Haynes & Ors- Trustees of the Spencer Mason Trust HC Auckland CIV 2006-404-000992

[2008] NZHC 2268

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2006-404-000992

IN THE MATTER OF     Trustee Act 1956

IAN LESLIE HAYNES, AUDREY ROSEMARY TOBIN, PAUL THOMAS RISHWORTH, ANDREW ROBERT GILCHRIST AND PIERS ANTHONY DAVID DAVIES - TRUSTEES OF THE SPENCER MASON TRUST FUND Applicants

Hearing:         21 April 2008

Appearances: G R Nicholson for Applicants

Judgment:      22 April 2008 at 12:00 noon

RESERVED JUDGMENT OF COURTNEY J

This judgment was delivered by Justice Courtney on 22 April 2008 at 12:00 noon

pursuant to r 540(4) of the High Court Rules

Registrar / Deputy Registrar

Date……………………….

Solicitors:           Kensington Swan, Private Bag 92101, Auckland

HAYNES & ORS-TRUSTEES OF THE SPENCER MASON TRUST HC AK CIV-2006-404-000992 22 April

2008

Fax: [phone] – G R Nicholson

Introduction

[1]      The  applicants  are  the  trustees  of  the  Spencer  Mason  Trust  Fund,  an educational  trust  established  by  a  Trust  Deed  dated  16  September  1969  in accordance with the will of Nellie Louise Mason.   There are no named individual beneficiaries, the fund being held on trust for:

…students of and graduates in law in the district of the Law Society of the

District of Auckland.

with purpose of the trust described in the Deed as:

The advancement and propagation of education and learning among students of and graduates in law in the district of the Law Society of the district of Auckland  as  that  district  shall  from time  to  time  be  constituted  and  in particular for the establishment of a scholarship or scholarships the award of prizes the constitution and maintenance of a library or libraries (whether pre- existing or otherwise) the establishment of a lectureship or lectureships the conducting of a series of lectures and for other chargeable purposes (whether ejusdem generis with the forgoing or otherwise) for the benefit of such students or graduates or both.

[2]      The applicants are the current trustees.  They apply pursuant to s 64, 64A and

66 Trustee Act 1956 to vary the terms of the Trust Deed.  Trustees of a trust have the power to vary a trust deed if that power is expressly conferred by the Deed or, where there is no express provision for variation with the agreement of all trustees and all sui juris beneficiaries.  However, where the beneficiaries cannot provide consent the Court can do so under s 64A(1) Trustee Act 1956 which relevantly provides that:

Without limiting any other powers of the Court, it is hereby declared that where any property is held on trusts arising under any Will, settlement or other disposition or on the intestacy or partial intestacy of any person or under any order of the Court, the Court may if it thinks fit by order approve on behalf of…

(c)       Any unborn or unknown person…

[3]      The trustees have applied under s 64A(1)(c) because the beneficiaries are neither named nor currently known, being students of or graduates in law in the district of the Law Society of the district of Auckland and the general class who may, in the future, be applicants for funding from the trust.

[4]      The  approach  to  be  taken  in  considering  an  application  under  s  64A  is described by Tipping J in Re Greenwood [1988] 1 NZLR 197 as:

The purpose of s 64A is in my view to put the Court into the shoes of a beneficiary who is, by reason of infancy or other incapacity, incapable of assenting to the variation, revocation or enlargement of powers proposed. Similarly the Court is put in the shoes of unborn and unknown persons.  The Court, as one part of its consideration of the application, should ask itself whether, if the person on whose behalf it is acting had been alive and of full capacity and properly advised, that person would have been likely to have approved the arrangement on his or her own behalf and with or without conditions or amendment to the scheme.

Variations to Clause 3(c) – trustees holding office ex officio

[5]      There are two difficulties facing the trustees as a result of s 3(c).  They both relate to those trustees who hold office ex officio.  Under the Deed the trustees are to be:

a)       The president for the time being and from to time of the Law Society of the district of Auckland ex officio;

b)The Dean of the Faculty of Law at the Auckland University College (now known as the University of Auckland) for the time being and from time to time ex officio;

c)       Three other persons to be appointed by the Trustee.

[6]      Clause 3(c) of the Deed provides that:

In addition to all other powers vested in them by law the Trustees of the trust fund shall have the powers given to them by the said Will that is to say from time to time:..

(c)       To accept resignations of Trustees (other than ex officio Tustees) and to fill casual vacancies and determine the length of tenure of officers of Trustees other than ex officio Trustees.

[7]      As a result of s 372 Lawyers and Conveyancers’ Act 2006 the Auckland District  Law  Society  and  other  district  law  societies  in  New  Zealand  will  be dissolved  six  months  after  the  commencement  of  that  section.    Presently  it  is expected that the Act will commence on 1 July 2008.  This means that there will be no office of the president of the Auckland District Law Society in existence to take up the role of trustee.

[8]      The second difficulty facing the trustees is that the roles of president of the district Law Society and Dean of the Auckland Law School have developed substantially since the  trust  was  created  in  1969.    As  a  result  of  the  increased commitments faced by the holders of those offices it is now difficult for them to commit the time needed to properly discharge their obligations as trustees.   The trustees therefore seek to include a power of nomination for the trustees holding office ex officio to allow them to nominate a person to carry out that role on their behalf.   This would mean that the president and dean respectively would still be involved in the trust but may provide a nominee in the event that other commitments make it difficult to properly carry out their duties.

[9]      I am satisfied, having considered the affidavit evidence, that the variations sought are consistent with and intended to further advance the purpose of the trust. As I have already noted, the purpose identified in the Deed is the advancement and propagation of education and learning among students of and graduates in the law in the district of the Law Society of the district of Auckland.  The first variation sought reflects the imminent changes to the structure of the Auckland District Law Society and is clearly essential.

[10]     The variation sought to enable the president of the Auckland District Law Society and the Dean of the Auckland Law School to nominate a person to undertake the role of trustee in their stead is intended to ensure that the person who acts as trustee has sufficient time to properly attend to the matters that arise.  The variation does not mean that the trust will no longer have the oversight of those whom the original settlor wished to act as trustees but simply provides a practical means of ensuring that the trust’s interests are properly attended to.

Variation to Clause 3(f) – investment powers

[11]     The third variation sought relates to the investment powers  conferred by cl 3(f) which currently permits investment only in the following securities:

Government  Municipal  or  real  securities  on  first  mortgage  or  on  fixed deposit or at call in any Bank or upon any securities authorised by law for the investment of trust monies or in bonds, mortgages, debentures, debenture stock or guaranteed preference or ordinary share or guaranteed preference or ordinary  stock  issued  or  guaranteed  by  a  company  having  an  official quotation on the New Zealand stock exchange.

[12]     The trust fund currently stands at $1.7m and the trustees are seeking to vary the Deed so as to take the steps they consider are needed to protect, preserve and enlarge the fund.  The trustees are concerned that the present powers do not allow proper diversification of the fund as is usually recommended by prudent financial advisers.  One of the trustees, Mr Stevens, has deposed that ABN AMBRO Craigs currently recommend that the investment portfolio of a charitable trust such as this include a mixture of fixed interest, property and equities.  In addition, the portfolio should have a global range to provide further diversification.

[13]     The variation they seek is intended to bring their powers into line with those prescribed by law in s 13A Trustee Act 1956, which are the standard investment powers of trustees in the absence of specific clauses in a Trust Deed.  The variation sought in respect of the investment powers is one that reflects current best practice in terms of the management of trust funds of this kind.   Given changes to the commercial  environment  since  the  trust  was  settled  I  am  satisfied  that  it  is appropriate and to the advantage of the ultimate beneficiaries of the trust that trustees have the power to invest in a manner that is consistent with the powers now imposed on trustees by the Trustee Act 1956.

Orders granted

[14]     I am satisfied that none of these variations make any substantial difference to either the purpose of the trust or the demands on the trust fund and will advance the purpose for which the trust was established.

[15]      I accordingly make the orders in the terms sought, as set out in paragraphs 1,

3 and 5 of the originating application.

P Courtney J