Attention trustees and fiduciaries: is it time for a change to the non-profit rule and duty to account?

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Attention trustees and fiduciaries: is it time for a change to the non-profit rule and duty to account?

A fiduciary, including a trustee, is under a duty not to profit from their office.  Where a fiduciary is in default, equity requires them to account to their principal for any profit made. 

A recent decision of the UK Supreme Court has considered whether the non-profit rule and the duty to account are due for a change.  This is a particularly important issue for professionals, such as lawyers and accountants, who regularly act as trustees and provide other services as fiduciaries.

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The scope of ‘Design and Construct’ Professional Indemnity Cover

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The scope of ‘Design and Construct’ Professional Indemnity Cover

FKP Commercial Developments Pty Ltd v Zurich Australian Insurance Ltd [2022] FCA 862

Head contractors will often assume contractual responsibility for both design and construction of a development.  This remains their contractual responsibility, even if they engage consultants or subcontractors to carry out the design on their behalf. 

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A return to ‘normal’ - Napier City Council v Local Government Mutual Funds overturned on appeal

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A return to ‘normal’ - Napier City Council v Local Government Mutual Funds overturned on appeal

In August last year we reported on the High Court decision of Grice J in Napier City Council v Local Government Mutual Funds Trustee Limited (Riskpool). In that decision, Her Honour held that the Council was not indemnified under its professional indemnity insurance policy with Riskpool as the claim against it was in respect of both weathertightness and non-weathertightness defects. Consequently, the policy’s weathertightness exclusion clause applied to the entire claim. At the time, we commented that the decision may have come as a surprise to many in the insurance industry as it went against the approach taken by many insurers, which was to differentiate between weathertightness and non-weathertightness defects when considering indemnity. It was only when there was a defect which was caused or contributed to by an excluded peril that was excluded from cover.

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Limitation:  the importance of searching old paper files

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Limitation:  the importance of searching old paper files

Daisley v Whangarei District Council [2022] NZHC 1372

Decisions which consider whether a defendant had a continuing duty, and the implications of that for the purposes of a limitation defence do not arise often. The High Court has recently issued such a decision, in a long-running (and high-value) litigation against a local authority. Unfortunately for the Council, a land use consent, going back to 1988, was on their paper files but not recorded in the computer files. It led to the Council overlooking the land use consent, and then prosecuting a landowner for operating a quarry in breach of a resource consent. Ultimately, it also led to the Council being liable in damages to the landowner for in excess of $4m.

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The limits of fiduciary duties

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The limits of fiduciary duties

Claims Resolution Services Ltd v Pfisterer [2021] NZHC 1088

This proceeding arises out of a claim by Claims Resolution Services (Claims Resolution) against Ms Pfisterer for fees owing, for $93,700 (which included the legal fees paid to Grant Shand Barristers & Solicitors (GSBS)), for services it provided to assist her in resolving her insurance claim against EQC and insurance companies. Ms Pfisterer counter-claimed a breach of fiduciary duty against both Claims Resolution and GSBS, amongst other claims, and argued that no money was owing. The High Court found against most of her claims, as there were no conflict or loyalty issues at stake.

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Crown immune from liability for Psa outbreak

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Crown immune from liability for Psa outbreak

Attorney-General v Strathboss Kiwifruit Limited [2020] NZCA 98
In this recent decision, the Court of Appeal found that the Crown was immune from liability to kiwifruit growers and post-harvest operators in negligence for granting an import permit for a consignment of kiwifruit pollen from China and for not inspecting those goods when they arrived in New Zealand. Further, even if the immunity had not been made out, the Court found no duty of care in any event.

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Court clarifies limitation period for fiduciary claims

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Court clarifies limitation period for fiduciary claims

George v Sell Smart Bis Ltd [2019] NZHC 37

Recently, the High Court decided that a claim for breach of fiduciary duty against a mortgage broker was barred under the Limitation Act 1950 (the Act). The Court applied by analogy the limitation period that applies to contractual/tortious claims. This decision is very important in clarifying the time limit which will apply to claims for breach of fiduciary duty, such as acting in a conflict of interest or failing to act honestly in the client’s interests.

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