Contents

Summary of recommendations

Chapter 11 – Reviewing the actions of trustees

R32 The new Trusts Act should include a review provision to replace section 68 of the Trustee Act 1956 with the following features:
(1) The court should be able to review the act, omission or decision (including a proposed act, omission or decision) of a trustee on the grounds that the act, omission or decision was not reasonably open to the trustee in the circumstances.
(2) The procedure for review should be a two stage process:
(a) an applicant for review should be required to put forward evidence that raises a genuine and substantial dispute as to whether the act, omission or decision in question was reasonably open to the trustee in the circumstances (first stage); and  
(b) if the court is satisfied that the applicant has established a genuine and substantial dispute, the court must allow the trustee the opportunity to appear before the court and put forward evidence establishing that the act, omission or decision was reasonably open to the trustee in the circumstances (second stage).
(3) Where the court finds, on a balance of probabilities, that the trustee’s act, omission or decision was not reasonably open to the trustee in the circumstances, the court may set aside the act or decision, restrain the trustee from acting or deciding the case, or in the case of an omission direct the trustee to act.
(4) The court must not make any order under the provision that affects:
(a) a distribution of the trust property that has been made not in breach of trust and before the trustee had notice of the application; or  
(b) any right or title acquired by a person in good faith and for value.
(5) A trustee’s act, omission or decision under a power either in the new Act or the terms of the trust would be subject to review under the new provision.
(6) An application for review may only be made by:
(a) a beneficiary; or  
(b) any personal representative of a beneficiary who lacks capacity (such as a parent or guardian of a minor beneficiary, or a property manager or holder of an enduring power of attorney for an incapacitated beneficiary).