Estate of Clarke

[2023] NZHC 3341

IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY

I TE KŌTI MATUA O AOTEAROA KIRIKIRIROA ROHE

CIV-2023-419-156

[2023] NZHC 3341

UNDER	the Charitable Trusts Act 1957
IN THE MATTER	of an application to approve a scheme under s 35(2) of the Charitable Trusts Act 1957
PUBLIC TRUST as executor for the estate of the late Marlayne Clarke of Hamilton Applicant

Hearing:	On the papers
Counsel:	J J Pietras for the applicant
Judgment:	23 November 2023

JUDGMENT OF GAULT J

This judgment was delivered by me on 23 November 2023 at 4:00 pm pursuant to r 11.5 of the High Court Rules 2016.

Registrar/Deputy Registrar

……………………………………

Solicitors:

Mr J J Pietras, Thomas Dewar Sziranyi Letts, Lower Hutt

RE ESTATE OF THE LATE MARLAYNE CLARKE [2023] NZHC 3341 [23 November 2023]

[1]    Public Trust seeks approval, under the Charitable Trusts Act 1957 (the Act), of a scheme in respect of a trust created by the will of the late Ms Marlayne Clarke. The proposed scheme is to vary a charitable bequest left for a facility that is now defunct and to substitute it with another charitable bequest for the purposes of a different programme operated by the same entity.

[2]    Following advertising of the scheme as required,1 no opposition was received. As Mr Pietras (for Public Trust) submitted, the application may be determined on the papers.

Background

[3]Ms Clarke’s will dated 29 April 1980 left the residue of her estate:

… UPON TRUST for the PRESBYTERIAN SOCIAL SERVICES

ASSOCIATION AUCKLAND INC. for the general purposes of Trevellyn Home for the Aged in Hamilton …

[4]    Following successive name changes between 1983 and 2003, Presbyterian Social Services Association Auckland Inc. (PSSAA) was renamed Presbyterian Support (Northern) (PSN).

[5]    In 2008, PSN was formally registered with the Charities Service (reg. no. CC21532).

[6]Ms Clarke died on 22 July 2017.

[7]    Ms Clarke’s surviving executor (appointed under a codicil dated 17 December 1981) renounced probate in favour of Public Trust.

[8]    Public Trust’s enquiries revealed that Trevellyn Home was operated by PSN for 50 years between 1954 and 2004, when it was sold to Oceania Healthcare Ltd (Oceania), an NZX listed for-profit company.

1      Charitable Trusts Act 1957, s 36 requires advertising before the application is considered by the Court.

[9]    After PSN divested itself of its rest home facilities, it continued to provide a restorative home and community support programme for elderly people in the Hamilton area, called the Enliven Maximising Independence programme. This aims to provide home-based care and community support services for the elderly, enabling them to live independently in their own homes, with personal care and home management services. It also offers support services to those with dementia and other disabilities.

[10]   In 2018, Oceania began work on a new retirement village on the site of Trevellyn Home. The existing building was demolished and replaced with the Awatere Rest Home and Village.

[11]   Public Trust’s attempts to resolve the issue with Oceania informally were not successful and legal fees materially diminished the estate’s residue. The residue of the estate is approximately $64,000.

[12]   Public Trust elected to apply for orders to approve a charitable scheme variation under Part 3 of the Act. The proposed substitution is from “[PSSAA] for the general purposes of Trevellyn Home for the Aged in Hamilton” to “[PSN] for the charitable purposes of the Enliven Maximising Independence programme in Hamilton”.

[13]   As required under  the  Act  before  applying  to  the  Court  for  approval,2 the scheme was submitted to the Attorney-General for a report. The report of the Attorney-General dated 23 May 2023 by the Deputy Solicitor-General, Ms Hardy, has been filed.

[14]   PSN supports the application. It considers it is the rightful recipient of the bequest. If the scheme is approved, PSN will use the estate funds solely for the purposes of the Enliven Maximising Independence programme in Hamilton.

2      Charitable Trusts Act 1957, s 35.

Applicable provisions and principles

[15]Section 32 in Part 3 of the Act provides:

32 Property 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.

…

(3)This section shall not operate to cause any property or income to be disposed of as provided in subsection (1) or subsection (2)—

(a)if in accordance with any rule of law the intended gift thereof would otherwise lapse or fail and the property or income would not be applicable for any other charitable purpose:

(b)in so far as the property or income can be disposed of under Part 4 of this Act.

…

[16]   As the Court of Appeal said in Presbyterian Support (Upper South Island) v The New Zealand Guardian Trust Company Ltd:3

[16]      In summary, where there is some failure of the original specified charitable purpose, s 32(1) of the Act provides for the application of property to another charitable purpose. It expressly states that s 32(1) applies whether or not there is any general charitable intention. However, s 32(1) cannot be used to dispose of property if s 32(3) applies. Section 32(3) preserves the common law doctrine of lapse. That doctrine applies where the charitable purpose has failed before the gift came into effect and where there is no general charitable intention to save the gift.

[17]      Difficult issues of interpretation and construction arise when ss 32(1) and 32(3) are considered together.4 However, where there is a general charitable intention present then the doctrine of lapse will not apply…

3      Presbyterian Support (Upper South Island) v The New Zealand Guardian Trust Company Ltd

[2016] NZCA 556, [2017] NZAR 84.

4      See for example Re Pettit [1988] 2 NZLR 513 (HC); and Alacoque v Roache [1998] 2 NZLR 250 (CA).

[17]   The Court of Appeal indicated that determining whether there is a general charitable intention requires consideration of the mode and the substance of the gift in question. It said that although there is no presumption in favour of a general charitable intention, the Courts tend to lean that way.5 As Ms Hardy’s report also noted, the Court of Appeal summarised the approach as follows:

[37]      … the courts have found a general or paramount charitable intention in a number of cases where property has been left for a specific charitable purpose and the donor has indicated with some degree of particularity the mode in which he or she desires the gift to be applied.6 This reflects both the preference of the courts to avoid intestacy where possible and also, in public policy terms, the important position and status of charities in the provision of welfare services in New Zealand. As a result, the courts will generally accept even a fairly small indication of a donor's intention as showing that a purpose, and not a specific person or institution, was the intended beneficiary.7

[38]      In some cases, however, it will be indisputable that the deceased intended to benefit a specific institution only. In Alacoque the gift was to be applied “for the benefit absolutely and exclusively of the Saint Joseph Convent at Eltham”.8 The Convent was closed before the testatrix died and there had ceased to be a religious order in existence that could answer the description contained in the Will. The words “absolutely and exclusively” were apparently relevant to the Court's finding that there was no general charitable intention. The Court held that the deceased intended to benefit only that Convent and no other institution or broader purpose.9

Discussion

[18]   The Attorney-General’s report indicates that Ms Hardy is satisfied that the scheme is a proper one and should carry out the desired purpose or proposal, and is not contrary to law or policy or good morals; that the scheme can be approved by this Court under Part 3 of the Act; that the 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 the report.

[19]   It is no longer possible to carry out the particular purpose given the permanent closure of Trevellyn Home.

5      Presbyterian Support (Upper South Island) v The New Zealand Guardian Trust Company Ltd

[2016] NZCA 556, [2017] NZAR 84 at [33]–[34].

6      William Henderson, Jonathan Fowles and Julian Smith Tudor on Charities (10th ed, Thomson Reuters, London, 2015) at [9-027]-[9-028].

7      At [9-065]. See also Re Petitt [1988] 2 NZLR 513 (HC) at 547 and 551; and Public Trustee v Attorney General [2005] NSWSC 1267 at [19].

8      Alacoque v Roache [1998] 2 NZLR 250 (CA) at 252.

9      At 254–255.

[20]   However, I am satisfied there is a sufficient general charitable intention within the relevant clause in the will to prevent the bequest from failing altogether. I do not consider the issue of lapse arises. I agree with Ms Hardy that it is possible to interpret the relevant words in the will as indicating that Ms Clarke had a general charitable intention to support the PSSAA, now renamed PSN, for the aged in Hamilton. PSSAA/PSN is a faith-based support network. There is no suggestion that Trevellyn Home was a separate legal entity. An appropriately purposive construction of the will indicates a sufficient general charitable intention.

[21]   I also accept Ms Pope’s evidence on behalf of Public Trust that it is highly unlikely that Ms Clarke would have intended her gift to pass to Oceania (a private company) as opposed to PSN (a faith-based charity). PSN continues to provide charitable services in Hamilton that are similar to the types of services it offered to elderly residents at Trevellyn Home, especially support programmes for those with dementia.

[22]   I agree with Ms Hardy that the proposed variation is the most closely aligned, that is, accords as closely as is reasonably possible in the changed circumstances,10  to Ms Clarke’s apparent intent in the terms of the original trust. I am satisfied the proposed scheme will ensure that Ms Clarke’s charitable bequest can be carried out in the way that most closely aligns with her testamentary intention.

[23]   Accordingly, I consider the Court should approve the variation to the will so that the residue of the estate can be used by PSN for the Enliven Maximising Independence programme in Hamilton.

Result

[24]   Orders accordingly as sought in paragraphs 1(a) and (b) of the originating application dated 13 June 2023.

[25]The applicant is entitled to 2B costs from the trust fund.

10     Re Tennant [1996] 2 NZLR 633 (HC) at 636; Re Twigger [1989] 3 NZLR 329 (HC).

[26]The Attorney-General is entitled to costs of $750 for the report.

Gault J