Estate of Kamo
[2020] NZHC 474
•11 March 2020
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE
CIV-2019-485-57
[2020] NZHC 474
UNDER Sections 31 and 32 of the Wills Act 2007 IN THE MATTER OF
an application by PUBLIC TRUST for an order as to the correct meaning of or, in the alternative, correcting the last will of MINNIE TE MIRI KAMO
Hearing: On the papers Counsel:
C J Kelly for Applicant
Judgment:
11 March 2020
JUDGMENT OF ELLIS J
[1] The Public Trust is the executor and trustee of the estate of Minnie Te Miri Kamo, who died on 3 April 2009. Mrs Kamo’s last will is dated 10 October 2006 and probate was obtained on 21 May 2009. The Public Trust now applies for a ruling as to the meaning of a clause in her will under s 32 of the Wills Act 2007 (the Act) or, in the alternative, for correction of her will under s 31 of the Act.
[2] In February 2019 leave was granted to commence by way of originating application and directions as to service were made. On 29 November 2019 Churchman J recorded that, while it had not proved possible to serve all those directed to be served, he was satisfied that all reasonable steps had been taken to comply with the directions—no further attempts at service were required.
IN RE ESTATE OF KAMO [2020] NZHC 474 [11 March 2020]
[3] None of those served has taken any steps in the proceedings: the application is unopposed. Although the application was set down for formal proof by Churchman J, I later agreed to determine it on the papers, which I do below.
The problem with the will
[4]Clause 3(b) of Mrs Kamo’s will reads:
I DIRECT the residue of my estate shall be administered by the Public Trustee as Trustee to provide a scholarship to be known as the Kamo-Tuuta Scholarship and the net income thereof shall be utilised on an annual basis at the discretion of the Trustee for the purpose of facilitating post graduate study through the University or other recognised tertiary education system firstly for members of the Peter Kamo and/or George Tuuta families but should there be no members of such families in any particular year available for such award then secondly, for any other Maori student of Te Atiawa or Arawa descent who intends undertaking post graduate study as the Trustee shall determine.
[5] On its face, the trust created by this clause is to last forever and so offends the rule against perpetuities unless it can be said it is a charitable trust. The Public Trust’s position is that the trust created by cl 3(b) is not charitable (a matter I discuss below).
[6] If the trust is not charitable, then, in order for the trust to be valid, a perpetuity date must be determinable in accordance with the Perpetuities Act 1964. The potential obstacle to that is that the words “and the net income thereof shall be utilised [for the specified purpose] on an annual basis” do not appear to contemplate any distribution of capital at all. And if that is so, then there is no possibility that all future interests in the trust can vest within the applicable perpetuity period. That is why the Public Trust says it is necessary to call in the aid of s 31 or s 32 of the Act.
Is the trust a charitable trust?
[7] As has more recently been clarified, the principal basis for the Public Trust’s position that the cl 3(b) trust is not charitable is that registration under the Charities Act 2005 has already been declined. Presumably that refusal was based on the decision of the English Court of Appeal in Re Compton which was concerned with a
will trust “for the education of Compton, Powell and Montague children”.1 The Court held that:
(a)the trust was merely a family trust and lacked the public element
necessary to make it charitable;
(b)a direction as to the kind of education to be provided was not sufficient to make the trust charitable;
(c)while there is an exception in the case of poor relations, this only applies to trusts designed to relieve poverty and will not be extended to an educational trust; and
(d)the trust not only failed as a charity but also failed as a private trust
because of a direction that it should be carried in perpetuity.
[8] The decision in Re Compton was subsequently approved by the House of Lords in Oppenheim v Tobacco Securities Trust Co Ltd, where the “public benefit” test was articulated by Lord Simonds as follows:2
[T]he question is whether that class of persons can be regarded as such a “section of the community” as to satisfy the test of public benefit. These words “section of the community” have no special sanctity, but they conveniently indicate (i) that the possible ... beneficiaries must not be numerically negligible, and (ii) that the quality which distinguishes them from other members of the community, so that they form by themselves a section of it, must be a quality which does not depend on their relationship to a particular individual. It is for this reason that a trust for the education of members of a family, or, as in Re Compton, of a number of families cannot be regarded as charitable. A group of persons may be numerous, but if the nexus between them is their personal relationship to a single propositus or to several propositi, they are neither the community nor a section of the community for charitable purposes.
1 Re Compton [1945] Ch 123, [1945] 1 All ER 198. It was clear that the trust was not concerned with providing a pension to or assisting anyone who was impoverished or in need; it was purely for educational scholarships.
2 Oppenheim v Tobacco Securities Trust Co Ltd [1951] AC 297 at 306; [1951] 1 All ER 31 (HL) at 34.
[9] Although the New Zealand courts have noted that the application of the Oppenheim test is not without difficulty, it was adopted by the Court of Appeal in NZ Society of Accountants v Commissioner of Inland Revenue.3
[10] In Mrs Kamo’s case, the trust created by cl 3(b) is, in the first instance, plainly for the benefit of members of her wider family—namely members of the Peter Kamo and/or George Tuuta families. So it would appear to fail the Oppenheim “public benefit” test. But the clause goes on to provide:
… but should there be no members of such families in any particular year available for such award then secondly, for any other Maori student of Te Atiawa or Arawa descent who intends undertaking post graduate study as the Trustee shall determine.
[11] In February I issued a minute to counsel acknowledging that an orthodox Oppenheim approach here—even with provision of education for this wider class of beneficiaries—would likely not meet the public benefit test. I expressed uncertainty, however, about whether the law is so clear where Māori trusts (or trusts for the benefit of Māori) are concerned. As the authors of Equity and Trusts in New Zealand note:
In Latimer v CIR4 the Court of Appeal held that Oppenheim ought not to be applied to Maori tribe-based trusts, holding that, “Maori beneficiaries, both together and in separate iwi or hapu groupings [are] a section of public for the purposes of a trust” established by the Crown and Maori aimed at assisting in the settlement of Treaty of Waitangi claims. This more modern understanding underpins s 5(2) Charities Act 2005 which provides that a purpose trust that would otherwise be considered charitable does not lose that status simply because the beneficiaries of the trust are related by blood; the effect of this is to ensure that, among other things, whanau, iwi or hapu based trusts are capable of registration under the Act.
[12] So I asked for counsel’s view as to whether the Oppenheim “public benefit” test remains apt in the present circumstances.
[13] In a memorandum filed in response, Mr Kelly advised that the number of identifiable beneficiaries under the Trust (descendants of Peter Kamo and/or George Tuuta) was considerably greater than previously advised. The Public Trust believes
3 NZ Society of Accountants v Commissioner of Inland Revenue [1986] 1 NZLR 147 (CA).
4 Latimer v CIR [2002] 3 NZLR 195 (CA).
that there are well over 100 such beneficiaries, although contact details are not held for all of them and some have not responded to correspondence.
[14] The short point is that, by virtue of sheer numbers, it now seems unlikely that the Trust could operate other than for the benefit of the members of the Kamo/Tuuta families—so it is unlikely to meet the Oppenheim public benefit test. As well, there is the new point that charitable status has, in fact, already been declined. I therefore proceed on the basis that the trust is not charitable.
The perpetuities issue
[15] The (non-charitable) trust created by the will contains no perpetuity date and so on its face infringes the rule against perpetuities. The issue is whether it can potentially be saved by reference to the “wait and see” provision (s 8) in the Perpetuities Act 1964. Section 8 effectively creates its own perpetuity period by reference to the duration of a life or lives in being plus 21 years. In the present case, Mr Kelly says, and I accept, that the relevant lives in being are the members of the Kamo and Tuuta families who were alive on 3 April 2009 plus 21 years after the last of them has died.
[16] But s 8 can only save the trust if it is—or can be—fully distributed within that period. Full distribution is impossible here because cl 3(b) of the will provides that only the “net income” of the residuary estate can be used to fund the relevant scholarships. If cl 3(b) is complied with in its terms, the capital will remain undistributed. That is why recourse to the Act is necessary.
Wills Act 2007
[17] Although Mrs Kamo’s will pre-dated the commencement of the Act, it is clear that ss 31 and 32 of the Act apply in this case.5 Accordingly the court has power either:
(a)to correct the will, provided the requirements of s 31 are met; or
5 Where a person has died after 1 November 2007 leaving a will dated prior to that date, s 40 provides that certain provisions of the Act do not apply or do apply subject to specific modifications. Section 40 does not, however, refer to either s 31 or s 32.
(b)to interpret the will using external evidence under s 32.
[18]Those sections respectively provide:
31Correction
(1)This section applies when the High Court is satisfied that a will does not carry out the will-maker’s intentions because it—
(a)contains a clerical error; or
(b)does not give effect to the will-maker’s instructions.
(2)The court may make an order correcting the will to carry out the will- maker’s intentions.
32External evidence
(1)This section applies when words used in a will make the will, or part of it,—
(a)meaningless; or
(b)ambiguous on its face; or
(c)uncertain on its face; or
(d)ambiguous in the light of the surrounding circumstances; or
(e)uncertain in the light of the surrounding circumstances.
(2)The High Court may use external evidence to interpret the words in the will that make the will or part meaningless, ambiguous, or uncertain.
(3)External evidence includes evidence of the will-maker’s testamentary intentions.
(4)The court may not use the will-maker’s testamentary intentions as surrounding circumstances under subsection (1)(d) or (e).
The evidence
[19] Both ss 31 and 32 contemplate the giving of evidence to establish the will- maker’s true testamentary intentions.
[20] Here, the relevant evidence comes from the lawyers who drafted the will, Helmore Bowron & Scott, who have provided a copy of their handwritten notes of the
instructions received from Mrs Kamo. Nothing in these instructions suggests the money available for the scholarship should be limited to the income of the residuary estate. Given the nature of the trust created by the will, it seems unlikely that Mrs Kamo intended the trust to continue forever or intended that only the income was to be used each year.
Section 32
[21] In my view, s 32 is not the appropriate route here. That is because it is not the words used that make cl 3(b) of the will meaningless (in the sense of being void for perpetuities) but, rather, the words that have been omitted. Even with the benefit of the evidence as to Mrs Kamo’s instructions I do not think it is possible to “interpret” the words “the net income thereof” as meaning “the income and the capital”.
Section 31
[22] I note that in Re Gallais this Court has held that the s 32 rules for interpreting wills do not limit the scope of s 31. The court may choose to correct the words of the will even if—as I have found here—those words are not themselves ambiguous.6 I respectfully agree with that.
[23] The Public Trust submits that the Court should exercise its power to correct the will because it does not give effect to Mrs Kamo’s instructions and also because, as a matter of logic, there must have been a clerical error.
[24] Counsel cited a variety of cases in which this power has been exercised.7 But the case most relevant is Marfell v Marfell.8 There, the will as signed did not dispose of the capital of the residuary estate. There was evidence about the terms of previous wills which indicated how the drafting error occurred. The point was also made that,
6 Re Gallais [2017] NZHC 1405 at [27].
7 Re Florence Remuera Armstrong HC Wellington, CIV 2008-435-95, 31 July 2008; Re Brown HC Palmerston North, CIV 2009-454-000154, 22 July 2009; Re Trehey HC Napier, CIV 2009-441- 899, 16 February 2010; Re McKeay [2012] NZHC 534; Re Bonnington [2016] NZHC 653; Re Curtis [2017] NZHC 2026; Re Williamson [2017] NZHC 993; Re Smedley, Bateman v Harris [2018] NZHC 1349; and Re Jackson [2018] NZHC 30.
8 Marfell v Marfell [2015] NZHC 2714.
without the correction, the will made no sense as it did not dispose of the whole estate. The words “and capital” were inserted after the words “to pay the income”.
[25] The Marfell decision is precisely on point. The evidence before the court is that Mrs Kamo did not instruct cl 3(b) to be drafted to exclude the use of the capital of her residuary estate for the purposes of the scholarship. And cl 3(b) will—in light of the perpetuities problem—be left meaningless and ineffective unless it can be corrected to enable the distribution of the whole of her residuary estate within the (default) perpetuities period.
Conclusion
[26] For these reasons I approve a correction of Mrs Kamo’s will sought by the Public Trust. I order that the words “the net income thereof shall be utilised on an annual basis” be deleted from clause 3(b) of the will and replaced with “the capital and income shall be used”.
Rebecca Ellis J
Solicitors:
Greg Kelly Law Limited, Wellington for Applicant
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