Chapter 10
Reviewing the exercise of trustee discretion

Application to trustees’ powers under trust deeds

Options for reform

10.20The options considered were:
(a)a new provision to allow for trustee decisions under either the new Act or the trust deed to be reviewed, for instance, based on section 8 of the Trusts Act 1973 (Qld) which provides that an application can be made in respect of:
any act, omission, or decision of a trustee or other person in the exercise of any power conferred by the Act or by law or by the instrument (if any) creating the trust.
(b)retaining the status quo which would allow only trustee decisions under the new Act to be reviewed.


10.21We consider that a new provision should allow for the review of all powers regardless of whether they are sourced from the new Act or the trust deed. This has the advantage of introducing a consistent standard across all such actions. It also addresses any uncertainty over whether review is available where powers contained in the statute are reproduced in the trust deed. Most submitters were in favour of this approach. They argued that it is something of an anomaly to allow the court to review when trustees exercise statutory powers but not when they exercise powers set out in the trust deed. It is confusing and leads to inconsistencies in the law. The NZLS noted that in Queensland the wider scope for review has not resulted in the courts more readily interfering with trustee decisions.

10.22If the provision is extended to cover trustee decisions under trust deeds as well as under the Act, then careful consideration also needs to be given to the question of what limits should be placed on the grounds for intervention by the courts. Currently, if a power is given to trustees by the trust document the courts are reluctant to interfere, as long as the power is exercised in good faith and not ultra vires. Most of the concern over extending review under section 68 to powers under trust deeds arises due to concern that the grounds for intervention will be expanded too broadly. Greg Kelly Law said in its submission that a new review provision should apply to all powers and discretions given to trustees whether under the statute or the trust deed, however this support was contingent on limits being placed on the grounds for intervention by the courts. Taylor Grant Tesiram submitted that a power to review should not extend to the exercise of dispositive discretions, such as the power to distribute income or capital.