Might the Bundle of Rights theory emerge in another form?

The Bundle of Rights “doctrine” is probably dead.

A major reason for its death is that it was never set in an adequate jurisprudential framework.

Tobias Barkley has just completed a thesis for a Master of Laws degree at the University of Otago. His thesis is entitled “Discretionary Interests and Rights to Replace Trustees: Can They Be Property?” It’s a substantial work – without indices and bibliographies it runs to 138 pages.

He argues that a controlling beneficiary does not have any property rights “in” or “attaching to” trust property but is nevertheless in an advantageous position because he/she can decide upon the person who has responsibility for deciding who should receive trust property.

He says that the controlling beneficiary’s position can be “property” for the purposes of the Property (Relationships) Act 1976 and the Insolvency Act 2006, but not for the purposes of the Family Protection Act 1955 and the Law Reform (Testamentary) Promises Act.

He argues that the threshold requirements for an interest to be categorised as “property” require that the interest should be recognised by the Courts as legally significant, that it should be economically valuable, and that it should be justiciable under a specific statutory scheme.

By these standards he says that within the framework of the PRA and the Insolvency Act, discretionary interests can properly be categorised as “property” and that a power to replace trustees can also be categorised as “property”.

To complete the thesis he has a chapter on how such interests can be valued.

An underlying principle of his thesis is that the more material certainty and comfort a person has that his/her powers will enable him/her to benefit from a Trust, the more likely it is that he/she is the owner of “property”.

He cites cases from Australia (30), Canada (4), England and Wales (137), New Zealand (91), and nine other jurisdictions. His bibliography is divided into monographs and books (59), journal articles and essays in edited books (64), New Zealand Government sources (19) and other sources (35).

A wealth of citation does not, of course, ensure that his conclusions are correct but the jurisprudence to which he refers helps make his reasoning more interesting.

The thesis is bold. It requires him to confront the Court of Appeal decision in Hunt v Muollo [2003] 2 NZLR 322 – which he says cannot be supported by either trust law or property law.

This is, at last, a serious attempt to give a jurisprudential basis for contending that some rights and interests in Trusts may constitute “property” for the purposes of some statutes and, in particular, the PRA.

As a practising lawyer who may be required to argue for and against the thesis I will not give my opinion on whether I think it is likely to be approved by the Courts. I suspect that I shall soon be arguing for or against it, or commenting on cases in which the thesis is discussed, and I will be drawn more into the debate at that time.

My reluctance to comment on it now should not be seen as detracting from its merits, and I am sure that litigants who have a keen interest in contending that Trust interests are “property” will want to invoke the thesis without delay.

The aspect of the thesis that is so welcome is that at last someone has taken the time and effort to study some comparative jurisprudence on this topic, and tried to establish a plausible pathway by which interests in Trusts might legitimately be categorised as “property” for the purpose of various statutes.

For people who access material from my website, Mr Barkley has allowed me to put the thesis there in conjunction with this article, and it can be accessed on the page “Trusts”. It can also be accessed at:

http://otago.ourarchive.ac.nz/handle/10523/2371.

I strongly recommend the thesis it to all readers who have an interest in this most important aspect of Trust law.