Otago Foundation Trust Board

[2018] NZHC 293

IN THE HIGH COURT OF NEW ZEALAND DUNEDIN REGISTRY

CIV-2017-412-000120 [2018] NZHC 293

UNDER THE	CHARITABLE TRUSTS ACT 1957
IN THE MATTER OF	An Application for Variation of Trust Under Section 32 of the Act
OTAGO FOUNDATION TRUST BOARD Applicant

Hearing:	26 February 2018 (By way of telephone conference)
Appearances:	M E Van Aart and T J Hutchison for Applicant
Judgment:	1 March 2018

REASONS FOR DECISION OF GENDALL J

Introduction

[1]      On 26 February 2018, the application by Otago Foundation Trust Board, for approval of a scheme under the Charitable Trusts Act 1957 was heard before this Court. There was no opposition to the application.

[2]      Having heard submissions from counsel for the applicant, and after considering all the material before the Court, the application was granted.   Orders (hereinafter called the Orders”) were made approving the proposed scheme under the Charitable Trusts Act 1957 as follows:

(a)       That the Trust established by the will of Robert Campbell be varied in accordance with the attached Deed of Variation.

(b)All reasonable costs and expenses of and incidental to the preparation, perusal and advertising of this scheme and submission of it to the

RE:  OTAGO FOUNDATION TRUST BOARD [2018] NZHC 293 [1 March 2018]

Attorney-General and to this honourable Court (including a contribution of $750 to the costs of the Attorney-General) and any costs of solicitors acting and counsel retained by them are to be paid out of the Trust fund.

(c)       The operative part of the Deed of Variation provided:

(i)        The  name  of  the Trust  is  changed  from  “The  Campbell Convalescent Home Trust” to “The Campbell Charitable Trust”.

(ii)       The charitable purpose of the Trust is altered to the following:

…

The Board shall hold the funds upon trust to support and promote the physical, mental and spiritual development, maintenance and support of persons who are in need and have resided for not less than two years or such period as determined by the Trustees within the Dunedin area with a priority given to members of the Presbyterian Church and students of Presbyterian Church Schools within the Dunedin area together with any other functions, services and activities which support these primary purposes.

(iii)      With  effect  from  the  date  of  this  deed,  any  proposed distribution of funds to achieve the charitable purpose will be assessed by the Board, as Trustee, through the following criteria which are additional to the regional criteria and priority given to members of the Presbyterian Church:

a.         Those requiring support who are in need (relief of poverty):

i.        Income that is insufficient to support the fundamental necessities of life; and

ii.        Cannot access or facilitate continuous shelter due to level of income as well as other factors; or

iii.       Cannot afford sufficient food due to level of income as well as other factors; or

iv.       Cannot  obtain  adequate  clothing  due  to  level  of income as well as other factors.

b.Students of Presbyterian Church Schools (advancement of education) through the relevant governing body of the applicant school as they require support:

i.         To provide education on matters of religion; or

ii.        To provide leadership training programmes and workshops; or

iii.       To build and/or maintain school facilities; or

iv.       To provide books, equipment and educational aids for the advancement of education.

[3]      I now give brief reasons for that decision and the Orders outlined above.

[4]      First, in accordance with directions issued by the Court, advertising of this application has properly taken place.   This advertising was achieved by way of advertisements placed in the Otago Daily Times on 19 and 26 January 2018 and

2 February 2018 and in the New Zealand Gazette on 17 January 2018.   All this advertising is in order.

[5]      A detailed report has been provided by the Attorney-General pursuant to s 35 of the Charitable Trusts Act 1957 and filed on 8 December 2017. This report confirms that the Attorney-General is satisfied the proposed changes in the application are proper, not contrary to law, public policy or good morals and can be approved under Part 3 of the Charitable Trusts Act 1957.

[6]      Further, as already noted, there was no opposition or further appearances by any other party relating to this application before the Court.

Background facts

[7]      As to the background facts in this matter, in his will dated 13 December 1904

Robert Campbell, following his wife’s death, left certain land and offices standing on it to establish a home as a temporary residence for unmarried Presbyterian women. These women were required to be over the age of 38 years and have resided in Otago or Southland for not less than two years prior to admission to the home.  In addition, he set up an annuity with the residual property of the estate to erect buildings and support the inhabitants of the home (all this hereafter called “the Trust”).

[8]      The current trustee, the applicant, the Otago Foundation Trust Board, was appointed on 10 October 1964.

[9]      In late 1968 the Trust Board successfully applied to the then Supreme Court to vary the charitable scheme of the Trust and to amend the power of the Trustees.  This was on the basis that the Trust had become impracticable and inexpedient to carry out.

[10]     Few people, it seems, had been able to qualify for assistance under the Trust, the buildings were old, unsuitable and uneconomic to run as a convalescent home, and additional land in the Trust was uneconomical and did not provide sufficient income for repairs or rebuilding without resorting to capital.

[11]     As such, on 23 May 1969 the Supreme Court therefore varied the purpose of the Trust:

To provide or contribute towards the provision of a place of residence for persons over the age of 38 years who for not less than two years preceding admission have been resident in the area now comprising Otago and Southland and who in the opinion of the Trustee or Trustees will benefit therefrom with priority being given to members of the Presbyterian Church who are female in indifferent health and without substantial means.

[12]     It also changed the name of Mr Campbell’s will Trust to the “Campbell Convalescent Home Trust”.  In addition, the powers of the Board were varied under s 33 of the Charitable Trusts Act 1957 to include a power to sell Trust property and otherwise to invest Trust funds.

[13]     Despite the 1969 scheme, it appears the Trust Board still had significant difficulty in carrying out the purposes of the Trust. A Board report of 1988 recorded:

Despite attempts to make the purposes of the Trust more widely known there are still surprisingly few applicants for grants.   The Board normally only accepts grant applications which have been made through established statutory or voluntary welfare agencies in Otago but there has still been little response.

[14]     Accordingly, in March 1989 the Trust Board, having decided to use the Trust property for a different purpose, given that it had not been functioning properly prior to this time, took other steps.  First, it purchased a property at 224 Forbury Road and passed a resolution that the house would be let to elderly people or invalids with a housing need and minimal assets for an affordable rent, regardless of their gender or religious affiliation.  Later, the Board purchased another property at 40 Albert Street

to be used in a like manner.  These properties, it seems, are currently leased to PACT Otago, a non-governmental association that provides social services including accommodation support.

[15]     Affidavits    accompany    the    present    Application.        One    is    from Robert Esdale Henry, the Factor of the Trust Board, and it outlines the continued practical difficulties that arise in running the Trust within the charitable scheme.  He says that since 1969 the Trust has essentially been in a holding pattern with very few applications for grants and no applications since 2004.

[16]     The proposed variation which amends the purposes of the Trust under s 32 of the Charitable Trusts Act 1957 as outlined at para [2] above is made on the grounds that it is “inexpedient” to meet the charitable purpose that was accepted by the Court in 1969 for the reasons outlined in the affidavit evidence before the Court.

[17]     In addition, the Trust Board applies under s 33 of the Charitable Trusts Act

1957 to change the name of the Trust to “The Campbell Charitable Trust”.  It is said this will aid the administration of the Trust and better reflect its proposed charitable purpose.

[18]     In  Re  McElroy  Trust1   the  Court  of  Appeal  explained  the  meaning  of

“inexpedient” in the following terms:

The general connotation of the word “inexpedient” in its present context is of the original charitable purposes having become unsuitable, inadvisable or inapt.   Parliament’s wish to expand the concepts of impossibility and impracticability should not be inhibited by too narrow an interpretation of the word “inexpedient”.  Clearly, Parliament wished to give the Courts power to approve a scheme of variation in circumstances beyond those where the original purpose could no longer be carried out. The concept of inexpediency introduced a value judgment rather than simply an assessment of feasibility. It may remain possible and practicable to carry out the original purpose but it may have become inexpedient to do so…

[19]     In the present case, in focusing on whether the existing scheme under the Trust is inexpedient, I am satisfied that, given the passage of time and the change in

circumstances which has occurred for the Trust, this test is met.  There is no question

1      Re McElroy Trust [2003] 2 NZLR 289 (CA).

that the proposed purposes are charitable and that the modifications sought to the terms of the original trust are appropriate. The parties administering the property and income of the Trust, as I see it, would be assisted and better facilitated by varying the mode of administration of the Trust as sought in the variation Orders.  The proposed name change for the Trust is also appropriate and more properly describes the current varied purposes of the Trust.

[20]     Finally, and given the conclusions in the report from the Attorney-General which raise no objection to and effectively support the Orders sought, I am satisfied that the application must succeed.  The Orders outlined at para [2] above made on

26 February 2018 are confirmed.

...................................................

Gendall J

Solicitors:

Van Aart Sycamore Lawyers Limited, Dunedin