Lochhead v Attorney-General
[2020] NZHC 1735
•16 July 2020
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE
CIV-2019-409-000490
[2020] NZHC 1735
UNDER the Trustee Act 1956 IN THE MATTER
of the Sefton Public Library
AND
an application for orders replacing the
trustees of the Sefton Public Library Trust and to vest certain property in the new
trustees
BETWEEN
DENISE ANN LOCHHEAD of Sefton, Housewife, LOIS BARBARA LOCHHEAD
of Sefton, Retired and JUNE BERYL THOMPSON of Christchurch, Teacher Plaintiffs
AND
ATTORNEY-GENERAL
Defendant
Counsel: C W Knowles for Plaintiffs
D Jones and A P Lawson for Defendant
Judgment:
16 July 2020
(Determined on the papers)
JUDGMENT OF JUSTICE OSBORNE
This judgment was delivered by me on 16 July 2020 at 4.30 pm pursuant to Rule 11.5 of the High Court Rules
Registrar/Deputy Registrar Date:
LOCHHEAD v ATTORNEY-GENERAL [2020] NZHC 1735 [16 July 2020]
Background
[1] This proceeding brought under pt 18 of the High Court Rules 2016 relates to the Sefton Public Library Trust established by trustees of the estate of James Young in 1923 for the charitable purpose of establishing a public library at Sefton (the Trust). The proceeding was filed with a without notice application for directions as to service and representation. On 29 August 2019, Associate Judge Paulsen directed service upon the Attorney-General whose interest in the proceeding is as the protector of charities.
[2] The Sefton Public Library has been closed for several years. The plaintiffs originally applied for orders replacing the trustees of the Trust, for the vesting of property in those trustees, for the sale of certain property and for variation of the terms of the Trust allowing for the liquidation of its assets. Following discussions between Counsel, the plaintiffs now seek orders only in terms of paragraphs 10a. and b. of the statement of claim which read:
a.An Order under section 51 of the Trustee Act 1956 or alternatively under the inherent jurisdiction of the High Court that the [plaintiffs] be appointed as replacement trustees for the Trust.
b.An Order under section 51(1)(a) of the Trustee Act 1956 or alternatively under the inherent jurisdiction of the High Court vesting the land at Sefton currently registered in the names of George Clarke, John Fitzpatrick and Philip John Thorne in the names of the [plaintiffs] as trustees of the Trust.
[3] The further orders sought in the statement of claim are no longer pursued. If appointed as trustees, it is now the plaintiffs’ intention to seek approval for a scheme under pt 3 Charitable Trusts Act 1957 authorising the sale of the library and distribution of the proceeds of sale for community purposes.
[4] The Attorney-General takes no position in respect to the two orders that are currently sought by the plaintiffs.
Facts
[5] James Young died on 24 October 1921 leaving a will dated 7 December 1920. Probate was granted to James Marshall of Rangiora, County Clerk and Frederick
William Johnston of Christchurch, Solicitor. The will required Mr Young’s trustees to establish a public library for the benefit of the residents of the Sefton district. A sum of £1,500 was left for this purpose (£1000 for the library’s contents and £500 for the land and building).
[6] By Deed dated 4 October 1923, the Trust was established for the operation of the library at Sefton. It set out the rules for the library and provided it was to be operated by a separate library committee. Land at Sefton was purchased for £50 to operate the library. The property is Part Rural Section 2355 more particularly described in Identifier CB388/1. A library building was constructed on the property to house the contents of the library.
[7] The library operated over many years. Changes in the trustees were not recorded on the certificate of title to the land and the last memorials date back to 1926. The distinction between the trustees and those serving on the committee was lost. Since around the 1970s the Trust and the committee have been treated as one. Some changes of the committee members have been minuted. The last meeting of the committee recorded the trustees were Denise Ann Lochhead, June Beryl Thompson and Anne Jones. Anne Jones has since indicated she does not wish to be a trustee. Lois Barbara Lochhead, who has formerly been a committee member, has offered to take on the role.
[8] Due to a lack of patronage the library was closed in November 1996 and has not re-opened. There is no demand for a library in Sefton and no funds to pay rates and insurance or maintain the land and building. As the library no longer operates the purpose of the Trust is not being fulfilled. For that reason, the plaintiffs considered it appropriate to take action for the sale of the library and the distribution of the proceeds for community purposes.
[9] To achieve their intention the plaintiffs faced legal issues requiring resolution which were as follows:
(a)it is not clear who the last trustees were, or who had the power to appoint new trustees;
(b)the land remains in the name of the original trustees who have long since been replaced and died;
(c)the land is recorded as being limited as to parcels and title; and
(d)because the Trust had been established for a charitable purpose there are limitations over the use of funds which may be generated from the sale of the land.
[10] Since filing this proceeding, the plaintiffs have updated the Court on their activities and intentions. In a memorandum of 6 July 2020 are details of the scheme which they intend to pursue under pt 3 of the Charitable Trusts Act. They will propose the sale of the land and buildings because there is no need for a library in Sefton separate from library services offered by the Waimakariri District Council. Their preferred option is to apply the proceeds of sale as a contribution to the construction costs of the Sefton Public Hall. This will be a facility used by a wide variety of community groups in the Sefton district. The existing hall benefits user groups generally associated with educational or sporting activities. The hall needs to be replaced or repaired because it was damaged in the Christchurch earthquakes. In order to have authority to pursue the scheme, the plaintiffs seek appointment as trustees.
[11] There has already been community consultation. The issues were canvassed in 1997 and 2008 at the library’s annual general meeting which was advertised in the community newspapers and the school newsletter. More recently, the plaintiffs have done what they could in the circumstances of the COVID-19 pandemic to consult with the community. They have advertised in the community newspaper. They received a few responses which confirm the view that the library should be sold and the proceeds applied to the construction costs of the Sefton Public Hall. The plaintiffs intend to seek further community feedback and to continue discussions with the Waimakariri District Council.
Appointment of new trustees
The law
[12]Clause 17 of the Deed establishing the Trust provides:
On a vacancy occurring in the office of Trustee such vacancy shall be filled by the appointment of a new Trustee by the Committee and on such appointment any estate or interest in any land or chattels subject to the trust or the right to recover and receive any debt or other thing in action so subject shall vest in such new Trustee and the surviving or continuing Trustees as joint tenants.
[13]Section 51(1) Trustee Act 1956 provides:
51Power of court to appoint new trustees
(1)The court may, whenever it is expedient to appoint a new trustee or new trustees, and it is found inexpedient, difficult, or impracticable so to do without the assistance of the court, make an order appointing a new trustee or new trustees, either in substitution for or in addition to any existing trustee or trustees, or although there is no existing trustee.
[14] The Court also has an inherent jurisdiction to remove and appoint trustees. The inherent jurisdiction to remove trustees is ancillary to the principal duty of the Court to see that trusts are properly executed. The Court’s primary concern is the welfare of the beneficiaries.1
Discussion
[15] The requirements of s 51 for the appointment of the plaintiffs as trustees are met. Under cl 17 of the Deed establishing the trust the trustees are to be appointed by the committee but that is problematic in this case due to uncertainty both as to the identity of the last trustees and those holding office as committee members. In terms of s 51, it is difficult or impracticable to appoint new trustees without the assistance of the Court.
[16] It is also expedient that the Court exercise its power to appoint the plaintiffs as trustees. The plaintiffs are the only persons who have shown initiative in taking steps
1 Clarke v Karaitiana [2011] NZCA 154, [2011] NZAR 370 at [38]; and Letterstedt v Broers (1884) 9 App Cas 371 (PC) at 386-387.
to put the Trust’s affairs into order. There is a need for steps to be taken because the Trust is not fulfilling its charitable purpose, there is no longer any demand for a public library in Sefton and the proceeds of sale of the Trust assets should be applied to some other appropriate purpose in accordance with principles under the Charitable Trusts Act.
[17]I am satisfied the plaintiffs are appropriate persons to be appointed as trustees.
Vesting of land
The law
[18] The plaintiffs also seek vesting of the land under s 52 of the Trustee Act 1956. Section 52 relevantly provides:
52Vesting orders of land
(1)Subject to the provisions of subsections (2) and (3), in any of the following cases, namely –
(a)where the court appoints or has appointed a trustee of any land or interest therein, or where a trustee of any land or interest therein has been appointed out of court under any statutory or express power:
…
(d)where it is uncertain whether the last trustee known to have been entitled to or possessed of any interest in land is alive or dead:
Discussion
[19] Both s 52(1)(a) and (d) apply in this case. Given that the plaintiffs are being appointed trustees of the Trust, it follows that there should also be an order made vesting the Trust assets in them. There can be no sensible opposition to such an order.2
2 Strang v Strang [2016] NZHC 2203 at [17].
Result
[20]I order under s 51 of the Trustee Act 1956:
(a)The plaintiffs are appointed as trustees of the Sefton Public Library Trust (the Trust). For the avoidance of doubt they are appointed in substitution for any other persons previously appointed or acting as trustees of the Trust.
(b)Under s 52 Trustee Act 1956, the land comprising Part Rural Section 2355 more particularly described in Identifier CB388/1 Canterbury Land Registration District, (at present in the names of Philip John Thorne, John Fitzpatrick and George Clarke) is vested in the names of Denise Ann Lochhead, Lois Barbara Lochhead and June Beryl Thompson as the current trustees of the Trust established under the will of James Young.
(c)The costs and disbursements of this application are to be paid out of the assets of the Trust.
Osborne J
Solicitors:
Helmore Stewart, Rangiora Crown Law, Wellington
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