Avery

[2021] NZHC 2939

IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY

I TE KŌTI MATUA O AOTEAROA KIRIKIRIROA ROHE

CIV-2021-419-194

[2021] NZHC 2939

UNDER

Section 33 of the Charitable Trusts Act 1957 and Part 19 of the High Court Rules 2016

IN THE MATTER

of a Charitable Trust created by Leonard John Reynold

BY

KIM SONIA AVERY, JANN MICHELLE CROSSMAN, TRICIA CAROL HUNT,

LEHI JOHN ADAM DUNCAN and JENNY

ARISHMA NAND as Trustees of the Len Reynolds Trust

Applicants

Hearing:	28 October 2021
Appearances:	D Shore and E Macpherson for the Applicants G McNab as Objector
Judgment:	1 November 2021

JUDGMENT OF ROBINSON J

This judgment was delivered by me on 1 November 2021 at 3:30 pm pursuant to Rule 11.5 of the High Court Rules

…………………………………………………………………… Registrar/Deputy Registrar

Solicitors/Counsel:

McCaw Lewis Copy to: Mr McNab

RE: AVERY & ORS [2021] NZHC 2939 [1 November 2021]

Introduction

[1]    The applicants are the trustees of a Charitable Trust settled by Leonard John Reynolds (Trust). The Trust operates in accordance with a trust deed dated 1 March 1966 (Trust Deed). The trustees wish to replace the Trust Deed with a new Trust Deed (Proposed Trust Deed). They apply pursuant to s 33 of the Charitable Trusts Act 1957 (Act) for approval of a scheme that would have that effect.

[2]    Mr McNab wishes to oppose the application, but his opposition was late. Section 37 of the Act requires any intending opponent to file and serve a notice of intention to oppose at least seven days prior to the hearing. The trustees’ application was to have been called in the High Court at Hamilton on 6 October 2021. Mr McNab gave no indication of his intention to oppose the application until he emailed the Court on 5 October 2021, the day before the hearing. Mr McNab acknowledged he was late and sought an extension of time.

[3]    On 5 October 2021 Peters J adjourned the application to 28 October 2021. Her Honour directed the applicants to provide Mr McNab with the application and supporting documentation. She also made timetable directions for Mr McNab to file submissions both in support of his application for an extension of time, and in opposition to the trustees’ application.

[4]    I heard both applications together on 28 October 2021. They overlap because Mr McNab’s application for an extension of time within which to oppose the trustees’ application relies in part on the grounds of his opposition.

[5]The trustees oppose Mr McNab’s application. I deal with that first.

Mr McNab’s application for an extension of time

[6]    Mr McNab acknowledges that his notice of intention to oppose was late. He also acknowledges that his submissions were not filed or served in accordance with Peters J’s timetable directions. He says these are minor slips that are purely procedural. He relies upon s 55 of the Act which provides:

55       Power to wave non-compliance with procedural requirements

Either the Court or the Attorney-General, when approving a scheme, may waive any non-compliance with the procedural requirements of this Act in relation to the scheme.

[7]    Furthermore, he says he has strong grounds to oppose the application. In particular, he says that the trustees have not advertised the application in accordance with s 36 of the Act. He says the advertisements are defective because they do not advise the public that they have the right pursuant to s 35(4) of the Act to inspect the notice, scheme and the Attorney-General’s report without fee or charge. He says this defect deprives the court of jurisdiction to approve the proposed scheme.

[8]    The applicants oppose Mr McNab’s application for an extension of time. They rely on s 37 of the Act which provides:

37       Opposition to scheme

Any person desiring to oppose the scheme shall, not less than 7 clear days before the date proposed for the hearing of the application by the court, give written notice of his intention to oppose the scheme to the Registrar and the trustees and the Attorney-General.

(emphasis added)

[9]    They applicants submit that s 55 does not empower the Court to waive the mandatory terms of s 37. They say further that in substance Mr McNab’s email of 5 October 2021 was insufficient to comply with s 37, regardless of its timing. They say Mr McNab did not file a notice of opposition in an appropriate form until 26 October 2021; and that the timing of this was also in breach of Peters J’s timetable directions. Finally, they submit that Mr McNab’s intended opposition does not relate to the substance of the scheme but merely asserts, incorrectly, that the advertising is irregular.

[10]   I grant Mr McNab’s application for an extension of time within which he can oppose the trustees’ application. I am prepared to accept that the seven-day notice period provided for in s 37 is a “procedural requirement in relation to the scheme” such that I am empowered by s 55 to waive Mr McNab’s non-compliance that requirement. In terms of Mr McNab’s failure to comply with Peters J’s timetable directions, I extend the time for Mr McNab to have filed his submissions pursuant to r 1.19 of the High Court Rules.

[11]   My granting to Mr McNab an extension of time to oppose the application is substantively retrospective. Mr McNab attended the hearing and I read his written submissions and heard his oral submissions in opposition to the trustee’s application. For present purposes I am prepared to grant Mr McNab’s application for an extension of time before I deal with the merits of his opposition.

[12]I turn now to the trustees’ application.

Application to approve a scheme – the Proposed Trust Deed

[13]   The trustees seek to replace the Trust Deed with the Proposed Trust Deed. They rely on s 33 of the Act which provides:

33Extension of powers or alteration of mode of administration of   trust

In any case where it is made to appear that any property or income is given or held upon trust, or is to be applied, for any charitable purpose, and the administration of the property or income or the carrying out of the trust could be facilitated by extending or varying the powers of the trustees or by prescribing or varying the mode of administering the trust, the powers of the trustees may be extended or varied, and the mode of administering the trust may be prescribed or varied, in the manner and subject to the provisions hereafter contained in this Part:

provided that nothing in this section shall restrict the powers that are or may be conferred on the court or the trustees by or under the Trusts Act 2019 or any other Act or by law.

[14]   The trustees submit that the Proposed Trust Deed would facilitate the purposes of the Trust by extending or varying the powers of the trustees, and by prescribing or varying the mode of administering the Trust. They say the Proposed Trust Deed will modernise the Trust Deed and bring it in line with current compliance requirements in the Trusts Act 2019.

[15]   The application is supported by an affidavit of Melissa Louise Gibson, CEO of the Len Reynolds Trust. Ms Gibson’s affidavit contains the following annexures:

(a)the Len Reynolds Trust Deed dated 1 March 1966;

(b)the Resolution of the Trust Deed to make this application;

(c)the Annual Return summary for the year ended 31 March 2020;

(d)the Proposed Trust Deed;

(e)correspondence between the trustee’s solicitors and Crown Law Office (acting on behalf of the Attorney-General); and

(f)the Attorney-General’s Report dated 25 June 2021 (Report). I note that the Attorney-General’s Report is signed by a Deputy Solicitor-General in exercise of the functions of the Attorney-General pursuant to a delegation under s 9C of the Constitution Act 1986.

[16]   The trustees have followed the procedural requirements of Part 3 of the Act. They have prepared a scheme to vary the Trust (Scheme),1 and submitted the Scheme to the Attorney-General.2 The Attorney-General has prepared a Report. The Attorney- General endorses the Scheme. The trustees have applied pursuant to part 19 of the High Court Rules for approval of the Scheme. The Scheme and the hearing date has been advertised in the New Zealand Gazette at least one-month before the hearing of the Scheme, in a newspaper within the judicial district of the Hamilton Registry of the High Court, (namely the Waikato Times) on three occasions prior to the hearing date.3

[17]   The essential changes to be effected by the Scheme are set out in Ms Gibson’s affidavit and summarised in the Memorandum of Counsel for the trustees. The key changes are as follows:

(a)updating the background to reflect the past and current work of the Trust and the description of named beneficiaries;

(b)updating certain definitions;

(c)expressing the Trust’s purpose in modern language (see paragraphs [18]

– [22] below);

1      Charitable Trusts Act 1957, s 34.

2      Charitable Trusts Act 1957, s 35.

3      Charitable Trusts Act 1957, s 36.

(d)refining the description of the Trust’s “object” from:

“making provision for the Public Charitable organisations set out in paragraph (1)”:

to:

the primary object of the Trust is to manage and apply the Trust Fund for Charitable Purposes”

(e)enabling the Trustees to make further appropriate variations to the Trust (see paragraphs [23] – [24]);

(f)updating the Trustee’s duties and liabilities;

(g)clarifying the process of appointing trustees;

(h)streamlining the Annual General Meeting and voting process;

(i)inserting a clause expressly dealing with trustee conflicts of interest;

(j)specifying the circumstances in which a trustee can or cannot derive a benefit from the Trust; and

(k)rewording trustee powers, to be included as a separate schedule.

The Trust’s purpose

[18]   The Attorney-General’s Report brings to the Court’s attention that the Proposed Trust Deed rewords the purpose of the Trust. Amendments to a trust’s purpose are traditionally made pursuant to s 32, which applies in circumstances where it is “impossible or impracticable or inexpedience to carry out” the trust’s charitable purposes. That is not the case here. However, in making the current application the trustees do not propose to change the substance of the Trust’s Purpose. They intend only to reword the Trust Purpose in order to acknowledge changes in the names of some of the beneficiaries, and otherwise to modernise language.

[19]   It is appropriate to set out the relevant changes in full. The original Trust Deed expressed the Trust’s purpose as follows:

1.The Trustees shall stand possessed of the Trust Fund and the income thereof in perpetuity commencing from the date hereof UPON THE TRUST following:

(i)For the Trustees in the absolute and uncontrolled discretion at any time or times and for so long as the Trustees shall in their absolute discretion think fit to pay or apply the whole or any part of the current net annual income and/or the whole or any part of the capital of the Trust Fund including any accumulations of income of the Trust Fund for and towards the following objects:

(a)The support of the Child Sponsorship Scheme overseas promoted by the Overseas Missions Committee of the Presbyterian Church of New Zealand and/or for such other charitable and educational purposes as may from time to time be determined by the Presbyterian Church of New Zealand and/or for such purposes as may from time to time be determined by the Presbyterian Church of New Zealand aforesaid whether within New Zealand or overseas and/or

(b)The payment to any organisation in New Zealand or elsewhere of funds to be applied for the provision of food, nourishment, education and other necessities for the under privileged overseas and/or

(c)For the general purposes and/or for such special purposes of SALVATION ARMY OF NEW ZEALAND and/or MISSION TO LEPERS and/or LEPERS TRUST BOARD and/or any public charities whether within New Zealand or overseas as the Trustees may from time to time in their absolute discretion think fit."

[20]   The Proposed Trust Deed states the original purpose in full in the Background section and defines it as "the Original Purpose." It records that the Mission to Lepers is now the Leprosy Mission New Zealand Incorporated (CC 37638), and The Lepers Trust Board is now the Pacific Leprosy Foundation (CC 26987). The Charitable Purpose Definition is outlined as follows:

(b)"Charitable Purpose" means one or more of the following objects:

(i)The Presbyterian Church of New Zealand’s:

(A)  Child Sponsorship Scheme overseas promoted by the Overseas Missions Committee; and/or

(B)   Other charitable and educational purposes in New Zealand or overseas; and/or

(ii)Payment of funds to any organisation in New Zealand or elsewhere for food, nourishment, education and other necessities for the under privileged overseas; and/or

(ii)The general and/or specific purposes of:

(A)   Salvation Army of New Zealand; and/or

(B)   Leprosy Mission New Zealand Incorporated (CC37638); and/or

(C)   Pacific Leprosy Foundation (CC26987); and/or

Any public charities whether within New Zealand or overseas as the Trustees may from time to time in their absolute discretion think fit.

[21]   Ms Gibson deposes that the applicants consider that the purpose as set out in the Proposed Trust Deed is synonymous with that set out in the Trust Deed, albeit expressed in modern language. Similarly, the Deputy Solicitor-General on behalf of the Attorney-General is also satisfied that the rewording of the purpose is a “faithful modernisation of the original purpose”, and that there is no issue with the updating of the names of the named charities.

[22]   I also agree that the Proposed Trust Deed expresses the Trust’s purposes in modern terms, but does not substantively alter those purposes.

Variation of the Trust Deed

[23]   The Trust Deed does not have a variation power. Clause 6.1 of the Proposed Trust Deed provides as follows:

6.1 The Trustees may by Special Resolution  amend  this Trust  Deed,  except that any amendment must not be to the Charitable Purpose nor be inconsistent with the charitable nature and purpose of the Trust.

The provisions and effect of this clause must not be removed and must be included and implied into any document replacing this document.

[24]   The Attorney-General Report describes this new variation power as “appropriate and practical”. I agree. The power of variation is limited. It does not enable the trustees to amend the defined Charitable Purpose of the Trust, not to make amendments that would be inconsistent with its charitable nature and purposes. I would not have approved a broader power of amendment in the context of an application under s 33.

[25]   I turn now to the various issues raised by Mr McNab in opposition to the Scheme.

Mr McNab’s opposition

[26]   Mr McNab opposes the Scheme primarily on the basis that it has not been properly advertised in accordance with s 36 of the Act. As a result he says the Court lacks the jurisdiction to approve the sScheme.

[27]Mr McNab’s argument focuses on s 35(4) and s 36 of the Act:

35Scheme to be laid before Attorney-General

…

(4) The application, scheme, and report shall be open for inspection by the public without any fee or charge.

36Scheme to be advertised

(1)Before any such application is considered by the court, notice of the application shall be given as hereafter provided in this section once in the Gazette, and at least 3 times with an interval of not less than 6 days between any 2 insertions in 1 newspaper circulating in the judicial district in which is situated the office of the court in which the application has been filed. The first such notice shall be so published not more than 3 months and not less than 1 month before the date proposed for the consideration of the scheme by the court.

(2)Every such notice shall give particulars of the scheme, shall state the date proposed for the hearing of the application by the court, and shall require any person desiring to oppose the scheme to give written notice of his intention to do so to the Registrar and the trustees and the Attorney-General not less than 7 clear days before that date.

[28]   Section 36(2) sets out what is required to give “notice of the application”. Mr McNab’s essential complaint is that the advertisements in the New Zealand Gazette and the Waikato Times did not record that, pursuant to s 35(4) of the Act, “the application, scheme and the [Attorney-General’s] report shall be open for inspection by the public without any fee or charge”.

[29]   Section 36(2) does not expressly refer to the requirements of 35(4). However, Mr McNab submits that the public right of inspection is of such fundamental importance that it is a “particular of the scheme” which must be notified pursuant to s 36(2). In support of his argument Mr McNab has shown me advertisements of other schemes promulgated under Part 3 of the Act. Those advertisements do refer to the public’s rights of inspection free of charge under s 35(4).

[30]   Counsel for the applicants, Mr McPherson, refutes Mr McNab’s argument. He says that s 36(2) does not require notice to be given of the public’s rights to inspect the scheme pursuant to s 35(4). He refers to the decision of Paterson J in re Melanesian Mission Trust Board where Paterson J dealt with an identical argument as follows:4

Grounds for Opposition

Mr Tate's grounds of opposition can be considered under the following five headings

…

(b) Alleged Defects in the Form of the Advertisement … One of Mr Tate's objections is that the advertisement did not state that the scheme was open for inspection by the public without any fee or charge. This is a requirement under the provisions of s 35(4) of the Act. It is quite normal to include such a statement in the advertisement but this is not a statutory requirement. In this case, Mr Tate was able to obtain the documents he required from the Board's solicitors. He was in no way prejudiced.

[31]   Paterson J observed that it was “quite normal” for advertisements under s 36(2) to refer to the requirements of s 35(4). It may be helpful if they do. But I agree with Paterson J that this is not a statutory requirement. The public right of free inspection under s 35(4) is not itself a “particular of the scheme” which must be notified by virtue of s 36(2).

4      Re Melanesian Mission Trust Board HC Auckland M1140/98, 21 September 1998.

[32]   I also observe that, as in case before Paterson J, the advertisement in this case served its purpose. Mr McNab saw the advertisement, and has exercised his right to inspect the documents free of any fee or charge. This in turn has enabled him to mount his opposition. There has been no prejudice.

[33]   For completeness I record that Mr McNab also took issue with the fact the Attorney-General was not represented at the hearing. He said this is a derogation by the Attorney-General of his constitutional obligations as the Crown’s representative as the protector of charities. He submits that the Attorney-General’s absence from the hearing deprives the Court of jurisdiction.

[34]   The Attorney-General clearly has an important role in relation to schemes being promulgated by trustees pursuant to part 3 of the Act. Amongst other things, the Attorney-General is to report on the Scheme and deliver that report to the trustees.5 The Attorney-General has complied with those obligations. He reports that he endorses the Scheme. The Court has the Report. In those circumstances I do not consider that the Attorney-General or his representative was obliged to attend the hearing. Nor does his absence deprive the Court of jurisdiction.

[35]   Finally, Mr McNab submitted that the Scheme is unnecessary. He says he has read the Trust Deed and is able to understand it perfectly well. He says the Trust Deed has stood the test of time for over 55 years and there is nothing to suggest that it needs modernising.

[36]    Mr McNab might well be able to understand the original Trust Deed. But it was quite apparent to me that Mr McNab is more familiar than most people with trust documents, and relevant legal principles.

Conclusion

[37]The Attorney-General Report concludes as follows:

Pursuant to ss 35 and 56 of the Act and for the purposes of assisting this Court as to the matters of which it is required to be satisfied under s 56(1)(A) of the

5      Charitable Trusts Act 1957, s 35(1)(b).

Act, I report that I am satisfied that the Scheme is a proper one and should carry out the desired purpose or proposal, and is not contrary to law or public policy or good morals; that the Scheme can be approved by this Court under Part 3 of the Act; that every proposed purpose is charitable within the meaning of Part 3 and can be carried out; and that the requirements of part 3 have been complied with in respect of this Scheme up to the giving of this Report.

[38]I agree with the Attorney-General’s conclusion. I approve the Scheme.

Result

[39]   Mr McNab’s application for an extension of time to have filed his notice of intention to object is granted.

[40]The applicant’s application for approval of the Scheme is granted.

[41]   I make orders in terms of the draft orders filed by the applicants on 6 August 2021, including that a contribution of $750 towards the Attorney-General’s costs is to be paid out of the Trust Fund.

[42]   In my view costs as between the applicants and Mr McNab should lie where they fall. I note that Mr McNab was self-represented throughout.

Robinson J