globe and Mail reported on a $1.5 billion lawsuit launched against Barry Sherman, the founder of Apotex, and a trust company. The case offers an opportunity to question the duties of disclosure to beneficiaries.

The claimants are the beneficiaries of their deceased father’s estate. Their father died in 1965 and his estate was administered by the trust company. In 1999, the claimants learned that the trust company had sold one of their father’s corporations to Mr. Sherman in the late 1960s. The claimants later learned that the sale included terms that they were to be given an opportunity to work at the company upon turning 21 and the option of purchasing 5% of the company after 2 years of employment. These terms were subject to some important conditions, including that the company remain under control by Mr. Sherman.

However, Mr. Sherman sold the company in 1972 for a sizable profit.

The claimants now allege that Mr. Sherman and the trust company are liable for not advising them of the terms of the agreement, among other things.

An interesting catch is that the trust company passed its accounts in 1993 and no objections were raised at that time.

At issue in this case will be the trust company’s obligations to disclose all details about its dealings with estate assets, even when the information has not been requested, either at the time or when the accounts are passed.

Thanks for reading.

Jason Allan

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