3.10While we have tried to take account of these more theoretical debates where they impact on the practical reforms we suggest are implemented, in some senses it is unnecessary to completely resolve those debates in our legislation. Indeed, some of those theoretical debates are probably not capable of final resolution. For instance, we suspect that the current debate over the degree to which a trust confers a property interest on beneficiaries will not be conclusively resolved either in favour of the property interest or the partially competing obligations theory. Rather, the tension between those two conceptions of the trust will continue to be worked through in particular circumstances where the difference may have real world consequences. We have not endorsed one particular theory of what a trust is, but we have tried to articulate what we believe is the fair consensus. In the rare circumstances where there are debates at the edges of that consensus, we have left the resolution of those debates to the courts. For example, our proposed statement of the characteristics of a trust does not commit New Zealand to a particular theory of whether the trust confers a property interest or an interest arising from obligations.
3.12We are confident that recognition by the courts of an arrangement as a trust, despite not fitting within the new Act’s characteristics of a trust, will occur only in very rare cases. Rather than preventing the courts from recognising trusts outside this Act, our definition of an express trust will act as a “gatekeeper” for access to the provisions of the Trusts Act. The advantages of falling within the scope of the Trusts Act will be considerable. Those “trusts” that fall outside the Trusts Act will have to negotiate the many difficulties that the Trusts Act resolves, without the benefit of that Act, and the various Trustee Acts that have preceded it.
3.13The current Trustee Act applies to express trusts, “implied trusts”, and constructive trusts. While we intend the new Trusts Act to apply to express trusts, we recommend that it not apply to constructive or resulting trusts. During the course of our considerations, we have debated whether the statute should expressly cover resulting and constructive trusts, which arise by operation of law. On the one hand making such trusts subject to the statute would have the advantage of comprehensiveness. However, while some of our proposals might be clearly applicable or useful in relation to resulting or constructive trustees, it was also clear to us that some aspects of what we are proposing might apply only with difficulty. Indeed, some of the duties that we have formulated with express trusts in mind might have to be altered or excluded in relation to some resulting or constructive trustees. The reality will be that in many resulting or constructive trust cases there is little desire for trustees to hold property for any particular length of time, and that most of the provisions of the Act will simply not be relevant.
3.14While it would have been possible to create a schedule to the statute which expressly modified or made inapplicable particular provisions that did not apply to constructive or resulting trusts, it seemed to us that the sounder approach was to leave them out of the coverage of the statute. Our expectation is that judges, when recognising resulting trusts or imposing constructive trusts, will make use of the relevant provisions in appropriate cases.