You may think it nonsensical that the court can order someone to produce something (in this case documents) which they do not have, but that is precisely what happened in a recent case.
The dispute concerned a debt of some $50 million. The Court of Appeal ruled that the beneficiaries of a trust who, it was claimed, owed the money should be ordered to attend court to produce documents which were in the hands of the trustees of the trust.
In the view of the Court, the beneficiaries of a trust have the right to demand the documents of the trustees, so could be ordered to produce them for the purposes of resolving a dispute. The debtors had transferred their assets into the trust and claimed that they could not produce the information required, which was contained in documents that were not within their ‘knowledge, possession, custody and control’.
The Court refused to accept their argument, agreeing with the decision of the lower court that it was correct to regard the documents as being under their control.
Attempts to place assets out of the hands of others through the use of trusts and similar devices can be challenged in appropriate circumstances. Contact us for advice.