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appointment and removal of trustees, Removal of trustees, trust, Trusts, Vesting order

Who pays the piper?

When a trustee retires, it is necessary to transfer the trust’s assets from the trustees (including the retiring trustee) to the continuing and any new trustee.    Where a trustee is removed in contentious circumstances the trustee may be unwilling to assist in the transfer of trust property.  Sometimes with good reason – for example where appropriate indemnities are not forthcoming.  Sometimes, the reasons are complex and the rights and wrongs not easily discernible.  Kennedy v Kennedy, where two of the trustees were brothers is a case that falls into the latter camp.  In that case a vesting order was obtained, and then costs were sought by the Trust.  While an order for costs might have been presumed given the successful application for a vesting order, the court did not see the outcome as being quite so clear cut, A J Matthews noting at [7] that:

“It is not possible on an application of this kind to make definite factual findings in relation to who is right and who is wrong in relation to the need for the Trust property to be vested in the new trustees. It is clear that the reason Mr J D Kennedy did not cooperate stems from a complete breakdown in his relationship with Mr G D Kennedy. In my judgment this is one of those unfortunate cases where animosity has overborne commonsense, I suspect on both sides, with the result that costs have been incurred which should have been avoided. I am not prepared to apportion blame on the material I have, nor is it necessary to do so on this application. Mr J R Kennedy is an outgoing trustee. Ordinarily a trustee would have his own costs of retirement from office covered by the Trust. In this case the Trust has been put to more expense than it should have been by the events which unfolded.  In all probability there are rights and wrongs on both sides. I have decided that costs will lie where they fall, so there will be no order for costs against Mr Kennedy.”

A timely reminder perhaps that costs are at the discretion of the court and that all parties are wise to seek tolerable, if not amicable resolution of matters.


  • Kennedy v Kennedy [2017] NZHC 987



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