Doreen Brown Trust Fund

[2020] NZHC 449

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2019-409-611

[2020] NZHC 449

IN THE MATTER

of the Trustees Act 1956 and the Charitable Trusts Act 1957

AND

IN THE MATTER

of the trust deed of THE DOREEN BROWN TRUST FUND

AND

IN THE MATTER

of an application by J O TURPIN,

M MORRISON and M F TOOMEY, as
trustees of THE DOREEN BROWN TRUST FUND, for directions in respect of disposing

of the surplus assets of THE DOREEN BROWN TRUST FUND

On the papers:
Counsel:	H A Evans/S B Henry for Applicants A Powell for Attorney-General
Judgment:	10 March 2020

JUDGMENT OF CHURCHMAN J

[1]                On the 5 November 2019, counsel for the applicants sought certain orders in relation to disposing of the assets of The Doreen Brown Trust Fund (the Trust Fund).

[2]That application was supported by affidavits from Michael Frances Toomey

dated 5 November 2019 and Christopher David Ponga dated 1 November 2019.

DOREEN BROWN TRUST FUND [2020] NZHC 449 [10 March 2020]

[3]                The Trust Fund was established with funds received from the Will of the late Pearl Doreen Brown dated 6 February 1969.

[4]                As at the date of the application, the Trust Fund had assets of some $67,254.70. These funds were generating minimal income.

[5]                The terms upon which the Trust Fund were held meant that the trustees could not utilise the capital assets for the purposes set out in the Trust Deed.

[6]                Counsel for the Attorney-General filed a memorandum in this matter dated  13 February 2020. That memorandum highlighted certain difficulties with the course initially proposed by the trustees. It adverted to the possibility that were all parties interested in the corpus of the Trust to consent, it may be appropriate to proceed directly to a winding up where that is otherwise permitted.1

[7]                By minute dated 14 February 2020, Osborne J directed the applicants to file further evidence and any amended application addressing the issues arising out of the memorandum filed on behalf of the Attorney-General.

[8]                A further affidavit from Mr Toomey has been filed dated 21 February 2020. This affidavit advised that the trustees accepted that the Trust Deed structure meets that:

(a)the capital sum has not been protected from inflation; and

(b)the administration of the Trust has become inexpedient because the income earned each year was insufficient to make a meaningful contribution to fulfilling the charitable purpose set out in the Trust Deed.

[9]                The affidavit expressed the trustees’ conclusion that applying for a scheme under Part 3 of the Charitable Trusts Act 1957 was not viable on economic grounds,

1      See In the matter of the Mercury Bay Undenominational Church Assn Trust Board (Inc) HC HAM, M113/00, 15 June 2000, Hammond J.

and that the trustees had elected to pursue the original relief sought which was to pay the liabilities of the Trust Fund and dispose of the remaining assets for the benefit of Swimming Canterbury West Coast Incorporated, and then to subsequently wind up and dissolve the Trust Fund.

[10]            By memorandum dated 21 February 2020, counsel for the applicants confirmed that the applicants wish to have the matter resolved on the papers and, if possible, prior to the end of the 31 March 2020 financial year.

[11]            By memorandum dated 6 March 2020, counsel for the Attorney-General expressed the view that the course proposed in the memorandum of counsel for the trustees of 21 February 2020, was an available course and that the Attorney-General was content for the matter to be dealt with on the papers.

Analysis

[12]            One of the recognised common law exceptions to the general rule that a charitable trust cannot be terminated, is where the settlor has provided for the primary charitable trust to come to an end on the happening of a specified condition (such as the passing of a resolution by the trustees) and has made a gift over to an alternative charitable purpose.2 That set of circumstances applies here.

[13]            In the present case, the trustees propose to wind the Trust Fund up and to transfer remaining assets for the benefit of Swimming Canterbury West Coast Incorporated. That entity has a constitution that requires it to engage in swimming education, which is consistent with the settlor’s original charitable purpose. Its Board has resolved that:

The net proceeds of the Trust Fund received by SCWCI to be utilised to achieve a meaningful outcome in achieving the purposes enunciated by the provisions of the Trust Deed.

[14]            I am satisfied that this is a sufficient indication of a charitable purpose. I am also satisfied that the course proposed by the trustees is necessary and desirable in

2      Canterbury Orchestra Trust v Smitham [1978] 1 NZLR 787 (CA), at 799.

order to give practical effect to the intentions of the late Pearl Doreen Brown as identified in her Will.

[15]            Accordingly, I make the following directions that the trustees of the Doreen Brown Trust Fund are to:

(a)pay all costs, debts and liabilities of the Trust Fund, including all costs of and incidental to the originating application for directions, out of the (income and capital) assets of the Trust Fund; and

(b)pay or dispose of all remaining assets of the Trust Fund to or for the benefit of Swimming Canterbury West Coast Incorporated (SCWC); and

(c)subsequently wind up and dissolve the Trust Fund.

[16]            Michael Frances Toomey is to be appointed by the trustees as the liquidator of the Trust Fund.

Churchman J

Solicitors:

Young Hunter, Lawyers, Christchurch for Applicants Crown Law, Wellington for Attorney-General