Cornwall Park Trust Board - [2022] NZHC 2900

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2022-404-1293

[2022] NZHC 2900

IN THE MATTER OF The Charitable Trusts Act 1957 and the Trusts Act 2019

AND

IN THE MATTER OF

An application by the Cornwall Park Trust Board, a charitable trust registered under the Charities Act 2005 as CC27112 with its address for service at 203 Greenlane Road West, Greenlane, Auckland, for an order to vary the trust deeds

Hearing: 19 October 2022

Counsel:

A E Murray for Applicant

Judgment:

4 November 2022

JUDGMENT OF PAUL DAVISON J

This judgment was delivered by me on 4 November 2022 at 4:30pm pursuant to r 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Solicitors:
DLA Piper, Auckland

Introduction

[1] By an originating application dated 3 August 2022, the Cornwall Park Trust Board (the Board) applies pursuant to the Charitable Trusts Act 1957 (the Act) and the Trusts Act 2019 for an order that the Declaration of Trust dated 10 June 1901 (the Trust Deed), be varied by inserting two clauses which would enable the Board to indemnify the trustees personally, and/or the Board, against any loss or liability incurred in connection with the affairs of the Cornwall Park Trust (the Trust), and also to provide that the trustees shall not be liable for any loss suffered by the Trust other than losses directly attributable to a trustee’s dishonesty or wilful commission of a breach or breaches of trust.

[2] The application was placed in the Duty Judge List on 19 October 2022. At the hearing the Board was represented by its counsel, Ms Murray, and although a notice of opposition dated 16 September 2022 had been filed by Mr Darryl Clarke, he did not make an appearance at the hearing, and the matter proceeded with brief oral submissions being made by Ms Murray in support of the application, whereupon I reserved my decision.1

The application

The additional clauses the Board seeks to have included in the Trust Deed

[3] The Board applies for an order varying the Trust Deed by inserting the following two clauses:

(a)To be inserted as clause [XVIII]:

The trustees may indemnify, guarantee, insure and/or secure the trustees personally and/or the Trust Board against loss or liability incurred or undertaken on behalf of the trust and against any costs, losses or expenses in connection with the affairs of the trust, and in connection with the foregoing to charge the assets of the trust fund unless such loss or liability is attributable to the trustee’s dishonesty, wilful misconduct or gross negligence;

(b)To be inserted as clause [XIX]:

1 The Registrar notified and reminded both parties of the hearing date.

Trustee Liability

To the extent permissible by law, no trustees shall be liable for any loss suffered by the Trust from any cause whatsoever including a breach of the Trust, unless such loss is attributable directly to:

(i)the trustee’s dishonesty; and/or

(ii)wilful commission by him/her by any act known to…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Cornwall Park Trust Board

Details

AGLC: Cornwall Park Trust Board [2022] NZHC 2900
Case: [2022] NZHC 2900
Decision Date: 4 November 2022

CaseChat Overview and Summary

The Cornwall Park Trust Board, a charitable trust, sought to amend its Trust Deed to enable the trustees to be indemnified and insured against personal liability arising from their duties, as well as to limit their liability for losses suffered by the trust, unless caused by their dishonesty or wilful breach of trust. The application was supported by affidavits from the Chairperson of the Board, a Senior Executive Director at Aon New Zealand Ltd, and a former Chair of the Charities Registration Board. The application was opposed by Mr Darryl Clarke and others, who argued that the proposed amendments would unreasonably protect the trustees from accountability for their decisions. The Court considered the legal issues of whether the proposed amendments would facilitate the administration and carrying out of the trust's charitable purposes, in accordance with the Charitable Trusts Act 1957. The Court found that the proposed amendments were in line with contemporary commercial practice and would facilitate the administration of the trust by enabling the Board to attract and retain appropriately skilled professional trustees. The Court also noted that the opposition raised by Mr Clarke and others demonstrated the risk of claims being made against the Board and the trustees, which the proposed amendments sought to address. Accordingly, the Court granted the application and ordered the amendment of the Trust Deed as proposed by the Board.

In addition to the above, the Court noted that it is now standard practice for professional trustees to be provided with comprehensive indemnities and/or insurance to protect them from personal liability, and that the proposed amendments would align the Trust with this practice. The Court also rejected the argument that the trustees should be held accountable for their decisions without the benefit of insurance or indemnity protection, stating that the contemporary commercial, legal, and social context in which the trustees operate are far removed from what could have been contemplated when the Trust was established in 1901. The Court concluded that the proposed amendments would facilitate the administration of the Trust and its charitable purposes, and therefore granted the Board's application.

Orders