Mark Stuart Tutty and Charlene; Heather Benson, as trustees of the Estate of Beryl Edith McKenzie; s; And; University Of Otago
[2024] NZHC 3024
•16 October 2024
IN THE HIGH COURT OF NEW ZEALAND DUNEDIN REGISTRY
I TE KŌTI MATUA O AOTEAROA ŌTEPOTI ROHE
CIV-2024-412-000086
[2024] NZHC 3024
UNDER Part 18 of the High Court Rules 2016 AND UNDER
the Trusts Act 2019
IN THE MATTER
of the Estate of Beryl Edith McKenzie
BETWEEN
MARK STUART TUTTY and CHARLENE
HEATHER BENSON, as trustees of the Estate of Beryl Edith McKenzie
Plaintiffs
AND
UNIVERSITY OF OTAGO
Defendant
Hearing: (On the papers) Counsel:
J V Ormsby for Plaintiffs D Sim for Defendant
P J Gunn for Attorney-General
Judgment:
16 October 2024
JUDGMENT OF PRESTON J
This judgment was delivered by me on 16 October 2024 at 3.00 pm pursuant to r 11.5 of the High Court Rules
Registrar/Deputy Registrar Date……………
TUTTY v UNIVERSITY OF OTAGO [2024] NZHC 3024 [16 October 2024]
[1] The trustees of the estate of Beryl Edith McKenzie (Ms McKenzie) are satisfied that a charitable gift in Ms McKenzie’s will is properly payable to the University of Otago (the University) for the purposes of the Rheumatology Research Unit in the Department of Medicine at the University.
[2] Because of the way the gift in Ms McKenzie’s will is expressed, the trustees seek what is known as a blessing order, that is, an order effectively confirming that their decision was reasonably open to them.
[3] On 19 August 2024, a direction was made requiring this proceeding to be served on the Attorney-General in her role as protector of charities. It was also directed that no other person need be served.
The terms of Ms McKenzie’s will
[4] Ms McKenzie’s will is dated 17 February 1995 with probate being granted in respect of her will on 9 June 1997. The original trustees have retired and been replaced by the current plaintiffs.
[5] The present application relates to the residue of Ms McKenzie’s estate as the life interest granted by Ms McKenzie to friends of hers has come to an end. I am satisfied that the surviving life tenant passed away on 2 July 2022 — his death certificate being produced in evidence meaning the trustees must now give effect to the residue clause.
[6]The value of the residue is $334,500 held in an investment portfolio.
[7]The gift of the residue is in the following terms:
(5) …
(b)after the death the survivor of the said [life tenants] to hold the capital as well as the income thereof UPON TRUST to pay the residue to the Department of Experimental Medicine in the Wellcome Medical Research Institute, Dunedin, to be applied towards research into the prevention of Rheumatoid Arthritis. (the residue clause)
[8] The issue for the trustees was the reference to the Wellcome Medicine Research Institute in a way that suggested it was an entity separate from the University.
[9] The evidence filed explains that there was initially some confusion regarding the existence of the “Wellcome Medical Research Institute” (the Wellcome Institute) in the Department of Experimental Medicine (the Department).
[10] One of the present executors, Ms Benson, who is a partner in a Christchurch law firm, carried out preliminary research and became concerned that there might never have been a Wellcome Institute, although there is a building called the Wellcome building associated with the University. The building was constructed in 1963 in Dunedin funded by the Wellcome Trust.
[11] Further enquiries were undertaken, including correspondence with the University and its legal representatives to obtain clarification of the history of the Department and whether the Wellcome Institute was a separate entity or reference to “Institute” was in reality a convenient expression to describe the University’s medical research activities carried out in the Wellcome building.
[12]The evidence establishes the following in relation to the Department.
[13] In the early 1960s, the Wellcome Trust, a large trust operating out of the United Kingdom, funded a building for the University now known as the Wellcome Building into which the research activity of the University’s Department of Medicine was gathered together under the leadership of Sir Horace Smirk.
[14] The activities taking place in the Wellcome Building became known as the Wellcome Medical Research Institute or the Wellcome Research Institute.
[15] Sir Horace Smirk and other researchers based in the Wellcome Building remained employees of the University at all times albeit under the Wellcome Institute “brand”.
[16] The activities carried out in the Wellcome Institute included a Rheumatology Research Unit.
[17] Neither the Rheumatology Research Unit nor the Wellcome Institute were ever independent of the University.
[18] Over time, staff working in the Wellcome Institute, including the Rheumatology Research Unit, were, for administrative purposes, described as being part of different University departments. For the greater part of the time since 1963, the staff and the Wellcome Institute itself were regarded as part of the University’s Department of Medicine. However, for an initial period, the Wellcome Institute was treated as if it were a department of the University in its own right, and for the period leading up to the time at which Ms McKenzie made her will, the activity was regarded as being within a separate department described as the “Department of Experimental Medicine” — however, it was a department within the University.
[19] Around the time Ms McKenzie made her will, the Department of Experimental Medicine, including the Rheumatology Research Unit, reverted to being part of the University’s Department of Medicine as it has remained.
[20] The University’s employees carried on the same work and research as previously.
[21] The Rheumatology Research Unit continued as it previously existed and continues to exist and undertake its research work today.
The evidence from the University
[22] Counsel for the plaintiffs has provided a copy of the proceedings to the University. Counsel for the University and for the trustees have filed a joint memorandum seeking the blessing order. Counsel take the view that it is clear from the terms of cl [5(b)] of the will set out at [7] above that Ms McKenzie intended for the Wellcome Institute to hold the funds on trust for her stated charitable purpose of research into rheumatoid arthritis.
[23] The view of the trustees, with which the University agrees, is that the charity Ms McKenzie intended to benefit was misdescribed in her will, but counsel submit that does not mean the gift fails.
Why the trustees consider this is a case of misdescription
[24] The trustees take the view that the charity here was misdescribed in Ms McKenzie’s will because of the way the University held out the Wellcome Institute as a separate body. Counsel submit that more correctly, the will ought to have described the object of the gift as the “Department of Experimental Medicine within the Wellcome Institute of the University of Otago”.
[25] Counsel rely on the following passages from Professor Dal Pont on the Law of Charity (2nd ed):1
… it should not be assumed that every instance where a named institution changes its form represents the successor institution scenario. A mere change in form— say, from an unincorporated association to a corporate form, or from an incorporated association to a company limited by guarantee— need not be seen as the charity ceasing to exist, provided that the objects and purposes of each institution remain constant.
…
If, on the evidence, the court is convinced that the donee institution, rather than being non-existent, is simply misdescribed, there is no need to find a general charitable intention, and the cy-pres doctrine is irrelevant. This is because the court is not applying the gift to an object as near as possible to the donor’s purpose, but to the donor’s actual purpose. There is consequently no need for the court-approved variation of trust that is part and parcel of a cy- pres scheme; primarily pursuant to its statutory power to rectify a will to reflect the testator’s intention, the court can give effect to the gift. The misdescription scenario can encompass where the same institution continues to operate but under another name, and where the testator has used an abbreviation for the name of the institution, as well as the standard case of a simple misnomer in naming the institution.
The more trivial the misdescription — say, a mere change of address — the more likely the court will attribute an intention to benefit an existing institution…
(footnotes omitted)
[26] Counsel submit that the evidence in this case establishes the donee of the gift continues to exist. They submit it was always intended that the Department of Experimental Medicine at the University would receive the gift for the purposes of research into rheumatoid arthritis. The trustees have concluded the same
1 G E Dal Pont Law of Charity (2nd ed, LexisNexis Butterworths, Australia, 2017) at [15.6] and [15.29].
Rheumatology Research Unit that existed at the University within the Department at the time Ms McKenzie made her will, continues to exist within the School of Medicine at the University. The parties submit, and the trustees have concluded, that the same team that existed within the Department continue to exist and operate in the same way under the Department at the University.
[27] Counsel submit that therefore this is a case where the charity was misdescribed in the residue clause and there is no need for the trustees to approach the gift in respect of the residue as if this was a failed gift.
[28] The evidence filed on behalf of the University from Sir David Skegg, an Emeritus Professor at the University who was also the Vice Chancellor of the University from 2004 to 2011, confirms the conclusion reached by the trustees on the state of the Wellcome Institute.
[29] Professor Skegg describes having access to previous University calendars which list the University’s academic staff by reference to their Departments and other academic groupings, in preparing his evidence. He has also referred to relevant published histories — one being of the Otago Medical School (Anatomy of a Medical School by Dorothy Page 2008) and another of the University itself called “Otago” by Alison Clarke published in 2018.
[30] Professor Skegg is also able to give evidence by reference to his own longstanding connection to the University.
[31] Professor Skegg observes that the term “Institute” is used in many universities around the world in widely varying senses. One of the ways in which the term is regularly used is to describe a grouping of staff of the University engaged in a particular research activity — it seems that is the way the term was used in the residue clause to describe the research staff at the Wellcome Building.
[32] Professor Skegg explains that the “Wellcome Institute” name was originally used to describe both a building and the research arm of the Department of Medicine which was, and remains, a Department within the University’s Medical School.
Currently, the Wellcome Institute is the name used for a building on the University’s Medical Campus, which houses staff from a variety of University Departments — not all of them now involved in research.
[33] Professor Skegg explains that the use of the “Wellcome” name derives from the then Dean of Law in 1961 persuading the Wellcome Trust in London to support the construction of a new building for the University to be known as the Wellcome Medical Research Institute. The new building was opened in 1963 when “all of the medicine department’s scattered research workers moved into their modern facility”, a passage taken from Miss Clarke’s history of the University itself, referred to above.
[34] Professor Skegg notes that initially the Wellcome Institute was listed in the University’s calendar as an entity within the Faculty of Medicine as if it were a separate department. Despite that, it was always essentially the research arm of the Department of Medicine and, by 1969, the Wellcome Institute was identified as being part of the Department of Medicine.
[35] Until 1989, the Wellcome Institute continued to be listed in the calendar as part of the Department of Medicine. However, for the five years from 1990–1994, the calendar listed “Department of Experimental Medicine (Wellcome Medical Research Institute)” as a department within the Otago Medical School. From 1994, the Wellcome Institute name ceased to be included in the University calendar and around that time, the activities of the “Department of Experimental Medicine” were once again subsumed into the wider Department of Medicine.
[36] Rheumatology research (which includes research into rheumatoid arthritis) has been conducted in the Wellcome Institute building by University staff from the time of its opening. In later years, rheumatology research continued there under the direction of a Dr Highton in his capacity as a member of the Department of Medicine. Previous research leaders were also members of the Department of Medicine.
[37] Professor Skegg’s view is that the Wellcome Institute was never independent of the University as it was also a name given to a grouping within the Faculty of Medicine of the Otago Medical School in Dunedin.
[38] Professor Skegg’s view, and one shared by the trustees, is that where Ms McKenzie’s will refers to the “Department of Experimental Medicine” and to the “Wellcome Medical Research Institute” it was intended to describe activities carried out at all times by the University through its Department of Medicine.
[39] As I have said, the trustees are satisfied that this is a situation where the residue clause incorrectly assumed the Department of Experimental Medicine was part of the Wellcome Institute. However, although there has been some changes in the name of the relevant Department of the University, it continues to exist. The trustees are of the view that the original donee was misdescribed in the will as the Department Ms McKenzie intended to benefit was always a part of the University.
[40] On that basis, the trustees take the view that a gift to the University for the purposes of the Rheumatology Research Unit in the Department of Medicine is in substance and reality a gift to the same object and for the donor’s actual purpose as contained in Ms McKenzie’s will.
[41] Having reached that conclusion, the trustees have applied to the Court, as I have said, for a blessing order.
Blessing orders
[42] Section 133 of the Trusts Act 2019 allows trustees to seek “directions about the exercise of any power or performance of any function by the trustee”.2
[43] The scope of its predecessor, s 66 of the Trustee Act 1956, for applications of this nature was considered by her Fitzgerald J in Re PV Trust Services Ltd.3 Her Honour clarified that it is allowable and appropriate for trustees to seek the court’s “blessing” on particularly momentous decisions, even in circumstances where there is no real doubt as to their ability to exercise the power in question.
2 Trusts Act 2019, s 133(1)(b).
3 Re PV Trust Services Ltd [2017] NZHC 2957, [2018] 3 NZLR 160.
[44] Hart J in Public Trustee v Cooper stated that, when considering an application for blessing orders, the court should consider the following matters:4
(a)First, has the trustee in fact formed the opinion which the court is asked to bless?
(b)Second, is the opinion formed one at which a reasonable body of trustees, properly instructed as to the proper meaning of any relevant provisions of the trust deed, could properly have arrived?
(c)Third, is the opinion vitiated by any conflict of interest under which any of the trustees might have been labouring?
[45] Blessing orders are available in all trusts, including charitable trusts.5 The Court has continued to take the same approach under the Trusts Act 2019 as under its predecessor.6
Does the application meet the requirements from Public Trustee v Cooper?
The conclusion of the trustees
[46] The trustees’ express evidence is that they are satisfied that this is a situation where the name of the original beneficiary was incorrectly named but where the original charity that in fact existed continues to exist. The trustees are of the view that the original donee was misdescribed in Ms McKenzie’s will as the Department named in the will was always a part of the University.
[47]Accordingly, I conclude that the first matter to be considered, identified in
Public Trustee v Cooper, is satisfied.
4 Public Trustee v Cooper [2001] WTLR 901 (Ch).
5 For example, see Church Property Trustees v Carrell [2021] NZHC 1130.
6 For example, see Stratford v Moses [2022] NZHC 2191.
Is the trustees’ decision a reasonable one?
[48] The evidence explains how it came to be that the residue clause described the Department of Experimental Medicine as being in the Wellcome Institute when that was never the case. The history of the Wellcome Institute building, how medical research became focused on that physical location, and the use of the name of the building as, in effect, a shorthand for the research undertaken there, is explained in the evidence of Professor Skegg.
[49] I am satisfied the conclusion of the trustees that this is a case of misdescription is one that reasonable trustees properly instructed could properly arrive at.
Conflict of interest
[50] The trustees are not under any conflict of interest here. They have undertaken proper research and instructed independent counsel. The process by which they have reached their decision is set out in the evidence which shows a methodical and reasonable approach to the decision that the beneficiary in cl 5(b) of Ms McKenzie’s will was misdescribed.
Attorney-General’s support
[51] No statement of defence has been filed. The Attorney-General, through counsel, supports the blessing of the proposed distribution on the basis the donee institution was simply misdescribed in the will and that, accordingly, no application for a scheme under the Charitable Trusts Act 1957 is required.
Decision
[52] I am satisfied this is an appropriate case to make the direction sought. This is a momentous decision in terms of the Trust as it is a distribution of the residue in the estate.
[53]I make the following order:
An order approving the distribution of the Residuary Gift (after payment of any trust and administration costs and expenses including the costs of the application for directions blessing and approving trustees decision application) to the University for the purposes of the Rheumatology Research Unit in the Department of Medicine at the University of Otago.
[54] Being satisfied that this is an appropriate case for the making of directions under the Trusts Act 2019, it is not necessary for me to determine the alternative cause of action pursuant to s 32 of the Wills Act 2007.
[55]The direction requiring an affidavit of service upon the Attorney be filed is
vacated.
Preston J
Solicitors:
MDS Law, Christchurch Gallaway Cook Allan, Dunedin
Copy to counsel:
J V Ormsby, Barrister, Christchurch Crown Law Office (P J Gunn)
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