Morris presents at Legalwise conference on trust law

On 12 May 2022, Sally Morris and Bethan Read presented a Legalwise seminar “Review of recent trust law cases and their implications”. Sally and Bethan’s seminar discussed five recent Supreme Court and Court of Appeal cases that have resulted in landmark decisions for New Zealand trusts.

Sally spoke about the Supreme Court case Preston v Preston [2021] NZSC 154. This decision provides important guidance on the application of s 182 of the Family Proceedings Act 1980 to trusts settled before or during a marriage, known as nuptial settlements, where the spouses later separate. The Supreme Court confirmed the purpose of s 182 is to remedy the consequences of the failure of the premise – a continuing marriage – on which the nuptial settlement is made. Importantly, the Court did not consider the circumstances of the case, being a short marriage with no children of the marriage, had any bearing on whether the court should exercise its discretion.

Sally also analysed the Court of Appeal decision McCallum v McCallum [2021] NZCA 237, which affirmed that Beddoe orders remain important in New Zealand. A Beddoe order is a direction given by a court to trustees which approves them bringing or defending litigation at the expense of a trust.

Bethan discussed the Supreme Court decision Lambie v Addleman [2021] 1 NZLR 207, which relates to a beneficiary’s request for trust information, including copies of legal advice obtained by the trustees at the expense of the trust fund. The Court confirmed that a trustee could not rely on legal professional privilege as a way to refuse disclosure unless the legal advice was provided to the trustee in the context of hostile litigation with the beneficiary.

Bethan also spoke about the recent Court of Appeal decisions Kain v Public Trust [2021] NZCA 685 and Brkic v White [2021] NZCA 670. In Kain v Public Trust the Court underlined the importance of memoranda of wishes provided by trustee. The Court observed that trustees are entitled to take these documents into account but only to the extent that they are not inconsistent with the terms and purposes of the trust. In respect of later memoranda of wishes that are inconsistent with earlier wishes, the Court confirmed that the trustees can consider the most recent wishes as overriding earlier wishes if the trustee assesses that they should have this effect. In Brkic v White the Court rejected an attempt to use the decision of Clayton v Clayton [2016] NZSC 29, a relationship property decision that allowed claims against a trust due to the level of control maintained by the settlor, as a way to attack a trust in a commercial context.

If you would like advice on how these cases may impact your situation, please contact Morris.

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