Trustee (Public Trust) Amendment Bill

Thank you very much for the opportunity to speak yet again on this important bill, the Trustee (Public Trust) Amendment Bill. Really, I want to take this opportunity just to prevail upon the Minister in the chair, the Minister of Justice, to answer the question that I think has been put in both the first and the second readings, even though we have not had the benefit of closely studying the transcripts of each of those readings. The question does remain of why urgency was taken on this provision, when there are alternative ways that would have allowed appropriate scrutiny of it, and at least have allowed members of the House, if not the officials themselves, through their regulatory impact statement, to take a considered view and hear from the professionals who are routinely dealing with these issues in the field every day.

We did not need to hear from Perpetual Trust. It clearly is taking its action. Were it not for the urgency, the Minister would stand to be fully, wholly, and unequivocally congratulated on the stance she has taken. It is right that she has taken the view that notwithstanding how unforeseeable it might have been—the Trustee Act might have been used by securities trustees or trustee companies—she should seek to protect the public entity that is being invited to step in as the trustee of last resort. That might never have happened in the 130-odd years of the Public Trust and in the many pieces of governing legislation for that office, but in any event it clearly was a possibility, which is what the lawyer for Perpetual Trust is banking on and is relying on. When you look at the Act, and when you apply the black-letter law of the Act, there is nothing there to exclude a securities trustee. It simply refers to trustees of a trust—of any trust. That particular provision of the 1956 Act is very widely drawn. So it was certainly a possibility on a simple reference to the Act.

The fact that we had a whole swag of failing finance companies from 2008 I would have thought would have prompted someone in the bureaucracy, if not in Cabinet, the executive, to think about the potential risks of just this sort of thing happening. Each of those finance companies was required to have a trustee. The basis on which deposits were to be taken was that there would be a trust sitting over them so that the deposits could not be used for anything other than the purposes for which they were provided or sought. That clearly has been a weak regime.

In any event, trustees were in place, and there were failing finance companies. I thought it would have been obvious that the trustees were going to be under some pressure. Receiverships have been created and receivers have been appointed since 2008. The issue should have been triggered, at least within that part of the bureaucracy that deals with commercial issues—the old Ministry of Commerce, the old Ministry of Economic Development, now the Ministry of Business, Innovation and Employment. The fact that it took until there were legal proceedings afoot for the bureaucracy to be alerted I think causes us some alarm. But, even then, the proceedings were afoot and it was not noticed until just recently, which has prompted this flurry of activity and urgent action. That is equally alarming.

But then when it comes to the executive and the Minister considering what steps to take, I think we are entitled to expect alternatives to urgency to be considered. The question remains for the Minister in the chair to answer the question of what alternatives other than urgency were considered, and why urgency—in the event that other alternatives were considered—was preferred, because there are alternatives that would have preserved the position. Clearly, Perpetual Trust, in relation to its failed trusteeship of Capital + Merchant Finance, is outside the net, and there is a risk to the public purse, at least to the Public Trust and the public purse that it holds. Perpetual Trust is off the hook in that regard, and we want to prevent other finance companies and their trustees from being in the same position. That could have been achieved simply by the draft legislation having a start date and that date being effective once the legislation took effect, even if it was retrospectively. That would have been a fair and appropriate signal to give to potential litigants or those who were considering following the same line as Perpetual Trust. That is the question that needs to be answered, and we eagerly await the answer.

The question has been raised again about the urgency. I am happy to address it again and hopefully more to the member’s satisfaction. I think there are always options around this, and this is certainly not a step that I have taken lightly. But the advice has come to me in only the last few weeks or so that the situation could become quite serious and that this is not something that we could leave for the normal select committee process. The Committee will be aware that this Government has not taken urgency for some time, which would give an opportunity for this. I would actually think that this bill, the Trustee (Public Trust) Amendment Bill, is exactly the sort of bill that should be going through under urgency.

I take on board the concerns that Mr Little has raised about urgency and why we could not just put a start date in that is essentially retrospective to the legislation coming into force. That is absolutely an option, but what we are dealing with here are 60 finance companies, all failed. What is being achieved by that? I would be more inclined to do that, although I am not someone who generally believes in retrospective legislation. For me, that is a very difficult step to promote. I think it inherently has issues, particularly around process.

In addition to that, in this case, I was also given some comfort from the fact that this bill is only a stopgap measure. We do, in fact, have the Financial Markets Conduct Bill coming through the House, through the normal process, and it does not come into effect until April next year, should it be passed by the House. As the Green member Ms Genter raised earlier, will it be in contravention of this bill, or will there be any issues with it? Oh no, I think Ms Dalziel did, sorry. Will it be in contravention of this bill? It will actually replace this bill. So, really, this is very much a stopgap measure.

If we were looking at urgency, urgency is often around issues that must be dealt with and certainly in all stages, like excise tax issues, where behaviours will change. I do not think I could trust, frankly, that the lawyers for these failed finance companies, or, rather, the trustee companies, would not charge off to court tomorrow to file proceedings under the existing law if they had the notice. We are not making this law for them; we are actually making this law for the public of New Zealand, the taxpayers and the Public Trust, which has actually done nothing wrong—not a thing. It has not done anything wrong. It was not paid large fees to be corporate trustees. It did not fail in its duty. It did not mislead or do anything wrong. It is an innocent bystander, and, frankly, I do not think that we can risk having it put further to the test when it comes to this sort of litigation that that would ensure. Yes, this is a test case that we are looking at, which is due for hearing on 6 June this year, so we do not have a lot of time.

Knowing the legal profession as I do, and with the greatest respect for it, I am sure that there are people right now preparing documents to be filed if this bill does not go through tonight. But I would like to take the opportunity again to thank the Committee for taking such a mature and responsible attitude to this legislation, which is entirely necessary.

Clauses 1 to 5 agreed to.

Bill reported without amendment.

Report adopted.

Third Reading