THE JUBILEE CRIPPLED CHILDREN FOUNDATION TRUST BOARD

[2024] NZHC 3969

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE

CIV-2024-485-535

[2024] NZHC 3969

IN THE MATTER

of the Jubilee Crippled Children Foundation

UNDER

Part 19 of the High Court Rules

AND UNDER

Section 130 of the Trusts Act 2019 and the inherent jurisdiction of the High Court to supervise the administration of trusts

BETWEEN

THE JUBILEE CRIPPLED CHILDREN FOUNDATION TRUST BOARD

Applicants

On the Papers

Counsel:

K H Lawrence for Applicants

P J Gunn and I M C A McGlone for Attorney-General

Judgment:

20 December 2024

JUDGMENT OF McQUEEN J

[1]    The trustees of the  Jubilee  Crippled  Children  Foundation  Trust  Board  (the Trustees) apply to vary the Trust Board’s trust deed dated 11 November 1985 (the Trust Deed).

[2]    The variations sought by the Trustees include the insertion of new clauses into the Trust Deed and amending the wording of existing clauses to provide clarity, modernise phrasing, and ensure compliance with the Trusts Act 2019. The Trust Deed

THE JUBILEE CRIPPLED CHILDREN FOUNDATION TRUST BOARD [2024] NZHC 3969

[20 December 2024]

does not contain a power of variation, so an application to this Court is required to address these matters.

[3]    The Trustees contend that the proposed variations may be made under s 130 of the Trusts Act and/or the inherent jurisdiction of the Court but propose in the alternative that the application be treated as an application for a scheme under s 33 of the Charitable Trusts Act 1957. The application is supported by the affidavit from Nigel Fletcher, one of the Trustees, on behalf of the Trust Board.

[4]    The Attorney-General, as protector of charities, has been served with the application. The Attorney-General considers that approval of the variations should be sought under s 33 of the Charitable Trusts Act as s 33 applies to administrative variations of charitable trusts and is broader in scope than s 130 of the Trusts Act.

[5]    No issue is taken by the Attorney-General with whether the variations should be approved, only the legal basis on which the Court should do so. Both parties have advised they will abide the Court’s decision.

Background

[6]    The Jubilee Crippled Children Foundation Trust (the Trust) was settled by  Mr Lionel Brierly by deed dated 11 November 1985. The Trust comprised initial assets, being a substantial share portfolio, and received further assets on Mr Brierly’s death in 2003. The Trustees have incorporated as a Board and now administer Trust funds totalling approximately $37 million.

[7]    The purpose of the Trust is to benefit “physically handicapped” people (using the outdated language adopted when the Trust was settled) living within the greater Auckland area. The Trust has historically had strong links with CCS Disability Action Auckland Incorporated (CCS Auckland) and it operates within a similar geographical area. CCS Auckland held the power to appoint and remove trustees of the Trust until August 2023, when this Court vested that power in the trustees of the Trust from time-to-time.1

1      Re Jubilee Crippled Children Foundation Trust Board [2023] NZHC 2318.

[8]    The Trust Deed is now nearly 40 years old. The Trustees are concerned to ensure that the Trust is fit for purpose in the future, that it is updated in light of the enactment of the Trusts Act and modern drafting practices, and that it uses modern language appropriate to its purposes. As the Trust Deed does not contain a variation power, the Trustees have signed a deed of variation dated 16 May 2024 which is conditional on approval from the High Court (the Deed of Variation). The Deed of Variation will not take effect unless or until the approval of the High Court is granted under s 130 of the Trusts Act and/or under the Court’s inherent jurisdiction and/or under any other Act or rule of law.

[9]    The Deed of Variation proposes to make three main categories of amendments to the Trust Deed, being:

(a)amendments and updates to trustee powers;

(b)amending wording in trustee liability clauses to reflect the enactment of the Trusts Act (and in particular the restrictions on trustee liability exclusion and indemnity clauses contained in the Trusts Act); and

(c)minor administrative and wording changes (including removing potentially offensive references to physical disabilities, adding headings, referring to modern legislation, referring to CCS Auckland rather than its predecessor organisation, and directly stating the geographical area within which the Trust operates).

[10]   These changes have been shown clearly in the “track changes” version of the Trust Deed annexed to the affidavit of Mr Fletcher. Mr Fletcher’s affidavit addresses the reasons for the most significant variations sought in the application.

[11]The significant variations to trustee powers relate to:

(a)allowing the Trustees to pay themselves an externally benchmarked honorarium so that the Trust can continue to attract high quality trustees;

(b)modernising the Trustees’ investment powers so that despite the existing wide investment powers in the current Trust Deed, the Trustees’ duties and obligations are clarified and they are required to invest in accordance with a statement of investment policies and objectives not in the Trust Deed, which is to be reviewed annually. Further, the Trustees’ investment powers would be extended to allow “impact investment” which may not be prudent investment in the usual sense;

(c)modernising the trustee appointment and retirement processes;

(d)rules about Trustees acting while conflicted, to promote more robust decision-making; and

(e)giving the Trustees a power of variation, limited to management and administration only, to assist the trustees to respond to future social and legislative changes without needing to apply to the Court.

[12]   Amendments are required to reflect the enactment of the Trusts Act, particularly the restrictions on trustee liability exclusion and indemnity clauses. The variations will clarify that a liability exclusion clause does not extend to losses arising from dishonesty, wilful misconduct or gross negligence and that liability exclusion and indemnity clauses must be specifically drawn to the attention of the signatory trustees (now the settlor has died).

[13]   As noted above, amendments are also sought to change the Trust name and various other references in the Trust Deed to remove potentially offensive references to physical disabilities, and to clarify the geographical area in which the Trust operates, namely Auckland, Northland and the Eastern Bay of Plenty (the wording amendments).

[14]   On 27 August 2024, this Court granted leave to commence the proceeding by way of originating application and ordered service on the Attorney-General.

[15]   The Court also directed the Trustees to advertise the application to vary the Trust Deed on the Trust’s website for 28 days, in terms as proposed in the memorandum of counsel for the Trustees dated 13 August 2024. These terms included setting out a summary of the proposed changes and making a copy of the existing Trust Deed with “tracked changes being immediately accessible through a hyperlink”. In addition, the advertisement advised that anyone who wished to become involved in the application to the court could request copies of the court documents from the lawyers for the Trustees.

[16]   Counsel for the Trustees, Ms Lawrence, has confirmed by way of memorandum that the application was advertised accordingly, and that no requests for the variation documents have been made nor other enquiries received.

The Law

[17]Section 130 of the Trusts Act provides that:

130 Power of court to vary or extend trustee’s powers in relation to property

(1)The court may vary or extend the powers of the trustees of a trust if—

(a)   the court consider that the variation or extension is necessary or desirable for the proper management or administration of the trust property; and

(b)   the variation or extension does not alter a beneficiary’s interest under the trust; and

(c)   the variation or extension does not involve a power to distribute trust property to a beneficiary.

(2)An application for an order may be made by—

(a)   a trustee of the trust; or

(b)   a beneficiary of the trust.

[18]   That provision superseded the former s 64 of the Trustees Act 1956, which provided that:

where any transaction is expedient in the management or administration of any property vested in a trustee or would be in the best interests of the persons beneficially interested under the trust, and where it would be inexpedient, difficult or impracticable to effect that transaction without the assistance of the court, the court may by order confer upon the trustee the necessary power to effect that transaction.

[19]   Applications to vary the administration of a charitable trust may be brought under pt 3 of the Charitable Trusts Act, specifically s 33 of the Charitable Trusts Act, which provides:

33 Extension of powers or alteration of mode of administration of trust

In any case where it is made to appear that any property or income is given or held upon trust, or is to be applied, for any charitable purpose, and the administration of the property or income or the carrying out of the trust could be facilitated by extending or varying the powers of the trustees or by prescribing or varying the mode of administering the trust, the powers of the trustees may be extended or varied, and the mode of administering the trust may be prescribed or varied, in the manner and subject to the provisions hereafter contained in this Part:

provided that nothing in this section shall restrict the powers that are or may be conferred on the court or the trustees  by or  under the  Trusts  Act 2019 or any other Act or by law.

[20]   Section 34 of the Charitable Trusts Act provides that where the trustees seek trust property or income to be dealt with under pt 3 of the Charitable Trusts Act, the trustees may prepare a scheme for the disposition of property or income, for extending or varying the powers of the trustees or for prescribing or varying the mode of administering the trust. Every such scheme is to be submitted to the Attorney-General, and after the Attorney-General has delivered their report on the scheme, the trustees may apply for the Court to approve the scheme.2 However, before any such application is considered by the Court, s 36 of the Charitable Trust Act requires that notice must be given in the Gazette, and at least three times with an interval of not less than six days between, in one newspaper circulating in the judicial district of the Court where the application has been filed.

[21]   Section 56(1)(a) of the Charitable Trusts Act provides that the Court shall not approve a scheme under Part 3 unless it is satisfied:

that the scheme is a proper one, and should carry out the desired purpose or proposal, and is not contrary to law or public policy or good morals; that the scheme can be approved under the Part of the Act under which the approval is sought, that every proposed purpose is charitable within the meaning of that Part of the Act and can be carried out, and that the requirements of that Part of the Act have been complied with in respect of the scheme.

2      Charitable Trusts Act 1957, s 35.

[22]   Once the scheme is approved or refused by the Court, notice of this shall be published by the Registrar of the Court in the Gazette as soon as practicable.3

[23]Section 55 of the Charitable Trusts Act provides:

Either the court of the Attorney-General, when approving a scheme, may waive any non-compliance with the procedural requirements of this Act in relation to the scheme.

The parties’ positions

Attorney-General’s report

[24]   The Attorney-General’s report acknowledges there is a precedent for variation of a charitable trust under s 130 of the Trusts Act, namely the Trustees’ earlier application in 2023 to vary the Trust to change the manner in which trustees are appointed.4 The Attorney-General says that in that case it was appropriate for the variation to proceed under s 130, noting Grice J could see no reason not to proceed in that way, particularly given the public advertising of the variation that had taken place.

[25]   The Attorney-General acknowledges there are limited legislative aids and case law on the scope of s 130, but notes Isac J’s conclusions in Re Setter that s 130 had broadened the Court’s jurisdiction to approve variations for administrative and management purposes and lowered the threshold for intervention from varying a trustee’s powers where it was “expedient” to where it was “necessary or desirable” for the proper management or administration of the trust property.5

[26]   The Attorney-General also notes the Court retains inherent jurisdiction in relation to trusts6 and refers again to Re Setter where the Judge stated inherent jurisdiction should be looked to in appropriate cases to “fill any gaps left by Parliament”.7 The Attorney-General says the situations where the inherent jurisdiction has been used to amend charitable trusts have been where the route under s 33 of the Charitable Trusts Act is not practicable. The examples she cites include Solomon-Rehe

3      Section 54.

4      Re Jubilee Crippled Children Foundation Trust Board as above, n 1.

5      Re Setter (as trustees of Central Hawke’s Bay Consumers Power Trust) [2021] NZHC 1603.

6      Trusts Act 2019, s 8; Clarke v Karaitiana [2011] NZCA 154, [2011] NZAR 370 at [38].

7      At [36(b)].

v Hokotehi Moriori Trust, where orders could not be made under s 64 of the Trustee Act 1956 and urgency meant it was not practicable to require a scheme to be advanced under s 33, and Re Barham where there was no suggestion that orders sought to be amended under s 133 and the Court’s inherent jurisdiction could have been made under s 33.8 The Attorney-General also  refers  to  Public  Trust  v  Cancer  Society  of  New Zealand where, because of time and cost, the use of inherent jurisdiction was considered appropriate to rectify the incorrect naming of a beneficiary and to delete a clause requiring trustees to accumulate 20 per cent of the trust’s income as capital.9

[27]   The Attorney-General’s submission is that the starting point for considering the appropriate legal basis for the Court to approve variations to charitable trusts must be s 33 of the Charitable Trusts Act. This is because it is the statutory route Parliament has prescribed for administrative variations to charitable trusts. The Attorney-General says given the only further requirement under s 33 is advertising the variation in the Gazette and newspaper, it does not seem varying the Trust Deed under s 33 would cause undue delay or expense, as submitted by the Trustees. The Attorney-General submits that all the variations proposed are of the kind mandated by s 33 and meet the only threshold under s 33, that the variation proposed would facilitate the carrying out of the Trust.

[28]   The Attorney-General contends that some of the proposed variations would only fit within s 130 of the Trusts Act if the provision is read in broad terms and other of the variations sought would not fit within s 130 even when the provision is read broadly.  She considers it is not necessary for the Court to resort to unduly straining  s 130 nor to exercise its inherent jurisdiction where the intended route of variation under s 33 offers a simpler coherent resolution. Rather, the Attorney-General says the documents filed by the Trustees can be treated as a scheme, and subject to further advertisement,10 the Attorney-General is satisfied pursuant to ss 35 and 56(1)(a) of the Charitable Trusts Act they can be approved by the Court.

8      Solomon-Rehe v Hokotehi Moriori Trust [2015] NZHC 46; and Re Barham [2023] NZHC 2760.

9      Public Trust v Cancer Society of New Zealand [2020] NZHC 615. The Attorney-General was not party to the application in this case.

10     As required under s 36 of the Charitable Trusts Act.

Trustees’ submissions

[29]   Ms Lawrence, counsel for the Trustees, submits that given s 130 of the Trusts Act was intended to be broader than s 64 of the Trustees Act 1956, and that s 64 permitted textual variations to trust deeds as recognised in Banicevich v Gunson,11 the wording amendments that the Attorney-General has identified as possibly not being available under the Trusts Act do in fact fall within the scope of s 130. Ms Lawrence contends that while the wording amendments may not explicitly relate to trustee powers, they do relate to the efficient management and administration of the trust by modernising the trust deed and making it easier to use.

[30]   Ms Lawrence also submits that if the Court considers the wording amendments do not fall within s 130, it can exercise its inherent jurisdiction to allow them. She notes the findings in Clarke v Karaitiana that the Court’s inherent jurisdiction allows it to act effectively in respect of matters regulated by statute “so long as it can do so without contravening any statutory provision”.12 She says the alternative would mean that where even minor or ancillary amendments are sought an application would be forced down a more cumbersome path under the Charitable Trusts Act.

[31]   Ms Lawrence says the increased administrative burden and associated cost of preparing a scheme and proceeding under the Charitable Trusts Act 1957 has been recognised by the High Court. She says newspaper advertising is expensive, with advertising three times in the Dominion Post likely to cost more than $1,000. She notes that s 64 of the Trustees Act and the inherent jurisdiction have been used as alternative pathways to proceedings under the Charitable Trusts Act. She refers to Friends of the Auckland Art Gallery Acquisitions Trust v Friends of the Auckland Art Gallery Inc where despite the Attorney-General considering a scheme under the Charitable Trusts Act was more appropriate, the Court accepted that the pathway under former s 64 of the Trustees Act was available.13

11     Banicevich v Gunson [2006] 2 NZLR 11 (CA) at [41].

12     Clarke v Karaitiana above, n 6 at [38].

13     Friends of the Auckland Art Gallery Acquisitions Trust v Friends of the Auckland Art Gallery Inc

[2018] NZHC 1768.

[32]   Ms Lawrence submits it is not correct to say alternative pathways have typically been preferred where the Charitable Trusts Act is not practicable, as suggested in the Attorney-General’s report. She says there is no apparent legal presumption against their being available when so elected and that the simpler and less expensive option of proceeding under s 64 or s 130 has been available historically. She observes that s 3(d) of the Trusts Act provides that one of the Act’s purposes is to make the law of trusts more accessible and s 4(b) requires the Court to have regard to the principle that trusts should be administered in a way that avoids unnecessary cost and complexity. She argues that because of these provisions, creating a presumption in favour of a more complex statute where simpler alternatives are available is inconsistent with the Trusts Act.

[33]   Ms Lawrence also says advertising has already taken place in a modern and effective way on the Trust Board’s website, and that if the Trust Board is to be proceed under the Charitable Trusts Act, the matter will not be able to be determined until the New Year due to the time associated with newspaper and Gazette advertising. She submits this will mean further court appearances and delays and thus further cost, and will also mean the Trust will continue to be saddled with an offensive name that undermines the Trustees’ ability to carry out their charitable purposes.

Analysis

[34]   The issues I must determine are whether the proposed variations to a trust deed, particularly the wording amendments unrelated to trustees’ powers, may be made under s 130, and whether the proposed changes to the Trust Deed should be made under s 130 of the Trusts Act, s 33 of the Charitable Trusts Act, or the Court’s inherent jurisdiction.

[35]   The Jubilee Crippled Children Foundation Trust, as a charitable trust, falls within the scope of both the Charitable Trusts Act and the Trusts Act. The wording of s 33 of the Charitable Trusts Act, in stating that “nothing in the provision shall restrict the powers of the court or trustees under the Trusts Act 2019 or any other Act or by law” makes clear that it is not the only means of varying a charitable trust.

[36]   I do not accept the Attorney-General’s argument that the starting point for variations of a charitable trust is s 33, and that only where this is not practicable should other avenues be pursued. As identified by counsel, on several occasions, charitable trusts have been varied under the predecessor to s 130—s 64 of the Trustees Act—or under the Court’s inherent jurisdiction.14 I also note Grice J’s findings in Re Jubilee Crippled Children Foundation Trust Board that “which route is appropriate or preferable will depend on the facts of each case”.15

[37]   As noted in the Law Commission’s report on the law of trusts, the purpose of s 130 of the Trusts Act was to broaden the ability of the court to make orders amending non-distributive administrative provisions of a trust deed, and to lower the threshold for intervention to where the amendment is necessary for the efficient management of the trust assets.16 There is no indication that s 130 was intended to provide a more limited scope than former s 64.

[38]   However, while textual variations to trust deeds have been made under s 64, these variations concerned trustee powers and were not, as in this case, more cosmetic changes to remove offensive terminology or simplify language.17 The Court of Appeal decision relied on by the Trustees, Banicevich v Gunson, merely stated that the power under s 64 may include a variation of a trust.18

[39]   In Re Setter, Isac J found that s 130 is directed to variations of trustee powers and only administrative management powers may be varied under that provision.19 I concur with that view. The wording amendments proposed by the Trustees cannot be made under s 130.

14  Solomon-Rehe  v  Hokotehi  Moriori  Trust,  above  n  8;  Public  Trust   v  Cancer  Society  of   New Zealand, above n 9; Friends of the Auckland Art Gallery Acquisitions Trust v Friends of the Auckland Art Gallery Inc, above n 13; and MacAlister v Royal New Zealand Foundation of the Blind [2015] NZHC 909.

15 Re Jubilee Crippled Children Foundation Trust Board, above n 1, at [14].

16   Law Commission Review of the Law of Trusts: A Trust Act for New Zealand (NZLC R130, 2013) at [10.22].

17 Philips New Zealand Ltd Retirement Plan v Philips New Zealand Ltd [1997] 1 NZLR 93; and Friends of the Auckland Art Gallery Acquisitions Trust v Friends of the Auckland Art Gallery, above n 13.

18 Banicevich v Gunson, above n 11, at [41].

19 Re Setter, above n 5, at [16].

[40]   In respect of utilising inherent jurisdiction to approve the wording amendments proposed, as referred to by both parties, inherent jurisdiction is utilised to fill any gaps left by Parliament. As I will discuss below, I do not consider there is such a gap warranting the exercise of inherent jurisdiction.

[41]   This leaves s 33 of the Charitable Trusts Act.   As noted by Paterson J in     Re Melanesian Mission Trust Board, for the Court to approve the variations under s 33 it must be satisfied that the administration of the property or the carrying out of the Trust could be ‘facilitated’ by the variation sought.20 This is much broader than the scope of s 130 which is restricted to trustee powers, and I consider that all the proposed variations fit this criterion.

[42]   The Trustees’ main concern with utilising this provision to vary the Trust Deed is the administrative burden and cost associated with preparing a scheme under the Act, particularly the advertising requirements under s 36 of the Act. Although this was not discussed in either the submissions of counsel for the Trustees or the Attorney-General’s report, these requirements may be waived by the Court under s 55 of the Charitable Trusts Act.

[43]   This was first considered in Re Laurie (deceased), where Glazebrook J found the advertising requirements under s 36 could be waived, but not the requirement to lay the scheme before the Attorney-General, as this was not a discretion available only when approving a scheme.21 In Presbyterian Church Property Trustees v Salvation Army, s 55 was again applied to waive advertising requirements in relation to time.22 Most recently in Re Barham, Grice J noted that given the new trust deed had been made publicly available online, there was no useful purpose to be served by advertising the proposed changes in the manner required under the Act.23

20     Re Melanesian Mission Trust Board HC Auckland M1140/98, 24 September 1998.

21     Re Laurie (deceased) HC Auckland M66-IM01, 21 May 2001.

22     Presbyterian Church Property Trustees v Salvation Army HC Wellington CIV-2007-485-317,  19 June 2007.

23     Re Barham, above n 8 at [9].

[44]   As mentioned earlier, the variations proposed in this case have already been advertised on the Trust’s website. Consequently, the purpose served by the advertising requirements, namely, to ensure persons affected by the changes to the trust have an opportunity to respond to and oppose those changes, has already been fulfilled by the website advertisements. Small notices in a local newspaper or in the Gazette, which cannot be said to be a widely read publication, are unlikely to advance this purpose much further. It may be time for Parliament to reconsider these anachronistic advertising requirements.

[45]   I consider the same circumstances that justified a waiver in Presbyterian Church Property Trustees and Re Barham are present in this case, and therefore exercise the Court’s power under s 55 to  waive the advertising requirements  under  s 36. I acknowledge that neither party directly sought this waiver, but consider it addresses the concerns of both parties, in ensuring the correct provision is utilised, and avoiding unnecessary cost and delay for the Trustees.

[46]   Accordingly, in the exercise of the Court’s power under s 33 of the Charitable Trusts Act, I conclude that it is appropriate to vary the Trust Deed in the manner set out in the conditional Deed of Variation.

Orders

[47]I order that:

(a)the proposed variations of the Trust Deed dated 11 November 1985 set out in the Deed of Variation dated 16 May 2024 are approved under  ss 33, 35(2) and 53 of the Charitable Trusts Act 1957;

(b)compliance with the advertising requirements under s 36 of the Charitable Trusts Act 1957 is waived;

(c)the costs of this application be met by the Trust Board; and

(d)the costs of preparing the Attorney-General’s report in the sum of $750 be met by the Trust Board.

McQueen J

Solicitors:

Greg Kelly Trust Law, Wellington for Applicants