Contents

Chapter 12
Other powers of the court

Sections 77 to 79 – Payments to the Crown

RECOMMENDATION

R37 The new Trusts Act should re-enact, with the following changes, the provisions in sections 77 to 79 of the Trustee Act 1956 under which trustees may pay unclaimed monies over to the Crown where they are unable to find beneficiaries and distribute the monies:
(1) The requirement for trustees to file an affidavit should be abolished and trustees should be required to give the Secretary to the Treasury information about the trust and beneficiaries (such as a copy of the trust deed and a statement of accounts).
(2) The Secretary to the Treasury should have a power to refuse to accept money where he or she is not given the required information about the trust and its beneficiaries.
(3) The obligation on the Secretary to the Treasury to publish a statement of all money held annually in the Gazette should be replaced by a more general requirement that he or she make that information publicly available in a manner that is likely to bring it to the attention of potential claimants. The obligation could in practice be fulfilled by putting the information into an online directory of unclaimed funds on a website.
(4) There should be no requirement on the Crown to pay any interest to claimants on any of the funds held under the provisions.
(5) The Crown should have a power to deduct any reasonable costs and expenses before making payment to any claimant.

12.25Where beneficiaries cannot be located, trustees may be relieved of their responsibilities as trustees by paying trust money or securities over to the Crown. Under section 77 trustees (or a majority of them) may:

(a) file an affidavit in the nearest High Court registry giving particulars of the trust and beneficiaries; and
(b) serve a copy of the affidavit on the Secretary to the Treasury; and
(c) pay the money or transfer the securities to the Crown.

12.26Where the majority of trustees wish to make use of the provision but other trustees do not agree, the court can make an order under the section requiring payment or transfer to the Crown. A receipt from the Secretary to the Treasury discharges the trustees and the money and securities are then administered by the Treasury. Where money has been paid to the Crown under section 77, an ex parte application for recovery can later be made under section 79 by any person claiming an interest in money or securities held by the Crown. The court may make such orders as it thinks fit.

12.27The Treasury holds monies paid under section 77 in a trust account for six years. The Treasury must publish a statement of all money and securities held by the Crown under section 78 in the Gazette at the end of each financial year.278 The Treasury’s practice is to list the name of individual beneficiaries, where these are known, as well as the names of the funds and the amount being held. Where someone is able to establish a claim, the Treasury may pay the money held to that person. The reasonable costs and expenses of the Crown may be deducted before payment is made.

12.28Money that is not claimed and paid out during the six years that it is held in a trust account by the Treasury is ultimately transferred to the Crown bank account as unclaimed money.

12.29It is recognised that some final backstop procedure of this kind is necessary. Trustees need to have access to a mechanism under which they can lawfully pay unclaimed monies over to the Crown when they are unable to find beneficiaries and distribute it.

12.30All submitters agreed that these long provisions (spanning over four pages of dense text) should be simplified and all unnecessary procedural requirements removed. Submitters considered that the requirement to file an affidavit unnecessarily added to the cost of using the provisions. They considered that trustees should only need to give the Treasury copies of statements of account and of the relevant trust documents (such as deeds and wills). A requirement to provide information about the trust and its beneficiaries would be sufficient.

12.31Submitters also considered that the requirement that the Treasury advertise in the Gazette was no longer appropriate. Few people ever see these advertisements so it would make more sense for the Treasury to place the material on a website so that information about missing beneficiaries would be available to anyone who wished to search for it. The New Zealand Law Society submission said that it was unclear under the current provision whether the Treasury could refuse to accept money where the required information was not given. We agree that this point should be clarified. We also recommend that sections 77 to 79 be simplified and all unnecessary procedural requirements and detail, including the requirement that trustees file an affidavit, be removed. We recommend a simpler, less expensive process for dealing with unclaimed money. Given the potential administrative costs, we consider that the Crown should retain the power to deduct any reasonable costs and expenses before making payment to any claimant.

12.32At present a significant amount of money is never claimed from the Treasury and ultimately is absorbed into the Crown Account. This suggests that notification in the Gazette is insufficient to bring the existence of funds to the notice of unaware beneficiaries. We recommend instead publication of a directory of unclaimed funds on a website.

12.33 Finally, as discussed in the Preferred Approach Paper, we consider that it would be sensible, at some future date, for the Government to consider amalgamating all the different provisions and arrangements the Crown has for dealing with unclaimed money into one regime.279 At present the Unclaimed Money Act 1971 covers unclaimed money from deposits in banks, financial institutions, some money in solicitors’ trust accounts, unclaimed proceeds of life insurance policies, and unpaid wages and employee benefits. Money is paid to the Commissioner of Inland Revenue under that Act. However, under some Acts other unclaimed money and assets are to be paid to the Public Trust, and under others to the Māori Trustee. In addition, unclaimed awards from court cases and reparations to victims of crime are held by the Ministry of Justice, and unclaimed prisoners’ allowances are held by the Department of Corrections. The number of different arrangements involving different arms of the Crown suggests that a review of this whole area may be desirable.
278Trustee Act 1956, s 78.
279Preferred Approach Paper, above n 273, at [11.57].