Kathleen Dorothy Kirkby Charitable Trust

[2024] NZHC 1183

IN THE HIGH COURT OF NEW ZEALAND TAURANGA REGISTRY

I TE KŌTI MATUA O AOTEAROA TAURANGA MOANA ROHE

CIV-2024-470-32

[2024] NZHC 1183

UNDER	ss 124 and 125 of the Trusts Act 2019
AND
IN THE MATTER	of an application by PERPETUAL TRUST LIMITED as Trustee (the trustee) of the Kathleen Dorothy Kirkby (the settlor) Charitable Trust (the trust)

Hearing:

6 May 2024

Counsel:

T J Conder and P R Symonds for the trustee

B S Sutton for The Priory in New Zealand of the Most Venerable Order of the Hospital of St John of Jerusalem (St John)

Date of judgment:

13 May 2024

JUDGMENT OF JAGOSE J

This judgment was delivered by me on 13 May 2024 at 4.30pm.

Pursuant to Rule 11.5 of the High Court Rules.

………………………… Registrar/Deputy Registrar

Solicitors:

Holland Beckett, Tauranga

Copy to:

The Priory in New Zealand of the Most Venerable Order of the Hospital of St John of Jerusalem

RE KATHLEEN DOROTHY KIRKBY CHARITABLE TRUST [2024] NZHC 1183 [13 May 2024]

[1]    As duty judge, I have an application for judgment by default by way of formal proof,1 on the trustee’s originating application for orders approving proposed variations to a deed of trust.

Background

[2]    The trust was settled on 31 March 1969 for specified health, education and medical research charitable purposes. The trust deed entitled trustees, “[d]uring the lifetime of the [s]ettlor”, to make distributions of up to 25 per cent of the trust fund’s capital to such charities approved by her. Power was reserved to her to include further charities as beneficiaries. Approved beneficiaries were named in supplementary deeds. The settlor died on 26 September 1992. The trustee has not since been able to make significant distribution to any beneficiary, despite the trust’s accumulating capital.

[3]    Variation is sought to enable the trustee to give effect to the trust’s charitable purposes and the settlor’s ultimate intentions to all beneficiaries’ benefit, and without which all beneficiaries would detrimentally be affected by the trustee’s likely inability to make significant distributions after the settlor’s death, including by modernising its terms consistently with the Trusts Act 2019.

[4]    The terms of the trust  may encompass  additional people  who may  acquire  a beneficial interest in the future, and future persons who may acquire a beneficial interest.   All   named   beneficiaries   consent   to   the   variation   sought,   as   do   a “representative sampling” of those contended to have an interest in the trust property.

Applicable law

[5]    At their request and with the trustee’s agreement, terms of a trust may be varied by unanimous consent of all beneficiaries and/or — if there are people who lack capacity or may acquire a beneficial interest in the future, and/or future persons who may acquire a beneficial interest — with the Court’s approval of the variation on behalf of those latter beneficiaries.2

1      High Court Rules 2016, r 15.9.

2      Trusts Act 2019, s 122.

[6]The Court’s approval may be sought under s 124 of the Trusts Act 2019:

Power of court to approve termination, variation, or resettlement of trust

(1)    The court may, on behalf of any of the beneficiaries described in subsection (2) who has an interest in the property of a trust, approve the termination, variation, or resettlement of the trust.

(2)    The beneficiaries are—

(a)a beneficiary who lacks capacity:

(b)a person who may acquire a beneficial interest at a future date or on the happening of a future event or on becoming a member of a certain class of persons:

(c)a future person who may acquire a beneficial interest.

(3)    An application for an order of approval may be made by—

(a)the trustees or any one of them:

(b)any person with a beneficial interest in the trust property.

(4)    On an application for an order of approval, the court must take into account each of the following factors:

(a)the nature of any person’s interest in the trust property and the effect of the proposed order on that interest:

(b)the benefit or detriment that may result to any person with an interest in the trust property if the court makes or refuses to make the proposed order:

(c)the intentions of the settlor of the trust in settling the trust, if it is practicable to ascertain those intentions.

(5)    The court must not make an order of approval if its effect would be to reduce or remove any vested interest in the trust property.

(6)    An order of approval binds the person on whose behalf it is made and takes effect without any further step.

[7]    Section 124 calls on the Court’s supervisory capacity.3 I adopt Mander J’s identification of the applicable principles, as modified by s 124:4

(a)    The power to approve a variation is discretionary.

(b)    The court may, on behalf of any beneficiary described in s 124(2) who has an interest in the property of a trust, consider any proposal to terminate, vary or resettle a trust.

3      See Talijancich v Talijancich [2021] NZHC 753 at [13].

4      Gavin v Gavin [2021] NZHC 550 at [15], referring to McKnight v Craig [2010] 3 NZLR 860 (HC) at [8] (citing Re Greenwood [1988] 1 NZLR 197; Re Byrne HC Wellington CIV-2003-485-0167, 25 May 2004; and Ewington v Schulz HC Auckland CIV-2008-404-6596, 5 May 2009).

(c)    The court’s discretion is to be exercised with reference to the factors identified in s 124(4), including the intentions of the settlor, to the extent these can be ascertained.

(d)    The court can approve a scheme which conflicts with the intentions of the settlor but should not do so lightly.

(e)    The court considers the trust provisions afresh if circumstances have arisen which were not foreseen or may not have been foreseeable at the time the trust was established.

(f)     The court is able to approve an arrangement to the detriment of any person on whose behalf the court is giving consent, provided the effect of the orders would not reduce or remove a vested interest in the trust property.

(g)    The court is to take a wide approach to benefits and detriments and arrangements and must consider the arrangements as a whole in a practical and business-like way. Indirect and intangible benefits and detriments are relevant, including the welfare and honour of the family.

(h)    Difficulties may be met by amendments to the proposal or covenants by persons benefitting to make good losses to the disadvantage of other beneficiaries.

(i)     An order approving a proposed variation may be conditional.

[8]    On a formal proof hearing, I need only be satisfied the applicant has filed affidavit evidence establishing “each cause of action relied on”.5 By ‘satisfied’ is meant I just make up my mind that is the case.6

Discussion

[9]    I construe the trust deed as embodying the settlor’s intentions to provide for the trustee’s indefinite distribution of the trust’s capital to benefit the charitable purposes she identified. Taking into account the s 124(4) factors and the trust’s charitable purposes intended by the settlor, and particularly given the unanimous consent of the named beneficiaries and of the ‘representative sample’, I am satisfied any s 124(2)(b) or (c) beneficiary also would consent if properly advised. Given those persons’ futurity, I also am satisfied the variation is not to reduce or remove any vested interest in the trust property. And I am satisfied in any event the variation is not otherwise to their detriment. None would benefit if the variation was not approved. Last I am satisfied the trust deed’s consistency with the new Trusts Act could not have

5      High Court Rules, r 15.9(4).

6      Z v Dental Complaints Assessment Committee [2008] NZSC 55, [2009] 1 NZLR 1 at [96].

been foreseen at the time of its making, and it is desirable such consistency be achieved.

Result

[10]   On behalf of anyone who may acquire a beneficial interest in the trust in the future, I approve variation of the trust in the terms expressed at exhibit I annexed to the affidavit of Stuart Alexander Thom sworn 29 February 2024.

—Jagose J