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Undisclosed agency decision overturned – but wait there’s more

The High Court decision in Stokes v Colebrook has been overturned on the undisclosed agency point ( for background see My Trust is My Creature).  Note that the parameters of the appeal have since been further defined.  See Stokes, Stokes and Williams as trustees of the Stokes Family Trust v Insight Legal Trustee Company Limited and Heenan as trustees of the RM Colebrook Family Trust [2013] NZHC 2113.

However, the matter is not fully settled yet and the Court of Appeal and remitted the case back to the High Court to establish whether the co-trustee provided subsequent consent to the purchase.

By way of background the Stokes are trying to argue that a trust associated with a purchaser who did not complete a contract (and the house was later sold for a much lower price) should be liable for the loss as the true or intended purchaser.

The issue to be detemined by the High Court is whether the subsequent actions of a co-trustee who was described by the court as having an “informal approach towards discharing her functions as a trustee”, can be found to have been retrospective consent so that the agreement signed by one trustee will bind both trustees.

The case raises issues about purchasing on an “or nominee” basis where the purchaser is a trustee of a trust.  Care should be exercised in this regard until the outcome of this decision is determined.  Regardless the case highlights (again) the dangers of the passive trustees or trustees that just “go along with” their co-trustees.




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