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Appointor; power of appointment, Removal of trustees, Trustee Act, Trustee liability, Trustees

Mixing oil and water

Trusts and marriage break ups are a tricky thing to manage – like trying to mix oil and water more often than not.  Some trustees can put personal differences aside and get on with it, most, it appears, can’t.  Often the pragmatic (and ultimately cost effective as it breaks deadlocks) solution is the removal of the settlor spouses and the appointment of an independent trustee – preferably one that both spouse trustees have faith in.  However, what is the court to do if the trust deed requires a minimum number of trustees, say two, and the court is only minded to appoint one trustee (who is not a body corporate)?  Perhaps so that one person can just get on with the job unimpeded, and / or to keep costs down.

Helpfully, that very point is considered in Moring v Moring where the trustees (husband and wife) were removed and a single professional trustee appointed.  In appointing a single interim trustee it was noted by way of foot note at [8](a) that:

“Both of the Trust Deeds envisage a minimum of two trustees when an individual is to hold that office. I am satisfied that in appointing a new trustee under s 51 of the Trustee Act 1956, I have power to appoint a single trustee. That person is responsible to the Court as well as to the beneficiaries for the due execution of each Trust. More generally, in relation to the s 51 power, see Attorney-General v Ngati Karewa and Ngati Tahinga Trust HC Auckland M2073/99, 5 November 2001 (Randerson J) at para [118]; special leave to appeal out of time to the Court of Appeal refused: Ngati Tahinga and Ngati Karewa Trust v Attorney-General CA73/02, 27 June 2007, in which the power to make an order appointing an interim trustee during the interregnum of removal of an existing trustee and determination of a substantive dispute was confirmed: at para [16].”

Usefully the same decision also provided by way of orders a road map of sorts for the independent trustee. While this may appear to be preaching to the converted; being an independent trustee appointed when trustees cannot work together can be akin to herding cats.  Accordingly, clear starting guidance appears to be in the best interests of all parties as well as managing expectations and the yard stick by which progress might be measured.

References:

  • Moring v Moring [2015] NZHC 2034
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