Relationship property — mirror trusts — trusts —whether trust property is relationship property — whether powers under the trust deed are relationship property — creation of a trust — fiduciary duties — powers and duties of a trustee — sole trustee — Clayton v Clayton [2016] NZSC 29 — Harrison v Harrison HC CIV 2008-404-001270 — Carmine v Ritchie [2012] NZHC 1514 —TMSF v Merrill Lynch [2011] UKPC 17 — Kain v Hutton [2007] NZCA 199 — [2008] 3 NZLR 589 (SC) — Armitage v Nurse [1997] 2 All ER 705 — New Zealand Maori Council v Foulkes [2015] NZCA 552 — Property (Relationships) Act 1976. In this dispute under the Property (Relationships) Act the appellant claimed that the respondent's powers in relation to a family trust were property interests and that the respondent had unfettered powers to control the assets of the trust at his own discretion; hence, the trust property was relationship property for the purposes of the Relationship Property Act. The court was asked to answer three questions: whether the respondent had property interests because of his powers under the trust deed, and if so, were such property interests relationship property; and whether a property owned by the trust was the family home, and if so, was it relationship property? The circumstances involved two mirror trusts originally setup between the respondent and a previous spouse, both held 50 per cent of the then family home. Both trusts were subsequently resettled following the separation of the respondent and his previous spouse. At the heart of this dispute was the respondent's new trust (the RMCFT). The respondent was a trustee along with two independent parties. The settlors of the trust were were the same as the original trust - the respondent and the two independent parties. The beneficiaries were originally the respondent as a discretionary beneficiary and his two children as discretionary and final beneficiaries, the new partner's children were added later as discretionary beneficiaries. The Court examined the terms and provision of the RMCFT in light of "Clayton" where it had been found that the combination of powers and entitlements held by the sole settlor and trustee in that case were tantamount to ownership of the trust assets so that although not a "sham", the trust could be termed as a "non-trust" and would fail. "Clayton" was distinguished as the powers and entitlements were fettered so that the respondent could not self-benefit, his powers were found to fall far short of ownership or property interests in the trust assets. It then followed that the trust assets were not relationship property, the Court noting that had it have been found that there was a property interest then there may have been a strong argument that the property would have been separate rather than relationship property. In relation to the family home, in light of the earlier finding that the respondent had no property in the trust assets, the answer was again no, it was not relationship property. The court commented that although the house is referred to as the family home, it was in fact owned by the trust not the respondent and had no relevance other than the possibility of a party claiming compensation pursuant to s 11B of the PRA. Judgment Date: 16 September 2016. * * * Note: Names have been changed to comply with legal requirements * * *