Clayton v Clayton – the last chapter?

The Supreme Court sat recently over three days to hear appeals and cross appeals from a decision of the Court of Appeal, handed down on 26 February 2015, in what is likely to be the seminal case on the interaction between trust and relationship property law in New Zealand.

Successive Governments have been slow to address what has become a procedural and jurisdictional quagmire for couples whose relationships end in circumstances where the assets of the relationship are held in family trusts and/or private companies. Anecdotally, New Zealand is said to have more family trusts per head of population than any other country in the developed world. Therein lies the problem: family trusts have a place and purpose in our fast changing society, whether for creditor protection, asset splitting or just plain old estate and tax planning. But they are not a panacea to each and every contingencies that may arise, and often times, on the breakdown of a relationship, the existence of family trusts accommodating the assets and wealth of a family relationship and under the effective control of one person only (or his/her professional advisers) becomes both a shield and a sword, not only in respect of the objective and probably quite sensible  contingencies initially contemplated, when the relationship was  a happy one, but more often than not on the breakdown too.

Protracted and expensive litigation is often the result, in an attempt to claw back a fair and just share of the nuptial property. Such was the case when the Claytons separated in 2006. Their dispute has been ongoing since and although they now await a decision of the Supreme Court on the respective appeals and cross appeals, it is anyone’s guess as to whether or not that decision will be the final chapter in their long running and bitter dispute. For those of us specialising in trust and relationship property litigation, this is cutting edge and fascinating law. Regrettably not so for the Claytons, whose lives remain on hold. But hopefully, through this case, others in same or similar positions may receive the benefit of clarity and certainty in the law that will hopefully obviate the need for their matters to suffer the same torturous fate as the Claytons.

Such is the importance of this case that I decided to take time out of my busy practice to travel to Wellington and sit through the hearing in the Supreme Court. My thoughts and impressions were published on 6 November in the 877th edition of Law Talk and reproduced now for the benefit of clients and friends of my practice.

Click here to read the article.