McLean Institute
[2021] NZHC 2875
•3 November 2021
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE
CIV-2021-409-000151
[2021] NZHC 2875
IN THE MATTER of the Charitable Trusts Act 1957 IN THE MATTER
of a charitable trust known as the McLean Institute, created by Allan McLean’s will
dated 20 July 1904 and the McLean Institute Act 1909, the McLean Institute Act 1930 and the McLean Institute Act 1934
AND
an application by the McLEAN INSTITUTE having its registered office at 148 Victoria
Street, Christchurch, for an order approving a scheme under s 35(2) Charitable Trusts Act 1957
Applicant
Hearing: 30 September 2021 Appearances:
S Caradus for the Applicant
D Harris for the Attorney-General G W McNab – Party Opposing
Judgment:
3 November 2021
JUDGMENT OF DOOGUE J
This judgment was delivered by me on 3 November 2021 at 2.30 pm pursuant to Rule 11.5 of the High Court Rules
Registrar/Deputy Registrar Date:
RE McLEAN INSTITUTE [2021] NZHC 2875 [3 November 2021]
Introduction
[1] This is an application by the McLean Institute (the Institute), as trustee of a charitable trust set out in the will of Allan McLean, to:
(a)vary the charitable purposes of the Trust;
(b)extend and vary the trustees’ powers; and
(c)vary the mode of administration under the Trust.
[2] The Institute was incorporated as a charitable trust board by a local Act, the McLean Institute Act 1909 (the 1909 Act). The terms of the Trust were subsequently amended by two private Acts, the McLean Institute Act 1930 (the 1930 Act) and the McLean Institute Act 1934 (the 1934 Act). I refer to these three Acts as “the Acts”.
[3] The Board of Governors of the Institute consider it has become impossible or impracticable to carry out the current charitable purposes of the Trust. The Institute seeks the Court’s approval of a scheme for these variations under Part 3 of the Charitable Trusts Act 1957 (CTA), which seeks to replace the existing terms of the Trust with a proposed new trust deed.
[4] A party opposing, Mr McNab, challenges the jurisdiction of this Court to make the orders sought, submitting the proposed variations are inconsistent with the Acts.
[5] The success or otherwise of the application rests on the answer to the question: does the Court have jurisdiction under Part 3 of the CTA to make variations to the terms of the Trust when the variations sought are inconsistent with the Acts of Parliament?
Background
[6] The Institute was settled by Mr McLean’s will dated 20 July 1904 (the will) and a codicil dated 28 November 1906 (the codicil).
[7] In his will, Mr McLean bequeathed a substantial property on the corner of Colombo and Manchester Streets known as “Holly Lea” to the Institute, along with the residue of his estate. The will provides for the creation of a public institution or “benevolent asylum for the benefit of destitute women”, namely the Institute.
[8] The bequest from the will is held on trust by the Institute (administered by a Board of Governors) to be applied in accordance with the charitable purposes set out in the will.
Purpose
[9]The operative clauses of the will are cl 6(1) and 6(2).
[10]Clause 6(1) of the will states that the Institute shall be open:
As to the Holly Lea property and furniture only to gentlewomen or women of refinement or education in reduced or straitened circumstances and the children not being over the age of ten years of any such gentlewomen or women … my special intention being that the Holly Lea property shall be reserved exclusively for the use of gentlewomen or women (including their children as aforesaid) who either by their birth education previous life or manner may be able to live in harmony under the same roof.
[11] Clause 6(2) provides that the remainder of the Institute (other than Holly Lea) be available to women over the age of 18 (and their children, provided they are 10 years or under) who are “poor and of good character and such as have been resident in the Colony for a period of three years at least prior to the application for admission”. In addition, such applicants must not have received a pension under the Old-age Pensions Act 1898, nor received aid from the Charitable Aid Board or another public institution at any time during the three years prior to admission.
Appointment of substitutes for certain official members
[12] The will stipulated the membership of the Board of Governors of the Institute. This contained specified office holders as follows:
(a)the Bishop of the Church of England, Christchurch Diocese;
(b)the Bishop of the Roman Catholic Church, Christchurch Diocese;
(c)the Minister of St Andrew’s Presbyterian Church at Christchurch;
(d)the Minister of the Wesleyan Methodist Church, Durham St, Christchurch;
(e)the Mayor of Christchurch;
(f)the Senior Stipendiary Magistrate;
(g)the Chairman of the Selwyn County Council;
(h)the Chairman of the North Canterbury Hospital Board or other institution having control of Christchurch Hospital;
(i)the Chairman of Canterbury College;
(j)two women; and
(k)Henry Cotterill and Boulton Merlin Molineaux (executors of the will).
[13] Section 9 of the 1909 Act ensured that, if the specified officeholder was refusing or was unwilling to act on the Board, a substitute could be appointed by resolution at any meeting of the council or board the officeholder hailed from.
Proposed Variations
[14]The proposed new purpose is contained in cl 5.1 of the proposed trust deed:
The purpose of the Institute is to provide assistance to and promote the welfare and wellbeing of disadvantaged women residing or located in the Region (and the children in the care of such women), who the Board considers are in need of care, support and assistance due to poverty, ill health or other circumstances, whether temporary or long-term.
[15] Clause 5.2 provides a non-exhaustive list of the ways in which the new purpose may be satisfied. Examples include:
(a)providing or facilitating the provision of temporary, emergency or transitionary housing;
(b)assisting women with housing needs to locate, obtain and/or retain suitable housing within their financial means;
(c)providing accommodation and other support for young women transitioning out of foster care (and any children of such women); and
(d)providing support to women in distress due to mental health or addiction issues, disability, trauma, violence, homelessness, poverty or dislocation.
[16] Clause 5.3 enables the Institute to apply its assets in the provision of accommodation outside of the region, where the person receiving the benefit of the accommodation was previously residing in the region and it is reasonable to provide accommodation to that person in escaping family violence or otherwise transitioning or recovering from their disadvantaged circumstances.
[17] Clause 5.4 provides that “women” is to be interpreted broadly, having regard to both biological sex and gender identity.
[18] The variations proposed for membership of the Board of Governors and substitution of members are:
7.2.1The Bishop for the time being of the Anglican Diocese of Christchurch, or if they shall be unable or unwilling to act as a Trustee, such other person as may be nominated by the Bishop of the Anglican Diocese of Christchurch;
7.2.2The Bishop for the time being of the Roman Catholic Diocese of Christchurch, or if they shall be unable or unwilling to act as a Trustee, such other person as may be nominated by the Bishop of the Roman Catholic Diocese of Christchurch;
7.2.3The Mayor for the time being of the City of Christchurch, or if the Mayor shall be unable or unwilling to act as a Trustee, then such other person as may be nominated by the Mayor;
7.2.4The Mayor for the time being of the Selwyn District Council, or if the Mayor shall be unable or unwilling to act as Trustee, then such other person as may be nominated by the Mayor;
Context for proposed variations
[19] In his affidavit, Nicholas Clark explains that since Allan McLean’s death in 1907 there have been several developments which make it impossible, impracticable or inexpedient to carry out the original charitable purposes:
(a)the sale of the Institute’s remaining 50 per cent shareholding in Holly Lea Retirement Village;
(b)the Institute was established before the advent of universal social welfare, invalids benefits and subsidies, which means the “straitened circumstances” as contemplated by Allan McLean in 1907 do not manifest themselves in the same way today;
(c)the requirements of being “gentlewomen” or a “women of refinement and education” are no longer consistent with societal norms; and
(d)clause 6(2) of the will states that a beneficiary is required to surrender any other form of aid.
[20] As a result, there has been a gradual reduction in the number of beneficiaries who qualify for the Institute’s support. In 2012 the Institute supported four beneficiaries who were living at Holly Lea but today that number has decreased to one.
Are the proposed variations inconsistent with the Acts?
[21] It is necessary to analyse the will and the Acts in order to identify the charitable purpose contained therein.
[22] The purpose of the will was set out in cl 6(1) and 6(2) as noted above at [10]-[11]. These purposes were to be facilitated by the Holly Lea property and
furniture which was left on trust to the Institute by cl 1. Clause 21, detailing the Board’s powers of admission and removal of inmates, further specified:
In considering applications for admission the Board shall always prefer applicants who in the opinion of the Board satisfy the qualifications for admission to the Holly Lea property and furniture to other applicants my object being especially and primarily to provide for persons who satisfy those qualifications.
[23] By cl 31 the will facilitated the Board providing a separate establishment for the fulfilment of the purposes using the Trust funds. Notably, however, the will did not provide an avenue for the Board to sell or relinquish the Holly Lea property in its entirety (as recognised and altered by the 1930 Act).
[24] Clause 40 declared Mr McLean’s desire that the Board should take all necessary steps to obtain the passing of an Act that establishes the Board as a body corporate with perpetual succession and a common seal. This was the task achieved and fulfilled by the 1909 Act.
[25]The preamble to the 1909 Act states:
And whereas the McLean Institute, mentioned and referred to in the said will, has been formed and is now carrying into effect the provisions of the will so far as the same relate to the said Institute.
[26] The provisions of the will relating to the Institute must include the purpose provisions referenced above.
[27] The preamble to the 1930 Act contained express adoption of the purposes contained in the will, stating:
And whereas the said will provides, inter alia, that the “Holly Lea” property and furniture therein mentioned [and the residue]… subject to the provisions therein contained, should be held by the trustees of the will upon trust for the purposes of a public institution … for destitute women to be called the McLean Institute, and that the Institution should be open:
(a)As to the “Holly Lea” property and furniture, only to gentlewomen or women of refinement or education in reduced straitened circumstances, and the children, not being over the age of 10 years, of any such gentlewomen or women, the testator’s special intention being that the “Holly Lea” property should be reserved exclusively for the use of gentlewomen or women (including their children as
aforesaid) who either by their birth, education, previous life or manner might be able to live in harmony under the same roof;
(b)As to the rest of the Institution not represented by the “Holly Lea” property and furniture, to persons of the female sex not being under the age of 18 years and to the children not being over the age of 10 years of any such person, but no person should be admitted to the Institution but such as were poor and of good character and such as had been resident in the colony for a period of 3 years at least prior to the application for admission and who were not and had not been in receipt of a pension under the Old-age Pensions Act 1898, or any statutory amendment thereof, at any time during the term of 3 years immediately before admission or in receipt of aid from the Charitable Aid Board or other public institution having the control of the distribution of charitable aid at any time during the term of 3 years immediately before admission.
[28]It also recognised that:
… it has been found by experience that one effect of the disqualification from admission [of those who receive public or statutory aid] has been to disqualify from admission persons who apart from such disqualification belong to the particular class which the said testator by the tenor of his or her said will appears to have intended to benefit.
[29] This was remedied by s 3(a) which allowed the Institute to admit any person who has been in receipt of public or statutory aid, provided such person surrendered that aid upon admission. Section 3(d) empowered the Institute to make weekly payments to admitted persons.
[30] Section 3 of the 1930 Act also empowered the Institute to sell the Holly Lea property and furniture in the event of an opportunity arising to acquire more suitable premises for the purpose of the Institution or to erect more suitable premises on other Institution lands. It was plainly envisaged that the Institute would retain at least some property or premises to use for the purposes contained in the will.
[31] The 1934 Act contained similar adoption of the purposes contained in the will to the 1930 Act. Its operative provisions validated payments made to one Mary Alexander Thomson by the Institute and ensured those payments were not loans requiring repayment.1 Section 5 of the 1934 Act also empowered future payments to Ms Thomson and her children.
1 McLean Institute Act 1934, ss 3 and 4.
[32]It is evident there are core elements to the charitable purpose as follows:
(a)whilst the Board of Governors was empowered to buy and sell land, including the Holly Lea property, the Institute was to retain land and a building or buildings to house destitute women; and
(b)women could not be considered for admission into the Institute’s facilities unless they surrendered any public or statutory aid.
[33] At a fundamental level, the purposes in both the Acts and the proposed scheme promote the health and wellbeing of women by providing housing and charitable aid. The variations as to purpose, however, are inconsistent with the Acts because they propose that the Institute no longer retain land and buildings to house women itself and they no longer require that those women are destitute in the sense of not being in receipt of any other form of aid.
[34] As far as the membership of the Board of Governors is concerned, s 9 of 1909 Act provides for the membership of the Board of Governors and the appointment of substitutes for some members of the Board. It states:
If any member of the Board, being the Mayor for the time being of the City of Christchurch, or the Chairman for the time being of the Selwyn County Council, or the Chairman for the time being of the North Canterbury Hospital Board or other the institution for the time being having control of the Christchurch Hospital, or the Chairman for the time being of the Board of Governors of Canterbury College, shall refuse or be unwilling to act as a member of the Board, then the City Council, or the Selwyn County Council, or the North Canterbury Hospital Board or other the institution having control of the Christchurch Hospital, or the Board of Governors of Canterbury College, as the case may be, may, by resolution at any meeting of such Councils or Boards respectively, appoint a new member of the Board of Governors of the Institute in place of the Mayor or Chairman, as the case may be, refusing or being unwilling to act, for the residue of the term of office of such Mayor or Chairman, as the case may be; and the certificate under the hand of such Mayor or of any such Chairman, as the case may be, shall be conclusive evidence that such new member has been duly appointed.
[35] The proposed trust deed retains only four of the original members of the Board being, under cl 7.2, the Bishop of the Anglican Diocese of Christchurch, the Bishop of the Roman Catholic Diocese of Christchurch, the Mayor of Christchurch and the Mayor of the Selwyn District Council. The Chairman of the North Canterbury
Hospital Board and the Chairman of the Board of Governors of Canterbury College are referenced specifically in s 9 of the 1909 Act above but are not included as trustees in the proposed deed.
[36] The proposed trust deed, under cl 7, also establishes a different process for substitution, stating the prima facie member may nominate a substitute themselves rather than, as the 1909 Act requires, nomination being made by the body they hail from passing a resolution.
[37] At a high level these variations may not be seen as inconsistent as Mr McLean wanted personnel of high office, including ecumenical representatives. Four such individuals are retained in the proposed trust deed. However, Mr Simson, an objector to the scheme and previous chairman of the Board, pointed out there is no apparent reason why the Presbyterian and Methodist positions on the Board should be removed but the Anglican and Catholic positions be retained. Mr Simson noted Mr McLean was, himself, a member of St Andrews Presbyterian Church. An explanation may be that the prima facie positions retained are those occupied by current trustees.
[38] While there may well be practical reasons for removing certain prima facie members, the variations are plainly inconsistent with provisions of the Acts in removing members mentioned in the 1909 Act and altering the process for substitution.
[39] Similarly, there is an inconsistency between the proposed deed and s 10 of the 1909 Act which states:
In addition to and not in substitution for anything contained in clause 4 of the said will, the office of a woman member of the Board, or of the said Henry Cotterill, or Boulton Merlin Molineaux, or of any member of the Board appointed in pursuance of clause 4 of the will, shall be deemed to be vacated if any such woman member of the Board, or the said Henry Cotterill, or Boulton Merlin Molineaux, or any member of the Board appointed in pursuance of clause 4 of the will, shall refuse or be unwilling or become incapable of acting as a member of the Board.
[40] The offices of “woman member of the Board” and that of Henry Cotterill and Boulton Merlin Molineaux (or duly appointed substitute) are no longer included in the proposed trust deed. Instead, cl 7.2.5 of the proposed deed states:
Up to four additional Trustees appointed by the Board for the purposes of ensuring diversity among the Board members, including (without limitation) diversity of gender, race, ethnicity, professional qualifications, skills, expertise, and religious and political beliefs. For the avoidance of any doubt, any Trustee already appointed to the Board pursuant to this clause 7.2.5 is, while they are a Trustee, part of the Board for the purposes of determining any subsequent appointments made pursuant to this clause.
[41] There are also variations to the administration of the Trust contained in the deed that are inconsistent with the Acts. These are largely a reflection of the proposal to change the purposes of the Trust as discussed above.
[42] For example, as mentioned, s 3(a) of the 1930 Act provides that persons may be admitted to the Institution even if they have received statutory or public aid, provided they surrender such aid upon admission. The proposed deed is inconsistent with this provision for two reasons. First, because the section plainly assumes the Institute will own/hold property for the purpose of accommodating women and the deed does not require that. Second, there is no requirement that if the Institute did hold property for the purpose of accommodating women those women would have to surrender statutory or public aid to gain admission.
[43] Section 3(d) of the 1930 Act, which empowered the Board to make weekly payments to admitted persons, capped such payments to a weekly sum of £3. The 1930 Act did not contain any procedure for the variation of the payment cap, nor even a scheme for inflationary adjustment. The proposed deed does not limit such weekly payments and indeed instead, under cl 11.1.18, confers on the Board the power to “do all things as may from time to time appear desirable to enable the Board to give effect to and to attain the [new] charitable purposes of the Institute”. Obviously a weekly sum of £3 is woefully inadequate to provide for a person’s upkeep in the modern world, but the inconsistency and extension of the Board’s discretion must be noted nonetheless.
[44] In summary, there are apparent inconsistencies between the proposed variations and the Acts, which raises the issue for determination by this Court.
Applicants’ case
[45] Mr Caradus, for the Institute, submitted the present application has similar facts to Re Eliza White Board of Management and that case established the Court had jurisdiction under the CTA to vary the Trust notwithstanding the existence of an Act of Parliament.2
[46] Re Eliza White Board of Management related to another Christchurch charitable trust incorporated by a private Act, the Eliza White Orphanage Act 1951. The proposed scheme involved variations to that Act. Mr Caradus submitted Gendall J approved the scheme and associated variations notwithstanding the existence of the private Act. The scheme had also previously been varied by the Court over 25 years earlier.
[47] Mr Caradus also referred to Re Cawthron Institute where the Court dealt with a similar jurisdictional issue.3 He submitted the Court concluded it had jurisdiction, notwithstanding the fact some of the proposed variations conflicted with a private Act. Mr Caradus referred to MacKenzie J’s comment there that, having concluded he had jurisdiction, the fact there were provisions of the statute now inconsistent with the current position was a matter of administrative detail capable of being addressed via reprint. Mr Caradus relied on an excerpt from the third edition of Parliamentary Practice in New Zealand, cited by the Court:4
… having established a judicial procedure to deal with variations of trusts, Parliament is reluctant to create legislative exceptions to it for the benefit of individuals or small groups of persons unless compelling reasons can be advanced. In general, persons such as trustees must apply to the court where the law provides avenues for them to attain their objectives and not look to Parliament to play the role which has been given to the courts.
Usually, if machinery exists under the general law to accomplish what the party (whether a trustee or not) wishes to effect, this is the course that must be followed. Private legislation should be a last resort because what is intended is impossible to effect without it, or because to proceed under the general law would be not merely inconvenient but impracticable or manifestly unfair in some way …
2 Re Eliza White Board of Management [2019] NZHC 181.
3 Re Cawthron Institute [2012] 1 NZLR 427.
4 David McGee Parliamentary Practice in New Zealand (3rd ed, Dunmore Publishing Ltd, Wellington, 2005) at 312; and Re Cawthron Institute, above, n 3, at [23].
[48] Mr Caradus acknowledged the Institute, which was incorporated by Parliament, can only be dissolved by Parliament. However, he submitted the Court has jurisdiction to vary the Trust because it is created by the will, not by the Acts. The Acts, he explained, do little more than incorporate a body corporate to hold assets on the terms of the Trust created by the will. He submitted it cannot have been intended that the Trust was never to be amended or affected by other legislation. If that were the case the provisions of the Trusts Act 2019, for example, would not apply.
[49] In addition, Mr Caradus reviewed the provisions of the Acts. He summarised the 1909 Act as incorporating a Board with perpetual succession that was able to hold assets on the terms of the Trust. He contended it did not set out the terms of the Trust, which might have been expected had it been intended to fix the terms of the Trust in perpetuity. He submitted that none of the provisions in the Acts restrict the Court’s ability to approve the proposed scheme under Part 3 of the CTA.
[50] Further, Mr Caradus submitted it did not matter that the 1909 Act was a local Act rather than a private Act because the courts have varied the terms of trusts incorporated by local Acts, referring to Re Wilson Home Trust.5
[51] Mr Caradus maintained there is nothing preventing the Court from amending the terms of the Trust. To the contrary, he submitted the CTA required the trustees to prepare a scheme and dispose of the assets for another charitable purpose. He referred to s 53 of the CTA, which states the Court “shall” have jurisdiction to hear and determine matters relating to schemes. Mr Caradus submitted this was express authorisation for the Court to vary charitable trusts where the criteria under Part 3 of the CTA are met.
Attorney-General’s position
[52] Ms Harris, for the Attorney-General, referred to Re Cawthron Institute and comprehensively analysed it.6 Importantly, she considered the fact s 18 of the private Act in Re Cawthron Institute expressly provided Part 3 of the CTA applied to the
5 Re Wilson Home Trust [2000] 2 NZLR 222.
6 Re Cawthron Institute, above n 3.
Cawthron Institute and variations brought about by the Act were to be treated as if they had occurred under Part 3. She noted MacKenzie J’s finding that, by this mention, Parliament intended to empower the Court to make changes which would otherwise require legislation. Ms Harris rightly noted that the Acts here do not expressly refer to the CTA nor its predecessor, the Religious, Charitable and Educational Trusts Act 1908. She submitted Re Cawthron Institute did not resolve whether the Court has jurisdiction to approve a scheme in conflict with an Act absent statutory recognition of the Court’s powers under Part 3 of the CTA.
[53] She acknowledged some merit in Mr Caradus’ submission that the will set up the Trust and the Acts merely established the Board and approved variations. However, she noted the amendments in each of the Acts might have proceeded under the Religious, Charitable and Educational Trusts Act 1908 if this proposition was correct. Ultimately, she accepted some confusion arises.
[54] Ms Harris submitted allowing the variations would be in accordance with the principle relied on in Re Cawthron Institute, that where the general law provides avenues for people to attain their objectives trustees should apply to the Court instead of looking to Parliament.
[55] Ms Harris referred to the Anglican Church Trusts Act 1981, which she submitted provides an express alternative scheme for variations to that contained in Part 3 of the CTA. She submitted the fact that Parliament has been willing to provide an express alternative to the CTA in other legislation suggests they would have done so here had they intended the Act (or, more appropriately, its predecessor) not to apply.
[56] However, s 10 of the Anglican Church Trusts Act states the alternative scheme is in addition to, rather than instead of, the provisions of the CTA. The intention there is that an applicable trust may be varied under either the Anglican Church Trusts Act or the CTA.
[57] Ms Harris also noted the considerable (and undisputed) practical advantages in favour of the Court having jurisdiction. She referred to the private Act procedure as “cumbersome” and submitted the Court was best placed to deal with the application.
She helpfully indicated the Solicitor-General, when providing recommendations on a private Act, will consider the provisions of the CTA and apply the same or similar principles as have been applied by the Court in CTA cases to the question of what should be contained in the Act.
The opposing party’s case
[58] Mr McNab objected to this Court assuming jurisdiction in this matter, submitting the Court does not have the power to revoke or amend an Act of Parliament nor amend the terms of the will. He is the only one of the three objectors to challenge this Court’s assumption of jurisdiction.
[59] Mr McNab submitted the applicant’s proceeding was illegal, referring to the Imperial Laws Application Act 1988 and the English Bill of Rights 1689. He further argued it was prevented by due process. He endeavoured to develop these submissions at the hearing, but I do not consider them of relevance to the issue before the Court.
[60] Mr McNab questioned whether there was proof that probate of the will had ever been granted. I dispose of this argument at the outset as the preamble to the 1909 expressly records the granting of probate.
Discussion
[61] Mr McNab is correct that this Court does not have the power to revoke or amend the Acts nor amend the terms of the will. The question is: does the Court have jurisdiction under Part 3 of the CTA to make variations to the terms of the Trust when the variations sought are inconsistent with the Acts of Parliament.
[62] I do not consider Re Eliza White Board of Management to be of much assistance.7 The jurisdictional issue was not raised before Gendall J and accordingly he did not consider it. His decision focused on the merits of the scheme and the legal tests governing applications under Part 3 of the CTA. He did note, however, that a previous variation had been granted (notwithstanding the existence of the private Act)
7 Re Eliza White Board of Management, above, n 2.
but did not explain how the Court in that instance reconciled the issue of jurisdiction (if indeed it did).
[63] In Re Cawthron Institute, MacKenzie J applied the purposive approach to statutory interpretation to consider the meaning of the Thomas Cawthron Trust Act 1924 and Thomas Cawthron Trust Amendment Act 1979.8 He considered s 18 (inserted by the Amendment Act) which stated:
18 Application of Charitable Trusts Act 1957
Notwithstanding that the powers of the Board, the trusts established by the will of the said Thomas Cawthron, or the mode of administration of those trusts, may have been varied by this Act, it is hereby declared that Part 3 of the Charitable Trusts Act 1957 shall apply to the Board and to those trusts as if –
(i)The purposes for which the property held by the Board is so held were charitable purposes within the meaning of that Act; and
(ii)The Board were trustees within the meaning of Part 3 of that Act; and
(iii)Those variations had been effected under Part 3 of that Act.
[64]And the preamble to the Amendment Act, which stated:
… whereas it would be more convenient if any further variation of the powers of the Board or of the mode of administration of said Trust were effected under Part III of the Charitable Trusts Act 1957.
[65] MacKenzie J found, in light of this statement in the preamble, that Parliament intended to empower the Court to make changes which would otherwise require legislation. He approached the interpretation of s 18 on that basis. MacKenzie J gave weight to the fact there had been subsequent statutory amendments after s 18 was added which stated their objects could not be attained otherwise than by legislation.9 Ultimately, however, he plainly preferred his own analysis.
[66] It was only after considering all these matters that MacKenzie J referred to the excerpt from Parliamentary Practice in NZ cited by Mr Caradus.10 I accordingly do
8 Re Cawthron Institute, above, n 3.
9 Thomas Cawthron Trust Amendment Act 1993.
10 David McGee Parliamentary Practice in New Zealand, above, n 4.
not consider he placed great weight on the principles referred to therein. The Judge appeared primarily influenced by s 18 itself and the preamble to the Amendment Act. Rather, MacKenzie J described the statement as a “useful statement as to the interrelationship between the roles of Parliament and the Court in relation to the variation of trusts”.11 He found it suggested there was no general presumption that Parliament intended to retain control over the matters specified in the original Act.
[67] I consider Re Cawthron Institute leaves the jurisdictional issue open. It can be readily distinguished because of the express reference in the legislation in that case to Part 3 of the CTA. There is no express adoption of Part 3 of the CTA or its predecessor in the Acts here, nor a similar practical acknowledgment contained in the preamble.
[68] The final case referred to by counsel was Re Wilson Home Trust.12 In that case the settlor transferred his family home at Takapuna to the Auckland Hospital Board upon trust for the benefit of crippled children in the province of Auckland. At the same time an endowment fund was raised by public subscription for the purposes of the Trust. Part of that fund was provided by the settlor’s family on the condition that the income from this part of the fund was to be used for the maintenance of the property. The income on the balance of the fund was to be applied for the maintenance of crippled children in the home.
[69] The property subject to the Trust was described in two schedules. The land in the first schedule was to be used for the benefit of crippled children who largely had suffered the ravages of poliomyelitis. If, however, it was not fully utilised for that purpose then the Trust could accommodate convalescent non-crippled children. The land in the second schedule was to be used for the benefit of non-crippled children.
[70] Over a decade later the Board did not wish to provide an institution on the land in the second schedule for convalescent non-crippled children, and the advent of the Social Security Act 1938 had diminished the need for assistance to be provided from the endowment fund.
11 Re Cawthron Institute, above, n 3 at [23].
12 Re Wilson Home Trust, above, n 5.
[71] For these reasons the Board sought the assistance of Parliament and the Local Legislation Act 1947 (LLA) was passed. Section 28 of the LLA enabled the Board to use the whole of the land described in both schedules for the benefit of crippled children with the proviso that if facilities were not fully used for this purpose then convalescent non-crippled children could be assisted. Secondly, the section amended the terms of the original deed in relation to the endowment fund.
[72] At the time of the application before Laurenson J (50 years after the Trust was established) the scourge of poliomyelitis had been virtually eliminated. The need to provide for disabled persons had not, however, diminished due to the incidence of serious motor vehicle injuries. There remained a need for the facilities to provide services not only to the resident patients but also to provide a base for the provision of services to assist families by providing short-term respite care.
[73] Against that background, the trustees applied to vary the Trust to, in particular, redefine the class of persons to whom assistance could be provided to encompass “children with disabilities and/or their families” and to redefine the assistance to be provided on a far wider basis compared to the institutional care originally provided.
[74] In that case, counsel for the Attorney-General raised the issue of whether it was open to the Court to consider an application under Part 3 of the CTA in light of the LLA. The Attorney-General submitted that the terms of s 28 of the LLA effectively made the Trust a creature of statute, hence if there was to be any amendment to the Trust this could only be provided by statute.
[75] Laurenson J recorded the parties’ agreement that if the effect of s 28 was only to grant further permissive discretion to the Board (by granting it the discretion to use the total area for the benefit of crippled children) then it would not be the case that the section had also statutorily defined the purpose of the Trust.13
[76] The essence of the Attorney-General’s argument was that, notwithstanding s 28 was expressed in permissive terms, there was an argument for saying the intention of the Legislature was that the effect of the discretion was imperative (mandatory), in the
13 Re Wilson Home Trust, above, n 5, at [31].
sense that all the land could only be used for the building and establishment of an institution providing for the benefit of crippled children. In other words, the statute had created a situation where the lands could not be used for any other purpose.
[77] Laurenson J found that, in the final analysis, the resolution of the question of whether or not the Legislature intended a particular statutory power to be purely discretionary came down to an examination of whether the particular statute indicated a policy or purpose on the part of the Legislature one way or another.14
[78]Laurenson J noted the following:
[41] Accepting, therefore, that the issue in the present case falls to be determined on the same basis, I note the following:
(a)The word “may” arises in the context of a preamble which is, in itself, stated in non-mandatory terms, ie:
“28. … And whereas the lands described in the First and Second Schedules of the said deed could be used to better advantage for the benefit of crippled children if the whole of the said land were available for the building and developing of one institution … (Emphasis added.)
(b)There is nothing in the section which imposes conditions as to the exercise of the power or anything which defines the situation in which it may fall to be exercised.
[79]Later he observed:
[44] Viewed in this light I can see no basis for holding that the use of the word “may'” in the present case can be indicative of anything other than the conferment of a full discretion.
[45] There is, however, another way of testing this conclusion, namely by considering the reason for s 28(1) by reference to the terms of the original deed.
[46]This had specified that the land in the First Schedule was:
(a)Primarily for the benefit of crippled children; and
(b)Only available for the benefit of convalescent children if facilities were not required for crippled children.
14 Re Wilson Home Trust, above n 5, at [40].
[47] Land in the Second Schedule was to be used for the benefit of convalescent children, but with the rider that the board did not have to use the land for this purpose.
[48] This immediately left a hiatus in respect to this land, namely what was to happen if the board did not exercise its option in relation to it.
[49] The result, absent any correction, was that the board had an area, which it could not put to any other use because the deed had not covered the possibility that the board may exercise its right not to exercise the option.
[80] The Judge considered there was nothing in s 28 that imposed any restrictions on the exercise of power, nor anything which defined the situation in which it may fall to be exercised. He concluded the intention of the Legislature was merely to augment the powers of the Board in one respect, namely where the deed had left a hiatus. The proposed amendments did not run counter to the discretion contained in s 28 by interfering with that discretion.15
[81] Laurenson J accordingly concluded it was open to the Court to consider the application because it related only to matters not affected by the Act and the changes sought were consistent with s 28.
[82] When read together, these authorities establish that, in determining whether or not there is a route by which the Court can assume jurisdiction, the Court must examine the wording of the legislation to identify:
(a)whether there is express reference to the CTA, its predecessor, or some alternative Act for the purposes of reviewing a proposed variation scheme;
(b)any statements of policy or purpose in the statute one way or another;
(c)the language used in the relevant Act to identify if it conferred discretionary or imperative powers; and
15 Re Wilson Home Trust, above n 5, at [50].
(d)whether there is any language signifying that Parliament intended to augment the powers of the relevant board of governors or trustees or to deal with a hiatus in the deed or previous Act.
[83] In this case there is no reference in the Acts to the CTA or its predecessor nor express reference to leaving it to the Court to consider any proposed variations.
Accordingly, that route, taken in Re Cawthron Institute, is not open.16
[84] I turn now to examine the matters set out in [82](b) and (c) and the language of the Acts so far as the variation as to purpose is concerned. In his will, Mr McLean directed that the Holly Lea property, together with the residue of his trust funds, be held by his trustees upon trust for the purposes of a public institution or benevolent asylum for destitute women.
[85] The language of the 1909 Act is declaratory, merely recording the incorporation of the Institute as a body corporate. It records that the Institute is empowered to exercise all or any of the powers which the trustees of the will are thereby directed to exercise at the request of a board. The preamble states:
And whereas the incorporation of the said Board as a body corporate with perpetual succession and common seal are not attainable otherwise than by legislation.
[86]Section 11 of the 1909 Act says:
11 Will as herein amended to remain in force
Nothing in this Act contained shall prejudice or affect the provisions of the said will and codicil, or anything therein contained, except so far as the same are expressly altered or modified by or are inconsistent with this Act, the intention of this Act being that (except to such extent as aforesaid) the said will and codicil shall remain in full force and virtue.
[87]The 1930 Act was described as:
An Act to confer upon the McLean Institute further powers for the purpose of enabling it to carry out more effectually the trusts of the Will of Allan McLean, deceased.
16 Re Cawthron Institute, above, n 3.
[88] The preamble of the 1930 Act makes reference to s 11 of the 1909 Act and refers to examples of powers not already conferred on the trustees:
And whereas by the McLean Institute Act 1909, the Board of Governors to the Institute which had been appointed as provided by the said will was thereby incorporated under the name of the McLean Institute as a body corporate with a perpetual succession and a common seal, and it was in the said Act provided that nothing therein contained should prejudice or affect the provisions of the said will and codicil or anything therein contained except so far as the same were expressly altered or modified by or were inconsistent with the said Act, the intention of the Act being that (except to such extent as therein provided) the said will and codicil should remain in full force and virtue:
And whereas it has been found by experience that one effect of the disqualification from admission to the institution of those who are or have been in receipt of a pension under the Old-age Pensions Act 1898, or any statutory amendment thereof, or of charitable aid at any time during the term of 3 years immediately before admission has been to disqualify from admission persons who apart from such disqualification belong to the particular class which the said testator by the tenor of his said will appears to have intended to benefit, owing to such persons being compelled by extreme poverty to make application for old-age pension or charitable aid while awaiting admission to the institution:
And whereas the provisions of the said will do not empower the Institute to sell the said “Holly Lea” property and furniture:
And whereas in the event of the opportunity arising to acquire more suitable premises for the purpose of the institution, or in the event of the Institute finding it advisable to erect more suitable premises on other institution lands, it may become more desirable to sell the said “Holly Lea” property and furniture or part thereof:
And whereas it is desirable that the Institute should have power out of the annual income of the institution to make weekly payments to applicants for admission in certain cases:
[89]Section 3 sets out the additional powers conferred as follows:
3 Conferring upon the McLean Institute further powers
In addition to and in modification of the powers conferred on the Institute by the will and the McLean Institute Act 1909, and notwithstanding any of the provisions thereof, the Institute shall have the following powers, that is to say:
(a)Any person may be admitted to the Institution who is or who has been in receipt of a pension under the Pensions Act 1926, or any statutory amendment thereof, at any time before admission, or who is or has been in receipt of aid from the Charitable Aid Board or other public institution having control of the distribution of charitable aid at any time before admission:
provided that on admission such person surrenders such pension or such charitable aid for the period during which such person shall be an inmate of the Institution;
(b)The Institute may at any time or times sell and dispose of or exchange all or any part or parts of the “Holly Lea” property and the furniture, books, pictures, prints, musical instruments, plate, linen, china, glass, and other household effects in or about the “Holly Lea” property, and in so doing shall have the same powers and discretions as are contained and declared in the will concerning the sale and disposition of or exchange of any of the institution lands or chattels; and the Institute shall hold the net proceeds of any such sale or sales upon trust to invest the same in the purchase of any freehold lands, buildings, erections, and hereditaments in New Zealand and in the erection, pulling-down, adding to, altering, or in any way improving any buildings and erections on such purchased lands or on any lands for the time being subject to the trusts declared in the will concerning the “Holly Lea” property and furniture, and in the purchase of any furniture, books, pictures, prints, musical instruments, plate, linen, china, glass and other household effects, such purchased lands, buildings, erections, and hereditaments, furniture, books, pictures, prints, musical instruments, plate, linen, china, glass, and other household effects to be held by the Institute upon the same trusts and with and subject to the same powers and provisions as are declared in the will concerning the “Holly Lea” property and furniture, with and subject to such additions and modifications to such trusts, powers, and provisions as are effected by this Act, and pending such investment as aforesaid the Institute may invest the net proceeds of any such sale or sales or any part thereof upon any of the investments authorized in the will for the investment of the Institution funds and may apply the income derived from such investments for any of the purposes contained in the will concerning the “Holly Lea” property and furniture; and
(c)The Institute may at any time, by resolution of the Board of the Institute, declare that any parcel or parcels of land held by the Institute which are not subject to the trusts declared in the will concerning the “Holly Lea” property and furniture shall from and after the date of such resolution become subject to the trusts in the will declared concerning the “Holly Lea” property and furniture, and in such case the real and personal property held by the Institute subject to the trusts in the will declared concerning the “Holly Lea” property and furniture shall stand charged with such sum of money as shall in the opinion of the Institute as evidenced by such resolution be the fair value of such parcel or parcels of land, together with interest for the same at such rate as may be thought proper by the Institute, computed from the date of such resolution, such sum of money and interest to be held by the Institute upon the trusts and with and subject to the powers and provisions in the will declared concerning such part of the institution as is not represented by the “Holly Lea” property and furniture:
(d)The Institute may at any time or times make out of the annual income of the institution weekly payments to any person or persons who shall have applied for and be qualified for admission to the institution, and such weekly payments may be of such amounts and for such period
or periods, continues or discontinuous, as the Institute shall in its absolute and uncontrolled discretion think fit:
provided that the payments made to any one person pursuant to the powers hereby granted shall not exceed the weekly sum of £3.
[90] The 1934 Act is confined to ratifying and confirming distributions made by the Institute. However, the preamble is instructive as to the Institute’s purpose:
And whereas the said will further provides, inter alia, that the Board to be constituted as therein directed should have absolute and uncontrolled power of admitting inmates to any part of the institution and of determining whether any applicant for admission comes within the qualifications prescribed for that part of the institution:
And whereas, after reciting that it might be desirable to provide a separate establishment or separate establishments for women with children fulfilling the qualifications referred to in the foregoing paragraph (a) the said will further provides, inter alia, that, without prejudice to and in addition to any other powers thereby given by the trusts of the will, the Board might purchase in the names of the trustees, rent, erect, maintain, pull down, repair, improve, add to, or alter any buildings, colleges, houses, outhouses, fences, grounds, or enclosures which might be necessary or desirable for the purpose of providing any such separate establishments, and might also purchase any furniture, goods, chattels, and effects which might be required for the purpose of such separate establishments, and might generally conduct and carry on such establishments with the same powers in all respects as are thereby given to the Board with regard to the institution:
And whereas by the McLean Institute Act 1909, the Board of Governors to the Institute which had been appointed as provided by the said will was thereby incorporated under the name of “The McLean Institute” as a body corporate with a perpetual succession and a common seal, and it was in the said Act provided that nothing therein contained should prejudice or affect the provisions of the said will and codicil or anything therein contained, except in so far as the same were expressly altered or modified by or were inconsistent with the said Act, the intention of the Act being that (except to such extent as therein provided) the said will and codicil should remain in full force and virtue:
[91] Nothing in any of the language of the terms of trust in the will or in the Acts contemplates a situation where the Institute would not own accommodation and lands itself for the accommodation of destitute women. The proposed scheme in this respect appears to offend against s 11 of the 1909 Act and the policy in the preambles of the 1930 Act and 1934 Act in particular.
[92] I do not consider that the language in any of the Acts can be read so as to confer on the trustees the discretion to dispose of all of the Trust property to the extent of not retaining land and accommodation to house destitute women. This inability could not be seen as a hiatus in the Act but is rather a fundamental cornerstone of the original Trust. Therefore, the route identified in [82](d) is not available in this case.
[93] Similarly, there is nothing in the Acts which allows for the women to receive a public or statutory benefit during their residence at any facility provided by the Institute.
[94] I turn now to the proposed variations to the appointment of trustees and the process for substitution. Although s 9 of the 1909 Act is inconsistent on a plain reading with the variations proposed, it is a sufficiently permissive section for Laurenson J’s reasoning to apply.
[95] In making this finding I place weight on the fact that section states the relevant boards/councils “may, by resolution at any meeting … appoint a [substitute] member of the Board”. This means the substitution process in the Act was an extension to the Board’s powers that did not have to be exercised in every case. It may be that, if the variations are approved, the substitution process contained in the 1909 Act would remain an option for the Board. Thus, the existence of s 9 is not fatal to the applicants’ case in respect of that variation.
[96] The same cannot be said for the other inconsistencies in the modes of administration of the trust discussed at [39]-[43] herein. These inconsistencies, alongside those relating to the purpose of the Trust, cannot be addressed by one of the routes listed at [82].
[97] I accept there is demonstrable practical advantage in favour of the Court hearing the application. The only alternative is a private Act of Parliament. I accept at face value Ms Harris’ description of the private Act procedure as cumbersome.
[98] The reasons given for seeking the variations appear on their face to be laudable. The events that have occurred since 1934 do appear to provide justification for some
of the variations sought. Nevertheless, the apparent merits do not suffice when the Court cannot apply Part 3 of the CTA and amendment will need to be sought by recourse to Parliament.
Result
[99]The answer to the question I posed in [5] is “no”.
[100] The application under Part 3 of the CTA to approve variations to the Trust is dismissed.
Doogue J
Solicitors:
Duncan Cotterill, Christchurch Crown Law Office, Wellington CC:
Mr McNab
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