Appointing a receiver to a trust under the Trusts Act 2019 (Updated August 2026)
The Trusts Act 2019 (Act) came into force on 1 January 2022. As noted in a previous article, the Act applies to most existing and new trusts and signifies the first significant legislative change to trust law in New Zealand in over 60 years. The new Act is designed to make trust law more accessible by clarifying and simplifying core trust principles and essential obligations for trustees.
Many trust disputes involve trustees falling out with each other, or with the beneficiaries in whose best interests they are supposed to be acting. In most cases, beneficiaries or other trustees may look to remove a poorly performing trustee, often to be replaced by a professional trustee, and will seek a High Court judge’s assistance to do so. However, instead of having a trustee removed, in some cases it may be preferable to ask the Court to appoint a receiver to the trust, which is the focus of this article.
Section 138
Section 138 of the Act is a new provision and states:
138 Court may appoint receiver for trust
(1) The court may, on an application by an interested person or on its own motion, appoint a receiver to administer a trust.
(2) The court must be satisfied that the appointment of a receiver to administer the trust is—
(a) Reasonably necessary in the circumstances of the trust; and
(b) Just and equitable.
(3) Only a person qualified to be a trustee may be appointed under subsection (1).
(4) When appointing a receiver under this section, the court (having regard to the terms of the trust and the interests of justice) must determine—
(a) the extent of the duties and powers of the receiver; and
(b) the duration of the receivership; and
(c) the principles that the receiver is to apply in determining priorities; and
(d) whether the receiver is to be paid from the trust assets.
(5) If a court determines under subsection (4) that a receiver has a power in relation to a trust, the trustee of the trust cannot exercise that power for the duration of the receivership.
Analysis
The first point to note is that if a receiver is appointed, the practical effect is similar to having a trustee (or trustees) removed because under s 138(5) any power given to the receiver is thereby removed from a trustee for the duration of the receivership.
Second, it is commonplace for receivers to be appointed by creditors of companies, most often under the terms of a debenture, where their function is to receive income and pay outgoings, realise the business’s assets, and distribute them in accordance with the terms of the debenture. The ongoing viability of the company itself is often secondary. However, the function of a Court-appointed receiver is to preserve a company’s assets and its potential for earning profits in the future. Court-appointed receivers are officers of the Court, answerable to the Court, and not controlled by either the company or its creditors. Similar considerations apply to any Court-appointed receiver to a trust.
In its Review of the Law of Trusts: Preferred Approach (NZLC IP31, 2012), the Law Commission considered that providing for the appointment of a receiver to a trust “has the potential to be a very useful process; the receiver can take charge of the fund, deal with and if necessary realise some assets, conduct a managed distribution, and if appropriate, hand back the fund to the trustees.” It noted that while the High Court can already appoint a receiver in respect of trust property under its inherent jurisdiction, it rarely does so, probably due to a lack of awareness or understanding that the jurisdiction exists. The Law Commission recommended that the power to appoint a receiver should apply not only to trusts that have a corporate trustee, but to all trusts and that applications could be made by trustees and beneficiaries, not just creditors.
The first decision to consider s 138 was that of Jagose J in Reaney v Reaney [2021] NZHC 784, which concerned a family trust dispute. The context was a hearing on the papers of a without notice interlocutory application for an order appointing a receiver to trust property in a proceeding seeking the defendant husband’s removal as trustee.
Traditionally, a Court-appointed receiver, particularly in relation to a company, is seen as an option of last resort when there is no other adequate legal or equitable remedy available, or when the Court is satisfied that the existing law and contractual arrangements are such that no other means of achieving the desired object can be obtained.
However, at least in relation to trusts, Jagose J considered that s 138’s “new and explicit provision suggests such receivers’ appointment may not now be as much ‘a matter of last resort’ as formerly was the case.” A slightly different view was expressed by Walker J in Armani v Armani [2021] NZHC 3145, when she stated that “the ordinary meaning of ‘reasonable necessity’ [in s 138(2)(a)] does not precisely equate with a measure of ‘last resort’ but neither is it widely different.”
In that case, involving an acrimonious breakdown of the personal and business relationship, Walker J considered whether s 138 provides a new, broader basis for appointment of a receiver than under the inherent jurisdiction, and concluded that:
“There is nothing in the Law Commission report pointing to an intention to alter the approach under the inherent jurisdiction but there is some flexibility in the express connection with the ‘circumstances of the trust’. In its context, reasonably necessary means something more than expedient or desirable, falling closer to ‘required’ or essential to achieve a particular outcome or purpose, but is not necessarily restricted to measures of a last resort. Even so, the availability of alternative, less drastic remedies will be a factor going to the ‘just and equitable’ requirement.”
In both those cases, the applications to appoint a receiver were declined. In contrast, a receiver was appointed in Re Cameron and Robertson-Brown [2022] NZHC 2495, where all trustees supported the appointment of a receiver to wind up a failed property development project. Although the application was unopposed, Cooke J called for further information addressing the requirements of s 138(4), which are directed toward the justification for the appointment of a receiver.
Cooke J referred to the decision in Armani v Armani and agreed that the approach under the inherent jurisdiction does not set the required threshold for appointment under s 138:
“The applicant needs to show that appointment is reasonably necessary, not that it is needed as a last resort. This will involve consideration of what is sought to be achieved by the appointment of a receiver, and why this step is thought to be necessary to achieve that outcome in the circumstances.”
Cooke J also noted that any application under s 138 should explain why the appointment of a receiver is reasonably necessary, why it is just and equitable, and address the matters set out in s 138(4) in that context. It will usually be helpful to provide the Court with draft orders of appointment setting out the powers that the receiver will have (usually including those under s 14 of the Receiverships Act 1993), his or her reporting obligations, and addressing remuneration, as well as which of High Court Rules 7.60 to 7.67 will apply to the appointment.
An application to appoint a receiver, instead of one seeking removal of a trustee, may well be appropriate where, as in Re Cameron and Robertson-Brown, the expertise of an insolvency specialist will help to maximise the return on realising trust assets, or where an independent person is required to manage trust assets pending resolution of an existing trust dispute.
Developments since 2023
Since this article was first published in 2003, the Courts have had considerably more opportunity to apply s 138, and the body of authority on the “reasonably necessary and just and equitable” threshold has grown substantially.
The first appellate guidance came in Maka v Toailoa [2025] NZCA 261, an appeal from Toailoa v Eliu [2024] NZHC 1509, in which Wilkinson-Smith J appointed a manager to two related church trusts under s 60(1)(d) of the Charitable Trusts Act 1957, rather than a receiver under s 138. In the High Court, the Judge had identified three routes by which the Court can appoint a receiver or manager to a trust: under s 138 of the Act; under the Court’s inherent jurisdiction; or, for a charitable trust, under s 60(1)(d) of the Charitable Trusts Act. On appeal, the Court of Appeal adopted Walker J’s explanation of the s 138(2) test in Armani v Armani and applied it by analogy to the Charitable Trusts Act jurisdiction. Despite real governance concerns, including a high-risk Bitcoin investment and property transfers made outside the trust deed, the Court of Appeal quashed the manager’s appointment. It held that the significant costs already committed through a related funding order, together with the availability of a less drastic alternative in the form of prompt, tightly case-managed progress to a substantive hearing, meant the appointment was neither reasonably necessary nor just and equitable. Maka v Toailoa confirms that, while s 138 sets a materially lower bar than the “last resort” standard that applies under the Court’s inherent jurisdiction, that bar still has real bite, and the availability of alternative, less drastic remedies remains a live, and sometimes decisive, factor.
The Courts have also confirmed that s 138 is not confined to the family trust disputes that dominated the early cases. In Samnic Forest Management Ltd v Samnic Forest Waingaromia (No 1) Ltd [2025] NZHC 253, Venning J appointed a receiver to a forestry joint venture structured as a trust, after the joint venture’s purpose had been spent, but shareholder deadlock, and an auditor’s refusal to certify accounts because of litigation threats, prevented an orderly wind-up. Venning J still described the appointment as a matter of last resort on the facts, even though it was not necessary to reach that conclusion under s 138. This suggests that, notwithstanding Armani and its successors, the last-resort framing remains a useful practical touchstone when assessing whether appointment is truly reasonably necessary, even though it is no longer the formal legal test.
A further practical use of s 138 emerged in Booth and Maginness v Rahal [2025] NZHC 613, where the liquidators of a corporate trustee were appointed as receivers of the trust itself, after the trustee’s liquidation left the trust without any trustee at all. The High Court held that the absence of any trustee to deal with the trust’s assets, debts, and obligations, combined with the absence of any step by those holding the power of appointment to fill the vacancy, made appointment reasonably necessary and just and equitable. This is a useful illustration of s 138 filling a structural gap in a trust’s administration, distinct from the trustee-removal disputes the section was originally aimed at.
The fullest recent treatment of s 138 came in Maiolini v Fideis (New Zealand) Ltd [2025] NZHC 1832. Three points from that decision are worth noting. First, the Court held that “interested person” in s 138(1) is not confined to a trust’s trustees, beneficiaries, creditors, settlors, or protectors, and should not be read narrowly, so standing to apply may be available to a wider class of claimants than the early cases suggested. Second, the Court accepted, applying s 5(2) of the Act, that s 138 may in principle extend beyond express trusts to resulting or constructive trusts where necessary and appropriate, a significant potential extension of the section’s reach, particularly in fraud, tracing, and asset-recovery cases. Third, the judgment usefully catalogues the recurring circumstances in which receivers have been appointed to trusts:
an impasse or serious dysfunction preventing the trust’s administration;
trust assets in jeopardy;
disagreement over dealing with a specific asset requiring sale; disagreement or difficulty concerning trust liability;
the trust’s purpose having come to an end, requiring independent assistance to wind it up; and
litigation having already determined the parties’ rights, with receivers needed to aid enforcement.
Applying that framework, the Court appointed interim receivers over one of the two trusts in dispute, on the basis this was reasonably necessary to secure its assets pending determination of the plaintiffs’ substantive claims, while declining to do so for the other trust, which no longer held any assets capable of dissipation.
Taken together, these decisions show the Courts continuing to apply s 138 more readily than the old inherent-jurisdiction “last resort” standard, across an increasingly wide range of contexts, including commercial joint ventures, trustee-less trusts, and potentially resulting and constructive trusts. At the same time, Maka v Toailoa is an important corrective. The “reasonably necessary and just and equitable” threshold remains a genuine constraint, and an application is vulnerable where less drastic case-management or procedural alternatives exist, or where the financial burden of appointment is disproportionate to the governance concerns raised.
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