New Zealand Police Dog Charitable Trust (Southall)
[2023] NZHC 3165
•13 November 2023
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE
CIV-2023-485-553
[2023] NZHC 3165
UNDER the Charitable Trust Act 1957 IN THE MAATTER
of The New Zealand Police Dog Charitable Trust
AND
TODD PETER SOUTHALL, RHONDA THOMPSON, FIONA MICHELE McPHAIL, CHRISTINE FAYE OLIVER AND JOHN BLEACKLEY
Applicants
Hearing: On the Papers Counsel:
R L Powell for Applicants
Judgment:
13 November 2023
JUDGMENT OF McQUEEN J
[1] The trustees of the New Zealand Police Dog Charitable Trust (the Trust) apply to vary their trust deed pursuant to pt 3 of the Charitable Trusts Act 1957 (the Act).
Background
[2] The origin of the Trust lies in the will of Shirley Ellwood of Queensland, Australia, who made a gift of the residue of her estate to the New Zealand Police for the purpose of enhancing and improving the effectiveness of its Police Dog Section.
[3] The New Zealand Police instructed solicitors to prepare a trust deed for a charitable trust to set out the terms on which Ms Ellwood’s purposes would be carried
SOUTHALL, THOMPSON, McPHAIL, OLIVER AND BLEACKLEY [2023] NZHC 3165 [13 November 2023]
out. The Trust was settled on 6 December 2005 by a deed signed on behalf of the New Zealand Police and by the original trustees (the trust deed).
[4] The trustees recently instructed their solicitor to review the trust deed in light of the changes to the law brought about by the Trusts Act 2019. This in turn led to the present application being made in order to amend certain provisions of the trust deed that have become unworkable due to changes in the governance structure of New Zealand Police. The purpose of the application is to facilitate the administration of the Trust. No change is proposed to the Trust’s charitable purposes.
[5] The application came before me as Duty Judge, and I directed that it be determined on the papers.
The originating application
[6] The power to vary a charitable trust deed is set out in s 33 of the Act. Section 33 is aimed at facilitating a charitable trust in carrying out its charitable purpose by enabling the trustees to address any administrative problems that they might face.1
[7] The originating application has been brought by the current body of de facto trustees of the Trust. There has at all times been a fully functioning body of trustees, some of whom were formally appointed when the trust deed was settled and others of whom have been informally appointed over time. I do not consider the fact the application is made by de facto trustees to be a barrier to this application.2
[8] The lack of compliance with the trust deed is partly due to the impossibility of its requirements (given that there is no longer any Board of Commissioners of the New Zealand Police, as discussed below) and partly due to oversight.
[9] Counsel for the applicant, Ms Powell, submits that formalising the current de facto trustees’ appointments is a matter that can be attended to without the assistance of the Court once the scheme has been approved.
1 Re Te Mata Park Trust Board [2020] NZHC 239 at [13]–[14]; citing Re Melanesian Mission Trust Board (1998) 1 NZTR 8-003 at 15.
2 Re the Noeline Clark Foundation [2020] NZHC 2473 and Re the Boys’ Gordon Hall Trust [2020] 2027.
[10]The proposed changes are as follows:
8.1Clauses 1.3, 1.4, 13.1 and 15.2: the power of appointment of trustees and the power of variation are both held by the Governing Committee, which is currently defined as “the Board of Commissioners of the Founder” (the New Zealand Police). However, the New Zealand Police no longer has a Board of Commissioners. The proposed variation substitutes the words “Governing Committee” with “Governor” and defines Governor as “the Deputy Commissioner (as defined in the Policing Act 2008) who is responsible for the Police Dog Section.” The trustees consider the person in this role to be the most appropriate in all the circumstances.
8.2Clause 1.6: a reference to updating legislation is added.
8.3Clause 7.1: the trust deed restricts the power of investment to deposits in New Zealand registered banks. This requires an unnecessarily conservative approach. The restriction is removed to permit the trustees to diversify investments as required to comply with their duty to invest prudently under s 30 of the Trusts Act 2019.
8.4Clause 13.1: the proposed amendment to the power of variation will require any variations to be made by deed rather than by resolution, as is consistent with the usual approach to varying trust deeds.
8.5Clause 15.1: It is clarified that there is a minimum of three trustees (which was previously implied by the requirement of three nominated trustees in cl 15.3 but not made explicit).
8.6Clause 15.3: the current trust deed requires three of the trustees to be persons with particular roles within the New Zealand Police. An amendment is proposed to update these roles to reflect the current organisational structure of the New Zealand Police. Should there be future changes to those roles, the trust deed could be varied pursuant to clause 13.1.
8.7Clause 15.4-15.5: the procedure for appointment and removal of trustees has been made more specific, including by adding a power added for the Governor to remove a trustee by notice in writing, and confirming that appointments may be made by written document signed by the Governor and the trustee. This is more practical than requiring a deed.
8.8Clause 18.1(e): the reference to the Income Tax Act 1994 has been updated to the equivalent provision in the Income Tax Act 2007.
8.9Clause 19.1: the breadth of the trustees’ indemnity is proposed to be limited to exclude gross negligence, in order to comply with the Trusts Act 2019.
[11] The originating application is supported by an affidavit from Todd Southall. Mr Southall is a de facto trustee of the Trust. Ms Powell has provided two memoranda to assist the Court.
Procedural requirements
[12]Part 3 of the Act requires that before applying to the Court:
(a)the trustees prepare a “scheme” for extending or varying their powers (s 34);
(b)the scheme is submitted to the Attorney-General and the Attorney-
General reports on the scheme (s 35); and
(c)the scheme is advertised in accordance with s 36.
[13] These requirements have been complied with. The Attorney-General’s report dated 20 July 2023 has been filed together with the application. The Attorney-General supports the application.
[14] The necessary requirements for advertising, pursuant to s 36 of the Act, have been complied with. Ms Powell has attached to her memorandum dated 31 October 2023 copies of the advertisements placed in the NZ Gazette on 21 September 2023 and in the Post on 26 September 2023, 3 October 2023, and 10 October 2023.
[15] Ms Powell confirms that she is unaware of any opposition to the scheme proposed.
Attorney-General’s report
[16] The Attorney-General has provided a report. It records that pursuant to ss 35 and 56 of the Act and for the purposes of assisting this Court as to the matters of which it is required to be satisfied under s 56(1)(a) of the Act, the Attorney-General is satisfied that:
(a)the proposed scheme is a proper one and should carry out the desired purpose or proposal;
(b)it is not contrary to law or public policy or good morals;
(c)the scheme can be approved by this Court under pt 3 of the Act;
(d)every proposed purpose is charitable within the meaning of pt 3 and can be carried out; and
(e)the requirements of pt 3 have been complied with up to the giving of the report.
[17] The charitable purposes of the Trust remain as set out at cls 3 and 4 of the current trust deed:
(a)to enhance and improve the effectiveness of the Police Dog Section of New Zealand Police;
(b)to provide funds for the Police Dog Section of New Zealand Police for the acquisition of dogs, the training of dogs and handlers, the improvement of bloodline in dogs, the costs of and incidental to their handling, management and care and any other relevant charitable purpose;
(c)to promote any forms of study, research and educational programmes relevant to the above purposes and objects; and
(d)to support suitable means of making known its objects and activities.
[18] The Attorney-General highlights that the jurisdiction under s 33 of the Act is intended to deal with problems with administration faced by charitable trustees in giving effect to the intended purpose. As noted by Paterson J in Re Melanesian Mission Trust Board, the threshold for a scheme submitted under s 33 is that:3
It is necessary for this Court to be satisfied that the administration of the property or the carrying out of the Trust “could be facilitated” by the variation sought. The ordinary dictionary meaning of “facilitate” is “made easier, promoted, or helped forward”.
3 Re Melanesian Mission Trust Board, above, n 1, at 7. (Emphasis in original, footnote removed)
[19] The Attorney-General goes on to discuss the proposed amendments and whether they meet the test under s 33 of the Act.
Governing Committee
[20] Clause 1.4 of the trust deed defines the “Governing Committee” as meaning “the Board of Commissioners of the Founder”.
[21] A Board of Commissioners was set up by a previous Police Commissioner to have strategic oversight of the organisation but the New Zealand Police no longer has such a board. The current Commissioner has instead established an Executive Leadership Team.
[22]The powers of the Governing Committee under the trust deed are:
(a)to vary, amend, or add to any of the provisions of the trust deed by unanimous resolution; and
(b)to appoint new trustees.
[23] These powers cannot presently be exercised because there is no Governing Committee. The trustees propose the Deputy Commissioner who is responsible for the Police Dog Section takes the place of the Governing Committee under the trust deed. The Deputy Commissioner is appointed by the Governor-General pursuant to s 13 of the Policing Act 2008 and so the trustees consider the role is unlikely to be changed readily. While at present there are several Deputy Commissioners, one has designated responsibility for the Police Dog Section. Deputy Commissioner Tania Kura has confirmed that she would willingly accept the role as Governor.
[24] The trustees considered whether the Commissioner (which is also a statutory appointment) ought to be the Governor but decided against this because it would be impractical given the other responsibilities of the Commissioner and the relative unimportance of this Trust.
Power of investment
[25] Clause 7.1 of the trust deed restricts the trustees’ power of investment to deposits with New Zealand registered banks. The proposed change will delete this requirement and enable the trustees to invest in anything they think fit.
[26] Mr Southall says he would like the trustees to have the power to invest in stocks and shares because the interest rate on term deposits is very low. He says this will further the purposes and objects of the Trust if the trustees had the power to enhance the value of the Trust by diversifying investments. An investment strategy for the Trust is under consideration but is not yet drafted. Mr Southall confirms that he understands this will accord with the trustees’ duty to invest prudently as set out in s 30 of the Trusts Act.
Mechanism for appointment and removal of trustees
[27] Clause 15.3 sets out the requirement for appointment of trustees. Currently the total number of trustees shall be no fewer than three and not exceed six and three of the trustees are required to be, respectively, the District Commander of the Rotorua District for New Zealand Police, the National Co-ordinator for Dogs and a member of the Office of the Commissioner of Police. Two of these roles no longer exist within New Zealand Police due to an organisational restructure.
[28] The trustees propose to vary cl 15.3 by updating the roles listed to reflect the current organisational structure of the New Zealand Police. Should there be future changes to the organisational structure, the trustees propose to vary the clause pursuant to cl 13 (discussed below).
Power of variation
[29] The trust deed contains a power to make administrative variations to the deed by way of unanimous resolution of the Governing Committee. The trustees propose that this power be amended to allow variations to be made by the Governor by deed rather than by unanimous resolution, which is said to be consistent with the usual approach to varying trust deeds.
[30] This variation appears to reflect that, if accepted by the Court, the Governing Committee would be replaced by a single person. Therefore, the requirement for variation by unanimous resolution is no longer apt.
Procedure for appointment and removal of trustees
[31] The trustees propose clarifying the procedure for what happens when the office of any trustee becomes vacant. Most of the amendments particularise definitions, however the following additions are also made:
(a)a trustee may also be removed by notice in writing by the Governor;
(b)provided if at any time there are only three trustees, none of the trustees shall be discharged from the trusts and obligations under the deed until a new trustee has been appointed in their place; and
(c)appointment of new trustees shall be made by written document signed by the Governor and the new trustee.
Effect of these amendments
[32] The Attorney-General considers that these amendments will facilitate the administration of the Trust and the carrying out of its purpose.
Limiting the scope of the indemnity clause
[33] Clause 19.1 sets out the scope of trustees’ indemnity. The trustees want to limit the scope of indemnity so that gross negligence is not covered, as set out in s 41 of the Trusts Act.
[34] This variation appears to be largely clarificatory to reflect the changes to the law as introduced by the Trusts Act. It is not clear whether the Court’s approval is required for this variation. Nonetheless, the Attorney-General considers this clarification will facilitate the administration of the trust and the carrying out of its purpose.
Updating references to legislation
[35] The trustees also seek to update the references in the trust deed to repealed legislation to the equivalent contemporary provision and clarify that, in future, references to legislation include any provision which replaces, consolidates or changes it. It is not clear that the Court’s approval of this variation is required but the Attorney- General considers that the clarification will facilitate the administration of the trust and the carrying out of its purpose.
Costs of Attorney-General’s report
[36] The Attorney-General has indicated that costs in the sum of $750 would be an appropriate sum in respect of the report of the Attorney-General and the trustees concur.
Conclusion
[37] I am satisfied that the proposed amendments to the trust deed will facilitate the administration of the Trust in carrying out its charitable purpose. I therefore conclude that it is appropriate to approve the scheme in respect of the Trust.
[38] The application by the trustees of the New Zealand Police Dog Charitable Trust Deed for approval of a scheme varying the trust deed is granted. An order approving the scheme under s 53 of the Act is made accordingly.
[39] I order that all reasonable costs and expenses of and incidental to the preparation, perusal and advertising of the scheme and submission of it to the Attorney-General and to the High Court (including a contribution of $750 to the costs of the Attorney-General) and any costs of solicitors acting and counsel retained by the are to be paid out of the trust fund.
McQueen J
Solicitors:
Gem Legal, Lower Hutt for Applicants
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