Chapter 3 - Jurisdiction of the District Courts

Jurisdiction under the Trustee Act

District Courts cannot exercise any powers under the Trustee Act. The Act gives exclusive jurisdiction to the High Court. Some inconvenience and difficulty is caused by this restriction. It might even be argued that the District Court’s jurisdiction in respect of trusts is rendered ineffective because it is not able to make orders under the Act.

The problem is well illustrated by the Court of Appeal decision in Morris v Templeton.88 In this case beneficiaries brought proceedings against a trustee in the District Court alleging that the trustee had breached his trust by investing funds in unauthorised securities. The District Court judge found for the applicants that the trustee had breached his trust, but then purported to exercise the discretion given to the High Court under section 73 of the Trustee Act and excuse the trustee from personal liability for losses suffered as a result of the breach. The beneficiaries appealed. Eventually the case reached the Court of Appeal, which held that “[t]he Legislature specifically reserved the power to grant relief under section 73 to the High Court”.89 District Courts can hear claims for breach of trust under their equitable jurisdiction as provided for in section 34(1) of the District Courts Act but the Trustee Act reserves jurisdiction to grant relief under section 73 to the High Court so by virtue of section 34(2) the District Court has no jurisdiction.90

Where a District Court makes an order against a trustee for breach of trust the trustee will have to then apply to the High Court for relief if the trustee wishes to invoke section 73 and avoid personal liability. This is not a satisfactory situation because two separate courts will have to consider the same salient facts and make determinations. It may also effectively force such breach of trust cases into the High Court notwithstanding that there are relatively modest sums involved purely to avoid a multiplicity of proceedings.91

In its report Some Problems in the Law of Trusts the Law Commission recommended addressing this issue by amending section 73 to include a further subsection requiring breach of trust claims to be removed to the High Court where the trustee, by his or her statement of defence, seeks relief under the section.92 This approach to the issue was adopted in the Trustee Amendment Bill 2007. When introduced the Bill included a clause to be inserted into the District Courts Act that provided for the automatic removal of the entire breach of trust proceedings from the District to the High Court in any case where section 73 of the Trustee Act was invoked.93

The Select Committee rejected this approach in its report on the bill. Instead the Committee said:

We recommend giving District Courts jurisdiction over breach of trust cases within their monetary jurisdiction, by inserting new section 34(2A) into the District Courts Act 1947 (new clause 13). This is instead of the bill’s proposal that new section 45AA (clause 13) be inserted in the District Courts Act, requiring certain proceedings in a District Court to be removed to the High Court. Under the current Trustee Act, only the High Court has jurisdiction to relieve a trustee from personal liability for breach of trust. We also recommend amending section 73 of the Trustee Act (new clause 8A) to allow District Courts to transfer proceedings to the High Court if necessary because of complexity. We recognise that it is appropriate to have most such cases heard in District Courts, and having these cases heard in the High Court might result in delays and high costs for beneficiaries.

The Select Committee only considered jurisdiction under section 73 because this was the issue addressed by the Bill before it. It did not consider the broader question of whether District Courts should have jurisdiction under other sections of the Trustee Act.

Some commentators have expressed disagreement with the Select Committee’s assertion “that it is appropriate to have most such cases heard in District Courts, and having these cases heard in the High Court might result in delays and high costs for beneficiaries”.94 Others have suggested that further consideration should be given to the issue of extending certain (if not all) Trustee Act and other statutory powers to the District Court.95

The Trustee Amendment Bill 2007 as reported back by the Committee has not progressed. The question of what if any jurisdiction District Courts should have under the Act is consequently being looked at again by the Law Commission as part of this review.

Morris v Templeton (2000) 14 PRNZ 397 (CA).

Ibid at [9].

Ibid.

Andrew S Butler (ed) Equity and Trusts in New Zealand (2nd ed, Thomson Reuters, Wellington, 2009) at 10 [Equity and Trusts].

Law Commission Some Problems in the Law of Trusts (NZLC R79, 2002) at [16].

See Trustee Amendment Bill 2007 (144-1), cl 13, as introduced. 

One example being Tony Molloy QC “New Zealand: Cuckoos in the nest in an otherwise promising trust and investment jurisdiction” (2009) 201 Offshore Online 19 at 23.

Butler Equity and Trusts, above n 91, at 10.