Joe Raynes Scholarship - [2025] NZHC 396

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2024-404-3130

[2025] NZHC 396

UNDER the Charitable Trusts Act 1957

IN THE MATTER

of an application for variation of trust under Part 3 of the Act

BETWEEN

JOE RAYNES SCHOLARSHIP

Applicant

Hearing: 25 February 2025

Appearances:

S McNulty for the Applicant

Judgment:

5 March 2025

JUDGMENT OF ROBINSON J

[Application for approval of a scheme]

This judgment was delivered by me on 5 March 2025 at 12:00 pm pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar

Solicitors:
Jackson Russell, Auckland Crown Law, Wellington

RE JOE RAYNES SCHOLARSHIP [2025] NZHC 396 [5 MARCH 2025]

Introduction

[1] Joseph (Joe) Raynes was a successful hotelier from Dargaville. He died on 29 December 1937. In his Will dated 28 March 1934 (Will) he directed his trustees to set aside and invest 1,500 pounds and to use the income to grant scholarships to students at the Elam School of Art and Design in Auckland (Trust).

[2] After the second World War the Elam School of Art and Design was taken over by Auckland University. Since then, the Trust has provided scholarships – The Joe Raynes Scholarship – to students studying at Auckland University’s Elam School of Fine Arts.

[3] As of August 2023, the trustees of the Trust hold capital funds of $59,061. The fund does not generate sufficient income to enable the trustees to pay annual scholarships. Since 2012 only three scholarships have been awarded, each in the amount of $1,500. The trustees have not granted a scholarship since 2018. For the past four years, the Trust’s modest administration costs have exceeded its even more modest income.

[4] The trustees are incorporated as a Board pursuant to Part 2 of the Charitable Trusts Act 1957 (Act). Under the terms of the Will, they are restricted to using only the net income of the Trust to grant scholarships. The trustees may not use any of the Trust fund’s capital.

[5] The trustees have determined that it is impractical and inexpedient to continue to administer the Trust in the terms set out in the Will. They apply pursuant to Part 3 of the Act for approval of a scheme that would allow the trustees to distribute the Trust’s fund to The University of Auckland Foundation (Foundation), and then to wind up the Trust. The application is made under s 33, the provision of the Act allowing for the alteration of the mode of the Trust’s administration.

[6] The trustees have advertised their application for approval of the updated scheme in accordance with the advertising requirements set out in s 36 of the Act. The application is unopposed. The Attorney-General has prepared a report in accordance with s 35 of the Act and confirms that she supports the application.

The scheme

Trust terms

[7]The terms of the Trust are contained in clause 11 of the Will:

(b) My said trustees shall stand possessed of the paid…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Joe Raynes Scholarship

Details

AGLC: Joe Raynes Scholarship [2025] NZHC 396
Case: [2025] NZHC 396
Decision Date: 5 March 2025

CaseChat Overview and Summary

The Joe Raynes Scholarship case involves the trustees of a charitable trust seeking approval to alter the administration of the trust under the Charitable Trusts Act 1957. The trustees, established in accordance with the will of Joseph Raynes, who left a fund to award scholarships in art and design at the Elam School of Fine Arts, are unable to meet the charitable purpose due to insufficient income from the capital. They propose a scheme allowing them to transfer the trust’s capital to the University of Auckland Foundation and subsequently wind up the trust. The court must decide whether the proposed variation aligns with the charitable purpose and is in the best interest of the trust.

The key legal issues revolve around the court's power to approve a variation of the trust’s administration under section 33 of the Act. The court must consider whether the proposed scheme facilitates the administration of the trust, and if it adheres to the original charitable purpose. Additionally, the court examines the implications of allowing the Foundation to distribute the trust's capital, which is contrary to the original terms of the will, and whether such a variation is permissible under the Act.

In its reasoning, the court notes that while a charitable trust generally cannot be terminated, an exception exists if the variation facilitates the charitable purpose and does not infringe on the principle against termination. The court finds that the proposed scheme, which allows the trustees to distribute both the income and capital of the trust to the Foundation for the same charitable purpose, effectively facilitates the administration of the trust. It also concludes that distributing the capital will not terminate the trust but rather allow the Foundation to better manage and use the funds for the intended scholarships. The court acknowledges the Attorney-General's support for the scheme and its alignment with past precedents where similar variations were approved.

The court grants the application for the approval of the scheme, allowing the trustees to distribute the trust’s capital to the University of Auckland Foundation and wind up the trust once the distribution is complete. This decision ensures that the charitable purpose of awarding scholarships in art and design is better facilitated, despite the original constraints of the trust.

Orders