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constructive trusts

Express trust on account of pocket money

A trust can exist independently of any deed or express arrangement.  This was demonstrated in a recent case where a father was required to account to his two daughters for gifts and money they earned in a school holiday job.

The case was widely reported as kids sue father for pocket money has a catchy ring to it (more so than “father in breach of express trust”) and the matter has has wide spread attention as a result. 

The case is a useful example of the application of good old trust law 101 – what is required to create a trust.  Simply:

  • intention
  • subject matter
  • someone to benefit

The court found that when the children’s father appropriated the funds he did so as a trustee for his children (that is he knew that the money (the subject) belonged to his children (the objects of the trust) and that he would have to account for it to them or hold it for their benefit (intention).  In failing to do so the children’s father was liable in breach of trust for the misapplied funds (approximately $20,000) plus costs.

While this may seem a storm in a teacup, the case demonstrates the powers of trusts to provide remedies in everyday situations, somewhat removed from courts and academic tomes.

References:

Wayne Basher v Ellisha & Amanda Basher (through litigation guardian) [2013] NZHC 1334

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