Tikipunga Protestant Children's Home (Incorporated)

[2018] NZHC 2794

IN THE HIGH COURT OF NEW ZEALAND WHANGAREI REGISTRY

I TE KŌTI MATUA O AOTEAROA WHANGĀREI-TERENGA-PARĀOA ROHE

CIV-2018-488-97

[2018] NZHC 2794

IN THE MATTER	of the Charitable Trusts Act 1957
AND
IN THE MATTER	of an application by the TIKIPUNGA PROTESTANT CHILDREN'S HOME (INCORPORATED)
Applicant

On the papers
Counsel:	S Davies-Colley for the Applicant
Judgment:	30 October 2018

JUDGMENT OF TOOGOOD J

This judgment was delivered by me on 30 October 2018 at 11.00 am Pursuant to Rule 11.5 High Court Rules

Registrar/Deputy Registrar

TIKIPUNGA PROTESTANT CHILDREN'S HOME (INCORPORATED) [2018] NZHC 2794 [30 October 2018]

[1]    The Tikipunga Protestant Children's Home (Incorporated) is an incorporated charitable trust established originally in 1925. A replacement Deed of Trust was executed on 13 March 1936. Under the name "North Auckland Protestant Orphanage", the purpose of the Trust as varied was declared to be "for the benefit of orphans and destitute children who must be brought up in the Protestant Faith". With donations from the original settlors, Mr and Mrs Frederick Seymour Potter, an orphanage (the Home) was built on the 11-hectare property owned by the Trust, and operated in accordance with the terms of the Trust Deed. Changes in the Trust’s circumstances and the needs of the beneficial class led to variations to the terms of the Trust being approved by the Court, under s 53(3)(c) of the Charitable Trusts Act 1957, in a judgment delivered by Lang J on 19 November 2012.1

[2]    The trustees now apply by way of originating application for approval of a Scheme further varying the provisions of the Trust Deed to meet further changes in circumstances. The application is unopposed and the Attorney-General has reported under s 35 of the Charitable Trusts Act 1957 that the Scheme could be approved by the Court.

[3]The relevant grounds for the application are these:

(a)The Board is required by the current terms of the Trust Deed to "use the Trust's assets for the benefit of children in need of care or assistance, providing short-term and long-term care as needed". Historically, this was to run an orphanage, but in recent times the Home was used for emergency accommodation for agencies such as Child Youth and Family (CYF, now Oranga Tamariki).

(b)The Board is currently able to dispose of its land assets except for the Home and curtilage area traditionally used as the orphanage.

(c)The Board is in a position where it owns valuable land assets but in 2012, CYF represented that it would not use the type of privately run accommodation anticipated by the Trust, making that purpose

1      Re Tikipunga Protestant Children's Home [2012] NZHC 3078.

impossible. Even if it were feasible, the income from the land does not cover the costs of running a modern emergency accommodation facility. Running such a facility would rapidly deplete the Trust’s assets. For those reasons, it is impossible, impracticable and inexpedient for the Trust to provide short or long-term care by using the home and curtilage to provide primary care.

(d)Allowing the Board to use the Trust's assets "for the benefit of children from disadvantaged backgrounds" allows the Board to achieve the same or similar charitable purpose. The proposed purpose is charitable in that it meets a need or deprivation in society.

(e)As a logical extension to the requested amendment to the Board's purpose, the Board seeks orders amending its powers to enable it to sell the Home and curtilage area.

(f)The proposed amendments would allow distribution of the surplus assets to:

(i)projects which will benefit the charitable purpose of the Trust; and

(ii)other deserving bodies which are in a financial position to continue the same charitable purposes to the Board in perpetuity.

[4]    As Mr Davies-Colley's memorandum and the Attorney-General's report indicate, Lang J's decision in 2012 approved the sale of surplus land as an appropriate means of enabling the trustees to realise capital with which to maintain and improve the existing dwelling, but did not go so far as to approve the sale of the existing dwelling and curtilage. The variations to the Trust Deed approved by the Court in 2012 specifically included the provision of "short and long-term care" for children in need of care and assistance. Lang J considered that it was a core requirement of the 1936 deed that the trustees would devote a particular property to the Trust's purposes

and that granting a power of sale which included disposal of the dwelling would deprive the Trust of the ability to provide some form of accommodation for qualifying children.

[5]    The present application, however, seeks an order to vary the purpose of the Trust to one of providing "for the benefit of children from disadvantaged backgrounds" and removing the accommodation requirement.

[6]    Mr Davies-Colley's submissions explain the trustees' application in these terms:

(a)The proposed variation is a commonly used charitable purpose.2 The proposed purpose accords as closely as reasonably possible in the new circumstances to the essential elements of the current purpose.3 The original Trust Deed benefited orphaned or destitute children. The amendment takes into account the modernisation of state care of disadvantaged children and allows the Trust to provide charitable benefits to those children without having to actually provide primary accommodation itself. That accords with the requirement that a charitable purpose must meet some need or deprivation. It will allow for projects such as building playgrounds in deprived or disadvantaged areas.4

(b)The Board believes that the purpose of the Trust should be amended for the following reasons, including those contained in the affidavit sworn by a current trustee, Mr DD Reyburn:

(i)There is no longer scope for a private "orphanage"-type home as such care arrangements are now carefully managed and directed by various government departments.

2      Gallagher v Attorney General HC Napier 1990, CP7/90, Neazor J.

3      Re: Merton Trust CIV-2006-404-003327 [6 September 2006] at [30].

4      Canterbury Development Corp & Ors v Charities Commission HC, WN, CIV-2009-485-2133 [18 March 2010] at [41]-[43].

(ii)Oranga Tamariki has indicated that it will no longer regularly use or support the Home, removing the main source of referrals of children needing care and assistance and of external funding.

(iii)As at July 2017, the Trust had cash assets of approximately

$316,000 and had conditional agreements for the sale of portions of the Trust’s property for significant sums. Without the ability to realise the Trust’s current real property assets to provide cash for perpetual sustainable charitable purposes, the Board fears that operating within the constraints of the current powers would diminish the Trust’s assets over time.

(iv)The Trust wishes to apply the funds released from the sale of the property to charitable projects for children in disadvantaged areas of Northland, including Tikipunga.

(v)Another longstanding charitable trust, Te Ora Hou Northland Incorporated, wishes to purchase the building previously used by the Trust as a home and use it for a separate charitable purpose benefiting children, namely education.

(c)The trustees' proposal is to subdivide the property and sell three sections as follows:

(i)Section A, which includes the Home and curtilage, is to be sold to Te Ora Hou;

(ii)Section B is to be sold to a development company for the sum of $4.4 million; and

(iii)Section C is to be transferred to the Whangarei District Council for the sum of $1, conditionally upon the Council establishing and maintaining a children's playground on the site. The area would be named "Potter Park" and an appropriate plaque

erected to recognise the family who originally settled the Trust. The Board would provide the Council with a sum of $100,000 from the cash assets received upon the sale of the other properties to establish the playground for children living in the suburb of Tikipunga in Whangarei, which is said to have a relatively high proportion of children from disadvantaged backgrounds. The establishment and naming of that park would maintain public recognition of the generosity of the original settlors.

[7]    I am satisfied that the powers available to the Court under Part 3 of the Act enable the Court to approve the Scheme, without opposition, as being consistent with the overall purposes for which the Trust was established, and to meet changes in circumstances which have occurred since these purposes were last addressed by the Court in 2012.

[8]I am satisfied under s 56(1) of the Act that:

(a)the Scheme is a proper one;

(b)it should carry out the desired purpose or proposal and is not contrary to law or public policy or good morals;

(c)the Scheme can be approved under Part 3 of the Act;

(d)every proposed purpose is charitable within the meaning of that part of the Act; and

(e)the requirements of that part of the Act have been complied with.

[9]    I approve the Scheme accordingly and make the following orders as sought in the draft Orders filed:

(a)The purpose of the applicant is amended by replacing the requirement that the Board "use the Trust's assets for the benefit of children in need

of care or assistance, providing short-term and long-term care as needed" with the amended purpose to "use the Trust's assets for the benefit of children from disadvantaged backgrounds".

(b)The powers of the Board are amended to allow all Trust property to be sold, including the house and curtilage area, to realise cash assets to invest and/or apply in accordance with the amended purpose.

(c)All reasonable costs and expenses of and incidental to the preparation, perusal and advertising of the Scheme and submission of it to the Attorney-General and to this Honourable Court (including a contribution of $750 to the costs of the Attorney-General) are to be paid out of the trust fund.

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

Toogood J