Relationship Property Claim Against Trust Assets - s 44C Applicant - Trustee Respondent - Defending Trust Assets Against Division

Can trustees prevent a s 44C compensation order by arguing the trust assets are not relationship property?: Yes. The most effective defence is demonstrating that the trust is genuinely independent - the settlor-partner does not hold any power of resettlement or other mechanism giving effective practical control over trust assets. Where the trust was settled from separate property (pre-relationship assets), this should also be documented and pleaded as a complete or partial defence to the compensation claim.

Jurisdiction: Family Court of New Zealand or High Court of New Zealand, depending on where the applicant has filed. Trustees are joined as respondents to the existing proceedings and appear before the same court.

The Process at a Glance: Upon receiving the application and supporting affidavits, trustees must immediately engage independent solicitors with no conflict with the settlor-partner. The trust deed and financial accounts are reviewed to assess the Clayton effective control test. An independent trustee affidavit is prepared asserting the trust's genuine independence. If the trust assets are at risk of dissipation orders, trustees may apply for interlocutory directions. Expert accounting or valuation evidence is obtained to contest quantum. Counsel attends the judicial settlement conference and, if unresolved, the substantive hearing.

Key Legislation and Case Law: Property (Relationships) Act 1976 - s 44C (compensation from trust estate); s 44 (set-aside of disposition). Trusts Act 2019 - trustee duties and obligations. [Clayton v Clayton [2016] NZSC 29](https://www.courtsofnz.govt.nz/) - leading test for effective control of trust assets. [Ward v Ward [2009] NZCA 139](https://www.courtsofnz.govt.nz/) - compensation methodology and trust independence analysis.

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