J N Williams Memorial Trust

[2021] NZHC 2167

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV 2021-404-590

[2021] NZHC 2167

IN THE MATTER OF

The Charitable Trusts Act 1957 and the inherent jurisdiction of the Court

J N WILLIAMS MEMORIAL TRUST,

H B WILLIAMS TURANGA TRUST, and JN & HB WILLIAMS FOUNDATION

Applicants

CIV 2021-404-591

IN THE MATTER OF

Charitable Trusts Act 1957 and the inherent jurisdiction of the Court

HB WILLIAMS EDUCATIONAL TRUST, FRIMLEY 1975 (Formerly THE FRIMLEY FOUNDATION), and

FRIMLEY FOUNDATION

Applicants

Hearing:	11 August 2021
Appearances:	A A H Low for the Applicants
Judgment:	19 August 2021

JUDGMENT OF CAMPBELL J

This judgment was delivered by me on 19 August 2021 at 2:30 pm pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar

J N WILLIAMS MEMORIAL TRUST AND OTHERS [2021] NZHC 2167 [19 August 2021]

[1]                 The applicants are charitable trusts. They have applied for the approval of two schemes under Part 3 of the Charitable Trusts Act 1957 (the Act).

[2]                 Under Scheme 1, the proposal is that the JN Williams Memorial Trust and the HB Williams Turanga Trust be amalgamated into a single new trust, the JN & HB Williams Foundation. Under Scheme 2, the proposal is that the HB Williams Educational Trust and Frimley 1975 be amalgamated into a single new trust, the Frimley Foundation.

[3]                 Applications for approval of the schemes were made in two separate proceedings. The proposed schemes and the applications were almost identical, and the charitable trusts were all established by the same extended whānau. Accordingly, the proceedings were consolidated.

[4]                 The applications were advertised in accordance with s 36 of the Act and as directed by this Court. No opposition was filed to either scheme.

[5]                 Under s 35 of the Act, a proposed scheme under Part 3 of the Act must be submitted to the Attorney-General. The Attorney-General then delivers a report on the scheme.

[6]                 The applicants submitted their proposed schemes to the Attorney-General. The Attorney-General delivered a report which supported the proposed schemes, subject to three specific concerns.

[7]                 The applicants accepted all but one of those concerns. They amended their proposed schemes accordingly. The schemes that are before me therefore are supported by the Attorney-General, subject to one issue that I address below.

[8]                 Ms Low, counsel for the applicants, filed a detailed memorandum that set out the origin of the charitable trusts, the reasons for the schemes, and the legal framework for approval of schemes under the Act. At the hearing of the applications she explained how the schemes had been amended to address all but one of the concerns

raised  by the Attorney-General.    She then made submissions to me on the one outstanding issue.

[9]                 The applications are supported by comprehensive affidavits. Based on those affidavits, the Attorney-General’s report and Ms Low’s memorandum, I am satisfied that both schemes should be approved, subject only to determining the one outstanding issue raised by the Attorney-General. That issue affects only Scheme 2.

Scheme 2: removal of minimum capital requirement

[10]             The trust deed of the HB Williams Educational Trust includes a requirement that “in no case shall the capital of the Trust be reduced at any time below the value of Twenty Five Thousand Pounds”. That requirement is now to be read as referring to a minimum of $50,000.1

[11]             The applicants propose that this minimum capital requirement be removed. The trust deed for the proposed amalgamated trust, the Frimley Foundation, therefore has no equivalent requirement.

[12]             The Attorney-General, by contrast, wishes the minimal capital requirement to continue. He proposes that this be done by a term in the trust deed of the Frimley Foundation requiring that the capital of the Education Fund (a fund that will, within the Frimley Foundation, be the successor fund to the HB Williams Educational Trust) only be applied to charitable purposes if it exceeds $50,000.

[13]             The issue falls to be determined under s 32 of the Act. Section 32 provides for the variation of charitable trusts where their purposes have become “impossible or impracticable or inexpedient” to carry out. Inexpedience is a lower threshold than impossibility or impracticality. The general connotation of “inexpedient” is of the purpose having become unsuitable, inadvisable or inapt.2

[14]Ms Low submitted that the minimum capital requirement had become inapt.

$50,000 may have been a substantial sum when the HB Williams Educational Trust

1      Decimal Currency Act 1964, ss 5 and 7.

2      Re McElroy Trust [2003] 2 NZLR 289 (CA) at [14].

was settled in 1961, as it then could have generated a meaningful income for distribution to charitable purposes. But this was no longer the case. It was therefore inapt.

[15]             Ms Low also pointed out that the trust deed of the Frimley Foundation provides that the Education Fund can be liquidated only in accordance with s 25 of the Act. Section 25 requires an application to the Court. Any decision to liquidate the Fund would therefore be subject to consideration by the Court.

[16]             The Attorney-General’s position is that there is no evidence that the minimum capital requirement has given rise to any difficulties in the administration of the HB Williams Educational Trust or that administration would be facilitated by its removal. This is not surprising. The Trust has several million dollars in net assets.

[17]             In my assessment the continuation of this requirement is unsuitable or inapt, and therefore inexpedient. It no longer fulfils any useful purpose. The minimum capital amount will not generate any meaningful income. It will not ensure that the Education Fund continues in perpetuity. In the event the capital of the Education Fund ever came close to the minimum amount, it is likely the trustees would apply to Court to liquidate the Education Fund.

[18]For that reason, I approve the removal of the minimum capital requirement.

Result

[19]             After the hearing Ms Low submitted draft orders dated 16 August 2021, including alternative versions for Scheme 2 (depending on my decision on the minimum capital requirement). I make orders in those terms, with Scheme 2 being approved in the present terms of the trust deed for the Frimley Foundation.

Campbell J