Unnecessary cost

An undischarged bankrupt can only be appointed as a trustee with court consent. In an Application by Peter-Richard Prescott for appointment as a trustee the Court considers an application by a trust’s “Principal Family Member” who holds the power of appointment and wishes to appoint himself as a trustee notwithstanding that he is an undischarged bankrupt.

In considering whether the Court should consent to the appointment the Court referenced section 4 of the Trusts Act 2019, which provides that:

The application was supported by the applicant’s daughters. Grounds given in support included “… his extensive involvement with the Trust and his knowledge of its affairs make him well-suited. He says he feels strongly inclined to act to preserve and protect beneficial interests that on the face of it have been misappropriated.”

The application was declined. Reasons given included:

• the appointment will not avoid unnecessary cost in terms of section 4 of the Trusts Act
• if the appointment was made it could lease to what may amount to meritless proceedings and the attendant costs “without having been constrained in his decision-making by the full disincentive of the possibility of an adverse costs award”
• the Court’s view that if the trust’s beneficiaries were persuaded as to the merit of the proposed action they “should be required to pursue it themselves.”

References

• Trusts Act 2019, ss 4, 96
• Application by Peter-Richard Prescott for appointment as a trustee [2025] NZHC 2043
• Prescott v ASB Bank Ltd [2024] NZHC 2927.