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General

Time moves on

The decision in Enright v Enright has been successfully appealed and cross appealed (in part).  The fundamental conclusions reached in the High Court have been upheld, but with some significant finessing. 

  • the Limitation Act defence has been overturned on the basis of a reasonable assessment of when a person in the applicant’s situation, with comparable education and resources, “would have learned the essential facts needed to understand that a cause of action existed.”  See [75]
  • the amount that the trustees were required to account to the beneficiaries for dividend income was reduced to reflect the relevant tax component.  As noted at [89]:

“ … the dividend was retained in the Trust, it became trustee income and the trustees were entitled to, and did, pay the tax on the income using the imputation credits.  Lady Chambers QC submitted that awarding the beneficiaries the gross amount of the dividend without recognising the tax liability satisfied by the Trust through the use of the imputation credits would be a windfall for the respondents and result in a greater recovery than they would have achieved had there been no breach of duty.  This argument is based on the premise that, had the trustees distributed the income, the beneficiaries themselves would have had to pay the tax and would have used the imputation credits to do so.  So, the beneficiaries could never had had the benefit of the gross amount.”

  • With respect to the cause of action relating to breach of trust and tracing the Court of Appeal found that the appropriate remedy was a declaration that the beneficiaries were able to assert a proportionate proprietary interest with respect to the funds that were traced into Two Mile Station.

References:

  • Enright v Enright [2020] NZCA 529
  • Enright v Enright [2019] NZHC 1124

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