Greenwood
[2016] NZHC 1034
•19 May 2016
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
CIV 2016-485-196 [2016] NZHC 1034
UNDER Part 3 and Part 5 of the Charitable Trusts
Act 1957, the Trustee Act 1956 and
Part 19 of the High Court RulesIN THE MATTER
of The Brancepeth Preservation Trust
BETWEEN
JOHN PAUL GREENWOOD, GARRY EDWARD DANIELL, ALISTAIR DAVID MCLENNAN, RALPH WILLIAM TREVOR BEETHAM AND GERALDINE ANN BAUMANN
Applicants
Hearing: 6 May 2016 Counsel:
S M Bisley and C C Boardman for Applicants
Judgment:
19 May 2016
JUDGMENT OF BROWN J
Introduction
[1] Brancepeth, an historically significant farm in the Wairarapa, is owned by the Brancepeth Preservation Trust (the Trust). The Trust was established by a trust deed dated 31 October 1992 (the Current Trust Deed) for the charitable purpose of the “restoration, preservation and maintenance of the Brancepeth homestead and other
buildings”.
GREENWOOD, DANIELL, MCLENNAN, BEETHAM AND BAUMANN [2016] NZHC 1034 [19 May 2016]
[2] The trustees wish to clarify uncertainties in, as well as modernise, the Current Trust Deed and change various aspects of the mode of administration of the Trust. To that end they seek an order under ss 32 and 33 of the Charitable Trusts Act 1957 (CTA) approving a scheme (the Scheme) which in essence consists of:
(a) a proposed new Trust Deed;
(b) a proposed Deed of Lease between the trustees and Beetham Pastural
Limited;
(c) a proposed agreement for sale and purchase of livestock between the trustees and Beetham Pastural Limited; and
(d) a proposed residential tenancy agreement between the trustees and
Ralph Edward Beetham.
Additionally or in the alternative the trustees seek an order under s 66 of the Trustee Act 1956 directing that the trustees are permitted to enter into the transactions (b) to (d) above.
[3] On 8 April 2016 an order was made for directions as to service on the following potentially interested parties:
(a) John Beaumont Beetham;
(b) Haami Te Whaiti of Ngati Kahungau; (c) Jim Rimene of Ngati Rangitane; and
(d) Lydia Wevers as representative of Friends of Brancepeth.
[4] Service has been effected and the Scheme has been advertised in accordance with the requirements of the CTA. None of the persons served has taken any steps in response to the application. Consequently the application proceeds by way of formal proof under r 15.9 of the High Court Rules.
[5] The application is supported by affidavits of two current trustees, Mr John Greenwood, the current chairperson, and Ms Geraldine Baumann as well as an affidavit of Mr Ralph Edward (Ed) Beetham who was the chairperson of the trustees for the first 20 years of the life of the Trust.
[6] Prior to filing the application, in accordance with s 35(1) of the CTA the trustees submitted the Scheme to the Attorney-General who provided a report dated
18 March 2016 referred to below.
Background
[7] Brancepeth Station, located within the Wainuioru Valley near Masterton, was settled on the Trust by Barbara Josephine Beetham in 1992. The Trust is registered on the Charities Register (registration number CC38239).
[8] Brancepeth Station consists of the Brancepeth homestead and other historic buildings situated within 618 hectares of farming and forestry land, which supports an extensive sheep and beef farming operation. Between 1856 and 1992, the Station was owned and farmed by the Beetham family. Brancepeth Station has considerable historical importance: the homestead, historic buildings and pre-1950 fixtures and fittings have Category 1 status on the New Zealand Heritage List, and a number of books and academic articles have been written about both Brancepeth and the Beetham family. The buildings are of significant cultural and historic value to the Wairarapa region and to New Zealand.
[9] An affidavit of Geraldine Ann Baumann, a trustee and Senior Legal Counsel at Heritage New Zealand Pouhere Taonga, explained that Brancepeth Station has a number of “remarkable” features as a living historic place. Those features provide the potential for Brancepeth Station to achieve the goals of the ICOMOS New Zealand Charter for the Conservation of Places of Cultural Historical Value (Charter) “in a way that few historic places in New Zealand can”. They are:
(a) the fact that the heritage buildings are all intact;
(b) the “extraordinarily high” level of preservation of the historical assets;
(c) the relationship of Brancepeth Station with the Beetham family, and the close relationship between the family and local groups and iwi. Ms Baumann explained that the cultural heritage value of Brancepeth Station would be greatly reduced if the Beetham family were not involved in its conservation and management; and
(d)the fact that the Trust has an independent source of income from the farming lands.
[10] However to realise Brancepeth Station’s potential as a living historic place the Trust needs funds to carry out necessary conservation work (and, most urgently, to prepare and implement a detailed, thorough conservation plan, which, it is estimated, will cost around $200,000). The Trust also needs a clear, strong and efficient governance framework, and the express ability to allow the public access to Brancepeth’s buildings for recreational and educational purposes, as well as to advance the education of the public about Brancepeth and its history in other ways. Those are the aims that the Scheme is intended to achieve.
[11] It is convenient to consider the Scheme in two parts:
(a) the proposed amendments to the Current Trust Deed; and
(b) the proposed transactions at [2] above.
The proposed amendments to the Current Trust Deed
[12] A perusal of the Current Trust Deed serves to confirm the trustees’ contention that the Current Trust Deed is out-of-date. They consider that the purpose of the Trust as it is currently formulated does not clearly permit the trustees to act in ways that would be beneficial to the general public in respect of public access to Brancepeth and in respect of the Trust’s potential to advance the education of the public or particular individuals about Brancepeth and the history of the area.
[13] The several features that have caused some disquiet amongst the trustees are explained by Mr Greenwood as follows:
14.1The actual charitable status of the Trust needs to be clear on the educational aspects which the Current Trust Deed does not articulate at all and which at one level points to a risk that the Trust is not charitable.
14.2It is surprising to the Trustees that there is no mention of recognition of the heritage of the Beetham family and its connection with Brancepeth.
14.3The narrow appointment regime of the Trustees is inappropriate in a modern setting where what a Trust should look to is having the ability to appoint people with the right level of skills as identified in the Proposed Trust Deed.
14.4There is no limit on the tenure of Trustees which is unhealthy and does not generate sufficient robustness in terms of seeking constant change for the better.
14.5 There is a need to adopt modern drafting which features in the
Proposed Trust Deed.
14.6The Current Trust Deed in clause 3(d) provides there to be no social functions held in the homestead except a thanks-giving service to commemorate the early settlers once a year. Apart from being overly restrictive it effectively means the historic homestead is a museum not open to the public. This undermines the potential benefit to the public of preserving and maintaining Brancepeth Station by restricting public access to the homestead and restricting educational and fundraising activities.
14.7 There is no mission statement, which features in the Proposed Trust
Deed.
14.8The objects and purpose of the Current Trust Deed are not clearly articulated, which one can now see in the Proposed Trust Deed.
14.9There is a lack of recognition of the association with the local iwi and the proposed voluntary group of keen historians and others wishing to set up the Friends of Brancepeth Association, in the Current Trust Deed.
14.10There is no mention of a curator nor a heritage architect, which are both needed to ensure the quality control of preservation which is identified in the Affidavit from Geraldine Baumann.
14.11 There is a strong need to have a custodian living in the homestead since the security of, and fire risk to, the homestead is a major concern to the Trustees. Having a Beetham family member reside in the homestead seems appropriate and practical.
14.12There is an insufficient acknowledgement of the link with the adjoining Highcliffs and Puke blocks which both originally were part of the Brancepeth historic estate.
The proposed new purpose
[14] The trustees propose the following new statement of purpose:
1.4 Purposes of the Trust
1.4.1To the extent that these are charitable purposes under the laws of New Zealand from time to time, the Purposes of the Trust are the restoration, preservation and maintenance of the Brancepeth homestead and related buildings as specified in the original deed, and of their historic contents (as at the date of this Deed), for the benefit and education of the general public.
1.4.2These purposes are intended to achieve the following charitable objectives:
(a) To make the homestead and grounds available to members of the public, as far as practicable, for the purposes of recreation and “social welfare” and other purposes beneficial to the community; and
(b) The advancement of education, including educating and informing the general public.
[15] The circumstances in which the Court may exercise the jurisdiction to vary trust purposes are specified in s 32(1) of the CTA which relevantly states:
32. Property may be disposed by for other charitable purposes – (1)
… 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,
… then (whether or not there is any general charitable intention) the property and income or any part of the 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.
[16] The Attorney-General’s Report observed that the proposed new purpose remains sufficiently close to the original purpose, retaining the original purpose but extending it to guaranteeing public access and education. The Attorney-General’s delegate stated that the additional charitable objectives appropriately clarify the charitable aims of the Trust, that the current purpose may be considered inexpedient and that the proposed amendment can be justified.
The variation of trust administration
[17] Section 33 of the CTA addresses the circumstances where charitable trustees encounter problems of administration in giving effect to the intended purpose. It states:
33.Extension 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: …
[18] As noted by Paterson J in Re Melanesian Mission Trust Board, the threshold for a scheme submitted under s 33 is that:1
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] The Attorney-General’s report considered each of the following changes proposed and why the trustees believe those changes are necessary:
(a) Background and mission statement.
(b) Trustees: appointment; tenure; remuneration; trustee’s interest.
(c) Powers and investments. (d) Trustee liability.
(e) New power to amend Trust Deed.
(f) Annual reports and annual audits.
1 Re Melanesian Mission Trust Board HC Auckland M1140/98, 24 September 1998.
(g) Removal of restrictions on use of homestead and surrounding estate. (h) Introduction of curator and heritage architect, and custodian.
[20] The Attorney-General’s delegate recorded satisfaction that the proposed amendments would likely facilitate the administration of the Trust and the carrying out of the Trust’s charitable purposes as required by s 33.
Conclusion on proposed amendments
[21] Having reviewed the Current Trust Deed and considered both the trustees’ explanations for the proposed amendments and the Attorney-General’s Report, I am satisfied that the proposed amendments are within the jurisdiction conferred by ss 32 and 33 and that they are appropriate amendments to make.
Proposed agreements with Beetham Pastural Ltd and the Beetham family
[22] Mr Beetham lived at Brancepeth for 60 years and has been the informal custodian since the Trust was settled. He continued to supervise the farming operations until 2010 since when the farm has been run by a farm consultant and farm manager. In his affidavit he states that the current model of volunteer trustees is unworkable and that it is necessary to adopt the new proposal to raise capital and ensure sustainable income to carry on the purpose of the Trust which will include adopting a new conservation plan.
[23] Mr Greenwood deposed that the current trustees are not equipped to manage adequately and properly the running of the farm operation and the preservation of the historic buildings. The profit from the farm that is available for the maintenance and preservation of the historic buildings fluctuates from year to year owing to fluctuations in agricultural markets and weather events within the region.
[24] Mr Greenwood further explained:
16.As part of the Court application there is a need to recognise that the Trust will struggle to meet the financial needs of the capital injection needed to carry out urgent capital improvement works to the historic buildings. As explained in Geraldine Baumann’s affidavit, the
Trustees are aware of the need for a conservation plan to facilitate and guide the conservation of the historic buildings at Brancepeth. The plan and the necessary conservation work that it will identify will both cost significant amounts of money. Conservation architects have been selected to prepare a conservation plan for the buildings but it has not yet been prepared. I believe, based on my experience, that the preparation and implementation of such a plan could cost in excess of $200,000.00.
17.A conservation plan for the historic contents of Brancepeth has been prepared for the Trustees. The implementation of this plan alone will cost a significant sum; in my opinion, it could cost in excess of
$100,000.00. For instance, as recognised in the Proposed Trust
Deed at clause 1.5.8, a proper inventory of the contents of the Homestead and other historic buildings must be prepared – a process that will take many hours. The plan also recommends hiring a full-time housekeeper given the amount of work involved in preserving the contents of the Homestead. …
18.The proposal to sell the livestock on the farm and lease the farm at Brancepeth to Beetham Pastural Ltd and to see the adjoining Highcliff and Puke blocks linked up to Brancepeth will generate greater economic benefit and provide sustainability of income to the Trust. This in turn will enable the Trustees to undergo ongoing necessary capital improvements and repair and maintenance works, as well as ensure that the historic artefacts are looked after.
19.The capital to be derived from the sale of the livestock and the annual income generated from the lease of the farm will most likely prevent the Trustees from having to arise funds through borrowings which it is loath to do as a key purpose in the settling of the Trust was for the success of the farm operation to provide the necessary funding for the preservation of the historic homestead, outbuildings and their contents without requiring any borrowing or mortgaging of Trust assets.
[25] While the trustees consider that it is within their powers under both the Current Trust Deed and the proposed new Trust Deed to enter into the three transactions, they consider it prudent to obtain the approval of the Court given that:
(a) these are significant transactions for the Trust; and
(b)the Trust is proposing to contract with a company that is part-owned and managed by one of the trustees, William Beetham.
[26] Hence the trustees seek the Court’s approval of the transactions which the
trustees wish to enter into with Beetham Pastural Ltd and Mr Ed Beetham, which are
expected to provide funds for the necessary preservation works and will ensure the strong connection between the Beethams and Brancepeth is maintained.
[27] The Report of the Attorney-General did not express a view on the three proposed transactions, considering that that is a matter for the Court in making directions under s 66 of the Trustee Act. However the Report noted that the Attorney-General is satisfied that the trustees will have the powers to execute the proposed agreements if the Court approves the new Trust Deed.
[28] As noted above,2 the application for approval is made on alternative bases. It is first contended that the three transactions could be viewed as a variation of “the mode of administering the trust” as provided in s 33.3 It is suggested that that phrase is an apt description of the proposed suite of agreements.
[29] While counsel have not found authority directly on point, attention is drawn to the decision of the Court of Appeal in Re McElroy Trust4 as supporting an expansive approach to the interpretation of terms used within Part 3 of the CTA. In that case, which concerned s 32 of the CTA, the Court commented:
[14] The general connotation of the word “inexpedient” in its present context is of the original charitable purpose or purposes having become unsuitable, inadvisable or inapt. Parliament’s wish to expand the concepts of impossibility and impracticability should not be inhibited by too narrow an interpretation of the word “inexpedient”. Clearly Parliament wished to give the Courts power to approve a scheme of variation in circumstances beyond those where the original purpose could no longer be carried out. The concept of inexpediency introduced a value judgment rather than simply an assessment of feasibility. It may remain possible and practicable to carry out the original purpose but it may have become inexpedient to do so. If that is so, a scheme of variation may be approved so long as it keeps as close as reasonably possible in the new circumstances to the original intention of whoever established the trust: see Re Twigger [1989] 3 NZLR 329 and the various cases there surveyed, and in particular the influential decision of Tompkins J in Re Whatman (Supreme Court, Wellington,
16 July 1965). It may be worth repeating here that the question is not whether the scheme carries out the purposes of the trust better.
Rather it is whether it is now inexpedient to carry them out.
2 At [2] above.
3 At [17] above.
4 Re McElroy Trust [2003] 1 NZLR 289 (CA).
In fact the Court there found that the necessary inexpediency had not been demonstrated and hence there was no basis to approve the scheme under s 32.
[30] The relevant phrase is not confined to s 33. It also appears in s 41(1) of the CTA with reference to the administration of charitable funds raised by voluntary contribution the subject of Part 4. However there does not appear to have been judicial consideration of its ambit.
[31] There is certainly an argument that the phrase would encompass ongoing steps which the trustees wished to take in connection with the administration of the trust property. However whether it would fairly encompass a step which involved the cessation of administration of trust property may be open to question.
[32] In the present case there are three reasons why I consider that the Court should hesitate to approve the transactions via a s 33 order:
(a) there is at least a question whether the mode of administering the trust could fairly be said to relate to the livestock which is property to be permanently divested by the trustees;
(b)because the application has proceeded by way of formal proof there has not been the opportunity to hear argument in support of an alternative interpretation of the phrase; and
(c) the Attorney-General’s Report does not engage with the proposal so
far as the transactions are concerned.
[33] In those circumstances the better course in my view is to consider the appropriateness of the transactions under the alternative avenue provided by s 66(1) of the Trustee Act which states:
66 Right of trustee to apply to Court for directions
(1) Any trustee may apply to the Court for directions concerning any property subject to a trust, or respecting the management or administration of any such property, or respecting the exercise of any
power of discretion vested in the trustee.
[34] Mr Bisley drew attention to the recent exploration by Kόs J of the ambit of the s 66 jurisdiction in New Zealand Maori Council v Foulkes.5 He noted in any event that the orders sought on the present application fall squarely within the frequently cited passage in Re Allen-Meyrick’s Will Trusts:6
Wherever Trustees have some discretionary power of this kind, where it is properly described as a power or a cure discretion, and they are in doubt how, in the relevant circumstances, they ought to exercise their discretion, they are able to come to the Court and obtain directions what is the proper thing for them to do.
[35] Having considered the various matters traversed in the three affidavits, I consider that this is a proper case for making directions under s 66(1) that the trustees may properly enter into the transactions at [2](b), (c) and (d) above.
[36] I also consider, and I make a direction accordingly under s 66(1), that the trustees have the power to modify the suite of agreements in accordance with the powers conferred on them by cls 5.1.2, 5.2.5, 5.2.6 and 5.6.1 of the proposed new Trust Deed.
Disposition
[37] For the reasons explained above, I make orders in terms of the order annexed which includes a direction under s 52 of the CTA that the trustees may meet their
costs of the application and the Attorney-General’s costs from the assets of the Trust.
Brown J
5 New Zealand Maori Council v Foulkes [2014] NZHC 1777.
6 Re Allen-Meyrick’s Will Trusts [1966] 1 All ER 740 (Ch) at 743.
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