In Clayton v Clayton, the Supreme Court quashed any residual belief that a discretionary family trust set up by one spouse during a marriage will, in the event of the marriage dissolving, protect 'their' property from a claim by the other spouse.
The Court effectively held that whatever the spouses' stated intentions may be regarding a trust's purpose, if the trust's function was to provide for the family - either of the spouses and/or their children - then section 182 of the Family Proceedings Act 1980 (the Act) provides an avenue to seek the Court's relief should the marriage dissolve. That relief may well mean an equal sharing of the trust's property between the spouses consistent with their expectations of the trust's purpose had the marriage continued.
Some believe that the relief available under section 182 of the Act is limited to circumstances where there is a dissolved marriage or civil union. In fact, the section casts its net wider than this. The Court may also act under section 182 following any order under Part 4 of the Act including, for example, following a declaration validating a marriage or civil union.
The team at Martelli McKegg recently obtained an order from the Family Court in Singh v Bourchier declaring a marriage valid under Part 4 of the Act, notwithstanding that the marriage was a duly registered marriage under New Zealand law. The result now entitles the widow, whose husband died in an unexpected accident, to apply to the Court under section 182 for an inquiry into and relief from the family's trust despite the fact that the marriage was not and never will be dissolved.