Richgrove Pty Ltd v Flash Pack Travel Ltd

The High Court of New Zealand considered an application by the trustees of the France Trust Scheme concerning the future administration of the trust. The trust, established in 1887, was originally intended to support destitute orphan children in Napier and Petane, and its most recent trust deed from 1990 directs income towards the maintenance, advancement, welfare, and education of needy children and young adults in the Hawke's Bay region. The trustees sought court approval to transfer the trust's assets, valued at approximately $1.3 million, to the Hawke's Bay Foundation, a charitable trust with a more streamlined governance structure, to be administered as a sub-trust named the Robert France Fund.

The central legal issue before the court was whether to approve the proposed transfer of the France Trust Scheme's assets to the Hawke's Bay Foundation and, crucially, whether to permit the Foundation's trustees to have recourse to the capital of the Robert France Fund, or if its administration should remain strictly income-based as per the original trust deed. The Attorney-General, representing the Crown's duty to protect charitable uses, broadly supported the transfer, noting the administrative efficiencies it would bring. However, the Deputy Solicitor-General raised a concern that the Foundation's deed allows trustees to distribute capital, which could theoretically lead to the termination of the Robert France Fund, contrary to the original intent of preserving the capital.

The court reasoned that while streamlining administration and reducing costs were valid objectives, the original testator's clear intention was for the trust's capital to be preserved and only its income to be distributed. The court noted that this approach had successfully maintained the trust's assets for nearly 140 years. While acknowledging the potential benefits of flexibility, the court ultimately agreed with the Deputy Solicitor-General that there was no evidence of current difficulties arising from the inability to access capital, and therefore no need to confer greater powers upon the new trustees. The court found that if unforeseen circumstances arose necessitating recourse to capital, a further application to the court would be appropriate and could be dealt with efficiently.

Consequently, the court made orders permitting the transfer of the France Trust Scheme's assets to the Hawke's Bay Foundation, subject to specific conditions. The trustees of the Hawke's Bay Foundation were expressly prohibited from having recourse to the capital of the Robert France Fund, and the provision in the Foundation's deed allowing for the winding up of sub-trusts was not to apply to the Robert France Fund. The court also ordered that if the Foundation could no longer meet its purposes, its trustees must apply to the court for further directions regarding the fund's assets. Costs for the Attorney-General and the applicants were ordered to be paid from the France Trust Scheme.