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Trusts Act 2019

Court powers and dispute resolution - Alternative dispute resolution

147: Trustee’s liability in relation to ADR settlement or arbitration agreement and any arbitral award limited

You could also call this:

"When a trustee is taken to court, they are only in trouble if they broke the rules."

Illustration for Trusts Act 2019

If you are a beneficiary and you take a trustee to court about an agreement to resolve a dispute, this section applies to your case. You can only win the case if the trustee did not do what they were supposed to do under section 25 or the trust's rules. The trustee must have failed to comply with these rules for you to win.

If the trustee did not follow the trust's rules or section 25, they might be liable. You can check what the trustee's mandatory duties are in section 25. The trustee's duties are also specified in the terms of the trust.

The trustee is not liable just because the agreement to resolve the dispute was not consistent with the trust's rules. This means you cannot win the case just because the agreement was not what the trust said it should be. The trustee must have done something wrong for you to win the case.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM7383090.

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146: Trustee may give undertakings for purposes of ADR settlement or arbitration agreement and any arbitral award, or

"Trustees can promise to do something in the future if it's for a dispute settlement or arbitration."

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148: Application of Arbitration Act 1996, or

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Part 7Court powers and dispute resolution
Alternative dispute resolution

147Trustee’s liability in relation to ADR settlement or arbitration agreement and any arbitral award limited

  1. This section applies to a proceeding brought by or on behalf of a beneficiary and arising from or relating to an ADR settlement or arbitration agreement and any arbitral award under that agreement.

  2. An ADR settlement or arbitration agreement and any arbitral award under that agreement is valid and a trustee is not liable in the proceeding unless, in relation to the settlement, agreement, or award, the trustee failed to comply with—

  3. the trustee’s mandatory duty under section 25; or
    1. any duty specified in the terms of the trust for the purposes of establishing liability under this section.

      1. Despite subsection (2)(a), a trustee is not liable in the proceeding by reason only that the settlement, agreement, or award was not consistent with the terms of the trust.