Culpan HC Auckland CIV-2006-404-005110

[2011] NZHC 1546

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2006-404-005110

IN THE MATTER OF     THE CHARITABLE TRUSTS ACT 1957

AND IN THE MATTER OF THE TRUSTEES ACT 1956

BETWEEN  REYBURN CHARLES CULPAN AND MATTHEW JOSEPH KOPPENS Applicants

Hearing:         On the Papers

Judgment:      8 February 2011

JUDGMENT OF ELLIS J

This judgment was delivered by me on 8 February 2011 at 3pm, pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar

Solicitors:      Wynard Wood, PO Box 2217, Auckland 1140

Short & Partners, PO Box 137-241, Parnell, Auckland
Crown Law, PO Box 2858, Wellington 6140

[1]      This is an application under Part 3 of the Charitable Trusts Act 1957 (the Act)

for approval of a scheme in respect of a trust created by the Will of Maria Rossi

Scott.

CULPAN AND KOPPENS HC AK CIV-2006-404-005110 8 February 2011

[2]      The reason for the application is that the original trust created by the Will is impossible to carry out because the named beneficiary of a one-fifth share of the residue of the estate, Bird Rescue Auckland Inc, ceased to exist before the death of Ms Scott (which occurred on 8 January 2009).  Bird Rescue Auckland Inc was struck off  the  Register  of  Incorporated  Societies  on  8  February 1999  and  placed  into liquidation in 2002.

[3]      The proposed scheme is effectively that a proposed alternative beneficiary, New Zealand Bird Rescue Charitable Trust, be substituted for Bird Rescue Auckland Inc. The New Zealand Bird Rescue Charitable Trust (“the Trust”) was established by persons previously actively involved in Bird Rescue Auckland Inc.  In fact, the Trust was established after a bequest made by Jocelyn Jane Grattan in favour of Bird Rescue Auckland Inc had also failed on account of that body no longer being in

existence: re Short (alt sit re Grattan).[1]

[1] re Short (alt sit re Grattan) (2008) 27 FRNZ 283.

[4]      An affidavit as to advertising shows that the proposed scheme was advertised in the New Zealand Gazette on 28 October 2010 and by public notices in the New Zealand Herald on 22 October, 29 October and 5 November 2010.

[5]      When the application was called before Brewer J on 11 October 2010 His

Honour made directions that the application be served on: (a)           The Attorney-General

(b)      The New Zealand Bird Rescue Charitable Trust; and

(c)       The Society for the Prevention of Cruelty to Animals (Auckland) Inc

(being another of the residual beneficiaries under the Will).

[6]      Service was duly affected and both the SPCA and the New Zealand Bird Rescue Charitable Trust notified the Court that they had no objection to the proposed scheme.  Nor have notices of opposition been filed by any other person following the Gazette notice and advertising to which I have referred above.

[7]      As required by s 35 of the Act a full report on the proposed scheme was prepared on behalf of the Attorney-General.  The key issue identified by the report is whether the doctrine of lapse preserved by s 32(3) of the Act applies to defeat the operation of s 32(1).  It is section 32(1) that provides that where any trust property is given for any charitable purpose but it is not possible to carry out that purpose the property may be applied for another charitable purpose.   In effect this means that s 32(1) will not apply where there is no general (as opposed to particular) charitable intention disclosed in the Will.

[8]        Discerning the existence of a general charitable intention is a question of construction.  For the reasons given in the Attorney’s Report, I am satisfied that the requisite general charitable intention does exist in this case.   In particular I accept that:

(a)      While there is no presumption in favour of the existence of a general charitable intention, the courts have been willing to lean in favour of charity and to infer such an intention in the absence of clear indicia to the contrary;

(b)In the case of Ms Scott’s will an inference as to her general charitable intention can be drawn from the facts that:

(i)the bequest to Bird Rescue Auckland Inc was made “for the general purposes thereof” and thus for the purposes of bird rescue generally;

(ii)      the other two bequests of the residue were to charities;

(c)      Although there is conflicting authority as to the correctness of the second of these propositions, the first point suffices to evidence a wider charitable intention that encompasses the works of the Trust. As well, were it necessary to decide the matter, the first point informs and confirms the second; and

(d)On that basis it is appropriate and in the public interest that Ms Scott’s general  charitable  intention  be  upheld  by applying the  gift  to  the Trust’s purposes by way of a Part 3 scheme.

[9]      In terms of whether the criteria for the proposed variation itself are made out the Report refers to the following summary of the relevant principles contained in Re Tennant:[2]

The application must come within the statutory jurisdiction (which includes a necessity for the purposes to have been charitable at the date of settlement, see In Re Beckbessinger [1993] 2 NZLR 362). Second, the substituted arrangements must be charitable as that term is understood in law. Third, in deciding whether to approve the substituted arrangements the new scheme should accord as closely as is reasonably possible in the changed circumstances to the terms of the original trust. Fourth, the Court will dispose of the property in such a way as will best serve the interests of those intended to be beneficiaries and the public. Fifth, other considerations arise if an opposing party puts forward an alternative scheme.

[2] Re Tennant [1996] 2 NZLR 633 at 636.

[10]     I have no difficulty in concluding in the circumstances here that the first, second and fourth principles are met. The fifth is not in issue in this case.

[11]     As regards the third principle, the Attorney’s Report records that while the Court is not bound by the common law doctrine of cy-pres, it is widely accepted that any beneficiaries or purposes substituted should resemble as closely as possible those originally specified by the settlor.  In this respect it is relevant that an affidavit has been filed on behalf of Ms Scott’s trustees that discloses that they have done all they reasonably could  to  satisfy themselves  that  the Trust’s  activities  accord  as nearly as possible with the purposes that Ms Scott intended to benefit.  I note that such a conclusion is of course supported by the origins of the New Zealand Bird Rescue Charitable Trust itself, summarised above.  The origins and current work of the Trust was also helpfully set out in an affidavit filed by Ms Howlett who is the settlor of the Trust.

[12]     Based on the Attorney’s Report and the analysis above I conclude that :

(a)      the proposed 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;

(b)      the proposed scheme can be approved under Part 3 of the Act;

(c)       the proposed purpose is charitable within the meaning of Part 3 of the

Act and can be carried out; and

(d)the requirements of Part 3 of the Act have been complied with in respect of the proposed scheme up to the giving of the Attorney’s Report.

[13]     I am therefore satisfied that the requirements set out in s 56(1)(a) are met and approve the proposed scheme under Part 3 of the Act accordingly.

[14]     It is agreed that the Attorney General is entitled to have the costs of preparing the Report ($750) paid out of the trust fund.

Rebecca Ellis J