Chase v Kawerau Youth Care Centre Trust

[2019] NZHC 2080

IN THE HIGH COURT OF NEW ZEALAND ROTORUA REGISTRY

I TE KŌTI MATUA O AOTEAROA

TE ROTORUA-NUI-A-KAHUMATAMOMOE ROHE

CIV-2019-463-000052

[2019] NZHC 2080

UNDER

The Charitable Trusts Act 1957 and the Companies Act 1993

IN THE MATTER

of an action for the Liquidation of a Charitable Trust

BETWEEN

HANA CHASE as sole trustee of Kawerau Youth Care Centre Trust

Plaintiff

AND

KAWERAU YOUTH CARE CENTRE TRUST

Defendant

Hearing:	22 August 2019
Appearances:	C Drought for the Plaintiff
Judgment:	22 August 2019

JUDGMENT OF WOOLFORD J

Solicitors:           Mark Copeland Lawyers, Rotorua

CHASE v KAWERAU YOUTH CARE CENTRE TRUST [2019] NZHC 2080 [22 August 2019]

[1]    On 24 June 2019 the plaintiff filed an application in the form of a statement of claim to liquidate the defendant, Kawerau Youth Care Centre Trust (the Trust). The application was set down for hearing at 12.30 pm on 22 August 2019.

Factual background

[2]    The Trust was incorporated on 19 March 1993 under the Charitable Trusts Act 1957. The plaintiff is the only remaining trustee.

[3]    The Trust previously provided social services in Kawerau and Whakatane funded by contracts with the Ministry of Social Development, Oranga Tamariki, Ministry of Education, Department of Corrections and Poutiri.

[4]    In June 2018 the Ministry of Social Development commissioned an investigation by Deloitte into the activities of the Trust. The investigation was completed in August 2018. As a result of the investigation the Ministry of Social Development ended the service contract with the Trust on 31 August 2018. While the Trust was found to have met the test of solvency, it did not meet the test for feasibility and was found to have performance issues.

[5]    All other trustees have either formally resigned or have been terminated for “abandonment of duties” by the interim board (now dissolved). The Trust has no funding contracts and no other income. All operations of the Trust have ceased with the amount of $27,922.77 remaining in the Trust bank account. The Trust is not operating in any building or leased premises. There is no debt owing on either of the previously leased premises. The furniture of the Trust is stored at the Kawerau Site Storage with storage costs being paid from the Trust fund. The two vehicles owned by the Trust are stored at the plaintiff’s address. A schedule of assets has been prepared.

[6]    In October 2018, the interim board (now dissolved) resolved to place the Trust into voluntary liquidation due to insolvency and non-compliance issues.

[7]    On 7 March 2019, the Trust was removed from the Charities Register under  s 32(1)(b) of the Charities Act 2005 because it failed to file annual returns as required

by s 41 of the Charities Act 2005. The plaintiff says that because she is the only remaining trustee, the Trust can only be placed into liquidation by order of the Court. Voluntary liquidation is no longer possible.

Discussion

[8]    Advertisements of application for putting a charitable trust into liquidation were published on 3 July 2019 in the Beacon Newspaper, Whakatane, and on 4 July 2019 in the New Zealand Gazette. No one has taken any action following the advertisements.

[9]    On 13 August 2019, the plaintiff filed a memorandum seeking directions as to the completeness of service as having been effected by the plaintiff on the defendant to date. By minute dated 15 August 2019, Associate Judge Sargisson directed that no further service of the application was required.

[10]   Finally, the plaintiff has filed a consent and certificate of a proposed liquidator, Simon Paul Rogan, an Auckland Chartered Accountant and Accredited Insolvency Practitioner. Mr Rogan consents to being appointed liquidator and in the event that he is appointed the liquidator, seeks an order approving his rates of remuneration and the rates of his staff working under his supervision, as follows:

(a)Liquidator $260.00 plus GST per hour

(b)Manager $160.00 plus GST per hour

(c)Staff accountant $130.00 plus GST per hour

[11]   Section 25 of the Charitable Trusts Act 1957 provides a board may be put into liquidation by the appointment by the Court as liquidator of a named person if the Court is satisfied that it just and equitable that the board should be put into liquidation. In the circumstances outlined in the plaintiff’s affidavit, I am satisfied that it is just equitable that the board should be put into liquidation.

[12]   Accordingly, the Kawerau Youth Care Centre Trust is  put into liquidation. Mr S P Rogan is appointed as liquidator. Costs in this proceeding are to be paid on a

2B basis, to be fixed by the Registrar. Disbursements are also awarded to the plaintiff in an amount to be fixed by the Registrar. The rates of remuneration of the liquidator and staff working under his supervision and control are fixed at the rates set out in the liquidator’s consent, dated  8  July 2019.  Orders  timed  at  1.05  pm  on Thursday, 22 August 2019.

Woolford J