Dilworth Old Boys Benevolent Trust
[2022] NZHC 2755
•25 October 2022
IN THE HIGH COURT OF NEW ZEALAND
` REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2022-404-1578
[2022] NZHC 2755
UNDER
AND
Part 3 of the Charitable Trusts Act 1957 IN THE MATTER OF
the DILWORTH OLD BOYS
BENEVOLENT TRUST a registered charitable trust having its registered office at 45 Fordyce Avenue, Sunny Hills, Auckland Applicant
Hearing: 12 October 2022 Counsel:
S McNulty for Applicant
Judgment:
25 October 2022
JUDGMENT OF WOOLFORD J
(Variation of trust)
This judgment was delivered by me on Tuesday, 25 October 2022 at 12:30 pm pursuant to r 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Solicitors / Counsel: Jackson Russell (S McNulty), Auckland
Re DILWORTH OLD BOYS BENEVOLENT TRUST [2022] NZHC 2755 [25 October 2022]
[1] This is an application by the Dilworth Old Boys Benevolent Trust (the Trust) for an order under the Charitable Trusts Act 1957 (the Act) approving a scheme to vary the power of the trustees and varying the mode of administration of the assets of the Trust.
[2]In addition to the application itself, the applicant has filed:
(a)Draft scheme of variation;
(b)Affidavit of Bruce Bayford Owen in support dated 30 August 2022;
(c)Report of the Attorney-General dated 20 July 2022 (report);
(d)Affidavit of Alicia Anne McCabe as to advertising dated 30 September 2022; and
(e)Memorandum of counsel.
Background to Scheme
[3] The Dilworth Old Boys Association (DOBA) is an association of past pupils of the Dilworth School in Auckland. DOBA aims to support old boys in establishing themselves in their chosen careers by maintaining a strong network of past pupils.
[4] The Trust was established in October 1971 as a result of DOBA recognising that members of the old boy community may have certain financial needs over their lifetimes. The Trust Deed describes the core purposes of the Trust as providing financial and other assistance to Dilworth old boys, their widows and children as well as members of DOBA, who justify assistance by virtue of their distressed or straitened circumstances.
[5] The original Trust Deed uses outdated language and does not cater to the modern requirements and rules for the proper administration of a charitable trust.
[6] Paragraph 25 of the affidavit of Bruce Owen sworn on 30 August 2022 sets out what the effects would be if the proposed scheme was approved. The scheme being proposed in this application:
(a)Amends the charitable objects of the Trust by expanding the class of potential beneficiaries as close as is reasonably possible to those in the original Trust Deed. For example, it allows de facto partners and not just spouses of deceased old boys to be included as potential beneficiaries of the Trust;
(b)Amends and simplifies clauses and rules relating to trustee powers; and
(c)Amends certain rules relating to the administration and management of the Trust. These amendments can be made under the existing Trust Deed but have been included in the scheme so that there is a single scheme document to replace the Trust Deed.
Procedural requirements
The procedural requirements are contained in Part 3 of the Act. In summary:
(a)The draft scheme, the originating application and supporting affidavit of Bruce Owen were submitted to the Attorney-General (via Crown Law);1
(b)The Deputy Solicitor-General, in exercise of the functions of the Attorney-General, has provided a report.2 The Deputy Solicitor- General’s report endorses the amendments to the Trust that are proposed under the scheme, aside from the proposed clause 9;
(c)This application has been publicly advertised;3 and
1 As required by s 35 (1) of the Charitable Trusts Act 1957.
2 Section 35(1)(b).
3 Section 36.
(d)At the time of filing counsel’s memorandum, counsel was not aware of any intended opposition to the scheme or this application.
Report of the Attorney-General
[8] Every scheme prepared under Part 3 of the Act must be submitted to the Attorney-General.4 Such schemes must be provided to the Attorney-General together with full information as to all the facts upon which it is proposed to make the disposition set out in the scheme, and with copies of any instruments necessary to explain the scheme.
[9]The Attorney-General:
(a)May remit the proposed scheme to the trustees for consideration of any suggested amendments; and
(b)Shall report on the scheme as finally submitted by the trustees after they have considered such amendments (if any) as are suggested by the Attorney-General, and shall deliver the report to the trustees.
[10] The Deputy Solicitor-General (on behalf of the Attorney-General) has reported (emphasis added):5
Pursuant to ss 35 and 56 of the Act and for the purposes of assisting this Court as to the matters of which it is required to be satisfied under s 56(1)(a) of the Act, I report that with the exception of proposed clause 9, I am satisfied that the 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; that the scheme can be approved by this Court under Part 3 of the Act; that every proposed purpose is charitable within the meaning of Part 3 and can be carried out; and that the requirements of Part 3 have been complied with in respect of the scheme up to the giving of this report.
Amendment to the originating application – Reliance on s 32 of the Act
[11] The applicant notes that the draft originating application which was submitted to the Attorney-General for consideration has been amended prior to filing with the
4 Section 35(1).
5 Report of the Attorney-General at [3].
Court. The draft application submitted to the Attorney-General proposed that the application could be brought solely under s 33 of the Act, which relates to extensions of powers or alteration of the mode of administration of trusts.
[12]Paragraph 74 of the report states that
The Attorney-General does not consider the application can wholly be brought under s 33 of the Act; it must also be made under s 32 given that the effect of the alterations to the Scheme changes the object of the trust.
Section 32 of the Act
[13] The Scheme proposes amendments to the charitable purpose of the Trust under s 32 of the Act:
32Property may be disposed of for other charitable purposes
(1) Subject to the provisions of subsection (3), in any case where any property or income is given or held upon trust, or is to be applied, for any charitable purpose, and it is impossible or impracticable or inexpedient to carry out that purpose, or the amount available is inadequate to carry out that purpose, or that purpose has been effected already, or that purpose is illegal or useless or uncertain, then (whether or not there is any general charitable intention) the property and income or any part or residue thereof or the proceeds of sale thereof shall be disposed of for some other charitable purpose, or a combination of such purposes, in the manner and subject to the provisions hereafter contained in this Part of this Act.
[14] The report sets out the guiding principles relating to s 32 of the Act at paragraphs [66]–[70] and cites the classic statement in Re Whatman:6
It seems to me that in deciding whether to approve a scheme under s 32 the Court, having found that is impossible or impracticable or inexpedient to carry out the terms of the trust as directed by the settlor or that one of the other grounds set out in s 32 are established, owes a duty to the settlor of the trust property to dispose of it as nearly as possible in accordance with the intentions of the settlor in establishing the trust. It owes a duty also to those proposed to be benefited by the trust and to the public generally to dispose of the fund or property as nearly as possible in accordance with the charitable purposes of the trust and in such a way as will best serve the interests of those intended to be benefited. It is not, however, bound by the cy-pres doctrine as a guiding principle and may, if the original charitable purpose cannot be carried out, approve a scheme without regard to its resemblance to the old purpose.
6 Re Whatman (1965) 1 NZTR 0-004 (SC) at [11].
[15] The Deputy Solicitor-General considered7 that there is evidence that it is inexpedient to carry out the charitable purposes of the Trust in the originally envisaged manner.
[16] The report discussed both the proposed amendments to the class of potential beneficiaries and the conditions that would justify assistance to one of those beneficiaries:
(a)In respect of the class of potential beneficiaries, it concludes:8
I am accordingly satisfied that the proposed variation of the trust’s purpose to extend the class of potential beneficiaries is as close as is reasonable possible to the original purposes set out in DOBA’s deed and is one that may be approved by this Court.
(b)In respect of the proposed conditions that would justify assistance, the Report concludes that the “alteration to financial criteria for assistance is also as close as possible to DOBA’s original intention”.9
Section 33 of the Act
[17] The Scheme also proposes amendments to the mode of administration of the Trust under s 33 of the Act:
33Extension of powers or alteration of mode of administration of trust
In any case where it is made to appear that any property or income is given or held upon trust, or is to be applied, for any charitable purpose, and the administration of the property or income or the carrying out of the trust could be facilitated by extending or varying the powers of the trustees or by prescribing or varying the mode of administering the trust, the powers of the trustees may be extended or varied, and the mode of administering the trust may be prescribed or varied, in the manner and subject to the provisions hereafter contained in this Part of this Act:
Provided that nothing in this section shall restrict the powers that are or may be conferred on the Court or the trustees by or under the Trusts Act 2019 or any other Act or by law.
7 Report of the Attorney-General at [78].
8 At [86].
9 At [85].
[18] In re Melanesian Mission Trust Board, Paterson J discussed the threshold for a scheme submitted under s 33 of the Act:10
… it is necessary for this Court to be satisfied that the administration of the property or the carrying out of the trust ‘could be facilitated’ by the variation sought. The ordinary dictionary meaning of ‘facilitate’ is made easier, promoted, or helped forward.
[19] In Re Hamilton Residential Trust, Muir J referenced Paterson J’s comments in re Melanesian Mission Trust Board and noted in relation to s 33 that “the threshold test is not therefore high”.11
[20] The report states that “the threshold to be established under s 33 of the Act is only that the variation proposed would facilitate the carrying out of the Trust”12 and concludes:
Aside from cl 9, the proposed changes will, in the Attorney-General’s view, likely facilitate the Trust Board and its trustees in the carrying out of the trust’s charitable purposes.13
Proposed clause 9
[21] The position under the current Trust Deed is that clause 20 of Appendix A empowers the Board:
20. TO alter in any way all or any of the Rules annexed hereto and headed “Appendix B” in the manner set forth in Clause 8 of the said Rules, but not to alter Rule 8 itself.
[22] Rule 8 of Appendix B of the current Trust Deed allows the Board to amend the administrative rules of the Trust as set out in Appendix B by a three quarters majority of Board members. It provides:
These Rules excepting this Rule, may be altered to added to at any meeting of the Board subject to the following conditions:
(a)Notice stating the general tenor of any proposed alterations or additions to the Rules shall be given to each Member.
(b)The meeting may amend any such proposals.
10 Re Melanesian Mission Trust Board, HC Auckland, M1140/98, 24 September 1998 at page 7.
11 Re Hamilton Residential Trust [2017] NZHC 104 at [32].
12 Report of the Attorney-General at [87].
13 At [88].
(c)No resolution of any meeting shall effect any alteration of addition to the Rules unless it be carried by a majority of at least three quarters of the Members present at such meeting and entitled to vote.
(d)Duplicate original copies of every such alteration, addition, recission or amendment shall forthwith be delivered to the Registrar of Incorporated Societies to be filed with the Constitution and Rules.
[23] The scheme submitted to the Attorney-General proposed that clause 20 of Appendix A and Rule 8 of Appendix B in the original Trust Deed be replaced with an expansion of the trustees’ powers to amend the terms of the Trust. Proposed clause 9 involved a substantive change to the trustees’ powers as it went beyond the trustees having the ability to amend the Trust’s administrative rules. It also would have allowed the trustees to vary the Trust’s charitable purpose with a three-quarter majority vote of trustees and provided the Dilworth Trust Board and the Council of DOBA consent.
[24] Proposed clause 9 is discussed at paragraphs [4], [36]–[38] and [90] of the report. At paragraph [90] the Report states:
If and to the extent this would allow trustees to vary the purposes of a trust without seeking the Attorney-General’s report on and the Court’s approval of a scheme under Part 3 of the Charitable Trusts Act, the Attorney-General concludes it would be an impermissible amendment.
Amendment to the Scheme – New Clause 9
[25] In order to address the concerns raised by the Attorney-General, the applicant has amended the Scheme after receiving the Report.
[26] The applicant now seeks to include as ‘new’ clause 9, one that reflects what is included in the existing Trust Deed. In other words, new clause 9 provides the trustees with the power to alter only administrative clauses in the Trust Deed, by a three- quarters majority.
[27]New Clause 9 provides:
The Trustees may, by a resolution passed by not less than three-quarters in number of all the Trustees in office revoke, vary, or add to any of the administrative provisions of this deed.
[28] Counsel for the applicant notes that enquiries were made with Crown Law as to whether a further report of the Attorney-General would be required if proposed clause 9 was revised such that it was simply a power to vary administrative clauses of the Trust Deed. By e-mail of 11 August 2022, Crown Law advised that no further report from the Attorney-General was required in this instance, though it did request that the applicant advise the Court of this amendment to the Scheme after the applicant’s receipt of the report.
[29] Counsel for the applicant also notes that as a result of this change, the affidavit of Bruce Owen has also been altered since receipt of the report; being paragraphs [42] and [43] under the heading “Trustee powers to amend terms of the Trust”.
Public advertising of the application
[30] Section 36 of the Act requires that the application be advertised once in the Gazette and three times in a local newspaper, with an interval of not less than six days between any two insertions in one newspaper. The first advertisement must be published no more than three months and no less than one month before the date proposed for consideration of the scheme by the Court.
[31] The notice advertised must give particulars of the scheme, state the date proposed for the hearing of the application by the Court, and require any person desiring to oppose the scheme to give written notice of his intention to do so to the Registrar, the trustees and the Attorney-General not less than seven clear days before that date.
[32] The Dilworth Scheme was advertised in accordance with the above requirements, as set out in the affidavit of Alicia McCabe dated 30 September 2022.
[33] No notice of opposition to the Dilworth Scheme has been received by the applicant. The Board is not aware of any intended opposition to this application.
Number of Trustees
[34] The Attorney-General’s report mentions an inconsistency in the number of trustees on the board, but notes that “We do not consider that changing this number, provided it stays within that range, would cause concern”.14
[35] Nevertheless, counsel for the applicant notes for completeness that there is no inconsistency:
(a)The number of trustees in the Scheme is set at five (refer to clause 3.1 of the Scheme).
(b)The existing Trust Deed for the Dilworth Old Boys’ Benevolent Trust provides for four (refer to rule 1 of Appendix B).
(c)The affidavit of Bruce Owen identifies that the number of trustees is being increased from four to five (refer to paragraph 52.1 of the affidavit).
(d)A certified working edition of the will of James Dilworth was annexed to the affidavit for background purposes only. The present-day successor to the original Dilworth trustees is the Dilworth Trust Board, which has six or seven trustees (refer S2022 [46A] and [47A].
(e)There is no inconsistency because the Dilworth Old Boys’ Benevolent Trust and Dilworth Trust Board are different trusts.
[36] For the avoidance of doubt, paragraphs [18] and [19] of the Report refer to past variations of the Will (not the Dilworth Old Boys’ Benevolent Trust Deed).
14 Report of the Attorney-General at [47] and [93].
Result
[37] I am satisfied that the amendments proposed by the Scheme meet the requirements of ss 32 and 33 of the Act. In addition, the procedural requirements set out in ss 34–36 of the Act have been met.
[38] I therefore approve the Scheme submitted in this application. I fix the costs of the Attorney-General at $750 and direct that they be paid out of the assets of the Trust.
Woolford J
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