Monday, January 23, 2023
Lucas Clover Alcolea (University of Otago, Faculty of Law) recently published an article, ‘Reform, Reform: Aren’t Things Bad Enough Already?’: The Case of the Trusts Act 2019, 17 J Equ, Forthcoming. Provided below is an abstract to the article:
New Zealand has recently conducted a comprehensive reform of its trust law, both reforming certain rules and restating others in the New Zealand Trusts Act 2019. Although the Law Commission intended to replace what it had, in earlier law reform efforts, described as a “tyre in a hazardous state of deflation” it is unclear whether the provisions finally enacted by Parliament are an improvement on this position. This is because the Act contains significant innovations on the existing law which are nowhere defined or explained, such as the requirement for those interpreting the act to take into account a trust’s “terms and objectives” and trustees to take into account a trust’s “context and objectives” when carrying out their duties. Equally the provisions on information rights whilst intended to guide trustees as to when to provide information are so complex that they could provide a cloak for unscrupulous trustees to unreasonably refuse requests for information or even loot trust property. Additional issues are caused by creating a vague duty for the trustees to act honestly and in good faith and the codification of the duty of loyalty as merely a default rather than a mandatory provision. The present article aims to analyse these shortcomings and suggest means by which the courts may, in due course, patch the Act before it deflates altogether.