Burnett Mount Cook Station Charitable Trust
[2016] NZHC 2214
•16 September 2016
IN THE HIGH COURT OF NEW ZEALAND TIMARU REGISTRY
CIV-2016-476-000026 [2016] NZHC 2214
IN THE MATTER OF BURNETT MOUNT COOK STATION
CHARITABLE TRUST
BETWEEN
MICHAEL ASKIN, TRUSTEE OF THE BURNETT MOUNT COOK STATION CHARITABLE TRUST
First Applicant
JOSEPH GORDON BUTTERFIELD DEREK JOHN TAYLOR
EUAN BOYD LINDSAY HILSON Second Applicants
THE ATTTORNEY-GENERAL GUIDE HILL STATION LIMITED LINDA BEVERLEY SUNDBERG JANINE NORA SUNDBERG CLINT MILES
ALANA MILES DAVID GOULD
Parties Directed to be Served
NEVILLE JOHN CUNNINGHAM MOUNT COOK TROPHY HUNTING LIMITED
MAUREEN MYRA VANCE DAVID MICHAEL LAWRY ROYAL FOREST AND BIRD PROTECTION SOCIETY OF NEW ZEALAND INCORPORATED KATRINA GRIFFITHS
Subsequent Parties (Objectors)
Hearing: 15 and 16 September 2016 Appearances:
J Ormsby, H Shaw and S Campbell for Applicants
A Powell and A Dixon for Attorney General
P Page for Guide Hill Station Limited
G Hair and M McKay for L and J Sundberg
N Cunningham Appearing in Person and for Mount CookTrophy Hunting Limited
M Vance Appearing in Person
RE: BURNETT MOUNT COOK STATION CHARITABLE TRUST [2016] NZHC 2214 [16 September 2016]
D Lawry Appearing in Person
P Anderson for Royal Forest and Bird Protection Society of
New Zealand Incorporated
K Griffiths Appearing in Person
Judgment:
16 September 2016
ORAL JUDGMENT OF GENDALL J
Introduction
[1] This case concerns a charitable trust, the Burnett Mount Cook Station Charitable Trust (the Trust) settled by the late Mr Donald Burnett (Mr Burnett). Presently the Trust owns two large pieces of farmland in the Mackenzie Country near Mount Aoraki (Mount Cook) (the land). The first piece of land is described as Mount Cook Station comprising around 1610 hectares and the second is described as Cox’s Down comprising around 1004 hectares. The land had been in the Burnett family for several generations and farmed by Mr Donald Burnett throughout his life until his death in 2010 at about age 95.
[2] It has been said by Mr Anderson, counsel for an objector in this case the Royal Forest and Bird Society of New Zealand, that the land in question is a valuable and iconic High Country station whose future is at stake here.
[3] At the heart of this case are issues as to whether or not a sale of the land owned by the Trust, which certain parties entered into at the time as vendors wrongly presuming they were the continuing trustees of the Trust, is to be permitted by the Court.
[4] There are effectively three applications before the Court, the first two dated
9 May 2016 and the third dated 12 July 2016.
[5] The applicants in these applications are Mr Michael Askin, Mr Joseph Gordon Butterfield, Mr Derek John Taylor and Mr Euan Broad Lindsay Hilson (who I will refer to together the applicants).
[6] Effectively these applications seek orders from the Court:
(a) Under s 51 of the Trustee Act 1956 (the TA) to appoint Mr Askin and
Mr Hilson as new trustees of the Trust.
(b)Under s 32 of the Charitable Trusts Act 1957 (the CT Act) to approve a scheme to vary the objects of the Trust which it is claimed will effectively allow the sale of the Trust land; and
(c) Under s 66 TA by way of directions which will again effectively approve the sale of the land owned by the Trust, if granted.
Background facts
[7] Turning now to the background facts, the Trust was established by Mr Burnett on 11 November 2009. The land which was owned by Mr Burnett at the time was to be settled on the Trust under the terms of Mr Burnett’s will, a will dated
15 December 2009.
[8] On 10 December 2009 the Trust was registered under the Charities Act 2005 with, as its original trustees, Mr Butterfield and Mr Taylor.
[9] Mr Burnett died on 15 July 2010. Under his will his sister Catriona Baker (Ms Baker) was given the right to free use and occupation of the house at Cox’s Down during her lifetime. Ms Baker died on 13 November 2014. She also settled funds on the Trust herself by her will.
[10] It was not until 30 November 2015 that the land was transferred from Mr Burnett’s estate to the Trust. It is said the reason for this delay was that a decision had been made not to transfer the land until expiry of a lease of part of the land to Mr Neville Cunningham (Mr Cunningham), in light of difficulties which had arisen surrounding the lease.
[11] At about the time of the transfer of the land to the Trust, the original trustees purported to appoint Mr Hilson as a further trustee. This was ineffective, however,
as only validly appointed trustees could exercise the power to appoint a new trustee and Mr Taylor and Mr Butterfield had allowed their original five year terms as trustees of the Trust to expire without renewal. Their appointment of Mr Hilson as a result was invalid.
[12] Mr Butterfield, Mr Taylor and Mr Hilson then put the land out for sale by tender. This then resulted in them accepting a tender said, to be the highest tender, and entering into an agreement (purporting to be in their capacity as trustees of the Trust) to sell the land to that tenderer, a Mr David Gould (Mr Gould) of Guide Hill Station Limited. This sale agreement after some further negotiation determined a sale price, I understand, of $4.9m and provided for settlement to occur on 29 April
2016. That settlement has not occurred although as I understand it arrangements of some sort have been concluded with Mr Gould and his company to farm the land since then, pending some resolution of matters through the present proceeding.
[13] It does seem the decision to sell the land related very much to what I am told was a significant dilemma faced by the applicants at the time. This dilemma was said to relate to the difficult and uncertain financial position which the loss-making farm operation on the land was suffering, and had suffered for some years, and a growing wilding pine infestation on the land.
[14] Around the time of entering into the agreement for sale and purchase of the land, Mr Butterfield, Mr Taylor and Mr Hilson also purported to appoint Mr Askin a further trustee of the Trust.
[15] It seems to be accepted now that each of the steps which I have described above, which the parties purported to take since 11 November 2014 (being the date when their terms as trustees of the Trust had expired), were steps taken when Mr Butterfield, Mr Taylor and Mr Hilson were not validly appointed as trustees.
[16] As a result, on 9 May 2016 the current proceeding was commenced. The present applications seek orders under the TA as to appointment of trustees and approval of steps taken when the applicants were trustees de son tort including the sale of the land to Mr Gould’s company, Guide Hill Station Limited.
[17] Once this proceeding was issued a further step then took place, pursuant to s 36 of the CTA, whereby a draft scheme to vary the purposes of the Trust under s 32 was subsequently submitted to the Attorney-General and a resulting report was provided by the Attorney-General under some urgency on 23 June 2016.
[18] As a result of concerns raised by counsel for the Attorney-General about the standing of the parties in question to bring these proceedings under the CTA, Mr Askin was appointed by this Court without opposition as an interim trustee of the Trust on 11 July 2016.
[19] The applications before this Court that I have outlined above are supported by:
(a) The applicants; and
(b)Guide Hill Station Limited (and the Goulds who effectively control that company).
[20] The applications, however, are opposed by:
(a) Jasmine Nora Sundberg and Linda Beverley Sundberg;
(b) Neville Cunningham, the owner of Mount Cook Trophy Hunting
Limited, the previous lessee of a portion of the land; (c) Maureen Myra Vance;
(d) Ram Haikai Tane; (e) Katrina Griffiths;
(f) Jan Roanna Finlayson;
(g) David Michael Lawry; and
(h) Royal Forest and Bird Protection Society of New Zealand
Incorporated.
[21] As I have noted above, there are three applications before the Court. Today,
16 September 2016, at my invitation I have heard submissions from all parties directed principally to the first application before me only. That is the application to appoint new trustees. I had said earlier today that I proposed to do this and to adjourn the other two applications before me for final argument and submissions, which is to occur on 4 October 2016. Directions to this effect will follow.
Application to appoint new trustees
[22] I turn now to address the first application, that is one whereby the applicants seek the appointment of Michael Askin and Euan Hilson as new trustees of the Trust.
[23] In appointing new trustees the process to be adopted requires first that the Trust instrument, here the Deed of Trust, is considered and if an express power of appointment is contained in the Deed it should be utilised unless there is some reason why that cannot occur. In this case the Trust Deed does provide for a default power of appointment, this being vested in the President for the time being of the New Zealand Law Society. This is to take effect in the absence of the trustees being unable to utilise the power of appointment initially held by them.
[24] In this case of course, there are no continuing trustees to exercise the power of appointment and I am told also that the New Zealand Law Society has been approached but effectively has either ignored the approach or declined to act. I say nothing further about this at the present time.
[25] I conclude therefore that the express power of appointment of new trustees in the Trust Deed itself does not assist here. In this event the Court needs to revert to s 43 of the TA, if it is able to apply, but again I am satisfied that it also does not assist here.
[26] The applicants have specifically stated in this case that they bring this present application in terms of s 51 of the TA. Section 51(1) of the TA provides that in all
cases where it is expedient to appoint a new trustee and it is found inexpedient, difficult or impracticable to do so without the assistance of the Court, the Court may make an order appointing a new trustee either in substitution for, or in addition to, any existing trustee, or to fill a gap in trustees.
[27] It is not in dispute that this case is an appropriate one in which the statutory jurisdiction of the Court to make appointments should be invoked. It is accepted on all sides that it has become “impracticable” to appoint trustees without the assistance of the Court here. There being a plain statutory jurisdiction to do so, it is unnecessary for the Court to invoke its inherent jurisdiction to supervise the administration of trusts in general, and charities in particular. On all this I note too that the discretion of the Court to appoint new trustees is not one to be exercised in an unfettered and arbitrary manner.
[28] Here the proposal, as I have noted above, is one to appoint Michael Askin and Euan Hilson as new trustees of the Trust. It is clear from all the applications which are before the Court that their primary immediate purpose, if they are so appointed as trustees, is to pursue the applications, both under the CTA, for the settlement of a scheme to enable them to vary the trust deed for the Trust which would provide a mechanism for the sale of the land, and under the TA for directions to validate that sale. As I have already noted, the sale agreement for the land was entered into by Mr Butterfield, Mr Taylor and Mr Hilson as vendors when they (wrongly) thought they were acting in their capacities as trustees of the Trust.
[29] Again, I record this was principally because the original five year appointment terms of those parties as trustees of the Trust had come to an end sometime earlier, so there were no valid trustees at that time in a position to act.
[30] It is accepted also by all parties that in this case there are no existing validly appointed trustees. The applicants here also accept that the two original trustees were not validly appointed at the time they resolved to appoint Mr Hilson and then Mr Askin as additional trustees.
[31] Turning now to consider this present application, it is opposed in particular, by Mr Cunningham who, as I have mentioned, was a previous lessee of a portion of the Trust farm properties for his hunting business. He contends that Mr Hilson and Mr Askin are not proper persons to be appointed. The Sundbergs, Mr Lawry, Ms Griffiths, Ms Vance and Ms Finlayson generally, as far as I can tell, agree.
[32] At this point I leave on one side any questions as to whether the present applicants have standing to bring this application to appoint new trustees. There is no doubt that the Court’s approach particularly in an emergency situation, which I consider this is, has been to intervene and appoint new trustees of a trust where that office has been left vacant and there is an inability to fill the position. In my view that is the position here.
[33] I turn now to who may be appropriate to be appointed by the Court as new trustees in the present case. On this aspect the principal rules on which Courts act are set out in Nevill’s Law of Trusts Wills and Administration as follows:1
(a) The Court will have regard to the wishes of the persons by whom the trust was created if expressed in the instrument creating the trust or clearly to be collected from it. For example, in Mendelssohn v Centrepoint Community Growth Trust the Court held that in exercising its discretion it should consider the settlor’s intentions, neutrality between beneficiaries and the promotion of the purposes of the trust. If it is express or implicit that the settlor intended the trustees to be of a particular description, that intention would be given considerable weight by the Court. However, the Court would not be bound by those wishes and could depart from them if good cause was shown.
(b) The Court will not appoint a person to be a trustee with a view to the interests of some other persons interested under the trust, in opposition either to the wishes of the will-maker or to the interests of other beneficiaries.
(c) The Court will have regard to the question whether the appointment of a particular person will promote or impede the execution of the Trust.
(d) A person will not be appointed if to do so will place him or her in a position where duty and interest might conflict.
1 Nevill’s Law of Trust Wills and Administration 12th Ed at para 7.2.4(d)
[34] In Mendelssohn v Centrepoint Community Growth Trust,2 the Court of Appeal held that the Court’s task in appointing a trustee under s 51 TA is to appoint the person or persons best suited to administer the Trust in the circumstances prevailing.
Discussion
[35] Mr Ormsby for the applicants before me submitted that persons currently acting in a capacity as a continuing trustee or as a previous trustee, such as Mr Askin and Mr Hilson respectively, ought to be appointed by the Court unless there is good reason not to do so. The position of the objectors, however, is that there are good reasons not to appoint them.
[36] In this case a real initial issue, in my view, does arise over whether these persons proposed to be appointed as new trustees, Mr Askin and Mr Hilson, may not be appropriate to be appointed, in that if they were appointed they might be placed in a position where their duties and interests conflict. Something similar to this
occurred in Re: Parsons, a 1940 English case.3
[37] Indeed, so far as Mr Askin is concerned on the evidence before the Court, the Deed of Appointment purporting to appoint him as an additional trustee of the Trust was signed around the same time as the land sale agreement with Mr Gould and his company. And, Mr Askin’s involvement in that sale process and the decision making of the other “trustees” was clearly signalled in Mr Butterfield’s evidence before the Court. This evidence was to the effect that “Mr Askin got to be involved in that sale process in some way over that period” and, “I think we discussed it with him before we made the final trustee’s decision on sale of the land and acceptance of the tender.”
[38] It is difficult to accept that Mr Askin did not have some reasonably intimate involvement in the decisions taken by all the applicants that the land needed to be sold, and the sale contract with Mr Gould’s company concluded. In my view, there is a possible risk that his judgment as a trustee here may well be clouded by what is a
predisposed view towards the particular transaction, such that he might well fail to
2 Mendelssohn v Centrepoint Community Growth Trust [1999] 2 NZLR 88.
3 Re: Parsons [1940] CH973.
act in good faith in the interests of the beneficiaries of the Trust. That is the fundamental duty of any trustee.
[39] So far as Mr Hilson is concerned, three things, as I see it, are clear here. First, he signed the sale agreement as one of the vendors. Secondly, even on his own evidence before me, Mr Hilson acknowledged a number of significant matters. As to this, he said that since his appointment in November 2015 as a trustee of the Trust, a possible sale of the land and the reasons for a sale were intensively discussed between he, and the other trustees. Also he stated categorically that, from his accounting and finance perspective, the land was not an economic unit and never would be and he sincerely believed the long term financial and other interests of the Trust would be met by selling the land.
[40] Potential liability of Mr Hilson to Mr Gould and his company, in the event the sale agreement might not proceed, brings added personal elements to Mr Hilson’s position and any future Trust decision-making in which he might continue to be involved.
[41] I can only conclude that in light of Mr Askin’s and Mr Hilson’s intimate involvement with the land sale process and concluding of the agreement to sell to Guide Hill Station Limited, their true independence and suitability as new trustees here must be in question.
[42] Notwithstanding submissions advanced to me by Mr Ormsby on behalf of the applicants, I am of the clear view that for all these reasons there might well arise significant conflicts between their interests and duties as trustees in this case if Mr Askin and Mr Hilson were appointed as new trustees. As I see it, they would not bring fresh minds to questions over Trust matters generally and as to whether any amendment to the Trust deed and/or approval of the sale agreement were indeed in the best interests of the Trust.
[43] Clearly therefore the present application to appoint Mr Hilson and Mr Askin as trustees of the trust must fail. However, an independent trustee, in my view, needs to be appointed in this case. As I see it, it is appropriate here for the Court, in terms
of s 51 TA to do so and to exercise its power under that section to make such an appointment and for the Public Trustee, as a trustee of last resort, to be so appointed. It is a role the Public Trustee has adopted before in cases such as this. It is clear the Public Trustee is independent and capable of fulfilling this role and that the Public Trustee can be appointed in situations such as this, and I refer to cases such as
Kain v Hutton4 and Attorney-General v Ngati Karewa and Ngati Tahina Trust5 in this
respect.
[44] With all these matters in mind, as I said at the outset, it is not appropriate at this point to turn to deal with the second and third applications which are before the Court. To repeat, these are the applications to approve the sale of the properties and to vary the Trust Deed. Those are matters upon which the new trustee, the Public Trustee, should provide some input and upon which the parties may provide further argument and their final submissions.
[45] Given that, I am told by all that there is significant urgency to reach a solution in this matter and propose therefore to adjourn those second and third applications to an urgent hearing which I have managed to allocate. This is to take place on Tuesday, 4 October 2016, with one day allowed. In the meantime, an order is to be made appointing the Public Trustee as trustee of the Trust, this appointment to commence immediately and to remain until further order of this Court is made.
[46] One other matter needs mention here. In this case, the Trust Instrument for the Trust directed that there be not fewer than two trustees. While a stipulation as to the number of trustees contained in the Deed of Trust here would be, and is, a matter to be taken into account by the Court in the exercise of its jurisdiction, the Court is
not bound by such a provision and I refer to the decision in Re: Tempest6.
4 Kain v Hutton HC Christchurch M198/100 and [2007] NZCA 199.
5 Attorney-General v Ngati Karewa and Ngati Tahina Trust HC Auckland 5/11/2001 M2073/99 and CP242/00 Randerson J.
6 Re: Tempest (1866) LR1 Ch.APP 485 at 491.
Result
[47] I now turn to the result. For all the reasons I have given, the application to appoint Mr Askin and Mr Hilson as trustees of the Burnett Mount Cook Station Charitable Trust must fail and it is dismissed.
[48] Secondly, the interim appointment of Mr Askin as a temporary trustee of the
Trust is also hereby revoked.
[49] Thirdly, an order is made however, pursuant to s 51(1) TA, appointing the Public Trustee as trustee of the Burnett Mount Cook Station Charitable Trust effective immediately, such appointment to continue until any further order of this Court is made.
[50] Fourthly, the second and third applications which are before this Court (that is the application under s 32 CTA to approve the scheme to vary the objects of the trust, and the application under s 66 TA by way of directions to effectively approve the sale of the land owned by the Trust), those two applications are adjourned and the hearing of those applications will reconvene at 10 a.m. on 4 October 2016 with one day allowed.
[51] Fifthly, the applicants forthwith are directed to provide to the Public Trustee copies of all the relevant documentation relating to this proceeding.
[52] Sixthly, the Public Trustee is directed by 5 p.m. on 30 September 2016 to file and serve a memorandum setting out the Public Trustee’s position so far as the Trust and the remaining applications before this Court are concerned.
[53] Next, costs with respect to this matter are reserved at this point.
[54] Lastly, leave is reserved to any party to apply further on 24 hours’ notice.
...................................................
Gendall J
Solicitors:
Wynn Williams, Christchurch
Crown Law Office, Wellington
Malley & Co, Christchurch
Gallaway Cook Allan, Dunedin
Copy to:
Mr N Cunningham
Ms M Vance
Mr D Lawry
Royal Forest & Bird Protection Society of New ZealandMs K Griffiths
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