Trusts Bill

Thank you, Madam Assistant Speaker. It’s a pleasure to take this call on the second reading of the Trusts Bill. Of course we support this bill. The reason why we support it is because the Hon Amy Adams and her team did all the work on this bill. This is her bill. It’s an outstanding bill and it’s in the spirit of what the National-led Government was trying to achieve and that is making our legal system easier for people to use and easier for people to understand. So this is a great bill.

It’s great to see that the best the new Government—actually, I shouldn’t say “new”, we’re 18 months into it now aren’t we—can do is come up with the Ombudsmen (Protection of Name) Amendment Bill. I can’t believe it. That’s the best you can come up with? Keep our bills coming through.

This is a good bill. I want to acknowledge the Hon Amy Adams and the fantastic work that she has done to get this bill finished, completed, handed over to the incoming Government who have had the good sense to bring it into the House, not only because it’s a good bill but because the Government doesn’t have any legislation of their own to bring into this House. That’s a sad state of affairs—18 months in, where’s the legislation? Faaf, sort it out, there’s got to be something going on.

ASSISTANT SPEAKER (Poto Williams): Order! You will refer to the honourable Minister in his full title.

Sorry, Madam Assistant Speaker. It is a very good bill. This is a good bill because it simplifies trust law, it explains trust law. When you think about it there’s a lot of Kiwis, actually, that are involved with trusts, with family trusts—it impacts a lot of people. It’s actually a very good thing that both trustees and beneficiaries now are going to have a much clearer and a much better idea of how the law operates and what their responsibilities are under this law. I’m very happy to commend this bill to the House.

Thank you very much, Madam Assistant Speaker. Thank you to their member who’s spoken, as well. It’s a great privilege to be able to speak on the second reading of the Trusts Bill, and before anyone claims any glory I think it’s important that we name and acknowledge all of those that have had a role in developing this much-needed piece of legislation.

So it is true that this bill was introduced in August 2017, but off the bat can I please note that the proposed reforms are largely based on the good work and recommendations done by the New Zealand Law Commission back in 2013. It’s important that we have that research done and that good work done in order to inform policy and legislation, such as the bill before us right now. So I would like to acknowledge the work of Amy Adams and the previous Government, and the Law Commission in terms of where this bill has got to today. I would also like to acknowledge the work done by David Goddard QC who was a really good help and assistance to the committee in a particular technical area, and gave further insight and help to develop and modernise this important piece of legislation.

In addition to that, we had two lawyers on board. We had Dr Duncan Webb and the Hon Christopher Finlayson, who helped form a subcommittee within the committee, with expertise to be able to make sure all the proper work was done. In doing that, we received 34 written submissions, and 14 of those presented to the committee—and there was a range. The submitters included those from the judiciary, professional organisations, and interested groups and individuals.

When we’re talking about trusts, it’s important to acknowledge just how prevalent they are in New Zealand. The estimated number is between 300,000 and 500,000 trusts, ranging from professional to family trusts. You only need to take a look at the annual declaration of pecuniary interests to see how prevalent trusts are to members even in this very House. Trusts are a key part of our infrastructure, so it’s very important that that legislation is up to date, and that’s exactly what this bill does.

Let’s just take a very quick look at the main issues with the current law and why this bill is needed. There’s a clear lack of understanding in the general public around how trusts work and the fact that we are requiring lawyers to act, at times, when it would be easier if the law was just clearer to understand. So in order to not have things get progressed to court in an unnecessary way, it’s important that we modernise this legislation. In saying that, it is at least 60 years since the trusts legislation has been updated, so we can understand how there would be a big change over that period.

The second point I’d like to make is how the current legislation does not reflect how trusts are working in practice right now. It is narrow in scope, and it is making it far more difficult to draft trust deeds. Trust administration is overly complicated when it doesn’t need to be so, so making changes to trusts can often require having to use lawyers and for it to be more expensive to the average household than it should be. Dealing with simple administrative matters often requires application to the courts when that shouldn’t be needed. So what the bill does is it updates and modernises what we have. It will make trust laws easier to access and understand by replacing the Trustees Act 1956.

The bill sets out the core trust principles and clear rules about how trusts should be managed, so that trustees can clearly understand what is required of them, and also of the beneficiaries, so that they can understand their rights. The main change that this bill includes is a description of the key features of a trust and how it will operate, and it spells out the duties of those trustees. There are clear rules when the trustees are required to act, and when, also, they are required to provide information to beneficiaries, so that beneficiaries are able to enforce the trust when they see that it is fit. Practical and flexible trustee powers will be able to make sure that the investment in the trust is done in the most appropriate way, and it also makes the important rule, which can be contentious, about removing and appointing trustees without having to go to court if not necessary. So in terms of a time when we would like to see things not proceeding before a court, it will provide a far more flexible piece of legislation that is workable in daily life.

The ability to hold property for the benefit of somebody else in a trust is still an important one today, and this is because trusts, as I’ve mentioned, are so important to very many New Zealanders. Some trusts hold the family home for the use of future generations, some become trustees through a will, and others set up a trust for a corporate structure purpose. But it’s good to see that this bill is supported across the House, as already mentioned.

The Trusts Bill will be of significant benefit by supporting our wide and varied use of trusts in New Zealand, but it’s also important to mention that the bill is a modern statute that is fit for purpose in the 21st century. It’s an ambitious bill because it seeks to keep alive much of the common law that has developed over many centuries. This bill will allow the courts to interpret the bill in the light of common law, but it also adapts and responds to a modern and changing society and looks at the many different ways that trusts are being used, and it enables the average New Zealand family to access and utilise a trust without having to draw upon unnecessary resources to go before the courts.

I am pleased to be a part of this process. It’s a good bill. I’m pleased it’s supported across the House, and I commend it to the House.

Thank you, Madam Assistant Speaker. I am very pleased to take a call on this Trusts Bill. This bill is a long time coming, and we’re only at the second reading stage, but I know it’s going to receive the unanimous support of the House, I think, and it will pass into law. Actually, the second reading does mark somewhat of a milestone for the House, because this bill started life as a review of the law of trusts. Now, I have to admit to the House that I have a particular aversion to trusts law. When I was a good, hard-working law student at the—

💬 Chris Penk: Equity—urgh!

Chris Penk is talking about equity and sounding very pleased behind me! I won’t just use a particular term I was going to use to describe him. Mr Penk may be enamoured with equity and trusts, but I have to admit to the House that when I was a very hard-working law student across the road at the Victoria University of Wellington law school, I was not. But it is undoubtedly true, notwithstanding my lack of prowess at the law of trusts and equity, that it is an extremely important part of the law in New Zealand. I think I read somewhere—it might have actually been during the passage of the bill and the consultation document by the Law Commission—that per capita, we have the most number of trusts anywhere in the world. I know my colleague Harete Hipango will have some views on that, and I look forward to her contribution.

We have a large number of trusts in New Zealand, and the law is extremely important, but for a long time the law has been a mess—it really has. That’s what prompted the previous National Government to do a very large-scale reform of the law and try and have a new Trusts Act, which would replace the old Act and bring all the law together, clarify—I don’t know if you’d call it a codification, but certainly something close to it. We went through this long process and there was a lot of consultation done.

Just at this moment, I do want to pay tribute to the hard-working team at the Ministry of Justice, and I have the privilege of actually knowing in a personal capacity a couple of the people who worked on that project. Can I say for the record of the House that that has taken up some degree of time over the last few years. If I was a public servant and I got asked to work on a very complicated and long project involving the law of trusts, I’m not sure I would stay in my job, but these very hard-working public servants in New Zealand put their noses to the proverbial grindstone. Honestly, it has been a quite large undertaking. They have helped get us to this point, but also they have helped us in the select committee.

We were very well served on the select committee by the Hon Christopher Finlayson, who is something of a trust expert, and he subbed in on the Justice Committee and did a very good job alongside the other members of the Justice Committee. I also want to pay particular tribute and acknowledge Dr Duncan Webb from the Government parties, the member of Parliament for Christchurch Central. Dr Webb is also a very noted lawyer with a background in trust law as well. He was not a permanent member of the Justice Committee at that point, but he started subbing in for other Labour members. He added quite a lot to the process as well, and now, of course, he is a permanent member of the very hard-working Justice Committee. You know, often members say “Oh, we’re a very hard-working committee.”, but I can honestly say, in the case of the Justice Committee, that is definitely true.

Look, this replaces the Trustee Act 1956, as I made mention before, and the Perpetuities Act 1964, to make it more sensible and clarify and codify some provisions of both those Acts. There’s going to be time, I know, in the committee of the whole House to go through it blow by blow, so to speak, but I just want to commend the bill to the House and, as I said before, say thanks to the hard-working officials who helped us with this process. Thank you.

Thank you, Madam Assistant Speaker. I rise to confirm New Zealand First’s support for this second reading of the Trusts Bill. I actually share Mr Bishop’s potential lack of enthusiasm for the dry, technical details of the Trusts Bill. This is painstaking stuff, and I absolutely commend, as he did, the officials and everyone that has been involved in bringing this to the state that it is now. Of course, long overdue it is, repealing the 1956 legislation, and 1956—I’m not sure what that means to you, but for me 1956 is all about the All Blacks beating the Springboks for the first time in that historic series, with Kevin Skinner coming off the bench, or coming out of retirement in the third test at Lancaster Park, and Peter Jones scoring the—

💬 Chris Penk: Did he have a trust?

—winning try at Eden Park—I’m sure they did have trusts, because that was the year that this bill came in, so they would have availed themselves of that.

But that shows you how long ago that was. I remember my father—the reasons why that’s relevant—got brought up on the knee hearing those stories, and they seemed an age ago, but yet we’re still operating in this modern economy under rules that were set up when a modern society like ours could hardly be envisaged. Of course, it is a fundamental building block to our legal and our financial system. We have some 300,000 to 500,000 of these trusts, and, of course, goodness knows how many trustees and beneficiaries are a part of that. So this will be a bill that affects a wide number of people, and, of course, they’re very important, and—I even know as myself, and as Ginny Andersen pointed out in her contribution—many of the members of the House have trusts; I have them, I’m part of an intergeneration family business. I’ve got a couple of daughters. I will be looking very carefully when the day comes when they start bringing boys or girls maybe, in this day and age, home. A trust is part of that to make sure that we can safely transfer that good work that’s been done by generations before through to the next generation, and hopefully beyond.

Of course, there’s all sorts of—that’s in a family or business trust, but they go up to, you know, we’re looking at Māori land trusts, we’re looking at unit trusts, charitable trusts, which play such a cornerstone in our society. So within those submissions—we had 34 of them, 14 oral, and I would like to, as others have, acknowledge David Goddard QC as the independent adviser. I know he’s also advising the Parliament on another bill at the moment, and I can attest to how skilled he is. So this bill sets out to simplify the system and put it in plain English, and I think that’s really important because those 300,000 to 500,000 trusts—the people that are the beneficiaries or trustees aren’t necessarily financially or legally literate. They’re often maybe in a time of grief or something, when they’re seeking to address the issues with the assets and transfer of wealth. Through these trusts they can often, I would imagine, feel overwhelmed; they’re faced with legal situations that they may not understand, and they are really, really important decisions that they’ll be looking to make.

So anything that we can do to clarify and put into plain English is very, very important indeed. That’s exactly what this bill sets out to do, and we know that this was initiated by the Law Commission in 2009, and I think it took through to 2013 for it to come out as a report, and it came to Parliament as a draft report in 2016. I would, in all fairness, acknowledge the previous Government, the Hon Amy Adams, for the work that she did getting it to the point that she did. So it does a number of important things. It clarifies the management of information and the communication of that information, and how that has to be disclosed to beneficiaries. It gives flexibility and trustee powers so that we can execute investment decisions more efficiently. It updates provisions around agents and how they can assume trustee powers, and it gives some more options for appointing trustees and taking out of the court system some of those steps. It also takes out the perpetuities, and I think that incorporates the Perpetuities Act 1964, and there is the 125-year provision, which puts a deadline—quite a long one I might say.

So there are a number of really important, key elements that have come in this bill. The Justice Committee has gone through and tested that, making sure it’s fit for purpose, and I commend the Justice Committee for doing that, and the Minister of Justice for continuing to shepherd this bill through the House. It is an important bill. It will affect a lot of people. It will simplify things. It will save a lot of money and complexity with legal fees, and it will also, by default, unclog our court system as well through minor issues that can be dealt with potentially outside the court system. So it’s a very positive bill, one long overdue, and one that I’m glad is receiving good support from the Parliament and, certainly, enthusiastic support from New Zealand First. Thank you, Madam Assistant Speaker.

Kia ora, thank you very much, Madam Assistant Speaker. It’s a pleasure to take a call on the Trusts Bill, the second reading here. They are an essential part of our system, with around 300,000 to 500,000 trusts operating in New Zealand—that’s a big number. Ordinary New Zealanders use trusts on a daily basis—the former speaker Mark Patterson referred to the number of members of Parliament that do—and they form the economic backbone of the commercial and social sectors here in our country.

So what we had before was an unnecessarily complex set of laws, and it’s quite difficult to navigate the scattered sense of what those laws were doing for trusts. We want to make sure that the law is now practical and usable and sensible for families and businesses that need to, as I mentioned before, manage their day-to-day affairs, and have confidence that they can be guided and have easier to resolve disputes should that be the case. So while I’m not on the select committee that reported on this bill, when I read through some of the material it was quite clear to see that they made improvements to the bill, and they are to be commended for it. They made what may seem like simple changes for definitions like “lacks capacity” or “power of appointment” or “default duty” or “mandatory duty”, and they may seem simple and clear, but they’re very important, because these terms take away the vagueness in legislation

So where there is potential for conflict to arise when you get to practical application of these terms, we’re now seeing, from the passage of this bill and from the good work of the Justice Committee, we now have much more clarity and guidance on matters that, as I’m saying, are currently unclear—we’ll now have that certainty. So we support this to its next stage. The committee has done some good work and certainty, clarity, and clear guidance are always a good thing. Thank you.

Thank you, Madam Assistant Speaker. I rise to offer the Greens’ support as well for this Trusts Bill at its second reading, and I’ll keep it as a relatively short call. I think the complexity of this bill has been well covered in terms of the debate so far, and the fact that this arises out of Law Commission work that happened over a four-year period and that this was legislation introduced by the previous Government and has unanimous support in this House—it’s pretty clear that there is support for it to proceed smoothly, and it’s not a controversial piece of legislation.

I will re-echo the point made by others that the Law Commission has estimated that there are 300,000 to 500,000 trusts in this country, so while it’s not controversial, it is significant, and has relevance to a huge number of New Zealanders. I do want to just make that point as well, as has been mentioned, that there’s many members in this House—even though I’m not one of them, and I understand that around at least three quarters of members of this House in the register of pecuniary interest have an interest in a trust, and that in this country there’s a trust for every 12 New Zealanders. That’s compared to one to every 34 Australians and only one to every 294 people in Britain. So it’s obviously a very significant player for us in financial arrangements as a country.

It is important the legislation reflects the times that we live in and is easy to read, and the primary purpose of this bill is to update it. The Trustee Act hasn’t been updated since 1956 and the Perpetuities Act, which it also amends, hasn’t been updated, I understand, since 1964. So it’s absolutely proper that we do that and make it easier for people to understand.

I would just like to put on record that for the Greens this legislation is also a bit of a missed opportunity. We would have ideally liked to have seen the transparency introduced into this legislation, because we know that there is the potential for trusts to be used to hide wealth and to reduce tax liability for some people, and we would have liked to have seen a register or registration, which could have been done in a way that wouldn’t have created a massive cost burden, in our view, and that had been recommended by the Law Commission in 2012, but apparently, subsequently, was ruled out because of concerns about cost and industry push-back. For us, sometimes that push-back is an indication of need rather than a reason not to do something.

I would also say that, for us, there is a question to be asked about why capital gains generated by trusts are not taxed at the trust rate. You know, if we are really going to get to the heart of inequality in this country then we need to look and guard against people hiding wealth and avoiding taxation through legal means, to make sure that everyone in this country pays their fair share and that we share the wealth fairly in this country.

With those caveats around this being a missed opportunity, I hope that there’ll be opportunities for us to have that conversation at a later date, and we do absolutely, along with everyone else in this House, support the legislation.

Thank you very much, Madam Assistant Speaker, and thanks to all others who have already contributed on this bill. It’s clear that there is wide support among the House for it, which is positive. The history of it has already been rehearsed by others. I don’t intend to re-traverse that ground, except to say that I think it’s clear that the finished product—if I can call it that; not withstanding that we’re at only the second reading—does reflect high-quality work by a large number of people.

The introduction to the bill makes a good point about the fact that many key aspects of trusts are currently set out in the common law, and this is a good reason for a bit of legislation now to provide some clarity. There is a good reason, historically, for the fact that it is the common law rather than statute that sets out a lot of the rules regarding trusts. Of course, it’s a creature of equity. The separate justice stream, if you like, as opposed to black letter law that was a more strict view of justice that the courts would decide. Equity, in the sense of fairness, would be applied in certain situations so that ways of understanding the holding of property, for example, could be understood in ways that didn’t reflect necessarily the strict legal ownership. So that’s the history of it. That’s the reason why often trust law is encapsulated in the common law, but, sadly, that means that often-times it’s difficult for those who are trustees to understand exactly what the rules are, how they apply to them, and to be able to meet their strict duties accordingly.

So this is a good thing: striking a balance between prescription and flexibility, as the bill itself says. I won’t make a long contribution. There might be an opportunity later on, perhaps in the committee stage, for that. But I will just note that law students up and down this land may rejoice when they see the phrase under clause 16(5), “The common law rule known as the rule against perpetuity is abolished.” Anything with the words “common law rule” and “abolished” in the same sentence is generally going to be well looked upon by law students—and perhaps many lawyers as well for that matter—so for that reason and the others I’ve stated, and indeed as others have also said, this is a good piece of proposed legislation and we are happy to support it further.

I understand this is a split call. I call the Hon Clare Curran.

Thanks, Madam Assistant Speaker. Interesting little contribution just before. Not having studied law, the arcane sort of things that make law students happy is some interesting to hear about. Why we’ve got this bill is a lack of public understanding about trusts, what they are, how they work, the implications of transferring property to them, and the rights and obligations of everyone involved. The Trustee Act is outdated. I think we’ve well traversed that—1956. It doesn’t reflect how trusts are working in practise. It’s narrow in scope. It makes it difficult to draft trust deeds, and trust administration is overly complicated. Making changes to trusts or managing unforeseen circumstances is difficult and often expensive, and dealing with simple administrative matters can often require an application to the courts.

It’s interesting, this, because a number of people have mentioned the sheer number of trusts in New Zealand: somewhere between 300,000 and 500,000. If you look at them, most trusts have a minimum of two trustees, and some more than that. So we’re likely to have around a million people in New Zealand who are trustees, which is quite a lot of people, and yet we’ve got such outdated legislation, so kudos to the Hon Amy Adams for kicking off this piece of work and for the Law Commission for doing it.

It’s also interesting—I had a bit of a look at some of the earlier Law Commission reports on this where they said that trusts are, interestingly, very popular in New Zealand. In fact, there’s almost like a trust movement and it’s called the trust industry, which advocates for trusts. Because they’re so easy to set up—

💬 Hon Phil Twyford: Is it a trust itself?

It could be a trust itself. They’re easy to set up and the system in which they operate—you know, there is a favourable tax environment for them. Interestingly, another comment that was made was that it’s a bit of a status thing to be a trustee, apparently. Who knew? The fact is that all those reasons that I read out at the beginning as to what the problem with trust law is means that it’s certainly overdue for an overhaul.

In the time I’ve got left, I just want to mention one thing that I’ve been reading about, and obviously, if I speak in the committee stage, I’d like to speak more about it, and it goes to the liability issues for trustees. The big debate that went on—as I understand, and I wasn’t in the select committee—was around the measure of gross negligence and the views on whether or not that should be considered, how it should be defined, and who should be liable and under what circumstances. The Law Commission had recommended including gross negligence in the restriction on an exemption in indemnity clauses. They took it out, then they put it back in again, but there were a lot of submissions on this, as I understand it. Federated Farmers and Rural Women New Zealand submitted that the trustees of a trust often bring very different skill sets and experience to their trustee roles. They could be both professional and lay trustees.

They’re concerned about trustees being held to a standard of behaviour beyond the relevant individual skill set under the exemption and indemnity clauses, and were concerned that uncertainty about the meaning of “gross negligence” would make it hard for trustees to get insurance for such liability. How the select committee dealt with that was to—the term “gross negligence” isn’t defined in the bill. It’s not a commonly used legal phrase. So to clarify the intent of the bill, they recommended inserting a clause 40A to provide guidance on how the court is to consider gross negligence. It sounded as if this was one of the main issues—I’m not sure—from those who were on the select committee, and that it was a good issue, which looks as if it’s had a good outcome. I hope we’ll hear more about that in the committee of the whole House stage. This is an overdue piece of law reform, and I commend it to the House.

Thank you, Madam Assistant Speaker. I’d just like to start by acknowledging my colleague Chris Penk, who just spoke and who reminds me of my young children, who have their lovely little cuddly toys, and they treasure those things like you would not believe. When they’re holding those, all is well with the world, and so it is for me when Mr Penk is talking about legal matters in this House.

Now, this piece of legislation we’re debating today was brought forward initially by the former Government—a great piece of legislation looking to update and modernise some of the trusts law. On this side of the House, we know about business, we understand some of those challenges, the need to adapt and to evolve—and, quite frankly, 60 years since this came into law; it is well and truly time to be updated.

Now, there’s one particular aspect within that that I wanted to touch on, and Mr Penk alluded to it as well: clause 16, which took out the perpetuity clause in relation to trusts, and his comments around how law students would be particularly excited by that. I note that it was replaced by a finite period of 125 years as the life of a trust. I think that’s an appropriate level. It talked about that being sufficient to allow for all matters to be wound up in due course and with due process. So 125 years, of course, is quite a duration. Although, I read an interesting article just recently, and in that article—it was a science-based article talking about the longevity of the human race, and the comment in there was that the first person to live to be 150 years old has already been born. I hope it’s not Winston Peters. But in that regard, there is, I guess, the need to perhaps modernise this as we continue. I just thought I’d chuck in that little fun fact on a Thursday afternoon. But aside from that—

💬 Greg O’Connor: Ha, ha!

—I’ll wrap it up there. I’ve seen lots of interest on the other side of the House. Mr O’Connor has finally woken up and joined the debate, so I welcome him at that point. We’ll be hearing shortly from Harete Hipango, who will cover off the finer remaining details on this piece of legislation for our side of the House. Thank you.

Thank you, Madam Assistant Speaker. It’s good to be in the House talking about this bill. Look, a lot of it’s been covered. It’s always great to see a piece of work that has the whole of the House’s support, despite some troublemakers trying to pretend it doesn’t and all the reasons why. But it’s been interesting listening to this. I’ve just learnt that there are more trusts in New Zealand than there are sheep, because there seem to be so many trusts. Everyone’s got one—I haven’t. Many on this side of the House haven’t. But, look, it is the second reading. It is overdue. It’s 1956—the only other bit of law I’ve seen around that era that needs a good shunt is the Adoption Act, which I’m looking at closely. But I digress.

I just want to thank the Justice Committee, who seem to have pulled together a cross-party group there with Dr Duncan Webb; the former member the Hon Chris Finlayson; help from an independent adviser, David Goddard QC; lots of submitters—34 of them, and 14 who came in and actually gave a presentation. So I’ve learnt a lot there.

I think it’s important to get to the guts of it. It’s going to replace the current legislation, really to ensure that it’s accessible, and when I saw that word I thought, “Absolutely.” Laws that are modernised so people understand their rights and obligations are a great thing. Even better, a bill that supports them to resolve their disputes both inside and outside the court system—fantastic. So a bill that makes the core trust law’s principles much clearer is a really good thing—plain words, and it incorporates core principles currently only found in common law. That’s good. Secondly, it is making the day-to-day administration of a trust a whole lot more easy, and that’s good.

The one thing—and it’s a short call to finish—and I thought this pertains to many New Zealanders, and that’s around how they relate to property. It’s the ability to hold property for the benefit of someone else in a trust, and that’s still a very important one today. Trusts are still relevant. Some use trusts to hold the family home—many in here, actually, but others have covered that; I won’t be mischievous. I think, therefore, it’s going to be of significant benefit to Kiwis wealthy, and on this side of the House, those who are not so wealthy, who will benefit. I commend this bill to the House.

Kia ora, Madam Assistant Speaker. I stand to take a brief call before the House this afternoon. I’m mindful that it has been some months since I have spoken, and would seize the opportunity to address the House, first and foremost, to acknowledge that this week is New Zealand Sign Language Week, and the importance of ensuring that our deaf and our mute communities’ voices are not silenced, and to engender in them a trust that their voice is heard.

Furthermore, I first spoke to this bill at the first reading of the House. That was back on 5 December 2017, and in commenting to the House, I indicated that this is a worthy piece of legislation. I ended off that segment by commending this bill to the House as a trustworthy piece of legislation, and I shall continue to do so. I acknowledge the Justice Committee, although I’m not a member. I do substitute into that, and I sat in on a session when there was discussion around this bill. I hearken to the words of my former colleague, the Hon Christopher Finlayson, who made a worthy contribution and a trusted one, of course, in relation to this. As is recorded in Hansard, I reflect that the Hon Finlayson said, “it’s of critical importance that the law on the subject [of this] is clear.”, and that the Justice Committee has enough time to “carefully and thoroughly analyse the law,”—which they have done—“because this is literally a once-in-a-lifetime opportunity,” hearkening to the fact that it’s been 60 years since this law has been reviewed and it is long due for that review.

The bill is not a complete codification of trust law, although it strikes a balance between prescription and flexibility, and that’s noted in the report from the Justice Committee back to the House. Without going into greater detail around that, I just hearken to—and I always, certainly, reflect on—the eloquence of my colleague, Christopher Penk. Chris’ father, Stephen, was the registrar at law school when I was a student, so it’s quite special that I’m standing and serving alongside Christopher when we speak to the law. My colleague has a very robust intellectual legal analysis and an articulated eloquence in his comprehension of the law. Mine is somewhat more pragmatic and practical, and I say—because I do take a short call—that the three main objectives of the bill are set out to be clear and accessible core trust principles, it ensures more efficient trust administration, and it simplifies and clarifies the role of the courts in relation to trusts.

Now, the Justice Committee’s report back to the House, in terms of going into the detail, which is too long for me to address the House on today—but to say that that has been a thorough and comprehensive study and analysis. I have just highlighted that that analysis is talking about clarifying definitions within the Trusts Bill, soon to become law; replacing clauses, inserting new clauses, amending, deleting—all about clarity and consistency, with the recommendations to avoid ambiguity. Again, the consistent thread running through their recommendations is around clarity and consistency. Providing guidance to ensure that the legislation is clear on how the court is to consider and interpret the law.

Bringing a brief call to the House, just to share that trusts are one of the most complex legal relationships, and this is reflected in the detail of the oversight and the review of the law. In saying that it’s the most complex legal relationship, it’s also indicative that the difficulties and the complexities around the trust law has, at times, enhanced the complexity to human relationships, and either the function or the dysfunction associated with the responsibilities as to how the trust law has been administered.

In closing, again, mindful that we are coming to the end of the evening and the end of the week before the House, but tragically there was news that broke this afternoon. It would be remiss of me not to acknowledge the family of Lance Corporal Nicholas Kahotea, the family of the New Zealand SAS, his whānau, his family, at the loss of a son, of a brother, a husband, a loved family member, and brother in arms.

The Trusts Bill before the House for its second reading—I commend that to its third reading and the passage of this into law. Thank you.

I’d just like to start by complimenting the courage of one of the previous speakers, Tim van de Molen.

💬 DEPUTY SPEAKER: Well, you can’t actually do that.

I can’t compliment him?

💬 DEPUTY SPEAKER: Well, you can’t talk about people’s courage.

Oh, well that’s—thank you, Madam Deputy Speaker.

💬 DEPUTY SPEAKER: Personally. You can talk generally.

Well, I’ll leave an adjective out of it. I’ll just say that Mr van de Molen mentioned that he was part of a party that understood business—the inference that they are quite business savvy. I thought that’s quite insightful to do that in a week when it’s quite clear that his party paid out a billion dollars more than they needed to in relation to South Canterbury Finance because of some very poor business understanding and decisions. So for a Friday afternoon, I thought it was quite an interesting observation to make. It brought some of the, perhaps, amusement that he was looking for with his crack around the Rt Hon Winston Peters—that had already been used. Perhaps that’s why there wasn’t quite the raucous laughter that you were expecting on that crack.

💬 DEPUTY SPEAKER: No, but it would be great to come to the bill.

But I will get to the bill, if I may. Just some things belie the opportunity to comment. If I may go to the bill. I was lucky enough to be a member of the Justice Committee that considered this bill. We bring life experience to our committees, and I was actually quite pleased to have the opportunity and, perhaps, the understanding as to what we were trying to achieve with this bill; having once been appointed as a trustee to a foundation—rather a large foundation—which was, shall we say, not in great shape as a result of some of the very failings which this bill is attempting to fix. It was as a result of, really, a poor understanding by the main trustee at the time of just what his obligations were. The fact was that all the information that we required to get the trust back up and running was in a laptop for which we had no access to because the trustee had actually passed away, unfortunately.

So it was actually interesting to sit through this process and have a context against which to work and to understand. And I very much admit to being a layman. I sat in awe of much bigger brains than my own sitting between the ears of Dr Duncan Webb, certainly the Hon Chris Finlayson, and David Goddard QC. So I sat in awe as those learned gentlemen did actually put some common sense and endeavoured to make sure that the sort of deficiencies in the bill were fixed to avoid the situation I had previously found myself in.

Even down to understanding what a trust is and who trustees are—I think that’s something that’s belying the large number of trusts that New Zealanders own. You’ve heard the figures, given that New Zealanders, proportionally, are very large users, beneficiaries, or trustees of such trusts, how little understanding there is of them and how much faith we have in the system. Again, that just shows the understanding of why this bill does need to be updated—simply because they are part of our way of life, and even just understanding what an express trust is. It means that—

💬 Alastair Scott: What is it?

I’m pleased you asked that, the soon-to-be redundant member for Wairarapa. It’s a fiduciary relationship, i.e. a relationship involving trusts, in which a trustee holds or deals with trust property for the benefit of the beneficiaries or for a permitted purpose. I hope, Mr Scott, that that satisfies your clear curiosity, which has remained alive, even late into this sitting week.

You’ll also be pleased to know the trustee is accountable for a way that the trustee carries out the duties imposed by the trustee by law. I hope Mr Scott—again, having shown an interest in this—that I’m not going too fast and you’re keeping up. I’m sure any questions you want to yell across the House, with the indulgence of Madam Deputy Speaker, I’ll endeavour to answer as I go through this presentation.

The trust is created by or under an enactment—still with me, Mr Scott?—by a person, the settler, who clearly and with reasonable certainty, and subject to any formalities prescribed by any enactment. I think you’ll understand why it’s important. But again, all levity aside—and this is an important part—the settler who clearly and with reasonable certainty, and subject to any formalities prescribed by any enactment, indicates an intention to create a trust. I think that’s important. It identifies the beneficiaries or the permitted purpose of the trust and, importantly, identifies the trust property. So I think, again, I hope I’ve been able to, in the short time allocated to me, satisfy you and others listening on the importance of this bill. But, as I say, it was a privilege to sit through the select committee—certainly to have the context I did in the need for good trust law, so that those who are the beneficiaries can have some faith in the system. I have no hesitation in recommending this bill to the House. Thank you, Madam Deputy Speaker.

Bill read a second time.