Retired trustee liable for costs of proceedings

Retirement and appointment of trustees is a routine occurance over the life of the trust.  On the appointment or retirement the trustee the trust property must be conveyed to the continuing and / or new trustees.  However, in a staggeringly high number of instances this need to convey the trust property is overlooked and does not occur.

The subsequent costs and difficulties in addressing the matter can be compounded where a trustee has died or later decides not to comply with the request.

A trustee’s refusal to sign a property transfer following his retirement as trustee was considered recently in a case where the trustee did not sign the transfer presented to him (sometime after his retirement) until after proceedings had been filed.  The proceedings having obtained their object of having the trustee sign the transfer, that could have been the end of the matter.  However, as the trust’s costs were in excess of $11,000 by that point, an application was made for costs.  The former trustee defended his position on the basis that he should have been presented with the transfer as soon as he retired.  Had this occurred, his later run in with a beneficiary would not have resulted in his subsequent refusal to sign the transfer.  While the manner in which matters proceeded, was considered by the court to have been less straight-forward than might have been warranted, the court was satisfied that there was no basis for the former trustee’s refusal to sign.  Regardless of any contretemps with a single beneficiary – the interests of all of the beneficiairies should have been taken into account.

The cost of this capriciousness was a costs award against the trustee personally (he was denied indemnification from the trust) of in excess of $8,000. 

References:

• Stephens v Miers [2012] NZHC 2883
• Stephens v Miers [2012] NZHC 3154