Huo RaymondRAYMOND HUO (Labour): Thank you Madam Speaker. The Trusts Bill was one of the highlights of the 23 or so bills that the Justice Committee has considered. This is technically driven and obviously one of the most difficult ones. If I may quote the former Attorney-General the Hon Christopher Finlayson QC: For any members especially for lawyers turned members this is one of the lifetime opportunities to get involved in this very important legislative process." I guess I can take some credit for establishing a subcommittee in the first place and for inviting Mr Finlayson QC from National and Dr Duncan Webb from Labour to join the subcommittee to consider this very important and complex bill. I thank them again for their contributions. I thank the officials advisers and in particular our independent adviser David Goddard QC for their experience their expertise and their fascinating insights into this particular area of law.The bill reflects recommendations made by the Law Commission from 2009 to 2013 as well as feedback from public consultation on an exposure draft. I thank the Law Commission. The Law Commission reviews reforms and develops the law and plays a very important role.The Trusts Bill is the first major change to our trust law legislation in over 60 years. This Government bill will repeal the Trustee Act 1956 and the Perpetuities Act 1964. The legislation as the Minister of Justice described is widely considered outdated and overly complex. The objective of this bill is therefore to clarify and simplify core trusts principles and essential obligations for trustees to improve their understanding about how trusts operate.The bill seeks also to take the most fundamental principles from the common law and to put them into accessible legislation. The common law is the law developed through the courts based on individual cases. Because this bill is not a complete codification of trust law it strikes a balance between prescription and flexibility.At the select committee stage we tried our best to provide definitions for some basic but important terms such as "settlor" "trustee" and "beneficiary". We had however some difficulty in providing definitions for other terms such as "resettlement" "negligence" "gross negligence" and "recklessness".There are some key points that I wish to highlight here. First of all the Act is intended to apply to all expressed trusts governed under New Zealand law whether created before on or after the commencement date. This means that where a trust and the Act are inconsistent or the Act imposes additional mandatory duties or requirements this Act will prevail. Needless to say the definition of an "express trust" under this bill is wide enough and effectively captures all trusts including family trusts charitable trusts and commercial trusts.Secondly clause 16 would replace the rule against perpetuities with a simple maximum trust duration of 125 years. Currently most trusts have a maximum duration of 80 years. We had some good discussions and exposure out of the Justice Committee. The common law rule against perpetuities is "a life in being plus 21 years". The 125-year period is considered to be closest to the maximum period currently possible under that rule and a 125-year period was chosen for the UK Perpetuities and Accumulations Act 2009 following their Law Commission's comprehensive review of their relevant legislation. Australia also followed the same rule.The duration of 125 years strikes the balance between providing a degree of flexibility for settlors to dispose of their properties as they choose and the need to retain some form of limit on the duration of trusts. Of course there are exemptions: the only trusts that may continue to exist indefinitely are charitable trusts certain superannuation schemes and certain specified exempt trusts. To avoid confusion the Justice Committee recommended inserting a new clause to make it clear that trusts for property settled on one trust and then resettled on another trust would not be able to last longer than 125 years from the date of the original settlement before being distributed.That brings us to a different but related question: will the Trusts Bill apply retrospectively to existing trusts? The short answer is no. This reinforces the Law Commission's view that there should be one law of trusts in New Zealand rather than a pre - Trusts Act law and a post - Trusts Act law. Having said that we should appreciate that the bill or Act will apply to and affect trusts that were already in existence.Thirdly at the Justice Committee we spent a considerable amount of time looking at issues in relation to specified commercial trusts in Schedule 3 and why appropriate exclusions are necessary. These provisions do not apply because these trusts are created as vehicles to give effect to commercial or financial transactions. Most of those commercial trusts such as debt security trusts broking trusts managed investment schemes—or MIS—are regulated under the financial markets legislation. Without appropriate exclusions there could be overlapping duplicative and inconsistent regulatory requirements. Also concerns for example about the lack of understanding or vulnerability that may arise in situations such as family trusts may not arise here.Lastly the retirement village—we recommend inserting a regulation-making power into the Retirement Villages Act. This would allow regulations to exempt trusts or trustees under the Retirement Villages Act from the provisions of this legislation. That would help to address the potential for uncertainty where there is overlap between the provisions of this legislation and the Retirement Villages Act. I'm not quite sure the changes are what the sector wanted but again I thank the retirement village sector for their submissions and their subsequent meetings with myself and other colleagues. There are between 300000 and 500000 trusts that are in use in New Zealand. This bill will affect a large number of people and it is an extremely difficult task to modernise and improve an area of law that has evolved through hundreds of years of common law. I commend this bill to the House."