Contents

Summary

Part 4 Court powers and jurisdiction

Revocation and variation of trusts

38The law has long recognised that there are circumstances where, notwithstanding the general rule, trusts should be able to be varied, brought to an end or even resettled on to new trusts.

39The reforms proposed in chapter 10 aim to bring greater clarity and certainty to the existing law in this area, and give the courts some further flexibility when it is called upon to approve a variation. In particular, we recommend that the new Trusts Act include:

40Clauses 52 to 57 of the draft provisions would give effect to our recommendations here (see Appendix A).

Reviewing the actions of trusteesTop

41In chapter 11, we recommend retaining the statutory review procedure under section 68 of the Trustee Act for reviewing the exercise of trustees’ powers in the new Trusts Act. We recommend extending the courts’ power of review of actions and decisions made under the trust instrument, as well as those made under the Act.

42The proposed reform broadens the ability to have trustees’ decisions reviewed, although this is subject to a threshold of evidence that is needed before an application is considered by the courts. To strike a balance between the interests of trustees and beneficiaries, we recommend a two stage process under which the applicant beneficiary is first required to put some evidence before the court that raises a genuine and substantial dispute as to whether the trustees have acted properly in the exercise of their powers (first stage). If the court is satisfied that the applicant has raised a genuine and substantial dispute, the trustee should be required to appear before the court and put forward evidence that their action or decision was a proper one in the circumstances (second stage). By the term substantial we mean that the matter genuinely in dispute is not trivial.

43Clauses 50 to 51 of the draft provisions illustrate our recommendations for an expanded two stage review process (see Appendix A).

Other powers of the court Top

44A wide variety of unrelated powers are conferred on the court by different sections of the Trustee Act. Chapter 12 deals with the issues raised by:

45In broad terms, we recommend that each of these provisions be modernised and retained. Where we have recommended reform, it is generally to improve clarity and to modernise. There are no significant policy changes in these areas.

Jurisdiction of the courtsTop

46Chapter 13 of the Report considers the respective jurisdictions of the High Court and District Court to determine proceedings under the proposed new Trusts Act, and the jurisdiction of the Family Court to make orders and give directions under the new Act.

47We consider that it makes little sense for the District Court to have, as it does under section 34 of the District Courts Act 1947, the same general equitable jurisdiction as the High Court but not to have jurisdiction to exercise powers under a new Trusts Act. Consequently, we consider that the District Court should have all the tools that are necessary to effectively exercise its equitable jurisdiction in respect of trusts and thus should have concurrent jurisdiction with the High Court for matters under a new Trusts Act. This is consistent with the District Court now being a court of general civil jurisdiction.

48We recommend that the District Court should have concurrent jurisdiction with the High Court to determine any proceeding under the new Trusts Act where the amount claimed or the value of the property at issue is within its jurisdiction level. Although currently $200,000, that level will soon rise to $350,000 as a result of the Government’s proposed new courts legislation. The District Court should also have concurrent jurisdiction to determine proceedings where there are no claims for money or property.

49We also propose that the Family Court should have jurisdiction to exercise powers and make orders under new trusts legislation to provide a remedy where a matter is already within its jurisdiction.

Resolving disputes outside of the courtsTop

50Chapter 14 recommends that the new Trusts Act include provisions relating to the use of alternative dispute resolution (ADR) in trust disputes. Primarily these provisions would clarify that ADR can be used and would facilitate the use of ADR by alleviating potential procedural difficulties. This recommendation accords with the aim to modernise trusts legislation and make it fit for use.

The Public TrustTop

51In several places in the Report we recommend giving the Public Trust new roles. Chapter 15 discusses our general approach to the Public Trust. It recommends that the new Trusts Act makes it clear that the Public Trust should not act in situations where there is an element of dispute or contention, or where there is significant complexity. It also recommends that the Public Trust be accountable to the Government for the exercise of its roles under the new Act and that the Public Trust should be able to charge a reasonable fee for carrying out its roles. The roles recommended for the Public Trust are those where it would be in the position of standing in the shoes of a trustee and those which involve a formal certification and validation process, both of which are akin to its current roles under other statutes. The recommendations in this Report would see the Public Trust:

52In addition, under the modernised form of section 83B of the Trustee Act, which we recommend, the Public Trust would continue to have the role of agreeing to the appointment of an auditor after an application for an audit of trust accounts by a trustee or beneficiary.

53We consider it necessary for there to be a neutral fiduciary power holder to fill the proposed roles, if the new Act is to accomplish the aims of providing greater efficiency, reduced costs and more robust processes for those involved with trusts. Expanding the roles of the Public Trust will reduce the dependence on the courts for administrative processes without having to establish a new standalone body, the costs of which are likely to be prohibitive. The Public Trust presents an attractive option because it is subject to a public accountability process, and has expertise in managing and overseeing trust matters.