Jubilee Crippled Children Foundation Trust Board

[2023] NZHC 2318

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE

CIV-2023-485-306

[2023] NZHC 2318

UNDER

Section 130 of the Trusts Act 2019

IN THE MATTER OF

The Jubilee Crippled Children Foundation Trust

BETWEEN

THE JUBILEE CRIPPLED CHILDREN FOUNDATION TRUST BOARD

Applicant

Hearing:

On the papers

Counsel:

K H Lawrence for Applicant

A P Lawson and R E R Gavey for Attorney-General

Judgment:

24 August 2023

JUDGMENT OF GRICE J

(Application to vary trust deed)

[1]                  The applicant, the Jubilee Crippled Children Foundation Trust Board (the board), has applied to vary cl 6 of the trust deed for the Jubilee Crippled Children Foundation Trust (the trust) under the Trusts Act 2019 to enable the board to appoint new trustees.

[2]                  The trust is charitable therefore Crown Law on behalf of the Attorney-General has been served and made submissions in support of the application.

[3]                  The present appointor – the Auckland Branch of the New Zealand Crippled Children Society (now known as CCS Disability Action Auckland) – consents to the application.

RE THE JUBILEE CRIPPLED CHILDREN FOUNDATION TRUST BOARD [2023] NZHC 2318 [24 August 2023]

[4]                  The applicant says no other persons are affected and has, in accordance with directions as to service, advertised this application in summary form on its website. No third parties have indicated an interest or sought further details of the application.

Reason for the application

[5]                  There were strong links between the trust and CCS Auckland when the trust was established on 11 September 1985. The settlor, Lionel Brierly, died in 2003 leaving the residue of his estate to the trust. The trust purpose is to benefit physically handicapped people living in the Auckland area. The trust now has funds totalling approximately $42 million and is administered by a board of trustees incorporated under the Charitable Trusts Act 1957. While the trust still has links to CCS Auckland, the trust now operates independently.

[6]Clause 6 of the trust deed provides:

6.     THE power of appointment of new trustees hereof shall be vested in  the Executive Committee of THE AUCKLAND BRANCH OF THE NEW

ZEALAND CRIPPLED CHILDREN SOCIETY a duly incorporated society having its registered office at Auckland, or, in the event of the said Society ceasing to exist, the surviving or continuing trustees or the personal representatives of the last surviving trustees.

[7]                  CCS Auckland is an external organisation with no specific skillset or knowledge relating to the board. The applicant says the board is best placed to identify suitable candidates to replace outgoing trustees and, in practice, already undertakes this function by making recommendations to CCS Auckland.

Proposed variation

[8]                  The applicant seeks an order of the Court pursuant to s 130 of the Trusts Act to vary cl 6 of the trust deed to read:

THE power of appointment of new trustees shall be vested in the trustees of the trust from time to time. This power may be exercised with a majority of votes in accordance with clause 13 of this deed.

[9]                  This places the power of appointing new trustees with the trustees of the trust, instead of CCS Auckland.

[10]              In the alternative, the applicant seeks a direction that a scheme be prepared under the Charitable Trusts Act, which vests the power to appoint and remove trustees of the trust in the trustees from time to time.1

[11]              The proposed variation is said to be desirable to safeguard the future management and administration of the trust property.

Comment on proposed variation and process for proposed variation

[12]              The applicant has applied for the above variation to be made under s 130 of the Trusts Act. This provides:

130Power of court to vary or extend trustees’ powers in relation to property

(1)The court may vary or extend the powers of the trustees of a trust if—

(a)the court considers that the variation or extension is necessary or desirable for the proper management or administration of the trust property; and

(b)the variation or extension does not alter a beneficiary’s interest under the trust; and

(c)the variation or extension does not involve a power to distribute trust property to a beneficiary.

(2)An application for an order may be made by—

(a)a trustee of the trust; or

(b)a beneficiary of the trust.

[13]              Applications to vary the administration of a charitable trust are usually brought under pt 3 of the Charitable Trusts Act, specifically under s 33, which provides:

33Extension 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

1      Counsel for the Attorney-General notes that the application under s 130 of the Trusts Act makes no mention of adding or amending a power to remove trustees. However, it appears such an amendment will be sought if the application were to proceed under the Charitable Trusts Act.

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:

provided that nothing in this section shall restrict the powers that are or may be conferred on the court or the trustees by or under the Trusts Act 2019 or any other Act or by law.

[14]              In my view, the proviso at the end of s 33 indicates that there is jurisdiction for the Court to vary a charitable trust under the Trusts Act.2 Which route is appropriate or preferable will depend on the facts of each case.

[15]              The variation seeks only to change the manner that trustees are appointed. The reasons outlined in the affidavit of Mr Nigel Fletcher in support of the application indicate that:

(a)When the board was established, it was closely linked to CCS and, while it still has close links to that organisation, it has been successfully operating independently from any other organisation for some time.

(b)The board is currently made up of 10 members who are highly skilled in their areas of expertise. Three of the members are affiliated with CCS: one affiliated with the CCS national group;  and  two  with  CCS Auckland.

(c)The trustees undertake considerable work, including serving of various subcommittees in relation to the areas of expertise. This includes an investment subcommittee, a property subcommittee and a grants committee. The committees are active and the trustees work hard for the trust.

(d)When new trustees are required, the board currently identifies the requisite skills for new appointees and conducts extensive background

2      A similar conclusion was reached in MacAlister v Royal New Zealand Foundation for the Blind [2015] NZHC 909 at [9] in respect of s 64 of the Trustee Act 1956, which was the predecessor to s 130 of the Trusts Act. Also compare s 33 with s 32 of the Charitable Trusts Act, which provides that any case falling within that section must be dealt with in accordance with the Charitable Trusts Act: Re Twigger [1989] 3 NZLR 329 (HC) at 340.

work to identify suitable candidates and then proposes new trustees to CCS Auckland.

(e)The trustees are of the view that it is no longer appropriate for the trustee  appointment  process  to  be  overseen   and   decided   by CCS Auckland. The board chair, Mr Earl White, has written to the trustees about this matter. It was discussed by the trust in August 2022 and the trustees agreed that given the significant assets and complex affairs of the trust, which are not necessarily well  understood  by CCS Auckland, and the lack of guarantee that CCS Auckland would be able to appoint replacement trustees in a timely fashion as well as the increased administrative burden associated with CCS Auckland holding the power to appoint trustees, it was appropriate to apply to the Court to vary the power of appointment.

(f)An approach was made to CCS Auckland following the agreement of the board in December 2022 to consider the proposed trustee resolution to vary the appointment process by vesting it in the trustees from time to time.

(g)CCS Auckland has provided its written consent to such variation.

Application of the Trusts Act

[16]              One feature of the Charitable Trusts Act variation process that is missing from the Trusts Act processes is the requirement that the proposed variation be publicly advertised before it is considered by the Court.3 It was suggested that the only person interested was the present appointor. While it is not clear what basis upon which someone might object to the application, it is not possible to rule that out. The trust is substantial. No doubt there are many people interested in its administration including those who are recipients of its grants.

3      Section 36 of the Charitable Trusts Act provides that advertising.

[17]              Therefore, it is important that persons who might be interested in the application be given an opportunity to make submissions. For that reason, following the suggestion of counsel for the Attorney-General, this Court directed the advertisement of this application by placing it on the trust’s website, as that appeared an appropriate method to ensure that the persons who might be interested in the organisation had an opportunity to make submissions in this application. No-one expressed interest in making a submission, nor were there any objections.

[18]              There is no reason why  this  Court should not deal with this variation under  s 130 of the Trusts Act rather than s 33 of the Charitable Trusts Act. The variation seeks only to change who may appoint trustees. The change suggested appears to be desirable to ensure the proper and efficient management and administration of the trust and so is in the public interest. The Attorney-General does not oppose the application and there have been no interested persons who have come forward to oppose the application.

Conclusion and orders

[19]              In those circumstances the application is granted accordingly. Orders are made in terms of the application pursuant to s 130 of the Trusts Act to vary cl 6 of the trust deed to read:

THE power of appointment of new trustees shall be vested in the trustees of the trust from time to time. This power may be exercised with a majority of votes in accordance with clause 13 of this deed.

Grice J

Solicitors:

Greg Kelly Law Limited, Wellington Crown Law Office, Wellington