Mabel Elizabeth James QSM Charitable Trust Board (Incorporated)
[2014] NZHC 581
•26 March 2014
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
CIV-2013-409-001770 [2014] NZHC 581
IN THE MATTER OF THE CHARITABLE TRUSTS ACT
1957
AND IN THE MATTER OF AN APPLICATION BY
THE MABEL ELIZABETH JAMES QSM CHARITABLE TRUST BOARD (INCORPORATED)
Applicant
Hearing: 26 March 2014
Appearances: W J Hamilton for Applicant
Judgment: 26 March 2014
JUDGMENT OF GENDALL J
Introduction and background
[1] The Mabel Elizabeth James QSM Charitable Trust Board (Incorporated) (the Trust) applied to this Court on 17 December 2013 for an order to place the Trust into liquidation pursuant to s 25 of the Charitable Trusts Act 1957 (the Act). The Trust was established under a Deed of Trust dated 30 March 1984 (the Trust Deed) by the settlor Mabel Elizabeth James QSM (Ms James). The original trustees under the Trust Deed were Ms James, Peter Robert Raleigh Mulligan (Mr Mulligan) a Christchurch solicitor, and two others.
[2] On 3 July 2013 the then trustees of the Trust elected to incorporate the Trust under the Charitable Trusts Act 1957 in order to facilitate the present application that
would enable it to be put into liquidation.
RE MABEL ELIZABETH JAMES QSM CHARITABLE TRUST BOARD (INC) [2014] NZHC 581 [26 March
2014]
[3] In the present application the Trust seeks three things – first that it be placed into liquidation, secondly that Mr Mulligan be appointed as liquidator of the Trust and, thirdly that the Trust be directed to transfer its surplus assets in equal proportions to:
(a) The Christchurch Early Intervention Trust (Registration No CC22708)
for the benefit of the Champion Centre;
(b) The Christchurch Civic Music Council Incorporated (Registration No
CC27957);
(c) The Christchurch Symphony Trust (Registration No CC11437); (d) The Hohepa Foundation (Registration No CC10696); and
(e) Such other charities as the Court deems appropriate.
[4] The grounds on which the orders are sought are set out in the application as follows:
(a) The size of the Trust’s fund has diminished (now about $150,000) and the income available annually for distribution (only about $7600) is largely subsumed by administration costs and professional fees (averaging about $3200);
(b)It is therefore generally uneconomic for the Trust to continue to operate and it is also impractical or inexpedient to carry out the purpose for which the trust was settled;
(c) If the Trust is not wound up, it is unlikely that the Trust will be in a position to make any further substantial distributions;
(d)In all the circumstances it is just and equitable that the Trust be placed in liquidation;
(e) The proposed distribution of the surplus assets is in accordance with the charitable purposes which the Trust is required to observe under the Trust Deed dated 30 March 1984.
[5] Pursuant to clause 4 of the Trust Deed the trustees are required to, amongst other things:
Hold the nett annual income of the trust fund UPON TRUST to pay or apply the same in such proportions as the trustees in their absolute and uncontrolled discretion shall decide upon for the benefit of intellectually handicapped persons in Canterbury and for the benefit of charitable and cultural purposes, especially music, in Canterbury.
[6] The settlor Ms James also expressed in clause 4 of the Trust Deed her wish that:
Without in any way imposing any obligation on the trustees that they will in the exercise of the discretions given to them give special consideration to the needs of the New Zealand Society for Intellectually Handicapped (Canterbury Branch) and the Christchurch Symphony Orchestra.
[7] Ms James as I understand it died in the late 1990’s. The only remaining trustees of the Trust are Mr Mulligan and one other Dr Caseley, who was a Christchurch paediatrician.
[8] Since 1998 it appears the Trust has distributed a total of $94,500 to the four entities noted at paragraph [3](a), (b), (c) and (d) above. The Christchurch Early Intervention Trust, which has operated the Champion Centre, has as its core business the provision of early intervention services to infants and young children with disabilities in the Christchurch area. Similarly, the Hohepa Foundation was formed for the purpose of establishing and maintaining home schools throughout New Zealand for the curative education and social therapy of children, young persons and adults with intellectual disability. The Christchurch Civic Music Council, also known as Music Canterbury, runs the National Concerto Competition, supplies instruments for concert venues and offers music scholarships to young persons. The Christchurch Symphony (Orchestra) Trust contributes to the cultural diversity of Christchurch through presenting a full and varied concert season annually. Since
1998, the above two entities associated with intellectually disabled children have
received approximately 59% of the total distributions from the trust and entities associated with music causes have received approximately 41%.
Charitable Trusts Act 1957
[9] The present application is made under s 25(1) of the Act which provides:
25 Liquidation of a board by court
(1) A board may be put into liquidation by the appointment by the court as liquidator of a named person or an Official Assignee for a named district if the court is satisfied that it is just and equitable that the board should be put into liquidation.
[10] Pursuant to directions made by this Court, the present application and supporting material have been served upon the Hohepa Foundation, the Christchurch Early Intervention Trust, the Christchurch Symphony Trust, the Christchurch Civic Music Council Incorporated and the Attorney General.
[11] The Christchurch Early Intervention Trust has filed a memorandum in this Court dated 12 March 2014 which supports the present application. The memorandum notes also that the Trust abides the decision of the Court.
[12] Correspondence is also before the Court from the Office of the Attorney
General confirming his support for the application and the proposed distribution.
[13] No communication or opposition to the present application has been received from any of the other parties who have been served.
[14] The application itself has also been advertised both in the Christchurch Press newspaper on 19 February 2014 and in the New Zealand Gazette on 27 February
2014. Those advertisements required any person wishing to appear at the hearing of the application today, 26 March 2014 to file an appearance not later than the second working day before that date. No notices of appearance have been filed by any party nor has there been any indication that any party opposes or wishes to be heard on the present application.
[15] The application is supported by an affidavit of Mr Mulligan dated
13 December 2013. As noted above, Mr Mulligan who is now a retired solicitor was an original trustee of the Trust since its establishment in 1984. Mr Mulligan deposes that over the last 15 years the Trust has made distributions to four charitable entities, being the Champion Centre (operated by the Christchurch Early Intervention Trust), the Christchurch Civic Music Council Incorporated, the Hohepa Foundation (for the benefit of the Christchurch branch) and the Christchurch Symphony Orchestra.
[16] The Trust has also apparently made minor historical distributions to the IHC Canterbury Branch (but I am told now that the IHC no longer has a Canterbury Branch) and the Royal Christchurch Music Society which later merged to become the Christchurch City Choir.
[17] Mr Mulligan noted also that, given that the IHC and the Christchurch City Choir had not received distributions during the past 26 years, it was his view that those organisations did not have any realistic expectation of further distributions from the Trust.
[18] Mr Mulligan also confirmed that he would be prepared to assume the role of liquidator of the Trust and he consented to this.
[19] As to the proposed distribution in the application noted at paragraph [3] above, Mr Mulligan suggested that this accorded best with the wishes of Ms James at the outset as expressed in the Trust Deed.
[20] Turning now to consider whether in terms of s 25(1) of the Act it is just and equitable to order the liquidation of the Trust, it is clear that the concurrence of the present trustees and the charities involved in their view that the Trust should be liquidated is not determinative here. There would appear to be general agreement on the view that ongoing administration of a trust fund of the size administered by the Trust with investment restrictions would be uneconomic relative to the extent of income available to be divided annually among the various charities. It is valid in my view to suggest here, as the applicant does, that whatever broad entitlements any charities may have to the capital of the Trust now would be of more utility to each of
those charities on an ongoing basis than an expectation of an annual supplement to their income. I balance against that the interests of Ms James in originally settling the Trust and no doubt having an interest in the perpetuation of her memory as a donor to charities within the Canterbury region.
[21] Overall however, in my judgment there is greater utility to the charities in question and their place in the wider community, arising from liquidation of the Board in the current circumstances rather than simply perpetuating a current situation which cannot be seen as economically viable. A consideration of Ms James’ wishes in my view can be properly reflected in the payments to be made to the nominated charities, which will be addressed subsequently in this judgment.
[22] I conclude that the just and equitable test in s 25(1) Charitable Trusts Act
1957 is met here and an order is to be made liquidating the Trust. Mr Mulligan, a retired Christchurch solicitor and one of the original trustees of the Trust, has consented to act as liquidator here and in my view with his long history and involvement in this Trust, is an appropriate person to be appointed as liquidator.
Directions as to distribution of surplus assets
[23] In cases such as the present where the Court assumes the power to direct distributions in relation to charitable property where the settlor’s intentions have become impossible or impracticable to execute, it is clear that in doing so the Court should adopt a course as close as possible to what can be discerned as the settlor’s intention – see generally Laws of New Zealand, Charities, paragraph 194.
[24] The total Trust funds available for distribution at present I understand are about $163,383. It is proposed that once legal and administration fees are deducted from this fund, the remainder is to be distributed evenly between the four entities noted at paragraph [3] above – the Christchurch Early Intervention Trust for the benefit of the Champion Centre, the Christchurch Civic Music Council Incorporated, the Christchurch Symphony Trust and the Hohepa Foundation. Each of these organisations is involved in charitable purposes and, in accordance with the wishes expressed by Ms James in the Trust Deed, this final distribution would be split
evenly between the two charities involving the causes of intellectually disabled children and the two charities involving music causes in Canterbury.
[25] I am satisfied that distributions in this manner would generally accord with the wishes of the settlor Ms James as expressed in the Trust Deed and are appropriate here. In the present circumstances, in which the initiatives represented by this charity are being brought to an end, in my view it is just and equitable that a final distribution in line with these intentions occurs with this distribution being by way of four equal payments to each of the four charities mentioned above.
Orders
[26] For all the reasons outlined above, I now make the following orders: (a) An order is made placing the Trust into liquidation.
(b)Insofar as it may be relevant this order is timed today, 26 March 2014, at 3:00 p.m.
(c) Given that in my view it is appropriate the trustees recover all reasonable costs of and incidental to these proceedings before the Trust is liquidated, an order is made that out of the Trust funds are to be paid costs on this application to the applicant on a category 2B basis together with disbursements as fixed by the Registrar.
(d) After payment of all legal and administration fees and costs for the
Trust, I order that the balance is to be paid equally to:
(i)The Christchurch Early Intervention Trust for the benefit of the Champion Centre;
(ii) The Christchurch Civic Music Council Incorporated; (iii) The Christchurch Symphony Trust; and
(iv) The Hohepa Foundation.
...................................................
Gendall J
Solicitors:
Duncan Cotterill, Christchurch
1
0
0