There is no public registry providing details of family trusts, forcing Auckland insolvency specialists Larissa Logan and Rhys Cain to get High Court orders requiring shareholders of insolvent Auckland recruitment agency BF7 Trading Ltd to identify trustee names for their family trust.
Without trustee names, BF7 liquidators cannot start legal proceedings to recover a $315,000 family trust debt allegedly owed the company.
BF7 was propelled into liquidation by Inland Revenue in 2021, claiming unpaid tax debts of some $480,000. The recruitment company has gained unwanted media publicity over migrant worker employment issues. Spencer Bishop is currently listed as BF7 director; Spencer together with Raymond Bishop as shareholders.
The High Court was told company financial statements list the Bishop Family Trust as a BF7 creditor owing some $315,000. A liquidators’ letter requesting repayment was ignored.
At a liquidators’ formal interview, Spencer Bishop declined to name trustees of his family trust; needing time to check the documents, he said. Follow-up requests for the information were ignored. BF7’s bank did not know the trustees’ names.
Liquidators were in a bind.
To get into court and sue for recovery of the claimed loan, the person or persons being sued need to be identified and served with court papers. Family trust records are private documents. There is no public record listing trustees of family trusts.
Both Spencer and Raymond Bishop were sued to force disclosure. They said it was a breach of privacy to force disclosure of private information about a family trust.
Associate judge Sussock said liquidators are under a Companies Act duty to realise and distribute company assets in a reasonable and efficient way. The Bishops were ordered to disclose written documents in their control that identified terms of the $315,000 family trust loan together with the trustee’s names and contact details.
To forestall responses by the Bishops that they have no relevant documents ‘under their control,’ Judge Sussock said in the circumstances of a family-owned company dealing with a family trust it did not matter in what capacity the Bishops had access to relevant documents, disclosure was required.
If Spencer and Raymond are beneficiaries, they are in a position to know names of the trustees; the Trusts Act requires disclosure to beneficiaries of ‘basic trust information’ which includes details of who are the trustees.
The disclosures required do not extend to disclosure of any assets held by the Bishop Family Trust, Judge Sussock emphasised.
Logan v. Bishop – High Court (16.02.24)
24.059