McCaw Lewis Trustees (no.4) Limited - [2014] NZHC 2627

IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY

CIV-2013-419-886 [2014] NZHC 2627

IN THE MATTER of the Trustee Act 1956

IN THE MATTER

of McCaw Lewis Trustees (No. 4) Limited and Vazey Child Trustees (2001) Limited as trustees of the LJ Reynolds No.2 Trust Applicants

Hearing: 23 October 2014

Counsel:

DP Shore and EM Lonnberg-Shaw for applicants
DJ Taylor for the beneficiaries of the LJ Reynolds No.2 Trust

- save for the Salvation Army

Judgment:

28 October 2014

JUDGMENT OF FAIRE J

Solicitors: McCaw Lewis Chapman, Hamilton
Gavin Boot Law, Hamilton (G Boot)

McCaw Lewis Trustees (No. 4) Limited [2014] NZHC 2627 [28 October 2014]

Table of Contents
Introduction ............................................................................................................[1] Directions and representation.................................................................................[2]

Background ............................................................................................................[3] Submissions on behalf of the applicants ................................................................[6] Submissions on behalf of the beneficiaries ..........................................................[10]
The law .......................................................................................................................
Principles of interpretation ..........................................................................[19] Analysis ....................................................................................................................[21] Orders .......................................................................................................................[25]

Introduction

[1] The applicants are the trustees of the LJ Reynolds No 2 Trust (“the Trust”). They seek a declaration that it is lawful for the trustees to make a distribution/s of income or capital, both interim and/or final, to the Mahi-a-Ngakau Trust. The Mahi- a-Ngakau Trust is a charitable trust. A distribution can only be made to it if it comes within the definition of “public charitable institution”, which is referred to as a class of discretionary beneficiaries under the Trust’s deed.

Directions and representation

[2] Associate Judge Doogue made orders giving directions as to service and representation. He appointed Mr David Taylor, barrister of Hamilton, to represent the beneficiaries named in the Trust. Mr Taylor appeared for those beneficiaries with the exception of one charity, the Salvation Army. The Salvation Army appointed counsel and solicitors to represent it. Counsel on behalf of the Salvation Army filed a memorandum advising that the Salvation Army neither supports nor opposes the orders sought in the statement of claim. The Salvation Army does not wish to appear or be represented at the hearing of the proceeding and will abide the decision of the Court.

Background

[3] The settlor of the Trust was the late Leonard John Reynolds. He, with New

Zealand Insurance Co Ltd were the original trustees.

[4] The relevant provisions of the trust deed provide:

1.THE Trustees shall stand possessed of the Trust Fund UPON THE TRUSTS following : -

(a) During the period (which is hereinafter called “the said period”) from the date hereof until a date fixed twenty-one (21) years from the date of death of Ada Mary Reynolds OR such earlier date as the Trustees may in their absolute discretion decide (hereinafter called “the date of distribution”) the Trustees shall stand possessed of the Trust Fund and the income thereof upon the following trusts : -

(i) UPON TRUST for the Trustees at their absolute and uncontrolled discretion at any time or times before the date of distribution and for so long as the Trustees shall in their absolute discretion think fit to pay or apply the whole or any part of the current net annual…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2014] NZHC 2627
Decision Date: 28 October 2014

CaseChat Overview and Summary

The applicants, trustees of the LJ Reynolds No.2 Trust, sought a declaration from the High Court of New Zealand that it is lawful for them to make distributions of income or capital to the Mahi-a-Ngakau Trust, a charitable trust. The legal question was whether the Mahi-a-Ngakau Trust qualified as a "public charitable institution" under the terms of the Trust deed, a requirement for such distributions. The applicants argued that the term should be interpreted broadly, encompassing any charitable institution, while the beneficiaries contended that the term referred specifically to high-profile charities with certain characteristics. The Court considered the principles of contract interpretation, emphasizing the importance of the context and the parties' intended meaning, and rejected the argument that extrinsic evidence such as the settlor's will and memorandum of wishes should be considered. The Court concluded that the term "public charitable institution" should be interpreted in a broad, common-sense manner, and since there was no dispute that the Mahi-a-Ngakau Trust was charitable, it qualified as a potential beneficiary.

The Court granted the declaration sought by the applicants, allowing the trustees to make distributions to the Mahi-a-Ngakau Trust. The decision hinged on the broad interpretation of the term "public charitable institution" and the absence of any contest regarding the charitable nature of the Mahi-a-Ngakau Trust. This interpretation aligns with the settlor's intent to benefit charitable causes broadly, as evidenced by the inclusion of various charitable organizations in the Trust deed.

Orders