Ngati Mutunga O Wharekauri Trust (in liquidation) HC Wellington CIV-2010-485-2185

[2011] NZHC 1802

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CIV-2010-485-2185

UNDER  Section 27 of the Charitable Trusts Act

1957 and Section 27 of the Incorporated
Societies Act 1908

IN THE MATTER OF     Ngati Mutunga O Wharekauri Trust (in liquidation) and Ngati Mutunga O Wharekauri Incorporated (in liquidation)

Hearing:         5 December 2011

Counsel:         P Chisnall for Liquidators

J A Langford for Te Runanga O Wharekauri Rekohu
G Sharrock for Golden Seas Ltd & James Pohio Family Trust
S Potter with J Hitchcock for Ngati Mutunga O Wharekauri Iwi Trust

Judgment:      5 December 2011

ORAL JUDGMENT OF THE HON JUSTICE KÓS

[1]      These are applications by liquidators (Christine Margaret Dunphy and Iain

Bruce Shephard) for directions as to distribution of surplus assets under:

(a)       section  27  of  the  Charitable  Trust Act  1957,  in  respect  of  Ngāti

Mutunga O Wharekauri Trust (the Original Trust) and

(b)      section 27 of the Incorporated Societies Act 1908 in respect of Ngāti

Mutunga O Wharekauri Incorporated (the Society).

Background

[2]      Both entities were placed in liquidation in June and July 2006 respectively. An issue arose as to the legitimacy of the resolution to wind up the Original Trust.

RE: Ngati Mutunga O Wharekauri Trust (in liquidation) & Anor HC WN CIV-2010-485-2185 5 December 2011

The Original Trust was formally wound up by Simon France J on 18 April 2011 under the just and equitable ground.

[3]      The Society was registered in March 1994.   It was to be the body clothed with the  mandate from Ngāti Mutunga, the iwi of the Chatham Islands, to negotiate Treaty settlements with the Crown and the terms of allocation of pre-settlement fisheries assets.  However, there was a contest between the Society and Te Runanga O Wharekauri Rekohu Incorporated (the Runanga) for that mandate.

[4]      Against that background the Original Trust was formed in October 1989.  Its objects included to receive all Ngāti Mutunga settlement moneys, to represent Ngāti Mutunga in  claims  before the Waitangi Tribunal  and  to  receive  Ngāti  Mutunga benefits from Te Ohu Kaimoana.

[5]      The Society transferred its assets to the Original Trust.   According to the statement of claim, the assets of the Original Trust, including those contributed by the Society, comprise approximately $700,785.

[6]      The Runanga continued to assert its right to the mandate.   It disputed the mandate of the Original Trust.  But in September 2003 an agreement was reached to establish a new single entity to receive fisheries assets. The intent was that thereafter the Original Trust would be placed in liquidation and its surplus assets transferred to the new entity.

[7]      In September 2004 Ngāti Mutunga O Wharekauri Iwi Trust (the New Trust) was formed. The intention was that it be the new entity to receive the fisheries assets allocated to Ngāti Mutunga. The objects of the new Trust include, generally:

that the fund be applied by the trustees toward any purpose or purposes that advances the cultural, social or economic standing of, or as otherwise is beneficial to any or all Ngāti Mutunga O Wharekauri provided that such purposes are charitable under New Zealand law.

[8]      In particular, its objectives are to improve the health of Ngāti Mutunga O Wharekauri; improve the welfare amongst members of Ngāti Mutunga in relation to conditions of life due to poverty and need; to provide financial assistance where

members of Ngāti Mutunga lack financial means; and to provide education and educational training.

[9]      The New Trust claims entitlement to the surplus assets of the Society and the Original  Trust.    However,  other  parties  have  made  claims  in  the  liquidation  or notified objections as to distribution of surplus assets to the New Trust.

[10]     Foremost among those was the Runanga.  But its counsel, Mr John Langford, clarified recently that the Runanga’s instructions are simply as a potential creditor in the liquidation.  It does not now oppose the application.

[11]     Secondly, there is Mr James Pohio and his family company, Golden Sea Limited.  Their counsel, Mr Gerald Sharrock, has confirmed that his clients’ position is the same as the Runanga’s.

[12]     Thirdly, the Crown initially opposed on the basis that the Original Trust had not been validly wound up, and that liquidators had not been validly appointed. However, as I have already said, that issue was resolved by Simon France J on

18 April 2011 when the Original Trust was wound up by the Court.  I note that the Attorney-General did not oppose the application for winding up.   The Attorney- General is not represented in Court today, having signified his approval.

[13]     Advertisements  advising  the  application  for  directions  for  distribution  of surplus assets to the New Trust were published on 15 March 2011 in the New Zealand Herald, the Dominion Post and the Christchurch Press.  The publication of those advertisements had been directed by Mallon J on 10 November 2010.

[14]     Following advertising, there were further interlocutory applications in the proceeding.  These culminated in a telephone conference before me on 23 November

2011.  At that point, or just after it when Mr Langford’s clients resolved their stance,

the following became clear.

(a)       first, the liquidators’ application is not opposed, and

(b)secondly, there are no parties other than the New Trust identified as appropriate to receive the surplus assets of the Original Trust and the Society.

[15]     There is little case law on the application of s 27 of the Charitable Trusts Act

1957.   In Re Mercury Bay Undenominational Church Association Trust Board Incorporated[1] the Court noted the proposed distribution was consistent with the cy- pres principle, that is for purposes as nearly consistent as possible with the intent of the original settlor.  In Re Wellington Nurses Education Trust Board Incorporated[2]

Dobson J approved distribution of trust assets to an organisation sharing similar purposes to the original, now defunct, trust.

[1] Re Mercury Bay Undenominational Church Association Trust Board Incorporated HC Hamilton, M113/00l, 15 June 2000.

[2] Re Wellington Nurses Education Trust Board Incorporated CIV-2009-485-236, HC Wellington, 25 March 2009.

[16]     In the present case the New Trust is the entity appearing to have objectives as nearly consistent as possible to those of the Original Trust and Society.

Disposition

[17]     Accordingly there will be orders as sought under s 27 of each Act approving the distribution of the surplus assets of the Society and the Original Trust to the New Trust.

Distribution

[18]     The liquidators have filed a memorandum stating that they consider that “it would not be prudent or responsible for them to make any distribution of assets before finally resolving the outstanding creditors’ claims, without making full provision for those claims”.  As a result of that there was no application before me today to restrain the distribution of assets.

[19]     Mr Sharrock and Mr Langford’s clients will need to act promptly to complete

discussions with the liquidators.  I direct the following timetable:

(a)       finalised proofs of claim are to be submitted to the liquidators no later than 23 December 2011;

(b)discussions between the liquidators and the proposed creditors are to be concluded by 10 February 2012;

(c)       the liquidators are to submit a final report to the Court by 24 February

2012.

[20]     I reserve leave to any party in this proceeding to apply thereafter for further directions.

[21]     I note that the purpose of my directions is to clear the way, if at all possible, for the distribution of surplus assets, over and above the proportion for which creditors’ claims are made, by the end of this year.  Any contest over the remaining surplus assets will need to be resolved as soon as possible after the final reporting date of 24 February 2012.   I reserve leave, as I have said, to enable the parties to come back to this court for final orders in relation to those matters.

Costs

[22]     By consent, costs on the present application are reserved.

Stephen Kós J

Solicitors:

McMahon Butterworth Thompson, Auckland for Applicants

Langford Law, Wellington for Te Runanga O Wharekauri Rekohu Inc

Kathy Ertel & Co, Wellington for James Pohio & Golden Seas Ltd

Enterprise Law, Auckland for Ngāti Mutunga O Wharekauri Iwi Trust

Counsel:

G Sharrock, Auckland

P Chisnall, Wellington