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Relationship Property, Trustees, Trusts

Relationship property limits trustees’ choice of forum

The jurisdictional boundaries of the Family and High Courts are not always entirely clear in trust matters.  While the Family Court has exclusive jurisdiction in relationship property matters, the Property (Relationships) Act 1976 provides that proceedings can be transferred to the High Court in certain circumstances. 

Further, even if the Family Court is accepted as the appropriate jurisdiction, it may be that some matters involving trusts, must be referred to the High Court, as the Family Court’s ability, as determined by statute, to hear matters relating to equity (trusts) is not as broad as that of the High Court.  For example, the Family Court does not have the jurisdiction to make orders under s. 182 of the Family Proceedings Act (orders in respect of certain trusts following divorce): See  A K R v S P.

Whether the Family Court has the jurisdiction to determine whether a trust is a sham is less clear as decisions in this regard have gone both ways: see F v W, B v X .

With the increasing numbers of matters coming before the courts that involve trusts, jockeying as to the appropriate court is an increasingly common starting point.

To avoid wasting time and money arguing as to the appropriate forum careful consideration of the issues involved is necessary.  However, when doing so a blinkered “this is a trust matter, not a relationship property matter, as all the property is owned by trusts” approach may not be helpful.  What is necessary is to determine what the court in question is being asked to do.  Where the High Court is being asked to determine whether property in question is relationship property, rather than asking that court to determine how the property is to be divided, the High Court may well be the appropriate forum.  See Jew v Jew and Yeoman v Public Trust LtdThe decision in Yeoman also provides a useful resource to the scope and extent of the Family and High Court jurisdictions.

Given the large number of trusts in New Zealand, it can be expected that the number of cases relating to the correct court, and in some cases the correct jurisdiction (see Jurisdiction, divorce and trusts) will continue.

Meantime, in the broader trust context, the Law Commission is considering whether there should be an alternate dispute resolution option for trustees to determine certain matters outside the High Court.   See the Fifth Issues Paper in the Review of the Law of Trusts, ‘Court Jurisdiction, Trading Trusts and Other Issues’

References:

  • Property (Relationships) Act 1976, s 22
  • Family Proceedings Act 1980, s 182
  • District Courts Act 1947, s 34
  • F v W  (2009) 2 NZTR ¶19-024
  • Jew v Jew  (2003) 1 NZTR ¶13-001
  • B v X (2011) 25 NZTC ¶20-034
  • A K R v S P (2011) 3 NZTR ¶21-022
  • Yeoman v Public Trust Ltd [1911] NZHC 1869

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