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Breach of parental fiduciary duties

A v D and E is a ground breaking decision of Gwyn J holding that a parent can owe fiduciary obligations that survive into adulthood and that property transferred in breach of this duty will be required to be accounted for.

The plaintiffs are the three surviving adult children of Mr Z (deceased). The three plaintiffs alleged abuse and sued the surviving trustees of a trust settled by Mr Z. As noted at [2] of the decision, “The practical effect of those dispositions (and
Mr Z’s stated intention) was to alienate the majority of Mr Z’s property so that it did not form part of his estate upon his death.” This meant that any claim available to the plaintiffs under the Family Protection Act 1955 was essentially worthless.

As noted at [3]:

The claim was novel.

The claim is summarised at [73] to [77] as follows:

The defendants’ case was set out at [79] as
The issues for the court are set out in full in [85] as follows as these populate the reasons for the decision:

After extensively canvassing the relevant authorities Gwyn J concluded at [107]:

However, the relevant consideration was whether “the relationship between Mr Z and the plaintiffs
beyond their childhood was also fiduciary in nature.” See [118]

Importantly as stated at [128]:

Also importantly, as set out at [158] and [159]:

Pulling together the relevant considerations, the court concluded that there was a fiduciary relationship between Mr Z and the plaintiffs at the time he gifted property to the Trust and that this was a deliberate step to ensure that his estate would not be available to meet the plaintiff’s needs and that this transfer was in breach of the fiduciary obligations he owed his children.

The writer is a director of Vicki Ammundsen Trust Law Limited, which acted for the plaintiffs.

References:

  • A v D and E Limited as Trustees of the Z Trust [2021] NZHC 2997
  • Louie v Lastman [2002] O.J. No. 3521
  • A v D [2019] NZHC 992
  • M (K) v M (H) [1992] 3 SCR 6

Discussion

One thought on “Breach of parental fiduciary duties

  1. This is an important case for me to read as my adult children who were abandoned by their father when they were toddlers have recently learned of his death in New Zealand and that he had formed a trust specifically to exclude them from inheriting anything from his estate, despite the Family Protection Act. Thank you for posting.

    Posted by Anita Agar | November 10, 2021, 9:04 am

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