Court of Appeal ruled new Trust Act powers can force disaffected family trust beneficiaries into mediation and arbitration to settle internal trust disputes, even if they prefer a hearing in open court.
More than a decade on from the 2012 death of Kenneth Gatfield, daughter Gillian together with her niece challenge sale of an estate asset: a family bach at Lake Rotoma in the Rotorua Lakes District.
The court was told his estate was left equally to his five daughters. Named as executor is Anne Hinton; one of his daughters and a now-retired High Court judge.
Disaffected beneficiaries object to sale of the bach.
In 2022, Ms Hinton as executor sold the bach to two of the other sisters. They paid $331,000.
No longer having a right of access, the disappointed beneficiaries claim they had an agreement with Ms Hinton as far back as 2013 that part-ownership would be transferred to them.
They sued.
In 2024, the High Court ordered Trusts Act mediation and arbitration, over top of their objections. They prefer a court hearing, primarily because of concerns that any mediator or arbitrator will not be neutral, swayed by having a High Court judge as one of the parties.
Mediation was not successful.
Disappointed beneficiaries then challenged being forced into the next step: compulsory arbitration.
There are very limited grounds to challenge an arbitrator’s ruling. An arbitration award can be enforced as if it were a court order.
Ruling for the first time on how new Trusts Act compulsory mediation and arbitration rules might operate, the Court of Appeal said arbitration can be ordered without agreement from all affected beneficiaries.
Arbitration is appropriate in this case, the court said.
Gatfield v. Hinton – Court of Appeal (12.02.26)
26.076