Supreme Court denies attempt to assail mediation, arbitration orders in family trust matter

In December 2023, the applicants commenced proceedings against the respondent. According to the applicants, the respondent swore to transfer her interest in the share to them as early as 2013. The applicants alleged that they paid the outgoings for the bach for years as if they owned it. 

In March 2024, the respondent applied for referral to ADR. Specifically, she sought to refer the proceedings to mediation. If mediation was unsuccessful, she wanted to refer the proceedings to arbitration. 

In June 2024, an associate judge of the High Court of New Zealand granted the respondent’s requested orders under s 145. 

In February 2026, the Court of Appeal upheld those orders. The appeal court found that:  

• The orders issued were within an associate judge’s jurisdiction 
• The associate judge could refer these “internal matters,” which the Trusts Act did not exclude, to arbitration under s 145 
• Section 145 authorised compulsory arbitration even without the parties’ agreement 
• The orders issued were appropriate here 

The appeal court noted that: 

• The court would have limited power under s 145 if the trust’s terms indicated a contrary intention, including an intention to exclude the relevant ADR processes 
• The court could consider the absence of an agreement when deciding whether to make an order under s 145 
• Clause 5 of schedule 2 of the Arbitration Act 1996 provided an appeal right to the High Court from an arbitral decision on legal questions 

The applicants applied for leave to appeal and for a stay of the lower courts’ judgments until such an appeal. In their proposed appeal, the applicants argued that: 

• Section 145 did not give the power to make coercive arbitration orders in a trust proceeding 
• Exercising the s 145 power required an arbitration agreement if interpreted with various constitutional rights, common law principles, the Trusts Act, and the Arbitration Act 
• The legislative history did not support the lower courts’ interpretation 
• The insufficient reasons provided for exercising the power, if such a power existed, misapplied the respondent’s judicial status 

Leave denied

In declining leave, the Supreme Court of New Zealand acknowledged that the scope and application of s 145 might raise questions of general or public importance of the Trusts Act. 

However, the Supreme Court saw no miscarriage of justice in the civil context and no sufficient prospects of success in this case. 

The Supreme Court noted that the Court of Appeal of New Zealand analyzed the statutory scheme, including the permissive wording of s 145(1)(b). The Supreme Court ruled that the applicants failed to establish an error in the appeal court’s assessment. 

The Supreme Court ordered the applicants to pay the respondent and the interested parties a single set of costs of $2,500.