Maka v Toailoa
[2025] NZCA 261
•19 June 2025 at 3 pm
| IN THE COURT OF APPEAL OF NEW ZEALAND I TE KŌTI PĪRA O AOTEAROA |
| CA255/2024 |
| BETWEEN | SALETAULUA CHARLES FAAMANATU MAKA AND TONGA SEINI FATA AS TRUSTEES OF THE SAMOAN INDEPENDENT SEVENTH DAY ADVENTIST PROPERTY TRUST |
| AND | SIAOSI DAVID SOOTAGA TOAILOA |
| FEU SEUMAALII Second Respondent | |
| PENIATA SAUNIA Third Respondent | |
| ATTORNEY-GENERAL Fourth Respondent | |
| SAMOAN INDEPENDENT SEVENTH DAY ADVENTIST CHURCH (SISDAC) AKA REMNANT CHURCH OF THE LIVING GOD Fifth Respondent |
| Hearing: | 8 October 2024 |
Court: | Hinton, Brewer and Osborne JJ |
Counsel: | J D McBride, R C Woods and S E Cameron for Appellants |
Judgment: | 19 June 2025 at 3 pm |
| JUDGMENT OF THE COURT |
A The appeal in CA255/2024 is dismissed, except to the extent the order at [1](c) of the High Court Result Judgment is amended to read:
(a)that the applicants shall be reimbursed by way of payment from the assets of SISDAC, and if no such assets are available then the SISDA Property Trust, for their legal costs (“the costs”), incurred in commencing and pursuing the main proceeding and the interim orders application, including the costs of and incidental to this application.
(b)the applicants’ entitlement to reimbursement will arise when:
(i)the applicants’ solicitors have rendered invoices to SISDAC and to the SISDA Property Trust; and, in addition
(ii)the applicants’ senior counsel has certified the costs:
1. have been incurred in relation to the proceedings declared reasonable and appropriate by these orders; and
2.are in fact fair and reasonable having regard to the nature of attendances undertaken; and, in addition
(iii) an Associate Judge of this Court, upon presentation of the information at (b)(i) and (ii) above has approved the costs as fair and reasonable.
BThe appeal in CA428/2024 is allowed to the extent the orders appointing Andrew McKay as manager of the Samoan Independent Seventh Day Adventist Property Trust and of the Samoan Independent Seventh Day Adventist Church and making directions in relation to his appointment are quashed.
CIn CA428/2024 the order whereby the preservation order currently in place was to remain in place pending the manager’s first report to the Court is varied to the extent of deleting the words “pending the manager’s first report to the Court” and inserting the words “until further order of the Court or agreement of the Parties”.
DCosts and disbursements of both appeals are reserved.
____________________________________________________________________
REASONS OF THE COURT
(Given by Osborne J)
TABLE OF CONTENTS
Introduction
Structure of this judgment
The substantive applicants
Pastor Toailoa
Feu Seumaalii and Peniata Saunia
Charitable trusts, incorporated boards, registered charities and Charities Services
The incorporation and registration of the Trusts
Purposes of the Trusts
The “World Committee”
Management of the Trusts 2013 to 2021
Overview
Events: 2013 to 2021
The 2021 Bitcoin investment
The Māngere Church building project (the Church Build)
Aftermath of the deregistration decision
The Remnant Church is established
Mortgage defaults by SISDAC
Re-registration of SISDAC
Transfer of SISDAC properties
SISDAC’s financial accounting
The application for Beddoe and prospective costs orders (PCOs)
The Beddoe Decision
The Beddoe Decision is stayed
The appeal against the Beddoe Decision
Grounds of appeal
Submissions
Discussion—the standing of the substantive applicants
Discussion—the joining of parties
The quality of the substantive applicants’ evidence
Discussion—the justification for a Beddoe order
The correct legal approach
Topic 1: Trust deed of SISDA Property Trust
Topic 2: Transfer of SISDAC properties to Sunrise
Topic 3: Governance and administration/replacement of the trustees
Topic 3A: The role of the Remnant Church
Topic 3B: The influence of Pastor Papu on major decisions
Topic 3C: Poor management of investments and finances
Topic 3D: Administrative failures
The best interests of the Trusts
Discussion—reimbursement of legal costs
Discussion—the amount of legal costs incurred
Discussion—the Beddoe Decision in relation to the interim receivership application
The Manager Decision
The interlocutory application
The statutory provisions
The judgment
The appeal against the Manager Decision
Grounds of appeal
Submissions
Discussion
The appeal against the continuation of the preservation order
The preservation order
The rule
Ground of appeal
Submissions
Discussion
Result
Introduction
Two appeals have been heard together. They concern orders made by the High Court in relation to litigation concerning the administration of two charitable trusts: the Samoan Independent Seventh Day Adventist Church (SISDAC) and the closely related Samoan Independent Seventh Day Adventist Property Trust (SISDA Property Trust) (in this judgment collectively referred to as “the Trusts”).
SISDAC, operating from more than 20 locations in New Zealand, is an important part of the lives of (largely) Samoan people who comprise its congregations. The congregations fund SISDAC through tithes and donations. As this judgment explores, cogent evidence has been presented in an interlocutory context to suggest that the management structure of the Trusts operates without proper regard to the legal principles which underpin charitable trusts, has limited commercial competence and, at least indirectly, continued to be influenced by a pastor whose inappropriate conduct had led to his disqualification from being an officer of the entities.
The first, second and third respondents (whom we will refer to as the substantive applicants) are respectively a former pastor and two elders of SISDAC and, as such, were formerly board members of SISDAC’s Trust Board.
The substantive applicants proposed to commence proceedings (the “main proceedings”) seeking orders as to the Trusts’ constitutions and administration for:
(a)removal and replacement of trustees of the Trusts by suitably independent professionals with governance expertise;
(b)related interim orders appointing a receiver and restraining disposition of trust property; and
(c)the substantive applicants’ reasonable legal costs to be met from SISDAC’s assets or, failing that, from the SISDA Property Trust’s assets.
The appellants are the current trustees of the SISDA Property Trust, a third trustee, Matauaina Eliu, having died since the judgments under appeal were delivered. The substantive applicants are also, with numerous others, trustees of SISDAC.
In August 2023, the substantive applicants filed their statement of claim. At the same time, they sought (without notice) an interim preservation order, under r 7.55 of the High Court Rules 2016, restraining the appellants from a full range of dealings over properties of the SISDA Property Trust, held by the Trust itself or by Sunrise Global Homes Limited (Sunrise). On 17 August 2023, Lang J made orders accordingly, reserving leave to the appellants to apply for rescission or variation on five working days’ notice.[1]
[1]Toailoa v Eliu HC Auckland CIV-2023-404-1747, 17 August 2023 (Minute).
The first appeal is against a judgment of Johnstone J dated 31 May 2024 (the Beddoe Decision).[2] The Judge declared it was reasonable and appropriate for the substantive applicants to commence the proceedings and to seek interim orders appointing an interim receiver or trustee. The Judge also ordered the substantive applicants’ reasonable legal costs to be met from the assets of SISDAC or, failing that, from the SISDA Property Trust.
[2]Toailoa v Eliu [2024] NZHC 1412 [Beddoe Decision].
The appellants, in the second appeal, challenge the subsequent decision of Wilkinson-Smith J dated 10 June 2024 appointing, on an interim basis, a manager of the Trusts (the Manager Decision).[3] In the Manager Decision, the Judge also ordered that an interim preservation order was to remain in place pending the manager’s first report to the Court.[4]
[3]Toailoa v Eliu [2024] NZHC 1509 [Manager Decision] at [253].
[4]At [253(g)].
The fourth respondent, the Attorney-General, in her role as the protector of charities,[5] has been represented in the High Court proceedings and on this appeal. She represents the public interest to ensure property devoted to charitable purposes is not used improperly. She represents the beneficial interests of the charity. SISDAC was joined as a party in the High Court proceedings after the Beddoe Decision and the Manager Decision and was subsequently joined as a fifth respondent in both appeals. It supports the appeals.
Structure of this judgment
[5]Better Public Media Trust v Attorney-General [2020] NZCA 290, (2020) 25 PRNZ 498 at [16]; and National Council of Women of New Zealand Inc v Charities Registration Board [2014] NZHC 1297 at [34]–[35].
As there is a substantial overlap in the material relevant to the Beddoe Decision and the Manager Decision, we will set out the relevant factual background as it relates to both proceedings and then identify the subject matter of the causes of action in the main proceedings by reference to a series of topics. That done, we will describe the Beddoe Decision and determine the appeal relating to that. We will then describe the Manager Decision and determine the appeal relating to that, both in relation to the appointment of a manager and to the continuation of the preservation order.
The substantive applicants
Pastor Toailoa
Pastor Toailoa has been a church minister of SISDAC since 2005 and a pastor of SISDAC since 2014.
Pastor Toailoa was appointed as Division Leader for the Central New Zealand Division of SISDAC in August 2020 and as such a trustee of SISDAC; chairman of the SISDAC Executive Committee in January 2021; and SISDAC Church Administrator in February 2021.
In May 2023, Pastor Toailoa was asked to stand down as Division Leader and instead serve as a pastor with the Peniamina branch of the Remnant Church. Pastor Toailoa did not agree with those decisions and shortly afterwards announced also his decision not to join the Remnant Church. Pastor Toailoa’s decision was viewed by the SISDAC Executive Committee as Pastor Toailoa “leaving the church”. The Executive Committee in August 2023 resolved to remove Pastor Toailoa as Chairman and replaced him.
Feu Seumaalii and Peniata Saunia
Feu Seumaalii and Peniata Saunia are elders of SISDAC.
Charitable trusts, incorporated boards, registered charities and Charities Services
We adopt Johnstone J’s summary of the legislative regime for establishing charitable trust boards and registering charities, and administering the regime:[6]
[4] The trustees of charitable trusts may apply to the Registrar of Incorporated Societies for their incorporation as a board under s 7 of the Charitable Trusts Act 1957. The Registrar’s role under that Act is to register trust boards, and to record changes to trust deeds, addresses and other details. The Registrar is not empowered to enquire into an incorporated board’s activities or operations.
[5] Qualifying entities may apply for registration as charitable entities under s 17 of the Charities Act 2005. The primary advantage of doing so is that registered charities may qualify for certain tax benefits, including tax exemptions for all or some of their income, and donee status, which allows donors to claim tax credits on donations.
[6] Charities Services is an agency established within the Department of Internal Affairs to administer the Charities Act, and to assist the Charities Registration Board to make decisions about registering or de-registering charities. Its website states that they “strive to be a modern, responsive, risk-based regulator focused on promoting public trust and confidence in the charitable sector and encouraging the effective use of charitable resources”.
The incorporation and registration of the Trusts
[6]Beddoe Decision, above n 2.
The Trusts were established and registered as charities as follows:
29 September 1980 SISDAC incorporated as a charitable trust board
4 February 2008 SISDA Property Trust established
19 May 2008 SISDA Property Trust registered as a charity
30 June 2008 SISDAC registered as a charity
Purposes of the Trusts
SISDAC’s purposes are to profess the beliefs of Jesus Christ and to foster the teachings of the Bible among all people, and particularly the Samoan people, in New Zealand. SISDAC has accumulated considerable assets from tithes and donations of congregation members. It is beneficially entitled to some 19 properties, including a new church hall in Māngere built at a cost in excess of $30 million.
The SISDA Property Trust was established to manage SISDAC’s operations. The parties disagree and there is uncertainty as to whether its governing instrument is its original deed of 2008 or a new deed dated 6 December 2022. The new deed added an objective to provide community housing and undertake commercial investments for SISDAC and the “wider community”.
The “World Committee”
SISDAC operates in New Zealand, Australia, Samoa, American Samoa and the United States. Its administration is overseen by an informal governing body known variously as the “World Committee”, the “Executive World Committee” or the “SISDAC World Committee”, and also sometimes referred to as the “World Council” (World Committee). Pastor Willie Papu since 1983 has been and remains the Executive Director and “World Leader” of the World Committee. The precise governance structure is not clear from the evidence but the hierarchy as explained narratively in Pastor Papu’s evidence appears to be in descending order:
· World Leader (Pastor Papu);
· World Council (meeting once a year but have not done so since COVID‑19);
· Executive Committee or World Committee (since COVID-19 meeting monthly with the divisions via Zoom);
· National Divisions;
· Local Churches.
A portion of all tithes and donations collected from all SISDAC churches was historically given to the World Committee to make decisions on funding allocations[7] but (as explained at [44] below), since the establishing of the Remnant Church in New Zealand, tithes from all the Mt Wellington and Ōtara SISDAC churches are now directly assigned to the Remnant Church and paid into its bank account. This current approach, as indicated by the evidence of Tonga Fata appears to stem from a view that there is no reason for separation of funds as the separately incorporated entities are “one and the same”.
Management of the Trusts 2013 to 2021
Overview
[7]Pastor Toailoa put the historical portion at “about 20% of all tithes”.
As a result of the conduct of the affairs of the Trusts from 2013, SISDAC was subjected to a number of investigations, initially by Charities Services (as an agency within the Department of Internal Affairs) then (on referral) by the Serious Fraud Office, and subsequently again by Charities Services and then by the Charities Registration Board.
Events: 2013 to 2021
The investigation of SISDAC by the Serious Fraud Office led to the prosecution of Elizabeth Papu, the daughter of Pastor Papu. In 2017 she was convicted and sentenced on charges relating to theft and misappropriation of $1.6 million of funds from SISDAC in her role as a finance administrator of SISDAC from between 2011 and 2015.[8]
[8]Serious Fraud Office v Papu [2017] NZDC 21687.
In the meantime, SISDAC from 2016 had invested almost $1 million into a cryptocurrency scheme, OneCoin. OneCoin was subsequently determined by the Commerce Commission and other authorities to be either a Ponzi or a pyramid scheme. After SISDAC was aware that a return on its investment was unlikely, further investments of SISDAC’s funds with OneCoin were made.
From 2017 to 2019, Charities Services carried out an investigation of SISDAC. The investigation found there had been serious wrongdoing by Elizabeth Papu, Joseph Stowers, Pastor Papu, Sina Hunt and Willie Papu Junior (Pastor Papu’s son) involving unlawful and corrupt use of SISDAC’s funds and gross mismanagement of the trust. The mismanagement identified included the “poor quality” and “highly risky” investments of almost $1 million in OneCoin cryptocurrency (above at [23]) and $1.7 million in WFE Capital (below at [29]).
It was established that Joseph Stowers, SISDAC’s former treasurer, took $498,997 of SISDAC’s funds as undeclared income. The investigation found that Pastor Papu took $84,031.32 of SISDAC’s funds for the personal benefit of himself and his family and influenced the entity to make further improper payments of $63,309.88. Another officer Sina Hunt was found to have taken over $200,000 of funds for her personal benefit. Willie Papu Junior was found to have wrongfully received over $316,000 for his personal benefit.
The Charities Registration Board considered SISDAC’s (systemic) poor financial management had given Elizabeth Papu and Joseph Stowers the opportunity to unlawfully or corruptly take SISDAC’s funds. The Charities Registration Board found Pastor Papu and Sina Hunt had been allowed to exercise an inappropriate level of influence over investment decisions. The findings were disputed by Pastor Papu and Willie Papu Junior. Charities Services recommended to the Charities Registration Board that SISDAC be deregistered as a charity and that several officers be disqualified from being an officer for periods of four to five years.
On 17 December 2020, the Charities Registration Board deregistered SISDAC with effect from 5 February 2021 and disqualified Pastor Papu and Joseph Stowers from acting as officers of a charitable entity for four years.[9]
[9]Samoan Independent Seventh Day Adventist Church (CC31057) Charities Registration Board Decision 2020-2, 17 December 2020.
The Charities Registration Board concluded that Pastor Papu, in 2020, retained his ability to influence SISDAC’s operations due to the interwoven nature of SISDAC and the World Committee. It referred to submissions Pastor Papu had made, including:[10]
I know that Charities Services would love to kill my influence. But influence is not something you can kill. It is a Legacy, built upon a lifetime of service and compassion. And now more than ever, I need that influence to … not only complete our current building project with the worship Centre complex, but to reach out to the world with our current spiritual concept of a “church without walls.”
[10]At [94].
In the meantime, in 2019, SISDAC had invested $1.7 million into WFE Capital, an offshore company based in Hong Kong, licensed to provide financial services in New Zealand or Hong Kong. In September 2019 (after the investment was made) the Financial Markets Authority issued a warning that WFE Capital may involve a scam.
The 2021 Bitcoin investment
Upon receipt in December 2020 of the Charities Registration Board’s highly critical report, the officers of the Trusts were on notice the Board considered there had been a repeated failure by officers to invest funds prudently, including through the influence of Pastor Papu and Sina Hunt.
Soon afterwards, the decision was made to invest $1 million into Bitcoin. That decision was made through SISDAC’s Executive Committee on 15 March 2021, shortly after Pastor Toailoa’s appointment in January 2021 as chairman of that committee.
It is Pastor Toailoa’s evidence that Pastor Papu proposed the Bitcoin investment in early 2021, without consulting any independent investment advisors. Pastor Toailoa says Pastor Papu told him the Bitcoin investment was his first task. Pastor Toailoa says that due to a lack of knowledge he was not in a position to contribute to the Board’s discussion that followed.
The Bitcoin was purchased from investors in the United States. Pastor Toailoa says that, although $1 million was paid for the Bitcoin, the value received was around $700,000 (New Zealand currency). Pastor Toailoa believes the balance ($300,000) has never been recovered by SISDAC.
The Bitcoin received was held in a wallet (saved on a computer) kept in Pastor Toailoa’s office. The computer was subsequently (in late 2021 or early 2022) removed from Pastor Toailoa’s office by Willie Papu Junior and taken to another location where it apparently remains.
Willie Papu Junior refers to having assisted Pastor Toailoa to purchase the Bitcoin. He deposes that, after the purchase, “[w]e then reinvested the coins in other companies”. He also deposes he showed Pastor Toailoa how to withdraw cryptocurrency from a wallet to pay for his rent.
Willie Papu Junior has deposed that he found, upon checking the wallets in about September 2023, the remaining value was roughly $300,000. He added he had heard at a meeting of “the Ministers” that cryptocurrency had been given to the United States branch of SISDAC. Pastor Papu has not disputed he had influence over the Bitcoin investment and that the investment was not “vetted by an independent investment advisor”, but refers repeatedly to the fact Pastor Toailoa was Chairman of the Executive Committee at the time and “at no time did he show any reservations”.
The ultimate fate of the $1 million investment in Bitcoin is not explained in the appellants’ narrative evidence. The financial report for SISDAC prepared by Michael Prasad for the 2021 financial year (see below from [55]) identifies a sum of $1 million as impaired, with a note explaining: “A payment of $1,000,000 was made to SISDAC California on 15 April 2021 which was for investment purposes. At balance date, the investment was not recoverable.” No recoveries are shown in subsequent reports. Mr Prasad does not identify the investment as a purchase of Bitcoin, but the item in the report is clearly referring to the Bitcoin purchase.
The evidence of Willie Papu Junior (that in 2023 the remaining value of the Bitcoin was roughly $300,000) appears irreconcilable with Mr Prasad’s note as to the level of impairment. It may also be indicative of a very poor state of record-keeping.
The Māngere Church building project (the Church Build)
SISDAC undertook a major building project of a church hall at Māngere (the Church Build). The project is now materially complete. From an initial quotation for the new build (January 2019) of $9,813,986, with another $2 million for required renovation, the hall has been completed with a very substantial cost overrun. Total costs to 2023 were reported as exceeding over $30 million. When an architect/designer was engaged in 2022 in relation to one stage of the project, they concluded there had been no adequate design documents for the build to that point and no quantity surveyor involved. It was also difficult to determine precisely what work had been done.
Aftermath of the deregistration decision
The Remnant Church is established
On 17 December 2020 (the day of the deregistration decision), a new church named the “Universal Remnant Church of the Living God (URCLG)” was established as a charitable trust board in Samoa.
On 29 June 2021, the same Remnant Church (having since changed its name to “Universal Remnant Church of the Living”) was incorporated as a charitable trust board in New Zealand, pursuant to a trust deed dated 28 June 2021. The Remnant Church was established, as deposed by the second-named appellant Ms Fata, to advance a mission of SISDAC to go “global” and unite people of the same beliefs but of different denominations. Some 14 branches of the Remnant Church were established in 2022 with separately incorporated boards.
In May 2022, Pastor Papu announced SISDAC’s local churches in Auckland, with the exception of Mt Wellington and Ōtara, had been reconstituted to form part of the Remnant Church. Pastor Toailoa initially remained as pastor of the Mt Wellington and Ōtara churches. Feu Seumaalii and Peniata Saunia, the second and third respondents are elders of the Ōtara church.
On 21 September 2023, at an annual general meeting of the SISDA Property Trust it was resolved:
(a)the trustees were re-appointed;
(b)SISDAC, the SISDA Property Trust and the Remnant Church were “amalgamated”; and
(c)the properties held by the SISDA Property Trust were affirmed to be held not personally by the trustees but on trust for the benefit of the Church.
Pastor Toailoa’s evidence is that, since the rearrangements involving the Remnant Church, all tithes from the original SISDAC local churches, apart from those ear-marked for the Church Build, have gone straight to the Remnant Church but tithes from the Mt Wellington and Ōtara SISDAC churches go to the SISDAC divisions, before being transferred to the Remnant Church.
Before the substantive applicants commenced their High Court proceedings (August 2023) no steps had been taken to have the Remnant Church registered as a charity in New Zealand. Such steps were taken in early 2024, with application made for registration on 22 February 2024. The application was accompanied by a different version of trust deed to that with which the Remnant Church was incorporated in New Zealand as a charitable trust board in June 2021. This other version of the trust deed is dated 7 April 2021 and contains a number of different provisions. Whereas the first stated purpose of the Trust in the 28 June 2021 deed was to establish a branch of SISDAC, the equivalent identified purpose of the 7 April 2021 version was to establish a branch of the Remnant Church of the Living God Trust. The Trust was then registered as a church on 22 March 2024 under the name “Universal Remnant Church of the Living God”.
Mortgage defaults by SISDAC
As a consequence of SISDAC’s deregistration, it was in default under its mortgages with General Finance Ltd (General Finance). General Finance issued a default notice in February 2021. SISDAC negotiated further funding from General Finance for funds urgently needed to continue with the Church Build, agreeing in March 2021 to borrow $2,896,055.77 (partly to repay an existing General Finance loan). Pastor Papu arranged funding from overseas branches of SISDAC to cover interest payments and to prevent further default.
Re-registration of SISDAC
In 2021, SISDAC faced a significant tax liability if it were unable to be re‑registered within 12 months from deregistration. In December 2021, SISDAC applied to be re‑registered as a charitable entity. In its application letter, SISDAC referred to work undertaken to address Charities Services’ concerns as to SISDAC’s core financial management. SISDAC identified intended amendments to SISDAC’s constitution to meet regulatory concerns. SISDAC said it was establishing an Investment Committee to establish an investment policy. It said it would shortly be transferring assets of SISDAC to the SISDA Property Trust to avoid adverse tax consequences arising from the deregistration. SISDAC identified that Pastor Papu had “made the decision to take a step backwards and to let the Executive Committee lead and manage SISDAC” — Pastor Papu’s role was now “mainly to provide spiritual guidance to the other pastors and to the congregation”, not being “involved in the day-to-day administration and management of SISDAC”.
SISDAC’s new constitution was passed on 31 December 2021.
On 1 February 2022, SISDAC was re‑registered as a charitable entity.
Transfer of SISDAC properties
On 28 January and 3 February 2022, SISDAC’s 19 properties were transferred to the SISDA Property Trust.
On 14 July 2022, a private company, Sunrise Global Homes Ltd (Sunrise) was incorporated. On 19 July 2022 four of the previously SISDAC properties were transferred by the SISDA Property Trust to Sunrise. Sunrise is not a charitable company and is not registered as a charity. The appellants are its shareholders and directors.[11]
SISDAC’s financial accounting
[11]The shareholding is held by the appellants in equal shares with Matauaina Eliu, now deceased; see above at [5].
Section 41 of the Charities Act 2005 imposes on every charitable entity a duty to prepare annual returns within six months after each balance date. Pursuant to s 42C of the Act, the Trusts are required to have their financial statements audited by a qualified auditor.
SISDAC’s balance date is 31 December.
When the substantive applicants commenced their proceedings (August 2023) the state of financial reporting was as follows:
(a)For SISDAC, the latest statement of financial performance filed with Charities Services was for the year ended 31 December 2018, filed in October 2020. It appeared that draft accounts may have been prepared for the year ended 31 December 2019.
(b)For the SISDA Property Trust, the latest statement of financial performance filed was for the year ended 31 December 2021. SISDAC, when applying in December 2021 for re‑registration, advised Charities Services that the decision had been made to engage the firm of William Buck Audit (NZ) Ltd (William Buck) as external auditors to SISDAC. No reference was made to the auditing of the statements of the SISDA Property Trust.
(c)William Buck was appointed auditor to SISDAC in August 2019 but was not appointed to any associated entity such as the SISDA Property Trust. Michael Wood, an accountant with William Buck gave evidence of his firm’s work for SISDAC. The initial audit was to be of the statements for the years ending 31 December 2016, 2017 and 2018. It took William Buck some time to produce audit reports for three years due to shortcomings with SISDAC’s records, including the lack of paperwork relating SISDAC’s cryptocurrency investments — he deposed “SISDAC was not able to produce statements, contracts, certificates or other paperwork of any kind to verify the existence and validity of the investments”. The audit reports had to be qualified.
(d)William Buck repeatedly sought information for the 31 December 2019 audit but failed to obtain from SISDAC supporting audit information. William Buck issued a disclaimer of opinion in September 2022 relating to the 31 December 2019 audit. William Buck was thereafter not prepared to accept further engagement as auditor due to its concerns over the lack of appropriate financial procedures and controls within SISDAC and its concerns over the Board’s financial management practices.
In the week before the Beddoe application was heard (in February 2024), the appellants filed an affidavit of Michael Prasad. Mr Prasad deposed his accounting firm had been appointed (on an unidentified date) to complete the financial statements of SISDAC, the SISDA Property Trust and the Remnant Church for the years up to and including 31 December 2022. He deposed his firm had now completed SISDAC’s financial statements for the 2020, 2021 and 2022 years. He said the financial statements of the SISDA Property Trust for the 2021 year had been prepared by the Trust’s previous accountants and that his firm had completed a draft (but incomplete) set of financial statements for the Trust for the 2022 year. He deposed his firm had also commenced work on the financial statements for Sunrise for the 2022 year. His firm had completed the financial statements for the Remnant Church for the 2022 year, that being the Remnant Church’s first set of (New Zealand) financial statements. None of the financial statements produced by Mr Prasad had been audited.
Evidence provided by the substantive applicants records the understanding of senior members of the Church that the Remnant Church and SISDAC are “one and the same”. The draft financial statements prepared by Mr Prasad show funds being transferred from the SISDA Property Trust to the Remnant Church but do not show funds being transferred from SISDAC, despite the appellant’s evidence being that that has been occurring.[12]
[12]Affidavit of Tonga Seini Fata affirmed 27 September 2023: “… intermingling of funds is … inevitable and there is no reason for them to be separated as while they have been incorporated as separate entities, they however are one and the same.”
Mr Prasad’s financial statements show that in the period to 31 December 2022:
(a)SISDAC received $2,262,121 in donations and tithes and made $1,566,454 in donations and distributions (other than the transfer of SISDAC’s properties to the SISDA Property Trust);
(b)the SISDA Property Trust received $11,488,264 in donations and made $855,131 in donations and distributions. It is noted in the financial statements that the Trust “had transactions and payments with the [Remnant Church] … recorded as donations made and/or received”; and
(c)the Remnant Church received $1,458,841 in donations, fundraising and revenue, and made $503,960 in grants and donations. It is noted in the statements that the Remnant Church “entered into various transactions and payments with the [Property Trust] … recorded as donations made and/or received.”
The application for Beddoe and prospective costs orders (PCOs)
The substantive applicants, by originating application, sought both Beddoe orders and PCOs, together with ancillary declarations. The orders specifically sought were as follows:[13]
[13]Emphasis in original.
Beddoe application
1.1Declaring that it is reasonable and appropriate for the applicants, to commence proceedings (the main proceedings) seeking to:
1.1.1Declare the proper deed of the Samoan Independent Seventh Day Adventist Property Trust (SISDA Property Trust);
1.1.2Transfer trust property currently legally owned by other persons and entities to SISDA Property Trust;
1.1.3Remove and replace the trustees of SISDA Property Trust and the Samoan Independent Seventh Day Adventist Church (SISDAC); and
1.1.4Amend the constitution of the SISDA Property Trust and SISDAC to better ensure the proper administration of those trusts in the future.
1.2Declaring that it is reasonable and appropriate for the applicants to seek interim orders in the main proceedings:
1.2.1Restraining the respondents from selling, transferring or otherwise disposing of certain property until the conclusion of the proceedings; and
1.2.2Appointing an interim receiver or trusteeship until the conclusion of the proceedings.
1.3That the applicants are entitled to be reimbursed out of the assets of SISDA Property Trust and/or SISDAC for their reasonable legal costs in commencing and pursuing the main proceeding and the interim orders application, including the costs of and incidental to this application.
Prospective Costs Orders
1.4That an order be made prospectively that the applicants be indemnified for their reasonable costs in relation to the main proceeding from the assets of SISDA Property Trust and/or SISDAC, such costs to be paid regularly on presentation of (redacted) invoices from the applicants’ solicitors accompanied by a certificate from those solicitors that the costs have been incurred in relation to the main proceeding.
1.5That, unless it be shown that the applicants have acted unreasonably, the applicants be immune from any order as to costs against them in relation to the main proceeding.
Respondents’ costs
1.6Declaring that until further order of the Court, the respondents are not entitled to meet their costs in relation to the main proceeding from the assets of the SISDA Property Trust or SISDAC.
The Beddoe Decision
Johnstone J adopted the explanation of Beddoe orders and PCOs set out by Thomas J in McLaughlin v McLaughlin:[14]
[19] A Beddoe application is made in prior separate proceedings for directions as to whether to bring or defend the main proceedings at the expense of the trust. Applicants — often trustees — primarily seek the sanction of the Court to bring or defend claims, the question being whether the trust’s funds should be spent or placed at risk in the main proceedings. An applicant must fully disclose the strengths and weaknesses of those proceedings. If granted, the applicant is indemnified by the trust fund for the cost of bringing or defending the main proceedings. It may extend to immunity from a costs award against the applicant personally. However, it will not typically deal with issues of costs as between the parties in the main proceedings. These are more commonly dealt with in prospective costs orders.
[20] Prospective costs orders are made in advance of the trial and are therefore contrary to the usual principle that costs follow the event. They fall into two broad categories. First, an applicant may seek an order that their own costs be paid out of the trust fund on an indemnity basis. Secondly, they may seek an order, in advance of the substantive hearing in the main proceedings, that they will not be liable to pay the other party’s costs, regardless of the outcome of the case. The former category can overlap with orders sought under a Beddoe application.
[14]Beddoe Decision, above n 2, at [31] citing McLaughlin v McLaughlin [2018] NZHC 3198, [2019] NZAR 286 at [19]–[20] (footnotes omitted).
Johnstone J referred to the general right of trustees to indemnity out of trust assets for costs and expenses properly incurred in the administration of the trust. The Judge identified the three categories of trust litigation explained in the classic statement of Kekewich J in Re Buckton.[15] He noted the Court of Appeal’s description (as used in Re Buckton) of the concept of “hostile” claims as involving a crude shorthand for cases where it is inappropriate to pre-empt allocation of costs in advance.[16] He referred to the better (although not wholly accurate) label of “self‑interested” litigation, which is unlikely to earn pre-emptive indemnity under a Beddoe order.[17]
[15]Re Buckton [1907] 2 Ch 406 (Ch) at 413–417.
[16]McCallum Jnr v McCallum [2021] NZCA 237, (2021) 32 FRNZ 851 at [42].
[17]Beddoe Decision, above n 2, at [33(e)].
Johnstone J viewed the descriptions of “Beddoe application” or “prospective costs application” as less significant than the consideration of three scenarios:[18]
(a)Actions demonstrably necessary to the proper administration of trusts and the protection of trust property are more likely to justify pre-emptive orders, particularly of the applicant’s own costs.
(b)Actions which carry the risk of self-interest are less likely to justify pre‑emptive orders.
(c)Pre‑determination of costs consequences as between the parties is rare.
[18]At [33(f)].
The Judge noted the test endorsed by the Court of Appeal in McCallum Jnr v McCallum, namely that Beddoe applications are gauged against what is in the best interests of the trust.[19] This is also, in the Judge’s view, similarly determinative of applications for prospective costs orders in trust litigation.[20]
[19]At [34] citing McCallum, above n 16, at [43], which endorsed McLaughlin, above n 14, at [29].
[20]At [35].
The Judge declared it was reasonable and appropriate for the applicants:[21]
(i)to commence substantive proceedings seeking certain orders as to the trusts’ constitutions and administration, for removal and replacement of trustees of [SISDAC] and [the SISDA] Property Trust, and for the transfer of various properties from the [SISDA] Property Trust back to [SISDAC]; and
(ii)to seek interim orders in those proceedings, appointing an interim receiver or trustee, and restraining disposition of trust property except for stated purposes;
[21]At [64(a)].
The Judge also ordered the substantive applicants’ fair and reasonable costs were to be met from SISDAC’s assets, or failing that, the assets of the SISDA Property Trust, the Judge specifically ordering:[22]
that the applicants shall be reimbursed by way of payment from the assets of SISDAC, and if no such assets are available then the SISDA Property Trust, for such of their legal costs, incurred in commencing and purs[u]ing the main proceeding and the interim orders application, including the costs of and incidental to this application, as may be approved by the Registrar of this Court as fair and reasonable having regard to the nature of the attendances undertaken, and upon presentation to SISDAC and/or SISDA Prope[r]ty Trust of invoices rendered by the applicants’ solicitors and accompanied by a certificate from those solicitors that the costs have been incurred in relation to the proceedings declared reasonable and appropriate by these orders.
[22]Toailoa v Eliu [2024] NZHC 701 (Result Judgment) at [1(c)].
The Judge made these orders in light of his findings as to the main proceedings being reasonable and appropriate and that such orders were in the best interests of maintaining the integrity and the charitable purposes of the Trusts.[23]
[23]Beddoe Decision, above n 2, at [65].
The Judge declined to immunise the substantive applicants against the prospect of an adverse costs award upon the determination of such proceedings. He also refused to make a declaration that the substantive applicants were not entitled to have their costs met from assets of the Trusts.[24]
The Beddoe Decision is stayed
[24]At [66].
On 24 July 2024 Johnstone J granted a stay of the Beddoe order pending the outcome of the appeals against it. The SISDA Property Trust was ordered to pay $100,000 into court to fund the substantive applicants’ legal costs on the appeals, as well as associated steps in opposition to the appellants’ applications. The Trust made the required payment into court. The Beddoe order has accordingly been stayed in the interim.
The appeal against the Beddoe Decision
Grounds of appeal
In the appeal against the Beddoe Decision the appellants recorded five specific grounds of appeal, which we summarise:
(a)The Beddoe orders were inappropriate as neither SISDAC nor the SISDA Property Trust were named as a party to the proceedings and they were not represented.
(b)The application was supported by an opinion from the substantive applicants’ own solicitors as to the prospects of success and related issues when that solicitor was conflicted and not appropriately qualified and his opinion did not meet the requirements of r 19.4A(1) of the High Court Rules. Further, the applicants’ entitlement to natural justice was breached through the opinion being withheld from them and the solicitor’s submitted costs estimate also being withheld.
(c)The substantive applicants’ costs to the date of the appeal (“conservatively” claimed at $438,706.85 (including GST) on 27 May 2024) are neither reasonable nor proportionate.
(d)The evidence relied on by the substantive applicants in the High Court was largely inadmissible opinion evidence and hearsay, fuelled by documented personal grievances and animosity between different factions within SISDAC.
(e)The High Court erred in law by making Beddoe orders against the SISDA Property Trust when the substantive applicants are not and never have been trustees of the SISDA Property Trust or persons in a position analogous to trustees.
For the purpose of the appeal hearing in relation to the Beddoe Decision the parties agreed to confine the issues to two:[25]
(a)Did the Trusts need to be named as defendants and served, and if so what is the significance of any failure to do so?
(b)Should the High Court have made a Beddoe order or PCO against the Trusts?
Submissions
[25]As to issue (a), see below at [81]–[86]; as to issue (b), see below at [90]–[150].
Mr McBride submitted the Judge erred by not recognising a significant distinction between a Beddoe application and a PCO application, given that Beddoe orders entitle trustees to be indemnified out of the assets of the trust for their costs and expenses properly incurred in the administration of the trust. Mr McBride submitted the Judge failed to appreciate the substantive applicants “simply do not have control of the [SISDAC] funds, in the way that trustees seeking Beddoe protection do”. In contrast, those seeking PCOs, which may include beneficiaries, are not entitled to indemnity and, as submitted by Mr McBride, are only available in the most extreme instances.
Mr McBride submitted, as the substantive applicants therefore needed to pursue a PCO, the correct test was not (as identified by the Judge) “what is in the best interests of the trust”, but rather whether an indemnity costs order in favour of the substantive applicants is a post‑trial inevitability.
Mr McBride also submitted that, while the Judge stated it would have been inappropriate to form a view on the merits of the substantive applicants’ claims, the Judge nevertheless reached conclusions on the merits through a number of his findings.
Mr McBride submitted that the Judge also failed to take into account a lack of necessity in the proceedings, with the substantive applicants not having sent a letter before action seeking changes or undertakings on the part of the trustees.
Mr McBride submitted the proposed litigation came within the category of “hostile” litigation described in Re Buckton. He submitted the making of a Beddoe order in favour of a non-trustee/non-beneficiary who makes allegations of serious misconduct against trustees is contrary to authority.
Mr McBride submitted there is no public interest in aggrieved persons, such as the substantive applicants, proceeding against a trust when there are alternative avenues available, including through Charities Services[26] and by intervention of the Attorney-General.[27]
[26]Charities Act 2005, s 10(i).
[27]Charitable Trusts Act 1957, s 58.
Ms Harris, for the Attorney, rejects the appellants’ criticism of the Judge’s reasoning and conclusions on the application for a Beddoe order and for a PCO. She observes the Beddoe Decision is primarily focused on the relief sought by way of a Beddoe order but recognises there is an overlap between that type of order and a PCO.
Discussion—the standing of the substantive applicants
Through a Beddoe application, a representative who is proposing to conduct litigation seeks the guidance of the court as to whether it is proper for them to conduct or defend the proceedings. The applicants are usually, but not invariably, trustees.[28] Thus, Beddoe applications have been successfully brought by former trustees.[29]
[28]McCallum, above n 16, at [40].
[29]Singh v Attorney-General [2022] NZHC 666. See also McLaughlin, above n 14, at [19]. While r 19.4(f) of the High Court Rules provides for a trustee to make a Beddoe application, the Court may invoke its inherent jurisdiction in relation to applicants having other capacities: Singh, at [96]. See also Fundación Pimjo AC v Aguilar & Aguilar Ltd [2015] NZHC 1402 at [31]–[32].
The appropriateness of allowing former trustees to bring Beddoe applications was explained by Walker J in Singh v Attorney-General:[30]
As former trustees are entitled to have their reasonable expenses and costs met if they act reasonably in a challenge to their removal, I see no good reason why they should not have standing in the inherent jurisdiction to apply for Beddoe orders since they are the pre-emptive version of the same principle. To hold otherwise risks permitting an errant trustee with power to remove other trustees avoid scrutiny by dismissing someone who is intent on holding them to account. This would not serve the beneficiaries’ interest. No (former) trustee would take on the risk of being personally exposed to costs in that scenario. Moreover, in this case, no other party may be likely to seek the Court’s intervention. Quarantine from scrutiny runs counter to the interests of the Trust, the beneficiaries and the public interest in respect of a charitable trust.
[30]Singh v Attorney-General, above n 29, at [96].
Johnstone J correctly concluded that Pastor Toailoa, as a former trustee of SISDAC, had standing to pursue a Beddoe application. Even had Pastor Toailoa not had such standing, the remaining substantive applicants would have had standing because they continue to be SISDAC elders and are therefore members of SISDAC’s trust board.
We also consider correct Johnstone J’s conclusion that because the interests of SISDAC and the SISDA Property Trust are so closely aligned, the substantive applicants have standing in relation to the SISDA Property Trust derived from their responsibilities relating to SISDAC. We further find the arrangements made by SISDAC, for the SISDA Property Trust to hold the SISDAC properties on its behalf, necessitate a finding that the substantive applicants have standing in relation to the proceedings in relation to both trusts.
Discussion—the joining of parties
By their amended originating application the substantive applicants joined as parties the three persons who were trustees of both the SISDA Property Trust and of Sunrise.
Directions as to service were sought and SISDAC was formally served before the (26 February 2024) hearing of the Beddoe application. Following service, SISDAC itself did not seek to be separately represented or to participate in the proceedings. It is clear, however, that the interests of both the Trusts were the subject of comprehensive submissions presented on behalf of the respondent trustees.
For the Attorney, Ms Harris recognised it might have been appropriate for orders to have been made for the joinder of SISDAC in the High Court proceedings, given SISDAC is incorporated as a trust board with a separate legal identity. Ms Harris submits, in the absence of any prejudice to SISDAC, the failure to join SISDAC in the High Court proceeding does not justify overturning the High Court judgment on that ground alone. She submits there has been no miscarriage of justice.
We agree. SISDAC had been served and could have sought joinder. The trustees opposing the Beddoe application, in the submissions presented by Mr Kohler KC at the 14 February 2024 hearing, expressly recorded they were representing SISDAC, described as a congregation about 1,000 to 1,300 strong in Auckland alone. They referred to a petition signed by 1,000 members of SISDAC which they had exhibited in evidence.
SISDAC was subsequently joined as a party on this appeal and Mr Mahuika has presented separate submissions on its behalf.
We do not find any miscarriage of justice to have arisen from the fact SISDAC was not formally joined as a party in the High Court on the Beddoe application. Its interests were fully represented through Mr Kohler.
The quality of the substantive applicants’ evidence
By one of their grounds of appeal, the appellants asserted the evidence relied on by the High Court in the Beddoe Decision was “largely inadmissible opinion evidence and hearsay, fuelled by documented personal grievances and animosity between different factions within the SISDAC church”. It was suggested for the appellants that the High Court had failed to take account of the petition signed by more than 1,000 members of SISDAC opposing the proceedings.
We have carefully reviewed not only the Judge’s reasoning but also the extensive evidence relied on by the respective parties. The evidence does contain many instances of hearsay. That is particularly so in relation to the alleged influence Pastor Papu retains over the Trusts. That said, there is the uncontested evidence as to how those involved treat the Remnant Church and SISDAC as “one and the same” and “merged”. In relation to the other areas of concern raised by the substantive applicants, any aspects of hearsay evidence assume relatively little significance because direct evidence exists — this applies to purported variations of the trust deed; transfer of SISDAC properties; the non-filing and non-auditing of financial statements; and the handling of the $1 million invested in Bitcoin.
As the appellants’ complaint as to the quality of evidence is central, we will examine the evidence in more detail by reference to three topics that are identified in the causes of action in the main proceedings. Our conclusion, as we come to at [139] to [143] below, is that the appellants have demonstrated no error in the Judge’s consideration of the evidence as it relates to whether the proceedings are reasonable and appropriate and in the best interest of the Trusts.
Discussion—the justification for a Beddoe order
The correct legal approach
As Johnstone J identified, the Court of Appeal in McCallum identified the fundamental question on a Beddoe application, quoting McLaughlin:[31]
The test as deduced from case law is simply that Beddoe applications are gauged against the fundamental question of what is in the best interests of the trust. The Court must therefore exercise its jurisdiction in the best interests of the trust, and the beneficiaries as a whole, having regard to all the circumstances.
[31]McLaughlin, above n 14, at [29], quoted by McCallum, above n 16, at [43].
In McCallum, this Court reviewed the way in which courts and commentators have previously characterised trust proceedings, including through the classic statement of Kekewich J in Re Buckton.[32] It was recognised the label “hostile” adopted in Re Buckton is a crude and inaccurate label, the Court observing:[33]
[42] We referred earlier to the concept of “hostile” claims. There are a number of New Zealand authorities suggesting that a Beddoe order will not be granted in hostile litigation, or only in exceptional circumstances. The expression “hostile” is a convenient but crude shorthand for cases where it is inappropriate to pre-empt allocation of costs in advance of the ultimate event. Typically, such a case involves a claim by a beneficiary asserting breach of trust or other fiduciary duty by the trustee. Because the label is crude, it is also inaccurate. For example, it is not inappropriate to pre-empt indemnity where trustees are defending the interests of the trust against third parties. Such litigation is “hostile” in a general sense, but the trustee will be indemnified for the reasonable and necessary costs in defending the trust estate against insurgents. In that sense the label “hostile” is wrong; some “hostile” claims will earn pre-emptive indemnity via a Beddoe order. A better (but still not wholly accurate) label would be “self-interested” litigation. In that sense, the fifth, sixth and seventh modern Lewin categories referred to at [35] above are “self-interested litigation” and unlikely to earn pre-emptive indemnity via a Beddoe order. Whether, in the end result, indemnity is available to trustees defending such actions will depend on the ultimate outcome of, and the trustees’ conduct in, the litigation.
[43] Thomas J in McLaughlin v McLaughlin was right to criticise earlier authority suggesting a Beddoe application brought in hostile proceedings will succeed in exceptional circumstances only. …
[32]McCallum, above n 16, at [34]–[36] citing Re Buckton, above n 15.
[33]Footnotes omitted.
The Court then explained the way in which the relevance of self-interest falls to be assessed:
[45] No absolute rule can, or should, be stated. As Sir Terence Etherton observed in Spencer v Fielder:[34]
I have emphasised that what matters is whether, in substance, trustees who are parties to litigation are acting in the best interests of the trust rather than for their own benefit. It is clear, for example, that, depending on the precise facts, trustees may be entitled to an indemnity for costs even though incidentally they will secure a personal benefit from a successful claim or defence or where there are allegations of breach of trust …
What can be said is that the greater the degree of self-interest of the trustee bringing or defending the proceeding, the less likely it will be that a Beddoe order should be made. That is because it is correspondingly less likely predetermination of that matter is in the best interests of the trust. But there will still be circumstances where the trustee defence would be self-interested, but it would nonetheless be right to grant pre-emptive indemnity. For instance, where the substantive proceedings are weak or vexatious, and should be tested by way of strike-out or summary judgment, or where it is in the interests of the trust that the claim be defended but the trustees otherwise lack resources to do so.
[34] Spencer v Fielder [2014] EWHC 2768 (Ch) at [27] (footnotes omitted).
In addition to these considerations identified in McCallum, there must be added, in this case involving charitable trusts, the public interest involved. Such was recognised by the High Court of Australia in Macedonian Orthodox Church St Petka Inc v His Eminence Petar the Diocesan Bishop of Macedonian Orthodox Diocese of Australia and New Zealand where it was stated:[35]
… in this litigation the interests at stake are larger and more complex than whether a defaulting trustee should make good the financial consequences allegedly flowing from mismanagement of a trust fund. There is a public aspect to those interests because they concern the administration of a charitable purpose trust.
[35]Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar the Diocesan Bishop of Macedonian Orthodox Diocese of Australia and New Zealand [2008] HCA 42, (2008) 237 CLR 66 at [114].
This approach has been similarly adopted in New Zealand, Walker J observing in Singh:[36]
… courts ought to be more interventionist where a charitable trust is involved. Leading text writers also suggest courts are more likely to intervene in respect of a charitable trust and pay more regard to the views of the Attorney-General than [they] would pay to the views of the beneficiaries in the case of a private trust.[37] There is a public overlay to the interests at stake.[38]
[36]Singh v Attorney-General, above n 29, at [112] (footnotes in original).
[37]Tudor on Charities (10th ed, Sweet & Maxwell, London, 2015) at [16-098].
[38]Macedonian Orthodox Community Church St Petka Inc, above n 35, at [114].
In the light of these principles, we turn to consider the subject-matter of the causes of action in the main proceedings by reference to the three topics which arose.
Topic 1: Trust deed of SISDA Property Trust
The SISDA Property Trust was settled by Pastor Papu by trust deed dated 4 February 2008. When the SISDA Property Trust came to be incorporated as a charitable trust board in December 2022, a different trust deed was uploaded in support of the registration, this dated 6 December 2022, again identifying Pastor Papu as settlor of the same trust. The December 2022 trust deed purported to add to the objectives of the trust a new provision:
(f) To provide Community Housing and Commercial Investment to convenient (sic) for the purposes of the Samoan Independent Seventh Day Adventist Church and to a wider community
By their statement of claim, the substantive applicants assert the new objective purports to permit purposes that are not charitable — a reference to the objective including a “wider community” than the Church and “commercial investment”.
The substantive applicants seek a declaration that the 4 February 2008 deed is the valid deed of the SISDA Property Trust. They assert the 6 December 2022 trust deed is ineffective to broaden the Trust’s objectives as the trustees have not followed the procedure required under the Charitable Trusts Act 1957 for the variation of a charitable trust deed.
In the High Court, the appellants disputed that Court approval was required for amendment of the trust deed and further disputed that the new objective was non-charitable. Additionally, they submitted the issue was “insubstantial”.[39]
[39]Beddoe Decision, above n 2, at [40(a)].
The Attorney’s position has consistently been that the amendment of the trust purposes is governed by s 32 of the Charitable Trusts Act and that the necessary procedure has not been followed.
In the Beddoe Decision, Johnstone J concluded in relation to this issue:[40]
(a)Determination whether the Property Trust’s new deed is valid appears to require the Court’s intervention. Whether the issue is indeed insubstantial as the respondents suggest is yet to be seen. It may be that without the new objective, the symbiotic relationship with Remnant proposed by the respondents cannot be maintained or developed. In any event, it appears common ground that proper administration of the Property Trust requires Court proceedings which the trust’s current trustees appear reluctant to pursue.
[40]Beddoe Decision, above n 2, at [57(a)].
We are not satisfied the Judge erred in ordering the preservation order was to remain in place. With the decision we have reached to quash the manager’s appointment, it is arguably even more appropriate the preservation order remain in place for the time being, with an appropriate amendment of wording to no longer refer to the manager’s report.
Result
The appeal in CA255/2024 is dismissed, except to the extent the order at [1](c) of the High Court Result Judgment is amended to read:
(a)that the applicants shall be reimbursed by way of payment from the assets of SISDAC, and if no such assets are available then the SISDA Property Trust, for their legal costs (“the costs”), incurred in commencing and pursuing the main proceeding and the interim orders application, including the costs of and incidental to this application.
(b)the applicants’ entitlement to reimbursement will arise when:
(i)the applicants’ solicitors have rendered invoices to SISDAC and to the SISDA Property Trust; and, in addition
(ii) the applicants’ senior counsel has certified the costs:
1.have been incurred in relation to the proceedings declared reasonable and appropriate by these orders; and
2.are in fact fair and reasonable having regard to the nature of attendances undertaken; and, in addition
(iii)an Associate Judge of this Court, upon presentation of the information at (b)(i) and (ii) above has approved the costs as fair and reasonable.
The appeal in CA428/2024 is allowed to the extent the orders appointing Andrew McKay as manager of the Samoan Independent Seventh Day Adventist Property Trust and of the Samoan Independent Seventh Day Adventist Church and making directions in relation to his appointment are quashed.
In CA428/2024 the order whereby the preservation order currently in place was to remain in place pending the manager’s first report to the Court is varied to the extent of deleting the words “pending the manager’s first report to the Court” and inserting the words “until further order of the Court or agreement of the Parties”.
Costs and disbursements of both appeals are reserved.
Solicitors:
Cameron Morris, Auckland for Appellants
Zhang Law Ltd, Auckland for First to Third Respondents
Te Tari Ture o te Karauna | Crown Law Office, Wellington for Fourth Respondent
Kāhui Legal, Wellington for Fifth Respondent
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