Patient - [2023] NZHC 2924

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2022-409-453

[2023] NZHC 2924

UNDER the Trusts Act 2019

IN THE MATTER

of the James H Smedley Charitable Trust

AND

IN THE MATTER

of an application for directions by TRACEY ANN PATIENT, trustee of the James H

Smedley Charitable Trust

Hearing: On the papers

Counsel:

G F Kelly for the Applicant

R J M Sim for University of Otago, University of Canterbury and the Christchurch City Council

Judgment:

18 October 2023

JUDGMENT OF OSBORNE J

This judgment was delivered by me on 18 October at 4.00 pm pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar Date:

RE PATIENT [2023] NZHC 2924 [18 October 2023]

Introduction

[1] This proceeding seeks to achieve the final distribution of the James H Smedley Charitable Trust (the Trust), created by Deed dated 15 June 2009 (the Deed) in order to avoid unnecessary costs and practical issues brought about by an unduly complex structure. That structure gives rise to uncertainty as to the precise scope of the trustee’s powers. The potential recipients of Trust funds identified in the Deed (the University of Otago, the University of Canterbury and the Christchurch City Council) (the three recipients) consent to the orders sought by the applicant.

[2] Tracey Patient, as sole trustee of the Trust, applies for directions under s 133 Trusts Act 2019 (the Act).

The directions sought

[3]The directions sought are that:

(a)distribution of the trust funds is limited to the three recipients;

(b)distribution of the trust fund may be made to three new trusts, one for each of the three beneficiaries;

(c)costs be charged to the Trust; and

(d)any further order be made as this Court finds necessary.

The constitution of the Trust and its operation

[4] Mrs Patient is a solicitor practising in Christchurch. The Trust was settled by the late James Hobson Smedley during his lifetime. Mr Smedley was a client of another Christchurch solicitor, William Mather, with whom Mrs Patient worked.

[5] In 2004, Mr Smedley formed a trust (the 2004 Trust) — it not being the trust in respect of this proceeding. The 2004 Trust was intended to provide funding for medical research to be undertaken by students of the Christchurch Clinical School of Medicine (Clinical School), beautification projects for the Christchurch Botanic

Gardens (Gardens) and scholarships for students of the Faculty of Fine Arts at the University of Canterbury (Fine Arts Faculty). The trustees were Mr Mather and Karen Scott, a friend of Mr Smedley.

[6] The 2004 Trust was to be funded by a gift in Mr Smedley’s Will. It would not have operated until his death.

[7]Mr Mather retired in 2010. Mr Smedley became a client of Mrs Patient.

[8] Mrs Patient explains that Mr Smedley instructed her to form a new trust. The new trust was to be identical to the 2004 Trust except the trustees were to be Ms Scott and Mrs Patient. Mr Smedley did not…

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.

Continue reading Patient

Details

AGLC: Patient [2023] NZHC 2924
Case: [2023] NZHC 2924
Decision Date: 18 October 2023

CaseChat Overview and Summary

This case involves an application for directions by Tracey Ann Patient, the trustee of the James H Smedley Charitable Trust, to the High Court of New Zealand, Christchurch Registry. The Trust, established by a Deed dated 15 June 2009, aims to avoid unnecessary costs and practical issues caused by an overly complex structure that creates uncertainty about the precise scope of the trustee’s powers. The potential beneficiaries of the Trust funds, the University of Otago, the University of Canterbury, and the Christchurch City Council, consent to the orders sought by the applicant.

The primary legal issue is whether the trustee can distribute the Trust funds in a manner that deviates from the detailed provisions outlined in the Deed, given that such distribution would better achieve the charitable intent of the settlor. The applicant argues that the detailed provisions in the Deed are not binding and that the broad charitable purposes stated in the Deed allow for the proposed distribution. The court must determine if the directions sought by the applicant are within the powers conferred by the Deed and if the applicant is entitled to seek such directions under s 133 of the Trusts Act 2019.

The court found that while the Deed contains conflicts and errors in cross-referencing, the broad charitable purposes outlined in clause 3 of the Deed must be accorded paramountcy. Clause 3 explicitly grants the trustee broad powers to distribute income and capital for any charitable purpose. The court concluded that the directions sought by the applicant align with the charitable intent of the settlor and are appropriate. Therefore, the court granted the directions sought, allowing the trustee to distribute the Trust funds to the three beneficiaries in the specified proportions, with the funds to be held and applied by the new trustees for the purposes set out in clause 3 of the Deed. The costs of the application were ordered to be charged to the Trust funds.

Orders