When the words get in the way

Sometimes it can be convenient to lose sight of the obligations of a trustee due to the manner in which the trustee relationship is referred to or recorded. See Kirkpatrick v Burns[1] where the Court, having reviewed the obligations of bare trustees, said at [62] “Although consideration of whether the trustees are “bare trustees” may be helpful in some contexts, there is a risk of becoming overly concerned with nomenclature to the point where the nature of the duties and discretions of the trustees may be obscured. Where the expression “bare trustee” is used in statute, the courts are of course obliged to give some meaning to it. But in the absence of a statutory reference of this kind, the real task is to ascertain the nature and extent of the trustees’ obligations and discretions by reference to the terms of the instrument establishing the trust, assessed in the context of all the relevant surrounding.” This was referred to in the High Court decision in Lieven v Grieve where various claims were made regarding alleged breaches of trust including a failure to account. As noted by Gwyn J at [61] “I am satisfied that there is a duty on the defendant, as bare trustee in relation to the property, to account. As I have set out above, I am not satisfied on the evidence before me that there has been a breach of that duty. A further inquiry is necessary if the Court is to reach a conclusion on that claim and on the defendant’s counterclaim.”

Kinnon v Hong is another matter before the courts were the words have perhaps gotten in the path of resolution. As noted by Jagose J at [2] to [4]:

The history of the matter and the steps taken that lead to the proceedings are set out at [5] to [17]. These passages while lengthy go a long way to establish why the assistance of the courts was required, and what steps could have been taken to avoid this:

For a detailed examination of contemporary trustee liability see Trust Series 2024 – Trustee Liability.

References:

• Kirkpatrick v Burns HC Christchurch CIV-2005-409-1349, 22 December 2005  
• Lieven v Grieve [2023] NZHC 1034
• Kinnon v Hong [2023] NZHC 1052