BETWEEN TE PUKENGA – NEW ZEALAND INSTITUTE OF SKILLS AND TECHNOLOGY Applicant
[2024] NZHC 3060
•18 October 2024
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2024-404-2538
[2024] NZHC 3060
UNDER the Trusts Act 2019 BETWEEN
TE PUKENGA – NEW ZEALAND INSTITUTE OF SKILLS AND
TECHNOLOGY
Applicant
Hearing: On the papers Counsel:
S R Hiebendaal for applicant
Date of judgment:
18 October 2024
JUDGMENT OF JAGOSE J
This judgment was delivered by me on 18 October 2024 at 3.30pm.
Pursuant to Rule 11.5 of the High Court Rules.
………………………… Registrar/Deputy Registrar
Solicitors:
Bell Gully, Auckland
RE TE PUKENGA – NEW ZEALAND INSTITUTE OF SKILLS AND TECHNOLOGY [2024] NZHC 3060
[18 October 2024]
[1] As duty judge, I have the applicant’s 11 October 2024 without notice application for permission to commence proceedings by originating application, and then for approval of a variation of trust under s 124 of the Trusts Act 2019.
Background
[2] The trust at issue is of a fund constituted on the winding up of the Students Association of the Manukau Institute of Technology some 20 years ago. The Association’s constitution provided, on such winding up, any surplus was to be held in trust by the applicant (as successor to the Manukau Institute of Technology)1 “for any similar Association which may from time to time be formed for the benefit of the students of Manukau Institute of Technology”.
[3] The fund presently amounts to some $560,000 held in an interest-bearing trust account. No “similar Association” has been or appears likely to be formed. The applicant proposes to use the fund for the benefit of present students on specific initiatives developed in consultation with and supported by the applicable student council. There are thousands of such students enrolled in part- and full-time educational programmes across a variety of subjects, represented by elected representatives on the council. The fund is intended to be drawn on to provide particular financial and welfare benefits for students over the next five years as endorsed by the council. The council’s president, Matangaro Ngatungane Raea, advises the council also endorses the proposed variation.
Approach
—to without notice applications
[4] I may determine the application for leave can properly be dealt with without notice if I am satisfied here an enactment expressly permits the application to be made without serving notice of it.2 Leave to commence proceedings by originating application may be sought without notice.3 I therefore am so satisfied and determine accordingly.
1 Education and Training Act 2020, sch 14, cl 4.
2 High Court Rules 2016, r 7.46(3) and (5).
3 High Court Rules, r 19.5(2).
—to originating applications
[5]The Court of Appeal has observed:4
Proceedings in the High Court are normally commenced by filing a statement of claim. However, consistent with the overall objective of the Rules to secure the just, speedy and inexpensive determination of any proceeding or interlocutory application, rr 19.2 to 19.4 provide that various proceedings must be commenced by originating application. These include applications made pursuant to various specified enactments. … However, r 19.5 provides that the court may permit any proceeding not mentioned in rr 19.2 to 19.4 to be commenced by originating application if it is in the interests of justice to do so.
A proceeding brought under s 138 of the Trusts Act is not one of those mentioned in rr 19.2 to 19.4. But, under r 19.5(1), it may be commenced by originating application “if … in the interests of justice”.
[6] The originating application procedure is “generally used for cases where it is not necessary to have full pleadings and interlocutory steps such as discovery for the proper determination of the issues”.5 Such a case:6
… tends to be an application under a specific statutory provision, where the issue that arises can be clearly defined, and the issues confined. The procedure is not well suited to the determination of substantive rights involving the application of common law doctrines as distinct from statutory tests. It is not well suited to cases involving multiple parties, and cases where there is a possibility of crossclaims or counterclaims.
“[A]ppropriate case management directions” can address such interlocutory issues as may arise,7 but the originating application procedure “is nevertheless, in relation to contested proceedings not listed in r 19.2, an exceptional procedure”.8 The “truncated procedure” is not to be used “as a short cut for urgent cases”,9 and “[i]t is not appropriate where factual issues are in dispute”.10 Finally, “the Court will generally
4 Siemer v Attorney-General [2022] NZCA 200, (2022) 26 PRNZ 113 at [2], citing the High Court Rules, r 1.2.
5 Fisk v [E] Ltd [2014] NZHC 2797 at [18] citing Groves v TSSN Ltd (in Liq) [2012] NZHC 2402, [2013] 1 NZLR 111 at [25], and Hong Kong and Shanghai Banking Corporation v Erceg (2010) 20 PRNZ 652 (HC) at [26]. See also Public Trust v Kain [2018] NZHC 1547 at [35].
6 Hong Kong and Shanghai Banking Corporation v Erceg, above n 5, at [25].
7 Fisk v [E] Ltd, above n 5, at [19].
8 Hong Kong v Shanghai Banking Corporation v Erceg, above n 5, at [26].
9 At [26].
10 Jones v O’Keeffe [2019] NZCA 222, (2019) 24 PRNZ 529 at [52].
adopt a conservative approach” to interlocutory applications in proceedings commenced by originating application.11
—to variations of trust
[7] At their request and with the trustee’s agreement, terms of a trust may be varied by unanimous consent of all beneficiaries and/or — if there are people who lack capacity or may acquire a beneficial interest in the future, and/or future persons who may acquire a beneficial interest — with the Court’s approval of the variation on behalf of those latter beneficiaries.12
[8]The Court’s approval may be sought under s 124 of the Trusts Act provides:
Power of court to approve termination, variation, or resettlement of trust
(1) The court may, on behalf of any of the beneficiaries described in subsection (2) who has an interest in the property of a trust, approve the termination, variation, or resettlement of the trust.
(2) The beneficiaries are—
(a)a beneficiary who lacks capacity:
(b)a person who may acquire a beneficial interest at a future date or on the happening of a future event or on becoming a member of a certain class of persons:
(c)a future person who may acquire a beneficial interest.
(3) An application for an order of approval may be made by—
(a)the trustees or any one of them:
(b)any person with a beneficial interest in the trust property.
(4) On an application for an order of approval, the court must take into account each of the following factors:
(a)the nature of any person’s interest in the trust property and the effect of the proposed order on that interest:
(b)the benefit or detriment that may result to any person with an interest in the trust property if the court makes or refuses to make the proposed order:
(c)the intentions of the settlor of the trust in settling the trust, if it is practicable to ascertain those intentions.
(5) The court must not make an order of approval if its effect would be to reduce or remove any vested interest in the trust property.
11 Public Trust v Kain, above n 5, at [35].
12 Trusts Act, s 122.
(6) An order of approval binds the person on whose behalf it is made and takes effect without any further step.
[9] Section 124 calls on the Court’s supervisory capacity.13 I adopt Mander J's identification of the applicable principles, as modified by s 124:14
(a) The power to approve a variation is discretionary.
(b) The court may, on behalf of any beneficiary described in s 124(2) who has an interest in the property of a trust, consider any proposal to terminate, vary or resettle a trust.
(c) The court’s discretion is to be exercised with reference to the factors identified in s 124(4), including the intentions of the settlor, to the extent these can be ascertained.
(d) The court can approve a scheme which conflicts with the intentions of the settlor but should not do so lightly.
(e) The court considers the trust provisions afresh if circumstances have arisen which were not foreseen or may not have been foreseeable at the time the trust was established.
(f) The court is able to approve an arrangement to the detriment of any person on whose behalf the court is giving consent, provided the effect of the orders would not reduce or remove a vested interest in the trust property.
(g) The court is to take a wide approach to benefits and detriments and arrangements and must consider the arrangements as a whole in a practical and business-like way. Indirect and intangible benefits and detriments are relevant, including the welfare and honour of the family.
(h) Difficulties may be met by amendments to the proposal or covenants by persons benefitting to make good losses to the disadvantage of other beneficiaries.
(i) An order approving a proposed variation may be conditional.
Discussion
—permission to commence by originating application
[10] The substantive application precisely reflects the type of case for which the originating application procedure is apt. It arises under a specific statutory provision. The variation for approval is clearly defined and confined. Factual issues are not in dispute. Except for the application for permission to commence proceedings by originating application, no other interlocutory applications are apparent. There is
13 See Talijancich v Talijancich [2021] NZHC 753 at [13].
14 Gavin v Gavin [2021] NZHC 550 at [15], referring to McKnight v Craig [2010] 3 NZLR 860 (HC) at [8] (citing Re Greenwood [1988] 1 NZLR 197; Re Byrne HC Wellington CIV-2003-485-0167, 25 May 2004; and Ewington v Schulz HC Auckland CIV-2008-404-6596, 5 May 2009).
precedent.15 The exception is justified. For the reasons I have explained at [5]–[6] above, it then is in the interests of justice to permit the applicant to commence its proceeding by originating application. I additionally am satisfied by the student council endorsement no other party requires to be served.
—approval of variation
[11] In the circumstances as they have arisen, I construe the constitution to embody the settlor’s intention to provide for the trustee’s distribution of the trust’s capital to benefit the students. Taking into account the s 124(4) factors and the trust’s purpose intended by the settlor, and particularly given the council’s endorsement, I am satisfied any s 124(2)(b) beneficiary would consent if properly advised. Given those persons’ futurity, I also am satisfied the variation is not to reduce or remove any vested interest in the trust property. And I am satisfied in any event the variation is not otherwise to their detriment. None would benefit if the variation was not approved.
Result
[12] On behalf of anyone who may acquire a beneficial interest in the trust in the future, I approve variation of the trust in the terms expressed at sub-subpara(a)(i)–(iii) of the originating application dated 11 October 2024. The applicant is indemnified by from the trust fund for its reasonable costs and expenses incurred on the application.
—Jagose J
15 Re Craig [2019] NZHC 2386; Gray v Heighway [2020] NZHC 473; Cooney v St Columban’s Mission Society of Lower Hutt [2020] NZHC 1958; and Law v George [2020] NZHC 3084.
0
9
1