Tawhiri Trust Board

[2025] NZHC 390

IN THE HIGH COURT OF NEW ZEALAND NELSON REGISTRY

I TE KŌTI MATUA O AOTEAROA WHAKATŪ ROHE

CIV-2024-442-000028

[2025] NZHC 390

IN THE MATTER

of the Charitable Trusts Act 1957

AND

IN THE MATTER

of an application by THE TAWHIRI TRUST BOARD, a duly incorporated charitable trust board having its registered office at C/O Glasgow Harley, Solicitors, 43 Halifax

Street, Nelson, for an order consenting to the sale of trust property

Hearing:

18 February 2025 (via AVL/VMR)

Counsel:

J B O’Meagher for Applicant

S M Kinsler and C E Sinclair for Attorney-General

Judgment:

5 March 2025

JUDGMENT OF LA HOOD J

Introduction

[1]                 This is an application by the Tawhiri Trust Board for an order consenting to the sale of trust property under s 21(1)(b) of the Charitable Trusts Act 1957 (the Act).

[2]                 I have been greatly assisted  by  the  report  of  the Attorney-General  dated 10 April 2024 confirming that the Attorney-General is satisfied that the proposed sale of the trust property is proper and can be approved.

THE TAWHIRI TRUST BOARD [2025] NZHC 390 [5 March 2025]

Background

[3]                 The Tawhiri is a classic yacht built in 1933. She was raced in Nelson and garnered a degree of attention for winning two races from Wellington to Lyttleton. By 2006, however, she was effectively abandoned at anchor in Oamaru Harbour.

[4]                 A Nelson businessman, Mr Sturgess, purchased the Tawhiri in 2006 and returned her to Nelson. In 2008, the Tawhiri Trust (the Trust) was settled to fund the restoration of the Tawhiri, with the intent that the yacht be operated for the benefit of “the Sailing Youth of Nelson/Tasman”.

[5]                 The Trust initially leased the Tawhiri from Mr Sturgess’ company until it became apparent that the Trust would require legal title to the yacht in order to apply for funding. The Tawhiri was accordingly gifted to the Trust in 2012.

[6]                 The Trust struggled to secure funding for the restoration of the Tawhiri, which at the time was estimated to cost over $200,000.1 The yacht was in storage on council- owned land at Port Nelson where, despite being under cover, it was deteriorating rapidly. The trustees have explained that if the Tawhiri is to remain the property of the Trust, “its only future is to fall into total ruin”.2

[7]                 The Trust was approached by Mr Markham, whose family at one point owned the Tawhiri. In late 2022, with the consent of the Trust, Mr Markham funded and arranged for the Tawhiri to be removed and shipped from the Nelson Marina to covered storage in Auckland. This was completed in order to prevent further deterioration and as the Marina could no longer provide for her cost-free storage.3

[8]                 In 2023, Mr Markham set up the  Historic Wooden  Boat  Charitable Trust (the HWB Trust), incorporated it as a charitable trust board with the Companies Office and registered it for charitable status with Charities Services.4

1      It is now estimated to cost over $300,000.

2 Memorandum of Counsel for the Applicant (in relation to originating application for consent to sale of trust property) at [6].

3      Joshua Andrew Markham states at [12] of his draft affidavit, that to date, he has spent approximately $30,000 in legal and accounting fees, cover and materials for stabilisation, transportation and storage fees on the vessel.

4      Incorporation Number 50175712, date of incorporation: 18 August 2023.

[9]The purposes of the HWB Trust as stated in the Trust Deed are:

(a)to promote public interest and education in aspects of the maritime history of New Zealand including the design and construction using traditional boat building techniques and the use of historic wooden vessels of all descriptions;

(b)the preservation, restoration, conservation, purchase, acquisition and maintenance of examples of historic wooden vessels of all descriptions built in New Zealand;

(c)to make available historic wooden vessels for the benefit of the general public and the youth of New Zealand interested in maritime history of New Zealand with such vessels to be made available for viewing and for sailings when and where suitable;

(d)to arrange, organise and promote educational and social opportunities to acquaint the general public and youth of New Zealand interested in maritime history of New Zealand with the heritage, preservation and use of historic wooden vessels, and

(e)to co-operate with other entities to better promote and achieve the aims of the Trust.

Application before the Court

[10]              Given the difficulties facing the Trust, the trustees apply for the Court’s consent to sell the Tawhiri to the HWB Trust, pursuant to s 21(1)(b). Section 21(1)(b) of the Act provides:

21       Powers in respect of property

(1) Without restricting the powers that  are or may be conferred on any  board by or under the Trusts Act 2019 or this Act or any other Act or otherwise howsoever, it is hereby declared that any board may –

…

(b) notwithstanding any trusts that may affect its property, sell or exchange any part of its property for any purpose upon such terms as it deems expedient:

provided that no property subject to any trust shall be sold or exchanged in exercise of the power conferred by this paragraph without the consent of the court in any case where it is of the essence of the trust that the particular property should be used for the purpose of the trust:

[11]              The Court’s consent is necessary because it is the “essence of the trust” that the yacht be used for the purposes of the Trust. The Trust’s “essence” is to facilitate the restoration of the yacht for the benefit of the sailing youth of the Nelson and Tasman region. Once the yacht has been disposed of for restoration, the Trust ceases to have a reason to exist.5

Comment

[12]              The approval of a sale under s 21 of the Act where the effect of the sale is likely to bring the Trust to an end is rare, but has been  approved in  a similar situation in Re Nelson Historic Theatre Trust Board.6 In that case consent was sought for the transfer of that trust’s core property, the Nelson Theatre Royal, to the Nelson City Council.

[13]              In the absence of an express wind up clause in the trust’s founding document, a charitable trust once created, cannot be terminated or wound up.7 Usually the trustees of a charitable trust cannot terminate an existing charitable trust; rather, they have a duty to apply for a scheme to vary the trust if the purposes have become impossible to carry out or the administration of the trust has become difficult. Even in cases where the trust deed provides for the Board to make an application for winding up, the Board must still satisfy the Court that variation of the trust under s 32 of the Act is not the more appropriate course.8

5      This has been acknowledged by Douglas William McKee at [17] of his affidavit.

6      Re Nelson Historic Theatre Trust Board [2014] NZHC 987.

7      See National Anti-Vivisection Society v Inland Revenue Commissioners [1948] AC 31 (HL) at 74: “A charity once established cannot die, though its nature may be changed.”

8      See Society of St Vincent de Paul v Wanganui Ozanam Villa Trust [2007] NZAR 77 (HC) at [47]– [48].

[14]              However, in Re Nelson Historic Theatre Trust Board, the Court was satisfied that a variation of the Trust’s purposes (without selling the theatre) would not assist the Board to continue, given the very specific objects of the Trust which were centred on the preservation and maintenance of a particular building, and the Board’s problems with obtaining sufficient ongoing funding.9 Given the Board’s financial position, the only alternative to the proposed sale would have been an application for winding up via liquidation under s 25 of the Act. Sale by a liquidator would have put the theatre at risk of a sale to a private owner who may not have wished to maintain the building as a working theatre. In these circumstances, the Court agreed that the sale of the Theatre Royal to the Council would best honour the spirit and intention of the Trust.10

[15]              Similarly here, the Trust does not have the resources to preserve or restore the Tawhiri. It has also provided evidence of several unsuccessful attempts to secure public or charitable funding for the restoration:

(a)In 2011 the trustees sought funding from the Canterbury Community Trust. In 2012, after it became apparent to the trustees that the Trust would need legal title in order to apply for funding, Mr Sturgess’ company gifted the Tawhiri to the Trust together with a donation of her original cost.

(b)Having decided to seek further funding following discussions by the trustees in September 2012, the Trust engaged a professional fundraiser to assist with preparing funding applications but none of these applications were successful. In addition to general economic conditions, Mr McKee, one of the Trust’s trustees, explains that the consequences of the Christchurch earthquake were such that charitable funding was very difficult to obtain.11 Since then, the trustees have not made any further applications as it was believed it was unlikely they would gain funding for a project to restore a yacht despite its charitable

9      Re Nelson Historic Theatre Trust Board, above n 6, at [18]–[19].

10 At [23].

11 Affidavit of Douglas William McKee at [9].

purpose. The trustees remain of the view that it is unlikely any funds will become available in the current environment.12

[16]              Despite over a decade having passed since the last application for funding, the Attorney-General is satisfied that the proposed sale of the Tawhiri to the HWB Trust is appropriate on the basis that the Trust in its current form is not viable due to ongoing insufficient capital with no ability for the trustees to safely store the Tawhiri due to cost pressures. I am also satisfied this is the case. The Tawhiri would remain a wasting asset without restoration, which will require significant funds.

[17]              The HWB Trust is an incorporated charitable trust board and is now registered with Charities Services. The purposes of the HWB Trust include to promote public interest and education in aspects of the maritime history of New Zealand; and to arrange, organise and promote educational and social opportunities to acquaint the public and youth interested in maritime history in New Zealand with the heritage preservation and use of historic wooden vessels.

[18]              Mr McKee notes given Mr Markham’s willingness to establish the HWB Trust, a charitable trust with the particular objectives and purposes set out at [9], the Trust considers the Tawhiri will continue to be used for a purpose to benefit New Zealanders (and in particular New Zealand youth).13

[19]              The trustees of the HWB Trust intend to keep her in Auckland to be properly restored, maintained, enjoyed, and so it can participate in club racing. This is a shift away from the Trust’s focus on the Nelson/Tasman region. In saying this, the HWB Trust has aligned its purpose with that of the Trust (as far as possible given locational differences) in making the restoration and use of Tawhiri available to the general public and youth of New Zealand. Mr Markham states the HWB Trust intends to remain connected to the Nelson Yacht Club and Tasman Bay Cruising Club to make the Tawhiri available annually for youth selected by these clubs.

12 Affidavit of Douglas William McKee at [11].

13 Affidavit of Douglas William McKee at [15].

[20]              Mr Markham also notes that another way they intend for the HWB Trust and Tawhiri to maintain a connection with the sailing community in New Zealand is via a website and social media account, to allow the Trust and public to remain connected to the restoration process.14

[21]              I consider that the general objectives of the HWB Trust, alongside the intent expressed by the HWB Trust to remain connected to the Nelson/Tasman Bay area (and make the Tawhiri available annually for the youth selected by these clubs) accords closely to the terms of the original trust and thereby the “essence” of the Trust. I accordingly agree with the applicant’s position that in the circumstances, sale of the trust property appears to be the best way of ensuring the objects of the Trust can be carried out in future.

Orders

[22]              I am satisfied that the proposed sale of the Tawhiri to the HWB Trust is proper and should be approved by the Court.

[23]I make an order approving the proposed sale accordingly.

[24]              By consent, I order the applicant to meet the Attorney-General’s costs for preparing her report in the sum of $750.00.

La Hood J

Solicitors:

Glasgow Harley, Nelson for Applicant

Meredith Connell, Wellington for Attorney-General

14 Affidavit of Joshua Andrew Markham at [21].