Gatfield v Hinton [2026] NZCA 17

The Court of Appeal has given some of the first guidance on the application of alternative dispute procedures under the Trusts Act 2019. This case concerned a dispute between family members over the way a share of estate property had been dealt with by one beneficiary who was also the sole executor of the estate.

The property was a lakeside bach which was left equally to the children of the deceased. One of them was the sole executor of the estate. In 2022 that person sold her rights in the bach to two of her sisters. That sale became the subject of proceedings in the High Court when the remaining two beneficiaries objected to the sale, claiming that the executor had promised to sell her interest to them and that they had met property outoings on the basis that they were owners of her share.

The executor made an interim application for orders under section 145 of the Trusts Act that the disputes be referred to mediation and, if that was unsuccessful, to arbitration. The application was granted and mediation occurred before the appeal was heard, but was unsuccessful. The claimants appealed the decision of the High Court to order mediation and the Court was asked to consider whether the Associate Judge who made the order had jurisdiction to do so.

The issue was whether the dispute between the executor and other beneficiaries of the estate was an "internal matter" as defined in section 145. The term is defined in two respects. The internal element requires that the parties to the matter are beneficiaries and/or trustees. The matter itself must be a dispute in relation to the trust affecting those parties, that may give rise to a legal proceeding but does not include actual legal proceedings or a dispute over trust validity. 

The appellants argued that there was no "internal matter" because legal proceedings were on foot and also that section 145 does not authorise compulsory arbitration such as the Associate Judge had ordered, assuming mediation failed. 

The Court of Appeal dealt with a preliminary procedural point, holding that there was no requirement that separate proceedings be brought under Part 18 of the High Court Rules to obtain the orders that were sought. It was not procedurally inappropriate for the application to be made on an interlocutory basis in the proceedings brought by the benefciaries. The Court set out several principles to be applied when considering whether the matter was internal and so subject to section 145:

(a)    The dispute was "classically" an internal dispute in that it involved an argument that a trustee had preferred some beneficiaries over others. That seems to have been the case even though the trustee was acting in her capacity as a beneficiary in disposing of her share in the estate asset.

(b)   That did not change simply because the remedy being sought was that the asset be returned - that was a remedy being sought in the internal dispute.

(c)   The plain wording of section 145 allowed arbitration to be required and this was neither unique nor unusual.

(d)   There was no strength in the appellants' argument that arbitration unjustifiably limited their access to the Court.

(e)   On the contrary a "highly emotive" family dispute warranted confidential processes which would be of real advantage in resolving the matter.

This decision is a pragmatic support for the use of ADR in internal trust disputes. Such disputes are often highly charged when famly members cannot agree. They are sometimes prosecuted by family members quite willing to waste trust resources to pursue matters of "principle" ("if I can't have it, no one will") that could be resolved with a practical, moderate and facilitative intervention, as oppsed to an adversarial contest. 

G D Clews 2026