Richgrove Pty Ltd v Flash Pack Travel Ltd

[2025] ATMO 178

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE

CIV-2024-485-691

[2025] NZHC 178

UNDER

the Trusts Act 2019, the Charitable Trusts Act 1957 and Part 19 of the High Court Rules 2016

IN THE MATTER

of the France Trust Scheme

BETWEEN

JAMES PATRICK GALLAGHER, ROBYN SARAH HUNT, MICHAEL JAMES WAITE

as trustees of the FRANCE TRUST SCHEME

Applicants

Hearing:	On the papers
Counsel:	K H Lawrence for Applicants
Judgment:	14 February 2025

JUDGMENT OF BOLDT J

[1]                 Robert France died in 1887. His will directed that much of his property should be held in trust and the income used for the support and education of “destitute orphan children in the Town of Napier and Petane forever.” The France Trust Scheme (the Trust) survives to this day.

[2]                 The most recent trust deed, approved by this Court in 1990, provides that the Trust’s income should be applied towards the maintenance, advancement, support, welfare and education of needy children and young adults living in the Hawke’s Bay region, including by providing for accommodation, sustenance, education, facilities and books, and by the establishment of scholarships.

RE THE FRANCE TRUST SCHEME [2025] NZHC 178 [14 February 2025]

[3]                 Most recently, the Trust has emphasised providing funds for education. It has assets worth around $1.3 million, and it generates income of between $40,000 and

$50,000 most years.

[4]                 The Trust also incurs substantial expenses. For example, in 2023 the Trust’s income was $48,041 while it incurred expenses of $20,271. That sum appears to have been something of an outlier; most years the Trust incurs expenses of between $9,000 and $12,000, which nonetheless represents a substantial proportion of the income it generates each year.

[5]                 In order to manage the Trust more efficiently, the trustees have applied to the Court for an order approving a new trust deed. Most importantly, the trustees wish to distribute the funds held by the France Trust Scheme to the Hawke’s Bay Foundation (the Foundation). The Foundation is a charitable trust with nine trustees. It manages numerous specific trust funds, each of which it administers as a sub-trust. The fact numerous sub-trusts are administered by a single umbrella organisation means — to quote Alesha Hope, the Foundation’s Chief Executive — that they “benefit from a streamlined investment, reporting administrative, and governance structure”.

[6]                 The trustees of the France Trust Scheme propose to re-establish the existing trust as a sub-trust within the Foundation. They contend the Foundation will provide for a more cost-effective governance structure. The Foundation is willing to administer the Trust as a sub-trust to be called the Robert France Fund. The trustees seek an order under s 130 of the Trusts Act 2019 permitting that to occur.

[7]                 The trustees referred the proposal to the Attorney-General. The Attorney-General exercises the Crown’s duty to protect property devoted to charitable uses. As counsel for the Attorney-General observed, the two main aspects of that duty are the protection of charitable purposes by an officer acting in the public interest (as there may be no beneficiaries to enforce them), and the need for charitable bodies to be scrutinised in the public interest.

[8]                 The Deputy Solicitor-General, on the Attorney-General’s behalf, prepared a detailed and thoughtful report which broadly supports the proposed transfer. It notes

the current trustees are volunteers, many of whom have been involved in the Trust for a very long time. The report records that over time the administration of the Trust has become more time consuming, expensive and complicated. It noted that transferring the Trust’s assets to the Foundation, to be held as a sub-trust, will rationalise its operational requirements, potentially reduce the Trust’s overheads and enable more funds to be available for charitable purposes.

[9]                 There is one point of contention. The proposed deed of distribution provides that the Robert France Fund should be administered as a sub-trust in accordance with the Foundation’s deed. That deed permits the trustees to have recourse to capital; in other words the trustees may diminish the capital held within the various sub-trusts rather than simply relying, as the present Trust does, on the income the Trust’s assets generate.

[10]              The Deputy Solicitor-General suggested the Court may wish to direct that those clauses of the Foundation’s deed which are not consistent with the Trust’s deed do not apply to the administration of the Robert France Fund. She observed it would otherwise be possible, at least in theory, for the trustees to effectively terminate the Robert France Fund by distributing its capital. She noted that another clause in the Foundation’s deed would permit its trustees to wind up the Robert France Fund.

[11]              The modification suggested by the Deputy Solicitor-General would effectively preserve the Robert France Fund as a fund which can distribute income only, and which cannot be wound up in the discretion of the trustees. Obviously, if circumstances arise which make winding up desirable, there will be no obstacle to a further application to the Court.

[12] Ms Lawrence, on behalf of the applicants, submits it would not be appropriate to limit the discretion of the Foundation’s trustees in the manner proposed by the Deputy Solicitor-General. She notes that circumstances change over time, and that providing sufficient flexibility for the trustees to have recourse to capital if necessary will reduce the need for further (expensive) applications to the Court. Section 4 of the Trusts Act provides that everyone performing a function or duty under that Act should

have regard to the principle that trusts should be administered in a way that avoids unnecessary cost and complexity.

[13]              Ms Lawrence notes the trustees will be subject to an overriding duty to exercise their powers for proper purposes consistent with the trust deed, and that the robust governance structure within the Foundation means the Court can be confident the broader discretion given to the trustees will be exercised appropriately. She submits that course is “far more practical and efficient…than for [the trustees] to spend tens of thousands approaching the Court for permission to exercise such power in future.”

[14]              Ms Lawrence proposed, as an alternative, that the Court could provide that the trustees may have recourse to capital only in unexpected situations rather than as a matter of routine.

[15]              While I acknowledge the force of Ms Lawrence’s submission, I agree with the Deputy Solicitor-General that it would be appropriate to maintain the status quo when it comes to the trustees’ power to have recourse to capital. While it is nearly 140 years since Mr France expressed his intentions, his will provided that the Trust should distribute only the income his property generated each year. That prohibition on access to the Fund’s capital has served it well in the many years since. The Trust’s assets remain intact.

[16]              The Deputy Solicitor-General is right to suggest that, in the absence of an obvious change in circumstances which might make recourse to capital desirable, there is no need to effect such a profound change to the way the Trust is administered. If genuinely unforeseen circumstances arise which makes it desirable for the trustees to have recourse to capital, there is no obstacle to a further application to the Court. If the circumstances are sufficiently compelling, it need not cost tens of thousands of dollars, and may well be capable of prompt determination on the papers.

[17]              I agree it is appropriate to streamline the administration of the Trust, and transfer of its assets to the Foundation is a sensible way of achieving that. But there is no evidence that the current trustees have encountered any difficulties by virtue of

it being unable to have recourse to the capital of the Fund, and accordingly I do not consider there is any need to confer greater powers upon the new trustees.

[18]              Ms Lawrence has helpfully provided a draft order with a range of possible options. I  make  orders  that  the  applicants  may  transfer  the  assets  of  the  France Trust Scheme to the trustees of the Hawke’s Bay Foundation in accordance with the conditional deed of distribution date of 29 August 2024, and I amend the existing trust deed in a manner which will enable them to do so. I also make an order that the trustees of the Hawke’s Bay Foundation may not have recourse to the capital of the Robert France Fund, and that the provision ordinarily providing for Foundation trustees to have recourse to the capital of its sub-trusts shall not apply in the case of the Robert France Fund.

[19]              In order to address the Deputy Solicitor-General’s concern about the possible winding up of the Trust, I make an order that if the Hawke’s Bay Foundation is no longer able to meet its purposes, the trustees must apply to this Court for further directions about the assets of the Robert France Fund. They must not otherwise exercise the power in cl 13 of the Hawke’s Bay Foundation trust deed permitting them to wind the fund up.

[20]              I also make orders that the Attorney-General’s costs at $750 are to be paid from the France Trust Scheme, that the applicants’ costs in making this application are to be paid from the France Trust Scheme, and the applicants may take whatever incidental steps are required to bring the France Trust Scheme to an end after its assets are transferred to the Foundation.

Boldt J

Solicitors:

Greg Kelly Trust Law, Wellington