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Acknowledgement of Debt, Cases, Contracting with trustees, Gifting, Illusory trust, Settlors, Spence v Lynch, Trustee liability, Trustees, Trusts

When the going gets tough – litigate and litigate and litigate …

Some cases seem to have eternal existence.  The original matter of Spence v Lynch is one of these.  The are now at least 9 recorded decisions by my count named either  White v Spence or Spence v Lynch.  The first case was written up in this blog as Dominant trustee architect of loss.  The name was apt then, and perhaps as much so now.  I have updated the original blog to outline the saga that has unfolded as the trustees attempt to provide late evidence that will shine new light on the amount of undocumented advances made by Mr Spence to the trust in question; and to have bankruptcy notices set aside (unsuccessful thus far).

Dominant trustee architect of loss usefully highlights the risks that can arise to all parties – trustees and advisers alike where trusts are not well managed.  The difficulty, while the message from this case (and so many others) is clear, is how to put this into practice.  While trusts are a common place means of asset ownership, many trust clients are not prepared to invest the funds (or time) required to properly manage the trust and to ensure the trustees are aware of the risks of what consequences can arise from certain administrative failures.

While the option of a national “Love your Trust Day” may prove a hard sell; advisors, readers of blogs like this, settlors, trustees and beneficiaries everywhere need to be more cognisant to the risk reward analysis of trust management.  Whether this will be achieved by the stick or the reward is not clear – what is clear, given the number of trusts is that times are changing and trust management standards need to improve.  This will likely remain an enduring theme for some time as so many trust “failures” can be linked back to failures to maintain gifting programs or to correctly document loan advances.

And ultimately in bankruptcy. See White v Lynch [2015] NZHC 3202

Editor’s note

9 decisions in the “core case” – but what about the other targets?  White v BNZ  is a related case that seeks unsuccessfully for the court to rescind a judgment from an earlier case that struck out Ms White and Ms Freeman’s claims against BNZ for breach of contract and unconscionable conduct.

While reading cases does not always fully convey the facts, sometimes it is necessary to step back, take in the whole picture and realistically assess prospects of success.

Further litigation

The Supreme Court has refused the  application to appeal the Court of Appeal decision not to appeal the High Court decision.

References

  • White v BNZ [2014] NZHC 1271
  • White v BNZ [2015] NZHC 1058
  • White v Lynch [2015] NZHC 3202
  • White v Lynch [2016] NZCA 513
  • White v Lynch [2017] NZSC 8

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