David Cummings Medical Trust

[2013] NZHC 2944

IN THE HIGH COURT OF NEW ZEALAND BLENHEIM REGISTRY

CIV-2013-406-000149 [2013] NZHC 2944

IN THE MATTER             of a Scheme under Part 3 of the Charitable

Trusts Act 1957

PETER JOSEPH RADICH and PERPETUAL TRUST LIMITED as the Trustees of the DAVID CUMMINGS MEDICAL TRUST

Applicants

Hearing:                   7 November 2013

Counsel:                  R D Crosby for Applicants

Judgment:                7 November 2013

JUDGMENT OF COLLINS J

Introduction

[1]      The question I have to consider is whether I should approve variations to the terms of the David Cummings Medical Trust (the Trust) created by the will of David Cummings (Mr Cummings) who died in 1980.

Context

[2]      This question arises in the context of an application by the trustees who have applied under the Charitable Trusts Act 1957 (the Act) to vary the terms of the Trust.

Re: David Cummings Medical Trust [2013] NZHC 2944 [7 November 2013]

Background

[3]      The Trust provides financial support in the form of scholarships for New Zealand    medical    graduates    to    pursue    post-graduate    medical    studies    at Edinburgh University.

[4]      Mr Cummings was influenced when making the Trust by his Scottish heritage and his experience with doctors who had been trained at Edinburgh University. Mr Cummings had served as a soldier on the Western front in the First World War and had spent long periods of time in hospital during that war.  He was impressed by the level of skill displayed by doctors who had studied at Edinburgh University.  He established the Trust to show his gratitude for the care provided to him, and to maintain a connection between his family and Edinburgh University.

[5]      In order to carry out the purposes of the Trust, the trustees advertised in medical journals and in university publications for applicants for the scholarships created by the Trust.   However, it appears that applications have dwindled, to the point that in recent years no applications have been made.   The last application, which was for a limited form of assistance, was made in 2010.

[6]      Inquiries    of    leading    medical    academics    in    New    Zealand    and Edinburgh University confirm that Edinburgh University is no longer considered a highly desirable  institution  for  New  Zealand  medical  graduates  to  pursue  post- graduate medical studies.  There are a number of factors that have contributed to this situation, namely:

(1)Edinburgh University no longer gives preference to Commonwealth students.

(2)There   is   greater    competition    for   places    at   United   Kingdom universities from students from the European Union.

(3)       A number of United States medical institutions are now regarded as being  highly  desirable  places  in  which  to  pursue  post-graduate

medical studies because of their status as world class post-graduate medical institutions.

The application

[7]      The trustees seek orders substituting a new deed of trust, with the following purposes:

(1)Expanding the locations at which post-graduate study can be pursued by  recipients  of  the  Trust’s  scholarship  to  include  any  overseas medical university.

(2)To  accommodate  the  pursuit  of  studies  at  Edinburgh  University through distance learning.

(3)To include computer resources and/or programs and distance learning programs as the type of support that can be provided for by the Trust.

Is it impossible, impracticable or inexpedient to carry out the Trust’s original

purpose?

[8]      Before a variation can be granted s 32(1) of the Act must be satisfied.  That section provides that where it becomes impossible, impracticable or inexpedient to carry out a charitable purpose, then the Trust property and income may be disposed of for some other charitable purpose.

[9]      Technically, it is not impossible for the Trust to continue to offer scholarships to medical students to pursue post-graduate medical studies at Edinburgh University. However, the trustees’ application is properly based on their concern that due to a lack of interest in Edinburgh University as a destination for post-graduate medical studies, it is now impracticable or inexpedient to continue to confine the Trust to scholarships to pursue post-graduate medical studies only at Edinburgh University.

[10]     In my assessment, the trustees’ concern is well founded because it impractical or inexpedient to achieve a trusts purpose if that purpose is now “unsuitable, inadvisable or inapt”.1

[11]     I am  in  no  doubt  that  it  is  impractical  and  inexpedient  for the Trust  to continue in its current form in view of the fact that no applications have been made for the scholarships provided by the Trust in recent years and therefore, the original purposes envisaged by Mr Cummings cannot be fulfilled.  Because there have been no scholarships issued since 2010 it is impracticable to retain the restriction that the Trust only provide financial assistance for New Zealand medical graduates who wish to pursue post-graduate medical studies only at Edinburgh University.

Is the proposed new Trust a charitable purpose?

[12]     Before I can approve the application I must be satisfied that the new purposes

of the Trust have a “charitable purpose”.

[13]     This issue is easily resolved.  The new purpose of the Trust Deed will be to advance medical training and education of New Zealand medical graduates.  This is clearly a charitable purpose.

Will the new Trust adhere as closely as reasonably possible to Mr Cummings’

intentions when he created the Trust?

[14]     While Mr Cummings’ original intention was to restrict beneficiaries of the Trust to students who wished to pursue post-graduate medical studies at Edinburgh University, his intention was based in part on the premise that Edinburgh University was a premier medical institution for post-graduate medical training in the Commonwealth.

[15]     Mr Cummings’ views about Edinburgh Medical School were undoubtedly

well founded at the time the Trust was created.  However, evidence now shows that a number of institutions, particularly in the United States have overtaken Edinburgh

1      Re McElroy Trust [2003] 2 NZLR 289 (CA).

University as institutions that are highly regarded for post-graduate medical studies by New Zealand medical graduates.

[16]     In my view, varying the terms of the Trust to reflect the changing landscape of post-graduate medical institutions will substantially give effect to Mr Cummings’ intentions  to  facilitate  New  Zealand  medical  graduates  pursuing  post-graduate medical training at the best teaching medical facilities in the world.

The Attorney-General’s view

[17]     The Attorney-General’s view has been sought under s 56(1) of the Act.  The Attorney-General  approves the creation of the new Trust along the lines of the scheme proposed by the trustees.

Conclusion

[18]     I am satisfied that the trustees’ application gives effect to Mr Cummings’ original intentions.  In particular, Edinburgh University’s distance learning programs will ensure that post-graduate medical students will be able to pursue post-graduate medical studies at Edinburgh University in appropriate cases.   In addition, other medical graduates from New Zealand universities will have the opportunity to take advantage of Mr Cummings’ generosity and pursue post-graduate medical studies at the world’s leading medical institutions.

[19]     Accordingly, the application by the trustees is granted.

Costs

[20]     The Attorney-General’s costs are fixed at $750 pursuant to s 52 of the Act and should be paid from the Trust’s assets.

[21]     The  Trustees  reasonable  costs  and  disbursements  in  relation  to  their

application should be paid from the assets of the Trust.

D B Collins J

Solicitors:

Radich Law, Blenheim for David Cummings Medical Trust