Chapter 4 - A new mechanism for trust disputes resolution

Trusts tribunal

Another option to improve trust dispute resolution is a tribunal. A tribunal could be established as an alternative to an ombudsman as a lower level decision-maker than the courts. It would have binding decision-making authority. Tribunals can be an option where there is a need for either a specialist decision-maker with expertise that a court cannot provide, or for a lower level, more informal and accessible decision-maker.

A tribunal could be given jurisdiction to make decisions on certain trust issues. It may need to have a jurisdictional limit, such as only being able to hear complaints where $200,000 or less is at issue. The likely caseload of a trusts tribunal would be small compared with some tribunals.137 However, there may be a sufficient number of cases that a tribunal would be warranted. There are existing tribunals that hear fewer than one hundred cases per year.138 Where there is not a sufficient case load for a full-time tribunal, tribunals can sit on a part-time basis.

The Law Commission’s study paper Tribunal Reform proposes a unified tribunal service that would unite a large number of tribunals, arranged into divisions, under the leadership of a Principal Tribunals Judge.139 While it is unclear whether this proposal will be progressed in the future, it is certainly evident that establishing a tribunal within an existing administrative structure could be more cost-effective than a completely independent tribunal. The Ministry of Justice’s Tribunals Unit is a possible location for a trusts tribunal.

Tribunal Reform sets out guidelines against which new tribunals can be considered in order to avoid tribunals being established indiscriminately without an eye to coherence or a principled structure.140 One factor that should be considered is whether there are compelling reasons relating to subject-matter or process which mean that trusts matters are more suitable to a tribunal than a court.

In its 1989 report on tribunals, the Legislation Advisory Committee identified three factors for assessing whether the decision-maker under any new statutory scheme should be a court, a tribunal or an arm of government. These are:141

(a)the characteristics of the function, together with the issues to be resolved and the interests affected;

(b)the qualities and responsibility of the decision-maker; and

(c)the procedure to be involved.

In trusts disputes, the function is adjudicative. However, the role also requires clarification of complex legal issues. It affects the rights and responsibilities of trustees, beneficiaries and settlors. The decision-maker is likely to need to be a judge, given the complexity and “judge-made” status of the law of equity. Because many trust disputes involve family arrangements, a formal court procedure is not necessarily the most helpful in trust disputes.

Evaluating the option of a trusts tribunal

A trusts tribunal could improve access to dispute settlement compared to the current situation. It is likely to be quicker, cheaper, more informal and less adversarial than the High Court. It would have a different role to an ombudsman. It could make binding decisions rather than recommendations, which may make it more effective at determining disputes. Educative, guidance and mediation functions would fit better with the functions of an ombudsman or commission (discussed below), although publicly available tribunal decisions would contribute to public education and guidance.

A tribunal would have the power to make legally binding decisions. At least one of the tribunal members could be a judge and this would imbue its proceedings with greater weight than a non-judicial ombudsman. The trusts tribunal would be able to build up specific expertise in the law of equity and trusts. This would address the concern that, as the courts are dealing with trust issues so seldomly, they are not building sufficient expertise in this area of law.

However, as discussed in relation to a trusts ombudsman, there is a concern that allowing a tribunal to make decisions on trusts would be delegating the court’s decision-making authority, and the determination of complex questions of equity, too far. Some powers could be retained for the courts under legislation and there would be a right of appeal.

A trusts tribunal would require some government funding. Complainants or the trusts industry could be required to contribute in the same ways as discussed above for an ombudsman. One of the benefits of a tribunal, so long as it is administratively supported within an existing structure, such as the Ministry of Justice’s Tribunals Unit, is that it can operate on a part-time basis and sit in response to its workload.

For a comparison of the caseload of a range of tribunals in New Zealand see Law Commission Tribunals in New Zealand (NZLC IP6, 2008) at 142−143.

For instance, the Student Allowance Appeal Authority, Land Valuation Tribunal, Customs Appeal Authority, Human Rights Review Tribunal and War Pensions Appeal Board (see Law Commission Tribunals in New Zealand, above n 137, at 142−143.

Law Commission Tribunal Reform (NZLC SP20, 2008).

Ibid.

Legislation Advisory Committee Report No 3: Administrative Tribunals (Government Printer, Wellington, 1989).