Trusts Bill

I don’t want to take too much of the House’s time unnecessarily, given the level of interest in this bill, but I know that this was a provision that excited the interest of some members of the Opposition—and I think of Mr Bayly in particular, whom I earlier described as having enough enthusiasm and energy for this area of the law to power a small town. I’ve had to make a downward revision of my metaphor and say that he brings enough enthusiasm to power a small EV. But these provisions deal with what happens when there is a dispute and how that is resolved and, if it goes to the court, how the court is to resolve a dispute. It is, sadly, the case that there are trusts where the trustees do not function particularly well and they have fallings out or they have disagreements—sometimes over trust objectives, sometimes over trustee decisions, for example, on investments—and we’ve seen some very sad cases recently, usually in relation to family trusts, where the decisions or the relationships have become so toxic, so embittered, that matters end up in court.

Well, I’m pleased to say that this part of the bill—Part 7—provides the courts with very good guidance and very good rules and principles for the resolution of those disputes. So the court, if called upon to do so, can look into the actions of trustees—their acts, omissions, any decisions—and can resolve those disputes. The court has a number of powers to vary or extend trustees’ powers in relation to property. A court can relieve a trustee of personal liability for something that has happened or a decision that has been made. A trustee can apply to the court for directions and, in applying for a direction, the trustee may get the protection of the court for actions that it takes following the direction of the court. So there are a number of rights of trustees in relation to disputes to go to court to get disputes resolved. In the end, the court’s principal objective is to preserve the objects of the trust and to make sure the trustees are discharging their responsibilities fully and properly. The court has the power to remove trustees and to appoint its own trustees to provide supervision of a trust.

So all of that is laid out there in Part 7, as with the other provisions of the bill—very clearly laid out—and I think, once again, like so many parts of this bill, it will provide very good guidance and a very good lead to the many trustees who depend on good legal principle and good quality legal precedent to guide them in their decisions and to discharge their responsibilities.

Thank you, Mr Chair. On this Part 7, looking at different kinds of disputes and how they might be dealt with, I thought I’d just focus briefly on a couple of different provisions within the bill. One is the power of the trustee to refer a matter to alternative dispute resolution. It’s a pretty helpful thing that the bill does, in clarifying the terms on which, or the situations in which, a trust—various key players: trustees and beneficiaries and so forth—might actually go to the court, as is dealt with in a later clause, or perhaps more helpfully, often in many cases, to alternative dispute resolution.

Clause 138, for example, sets out the times at which that particular section would apply: that would be if there isn’t anything set out in very clear detail in the trust deed itself that requires a trustee to refer a matter to an alternative dispute resolution process. So that’s the situation that would arise: that the trustees would turn to the legislation and, indeed, to some manner of alternative dispute resolution, and that would then be able to take place if the trustee with each party to the matter agreed to do it, to refer the matter in that way, and then it goes out to clarify that a beneficiary isn’t a party to an external matter—the “external matter” phrase being a term that’s defined specifically where parties are a trustee and one or more third parties. The meaning of that is pretty clear from the legislation, so I’ll spend no further time on that one.

It did occur to me as being interesting that, in clause 140, it deals with the power of a court to order an ADR—alternative dispute resolution—process for an internal matter. Again, “internal matter” is defined. That is where a party would include a trustee and one or more beneficiaries or multiple trustees. In that situation, it would be possible to go to the court to get an order that an alternative dispute resolution process would then be followed. So sort of two steps forward and one step back, so to speak, but it’s important to have mechanisms that do provide clarity in situations that otherwise aren’t provided for, and the legislation is at pains to do that and, I think, commendably so. The commendation is due to those who have drafted it, those who’ve examined it, and those who across the House are now supporting it.

Lest this be my last contribution on the bill as a whole, I’ll just quickly note that, at a prior reading of the bill, with your indulgence, Mr Mark Patterson was speaking very eloquently on the bill and actually referred to a historical situation where a particular All Black scored a winning try in some test match, I think it was—

💬 Mark Patterson: Peter Jones.

—Peter Jones; there we go—and the interesting thing is that I was actually contacted by a relative of that man who now has a very senior legal position in-house, I think, and she’d been watching the parliamentary debate and had heard her relative’s name mentioned in it and so she was interested, I think, to hear that brought up. In any case, I will seek no further time of the committee and look forward to the continued discussion from the Minister and, again, from anyone who might care to join in, and I suspect Dr Duncan Webb might be one.

The question was put that the amendments set out on Supplementary Order Paper 255 in the name of the Hon Andrew Little to Part 7 be agreed to.

Amendments agreed to.

Part 7 as amended agreed to.

Part 8 Miscellaneous provisions