In re Trust Created Under the Will of Samuel M. Damon, 140 Haw. 56

Background

Samuel M. Damon’s testamentary trust (Damon Trust) operated from 1914 and terminated in 2004 with ~$836 million; during 1999–2003 Trustees managed securities (including a 13% BancWest interest) and substantial real estate. Beneficiaries Christopher Haig and Myrna Murdoch together held just over 3% of the trust.
Trustees filed for court approval of the 1999–2003 income and principal accounts in 2004; a court-appointed Master was later authorized to review trust records under HPR Rule 29.
Christopher and Myrna requested production of trust documents (including those provided to the Master) to support objections to the Master’s Report; Trustees provided annual statements and audits but declined to provide all underlying documents, asserting the Master’s ex parte document access was proper.
Probate Court denied beneficiaries’ motions to compel and to transfer to the civil docket, adopted the Master’s Report approving the accounts, and denied appointing a discovery master; the ICA affirmed, relying on the presumption of trustee regularity and that beneficiaries were "reasonably informed."
Hawai‘i Supreme Court held that HRS § 560:7-303 requires trustees to provide information upon a "reasonable request," interpreted that reasonableness refers to time and place (not the scope/volume), concluded the ICA erred by requiring beneficiaries to overcome the presumption of regularity before getting documents, vacated and remanded for production consistent with the opinion.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
1. Right to production of trust documents under HRS § 560:7-303	Haig/Murdoch: statute entitles beneficiaries to documents upon reasonable request, including documents given to the Master; they needed them to make meaningful objections	Trustees: duty to inform is satisfied by annual accounts/audits; requests were overbroad and unreasonable, and Master has exclusive access per HPR rules	Court: "reasonable" concerns time/place, not scope; beneficiaries entitled to access to documents reviewed by the Master; remand for production evaluation under §560:7-303
2. Due process re: ex parte Master access and ability to respond	Haig/Murdoch: ex parte disclosure to Master deprived them of opportunity to review evidence and violated due process	Trustees: Master’s ex parte review is authorized; beneficiaries received same access to the Master and could object to the Report	Court: Probate process cannot deny beneficiaries requested documents; ICA erred in concluding no due process problem without document production; remand required
3. Spoliation / missing 1999–2002 receipts	Haig/Murdoch: missing/destroyed receipts show possible breach and warrant adverse inference or further inquiry	Trustees/Master: Master verified accounts via other records and audits; no evidence of intentional destruction; spoliation claim premature	Court: Did not resolve spoliation issue; remanded so beneficiaries can access records to assess whether spoliation occurred before addressing adverse inferences
4. Transfer to civil calendar / discovery master	Haig/Murdoch: needed civil discovery or discovery master to obtain records and meaningfully litigate objections	Trustees: Probate court has discretion to retain on probate calendar; extensive discovery not necessary because beneficiaries already received annual statements	Court: Probate court has discretion, but it erred by denying production under §560:7-303; remand to consider requests (time/place/vexatiousness) and whether further discovery is appropriate

Key Cases Cited

In re Estate of Damon, 119 Hawai‘i 500, 199 P.3d 89 (Haw. 2008) (prior opinion disqualifying a master for conflict of interest)
Mauna Kea Anaina Hou v. Bd. of Land & Natural Res., 136 Hawai‘i 376, 363 P.3d 224 (Haw. 2015) (addressing prejudgment and due process concerns in administrative proceedings)
In re Estate of Campbell, 42 Haw. 586 (Haw. Terr. 1958) (articulating the presumption of regularity and good faith afforded trustees)