Roman Catholic Bishop of the Diocese of Hamilton
[2019] NZHC 1255
•5 June 2019
IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY
I TE KŌTI MATUA O AOTEAROA KIRIKIRIROA ROHE
CIV-2019-419-000117
[2019] NZHC 1255
UNDER Section 64 of the Trustee Act 1956 and Part 18 of the High Court Rules
THE ROMAN CATHOLIC BISHOP OF THE DIOCESE OF HAMILTON, a
corporation sole established under the Roman Catholic Bishops Empowering Act 1997 as Trustee of the PACIFIC FATHERS TRUST
Applicant
Hearing: [On the Papers] Counsel:
B T P Cullen for the Applicant
Judgment:
5 June 2019
JUDGMENT OF EDWARDS J
This judgment was delivered by me on 2019 at am/pm pursuant to r 11.5 of the High Court Rules.
Deputy Registrar
Solicitors: McCaw Lewis, Hamilton
APPLICATION BY THE ROMAN CATHOLIC BISHOP OF THE DIOCESE OF HAMILTON [2019] NZHC 1255 [5 June 2019]
[1] The applicant, the Roman Catholic Bishop of the Diocese of Hamilton, trustee of the Pacific Fathers Trust (Trust), applies for orders under s 64 of the Trustee Act 1956 that would allow the original capital of the Trust to be distributed, and the Trust to be wound up. The applicant also seeks orders that it represent the beneficiaries of the Trust, and that service of the application and all other documents be dispensed with.
The Trust
[2] The Trust was created by Deed of Trust dated 19 June 1967. The settlor was the Lay Apostolate Council of the Parish of St Mary’s Star of Sea at Gisborne. The original capital of the Trust was £3,000. The Roman Catholic Bishop of Hamilton is the sole appointed trustee of the Trust pursuant to a Deed of Retirement of Trustee and Appointment of New Trustee dated 26 April 2018.
[3]The purposes of the Trust are:
(a)To apply the net annual income of the Trust in perpetuity, for or towards, the education in the Solomon Islands, or in New Zealand, or elsewhere, for ordination to the Roman Catholic Priesthood of Roman Catholic youths or men native to the Solomon Islands or such other Islands in the Pacific as may be specified from time to time by the trustee;
(b)In the event the trustee cannot determine an appropriate recipient to which to apply such income, that income may accumulate on trust until an appropriate recipient is found; and
(c)In the event of the failure of the Trust for any reason or reasons whatsoever, or in the event of the impracticability or difficulty or inexpediency from time to time of carrying out the terms of the Trust, the purpose of the Trust becomes, as in the judgment of the trustee, advancing the cause of the religion in the Solomon Islands or such other Pacific Islands as may be specified from time to time by the trustee or in New Zealand or elsewhere.
[4] Accordingly, the beneficiaries of the Trust are Roman Catholic youths or men of the Solomon Islands or such other islands of the Pacific as may be specified by the Trustee, who are or will be studying for ordination to the Roman Catholic Priesthood in the Solomon Islands, Pacific Islands, New Zealand or elsewhere.
[5] In the event of the failure of the Trust, impracticability, difficulty or inexpediency in carrying out the terms of the Trust, the Trustee has a discretion to apply the income of the Trust for such purposes as the Trustee considers will advance the cause of religion in the Solomon Islands or such other islands of the Pacific as may be specified by the Trustee.
[6] There were no distributions of capital or income from the Trust until 19 June 2018 when the Trustee distributed all but the original capital of the Trust by way of a one-off donation to the Pacific Regional Seminary in Suva, Fiji. Only the original capital remains. The applicant has commenced proceedings in this Court which would allow the original capital of the Trust to be distributed to that Seminary, and have the Trust wound up.
Service and representation
[7] Having read the without notice interlocutory application for directions as to service and representation, the affidavit of Bishop Stephen Lowe in support of the application, and the memorandum of counsel in support, I am satisfied that orders under rr 18.7, 18.8 and 18.9 of the High Court Rules are appropriate. Orders in accordance with the application are set out at the end of this judgment.
Substantive orders
[8]The applicant seeks the following substantive orders to be made:
(a)inserting new clauses 5(j) and (h) into the Trust Deed, as follows:
(j) To distribute the original capital of the trust to the Pacific Regional Seminary of St Peter Chanel in Suva, Fiji.
(k) To wind up the trust following distribution of its original capital.
(b)in the alternative, an order authorising the distribution of the Trust Capital to the Pacific Regional Seminary of St Peter Chanel in Suva, Fiji.
[9] The alternative order is sought because counsel acknowledges that there is uncertainty as to the Court’s jurisdiction to make an order winding up a charitable Trust. Counsel referred to Friends of the Auckland Art Gallery Acquisitions Trust v Friends of the Auckland Art Gallery Incorporated.1 In that case, an amendment to the trust deed under s 64 of the Trustees Act, allowing the trust to be terminated was not specifically sought, but it was acknowledged that the other amendments sought would facilitate that end goal. The primary question to be determined in that case was whether the Court should decline the application and require the trustees to prepare a scheme under Part 3 of the Charitable Trusts Act 1957 (CTA) to dispose of the trust’s property for another charitable purpose.
[10] Toogood J summarised the law as it relates to the variation and termination of charitable trusts as follows:
[15] Although the Court has jurisdiction to vary a charitable trust, the general rule is that such a trust cannot be terminated. There are, however, three exceptions to the rule:
(a)Where the trust is set up in such a way that the property is applied for charitable purposes for a limited duration and the trustees are given express powers to terminate.
(b)Where a charity that has the power to expend both income and capital no longer has funds.
(c)Where the objects of the charity are dependent on the existence of a particular institution or premises.
[16] Furthermore, a trust may come to an end if the trust deed allows the trustees to wind up the trust without outside intervention; if the trust is a society incorporated as a board; or if the society and trustees were incorporated on just and equitable grounds.
(citations omitted)
1 Friends of the Auckland Art Gallery Acquisitions Trust v Friends of the Auckland Art Gallery Inc
[2018] NZHC 1768.
[11] Toogood J found that the jurisdiction under s 64 of the Trustee Act allowed the Court to amend a trust deed of a perpetual charitable trust in a manner which is arguably contrary to the perpetual nature of the trust. Although the Court was cognisant of the ultimate objective, being to terminate the trust, it was neither invited nor empowered to sanction that outcome.2 Indeed, it was contemplated that the trustees would subsequently promote a scheme under Part 3 of the CTA or otherwise liquidate under the appropriate provisions of Part 2 of the Act as and when the trustees considered such a course to be appropriate.
[12] On the basis of this case, I am satisfied that there is jurisdiction under s 64 of the Trustee Act to direct the distribution of the capital to the Pacific Regional Seminary of St Peter Chanel in Suva, Fiji. However, I am not currently persuaded that there is jurisdiction to amend the Trust deed under s 64 of the Trustee Act to allow for it to be terminated. Such a direction would circumvent the statutory processes provided for variation and termination of a charitable trust set out in part 3 of the CTA.
[13] Accordingly, the issue I must determine is whether to make an order under s 64 of the Trustee Act authorising the distribution of capital; or require the Trustees to prepare a scheme under Part 3 of the CTA which addresses both distribution and termination.
[14] Although the former approach was followed in Friends of the Auckland Art Gallery Acquisitions Trust, that case has some distinguishing features. The judgment in that case followed a contested hearing in which all interested parties, including the Attorney-General, were present. There was also a two-stage process contemplated in that case where distribution of the capital was sought in the first instance, with the possibility of a scheme to terminate the trust at a later stage to come later.
[15] In this case, the Attorney-General has not been notified, and the service and representation orders I have made above mean that the beneficiaries of the Trust are not separately represented. The determination is made on the papers, without the advantage of full submissions on all issues. Furthermore, the distribution of capital
2 At [37].
and the winding up of the Trust are inextricably linked in this case – one automatically follows the other.
[16] Under Part 3 of the CTA, trustees may prepare a scheme for the Attorney- General3, who can suggest amendments and will prepare a final report.4 Before any application is considered by the Court, notice of the scheme must be published in the Gazette and in a local newspaper.5 Opportunities must be made for any person to oppose the scheme.6 The report is then put before the Court to consider whether to approve it in accordance with Part 5 of the CTA.
[17] Those statutory processes are designed to protect the interests of all those who may be affected by the termination of a perpetual Trust. Given I am not prepared to make an order under s 64 of the Trustee Act amending the Trust deed so as to provide for its termination, it is a process that the Trustees will need to follow in order to bring the Trust to an end in any respect. In the particular circumstances of this case, I consider it appropriate that the distribution of capital also be addressed in any scheme to be prepared in accordance with the CTA, rather than authorised, as an interim step, by an order under s 64 of the Trustee Act.
[18] Accordingly, and for those reasons, I decline to grant the originating application for substantive relief.
Result
[19] The without notice application for orders as to service and representation is granted. I make the following orders:
(a)The applicant is to represent the beneficiaries of the Trust.
(b)Service of this application and all other documents filed in the proceeding by the applicant is dispensed with.
3 Section 34.
4 Section 35.
5 Section 36.
6 Section 37.
[20]The originating application for substantive relief is dismissed.
Edwards J
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