Tilaima v Congretional Christian Church of Samoa (Westmere) Trust Board
[2014] NZHC 835
•28 April 2014
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV2009-404-005844 [2014] NZHC 835
IN THE MATTER the Judicature Act 1908
BETWEEN SEUMANU TILAIMA & ORS Plaintiffs
ANDCONGREGATIONAL CHRISTIAN CHURCH OF SAMOA (WESTMERE) TRUST BOARD
Defendant
Hearing: 28 February 2014
Appearances: E Telle for Plaintiffs
I M Gault and S R Hiebendaal for Defendant
HGP Stokes for Public Trust
Judgment: 28 April 2014
(RESERVED) JUDGMENT (No. 3) OF ANDREWS J [Application to wind up Trust Board]
This judgment is delivered by me on 28 April 2014 at 2pm pursuant to r 11.5 of the High Court Rules.
..................................................... Registrar / Deputy Registrar
Solicitors:
Bell Gully, Auckland
Neilsons, Auckland
SEUMANU TILAIMA & ORS v CONGREGATIONAL CHRISTIAN CHURCH OF SAMOA (WESTMERE) TRUST BOARD [2014] NZHC 835 [28 April 2014]
Introduction
[1] In a judgment delivered on 10 December 2013 (“the December 2013 judgment”), I held that it is just and equitable that the defendant, the Congregational Christian Church of Samoa (Westmere) Trust Board be put into liquidation.1 I did not make a liquidation order in that judgment, but adjourned the proceeding for a further hearing as to the appointment of a liquidator.2
[2] Subsequently, new counsel instructed for the “Sanerivi” group raised issues as to whether the role of the Congregational Christian Church of Samoa (“the Mother Church”) had been adequately addressed, and as to what orders this Court could make as to the distribution of assets, in the event that a winding up order is made.
[3] Accordingly, I am now required to determine:
(a) Whether the Trust Board should be put into liquidation, and if so: (b) Who is to be appointed liquidator.
(c) How are surplus assets to be distributed; and
(d) How costs should be dealt with.
[4] I am also required to consider an oral application for the joinder of additional parties to the proceeding.
Background
[5] The background to the dispute between the two groups of members of the
Congregational Christian Church of Samoa at Westmere (“the Westmere Church”)
was set out in detail in my judgment delivered on 20 December 2010 (“the
1 Tilaima v Congregational Christian Church of Samoa (Westmere) Trust Board [2013] NZHC
3272 at [54].
2 At [56].
December 2010 judgment”), at paragraphs [6] – [22].3 Those paragraphs were repeated in the judgment of 10 December 2013.4 It is not necessary to repeat the background here. I gave a brief summary of the proceedings between the parties in the December 2013 judgment, as follows:5
[2] A schism developed between two groups of the members of the Congregational Christian Church of Samoa at Westmere, (“the Westmere Church”, or “the Church”), after a dispute arose in mid-2006. Proceedings were later issued by each of the two groups, against the other. One group sought a permanent injunction restraining the other from entering and using the Westmere Church in the manner they sought. The other group sought an order to wind up the Trust Board. The proceedings were the subject of a defended hearing before me on 29 and 30 November and 2 December 2010, and my judgment was delivered on 20 December 2010 (“the December 2010 judgment”). At that hearing I had the benefit of hearing from counsel for the Attorney-General, as amicus curiae. The parties were before me again in December 2011, leading to an oral judgment delivered on 13 December 2011 (“the December 2011 judgment”).
[3] As will become evident, the two groups have not resolved their differences. Mr Tuasa's group has now made a fresh application to wind up the Trust Board. Mr Sanerivi's group responds that there are no grounds on which the Court could make the orders sought. It is also contended that, given time, the two groups may yet be able to reconcile.
[4] The two groups were before me for a defended hearing for four days in November 2013. As has been noted in respect of previous hearings in this proceeding, the significance of the proceeding to the people concerned was again amply demonstrated by the large number of persons present during the hearing. It is clear that the dispute remains of real significance to everyone concerned.
[5] As I said in the December 2010 judgment, it should not be assumed that a charitable trust will be wound up simply because that is the most convenient course. …
[6] Have matters now reached the point where justice requires the Court to take the “last resort” step of winding up the Trust Board? That is the issue I have to decide.
[7] For convenience, I have referred to each group by the name of the principal witness for each group. Thus, the group which sought an injunction has been referred to a “Mr Sanerivi’s group”, or “the Sanerivi group”, and the group which sought an order to wind up the Trust Board has been referred to as “Mr Tuasa’s group”, or “the Tuasa group”. I shall continue to refer to the two groups in this manner. I do not intend any disrespect to either Mr Sanerivi or Mr Tuasa, or the members of the two
3 Congregational Christian Church of Samoa (Westmere) Trust Board v Tilaima HC Auckland CIV-2008-404-1893 and Tilaima v Congregational Christian Church of Samoa (Westmere) Trust Board HC Auckland CIV-2009-404-5844, 20 December 2010.
4 Tilaima v Congregational Christian Church of Samoa (Westmere) Trust Board, above n 1, at [8].
5 At [2] – [7].
groups in doing so, nor do I intend to personalise the dispute. It is purely for convenience.
(References and footnotes omitted)
[6] Further, in the December 2013 judgment I summarised the matters decided in the December 2010 judgment, and set out events after that judgment, as follows:6
[9] In the December 2010 judgment I held that:
(a) The Trust was intended to be Charitable Trust, for the benefit of the public. Accordingly, none of the individuals named in the schedule to the Trust Deed could have any interest in the Trust’s assets, as individuals.
(b) The “beneficiaries” named in the Trust Deed have no role as beneficiaries in their personal capacity.
(c) Trustees of the Trust, after the three original trustees appointed under the Trust Deed, are to be appointed by duly convened meetings of the congregation of the Church.
(d) The trustees’ role is to hold Trust monies, and to transfer monies and
investments to, and receive monies from, the Board.
(e) The Board of Management of the Church has the powers set out in clause 6 of the Trust Deed. The Constitution of the Church makes no provision as to the appointment of Board members.
(f) Under the Constitution of the Church, the trustees and the Board of
Management are separate entities, with separate roles. (g) Mr Tuasa was the only current trustee.
(h) The Constitution of the Church had not been complied with. There had not been a Board of Management in place that complied with the Constitution. With the exception of Mr Tuasa, there were no current trustees. There were not in existence the entities provided for in the Constitution to hold the assets of the Trust and to administer the affairs of the Trust.
(i) Mr Tuasa's group did not leave Westmere Church voluntarily, or of their own free will.
(j) As a trustee, Mr Tuasa had standing to seek liquidation of the Trust. (k) I could not conclude that winding up was appropriate.
(l) My preliminary view was that, unless the parties could agree on the trustee or trustees to be appointed, then an appointment of a completely independent person, such as the Public Trustee, would be appropriate. The independent trustee was to be encouraged to,
6 At [9] – [27].
among other things, endeavour to facilitate resolution of the parties’
differences, so that the Church could be reunited.
[10] In the December 2011 judgment, I noted the parties’ agreement that the Public Trustee should be appointed, and that it was necessary that the Public Trustee act, and be seen to be acting, completely independently. For a limited period of time, the Church would be best served by Mr Tuasa standing aside, to allow the Public Trustee to at independently. I also made orders as to the terms of the appointment of the Public Trustee, and as to joint use of the Church over the 2011–2012 Christmas and New Year period.
[11] In a Minute issued on 11 December 2012, I made directions as to joint use of the Church over the 2012–2013 Christmas and New Year period.
Events since December 2010 (i) Use of the Church
[12] Following the December 2010 judgment, the Tuasa group’s then
solicitors wrote to the Sanerivi group’s solicitors on 22 December
2010, giving “notice of [their] intention to use the church building
and church hall over the festive season and every Sunday until a decision is reached either through appointments of new trustees or
through appointment of a Public Trustee”. In response, the Sanerivi
group’s counsel referred to the December 2010 judgment, where I directed that “unless the parties agree (and the Christmas season would appear to present an ideal opportunity for coming together), the arrangements in place at present are to continue”. The Tuasa group’s “demand” was rejected.
[13] The Tuasa group again sought to use the Church over the 2011–2012
Christmas and New Year festive season. The request was declined, and the Tuasa group applied for directions as to joint use of the
Church. I heard the application on 13 December 2011. It was submitted for the Tuasa group that since the schism, they had been
unable to hold funerals, marriages, or baptisms in the Church of which they were members, and to which they had contributed
financially, and in terms of physical work. The Sanerivi group
opposed an order that both groups be able to use the Church at different times, primarily on the grounds that joint use was not permitted under the Constitution of the Church.
[14] In an oral judgment, I directed that each group be permitted to use the Church at specified times during the festive period. Those terms of usage had been agreed between the two groups (both reserving their respective positions). However, a difficulty arose in that Minister of the Westmere Church, Reverend Va’aelua, took the view that he should choose the Minister to conduct the Tuasa group’s services. This issue was resolved following the intervention of the parties’ solicitors, and the Tuasa group’s services were conducted by a Minister of their own choice.
[15] The Tuasa group again sought joint use of the Church for services over the 2012–2013 Christmas and New Year period. Again, an application was made to the Court for orders. On 11 December
2012, I directed that each group was to use the Church on the same terms as for the previous year. Those directions were recorded in a
Minute dated 11 December 2012. Again, however, a difficulty arose.
[16] It had been agreed that a member of the Sanerivi group would be present to unlock the Church doors for the Tuasa group’s services. When the Tuasa group arrived for their New Years Eve service at 7 pm on 31 December 2012, the Church doors were locked. The group waited, but no-one arrived. At about 8.30 pm Mr Mulitalo (who had been assisting the Tuasa group) arrived to attend the service. He found the Tuasa group member families waiting outside the Church. Mr Mulitalo then went with Mr Tuasa to the Minister’s house, which is on the Church premises. Mr Mulitalo’s evidence (which was not contradicted by evidence from the Sanerivi group), was that the Minister’s initial response was to ask what the Tuasa group was doing on Church premises, and to profess to having no knowledge of the Tuasa group’s use of the Church. However, he later agreed to open the doors, and the service started at about 9 pm.
(ii) The Public Trustee’s appointment
[17] Like the issue of use of the Church facilities, this matter has not proceeded smoothly. In the December 2010 judgment I indicated that my preliminary view was that, unless the parties could agree on the appointment of new trustee or trustees, the Court would appoint as trustee a person who was completely independent of either group. I also indicated that the appointment would be on an interim basis, and the trustee or trustees would be encouraged to, among other things, endeavour to facilitate resolution of the parties’ differences with a view to the appointment of trustees and a board of management so that the Westmere Church could be reunited.
[18] On 2 February 2011, I heard counsel for the parties. Prior to the hearing, counsel had filed memoranda in which it was, in essence, agreed that the Public Trustee should be appointed. I directed that the Public Trustee be appointed as trustee, and that counsel provide me with a brief joint memorandum setting the requested terms of appointment. I also directed that Mr Sanirevi's group was to give full disclosure as to the financial position of the Trust, and that the Public Trustee’s costs (in the first instance) were to be met from the Trust. Leave was reserved for an application to be made, should it be considered appropriate that the Public Trustee’s costs be met in some other manner.
[19] On 5 September 2011 I issued a Minute, expressing my concern that the parties had not agreed on the terms of the Public Trustee’s appointment. I urged both sides of the dispute to put their particular, and personal, concerns aside in order to reach agreement as to the appointment of the Public Trustee.
[20] The parties did not agree on the terms of the Public Trustee’s
appointment. That issue was considered at the hearing before me on
13 December 2011. At issue was the contention by the Tuasa group that Mr Tuasa and the Public Trustee should act jointly, and the submission by the Sanerivi group that, if Mr Tuasa were to remain a trustee, he should be required to give an undertaking to abide by any decision of the Public Trustee, or stand aside, or be replaced by another trustee. It was submitted that Mr Tuasa did not have the confidence of the Sanerivi group.
[21] In the December 2011 judgment I recorded Mr Tuasa’s undertaking that for the period of the Public Trustee’s appointment he would stand aside and allow the Public Trustee to act independently. I also made directions as to the terms of the Public Trustee’s appointment. The Public Trustee was to compile a list of the members of the congregation of the Westmere Church, to convene a meeting of the congregation to appoint three members to be trustees in addition to Mr Tuasa, to review the constitution and submit a report as to any amendments required, and to have discussions with both groups with a view to promoting a mediated resolution of the differences between them.
(iii) Report of counsel for the Public Trustee
[22] Counsel for the Public Trustee, Mr Stokes, submitted a report dated
21 March 2013. He reported as follows:
(a) The issue of membership had not been simple to resolve, and there was disagreement between the two groups as to how a list of members should be compiled. He had received list of members from each group, stated as being members of the church as at 13 December 2011. He noted that it had been suggested that one group had “bolstered” its numbers, but concluded that since the membership lists had been prepared solely for the purpose of electing trustees, and each group could only elect trustees for that group, there could be no advantage from having a large number of members.
(b) A meeting had been held at the church on 5 October 2012, which resulted in the trustees being confirmed as follows:
(i) The Public Trustee
(ii) Mr Tuasa and Mr To’amata (for the Tuasa group);
and
(iii) Mr Sanerivi and Mrs Yandall-Vaega (for the Sanerivi group).
(c) A meeting of the trustees had been called for 1 November
2012, for the purpose of discussing proposed changes to the constitution and trust deed. Mr Stokes reported, concerning this meeting:
From the very start of that meeting it became clear to Counsel for the Public Trust that [the] two groups were quite simply not going to be able to come
together and work successfully as one united unit. It was clear that the distrust between the two groups runs very, very deep. There was quite robust discussion between the Tuasa Group trustees and the Sanerivi Group trustees and their respective counsel who were present. Counsel for the Public Trust formed the view that although it would be possible to draft a constitution that addressed all matters in terms of membership and all matters that should be addressed by a constitution in a situation such as this, the provision of such documentation, no matter how perfect will not be sufficient for the Sanerivi and Tuasa groups to be able to reform as one united church.
On that basis Counsel for the Public Trust considered that as it was so unlikely that the two groups will be able to unite it is more appropriate for them to be able to determine the terms and requirements of each of their constitutions in a normal manner as any charitable organisation would be able to do without the input of an imposed third party. This is on the basis that if they are going to continue as two separate groups then the dispute between them would not affect each individual group’s right and ability to determine the contents of its constitution subject to the provisions of applicable charitable law.
…
Neither of the groups have been particularly co- operative with each other despite both expressing willingness to resolve matters. The envisaged resolution that each party seems willing to achieve would appear to be poles apart.
[23] Mr Stokes also set out his view that the constitution of the Church and the trust deed should be totally re-written as one document addressing issues such as clarity in references to the Mother Church and the Westmere Church, how membership of the Church is to be achieved, different levels of membership and termination of membership, clarifying the role of trustees and the board of management and clarifying how assets of the Westmere Church are to be held and applied. He noted a conflict between the trust deed and the constitution in respect of holding assets.
(iv) The present application to wind up the Trust
[24] The present (second) application to wind up the Trust was filed on
20 March 2013. The grounds on which an order to wind up the Trust was sought may be summarised as follows:
(a) As a result of the Tuasa group being “forced to worship elsewhere” the Sanerivi group had wrongfully taken the
position that the Tuasa group were no longer members of the Westmere Church and therefore not entitled to use the Church property;
(b) The Sanerivi group had refused to allow the Tuasa group to use the Church property, unless Court orders were in place;
(c) The Sanerivi group had conducted itself in an unfair, unjust and inequitable way since about mid-2006 to ensure (insofar as it could) that it the full and exclusive use of the Church property to the exclusion of the Tuasa group;
(d) Since the December 2010 judgment there had been ongoing disputes and disagreements between the two groups;
(e) Because of the lack of trust and confidence between the two groups and the trustees of the two groups, the appointed trustees were unable to properly operate the Trust and therefore the Trust and the Westmere Church were dysfunctional;
(f) Because of that dysfunction, no management board had been put in place to manage the Trust and/or the Westmere Church;
(g) As a result of the disputes and issues between the two groups, there was a deep set resentment between the two groups, which was now irreconcilable; and
(h) All routes towards reconciliation had been attempted over the period of seven years that the two groups had been separated and the only option, being the last resort, was for the Trust to be liquidated, and in the circumstances, it was just and equitable for the Court to make the orders sought.
(v) Meeting on 1 November 2012
[25] As noted earlier, a meeting of the trustees (that is, Mr Tuasa and the trustees elected by each group Mr To’omaga, Mr Sanerivi, and Mrs Yandall-Vaega) was held at the Westmere Church on 1 November
2012. This meeting was called by Mr Stokes, and attended also by
the groups’ respective counsel.
[26] Prior to the meeting, counsel had exchanged correspondence with the Public Trustee (copied to each other) as to the matters to be discussed. It is evident from the correspondence that the two groups differed widely in their views as to what should be discussed. Counsel for the Sanerivi group suggested certain amendments to the constitution, while counsel for the Tuasa group expressed the view that the “minor issues” raised were a “clear indication that there is little or no goodwill between the parties”, and that efforts would be “more advantageously directed towards winding up” the Trust. Neither group’s position was acceptable to the other. The meeting did not result in any progress being made.
(vi) Incorporation of the Ekalesia LMS (London Missionary Society) Westmere Church Incorporated
[27] On 17 June 2013, the Ekalesia LMS (London Missionary Society) Westmere Church Incorporated (“Ekalesia LMS”) was incorporated by the Tuasa group, under the Incorporated Societies Act 1908. The application for registration of Ekalesia LMS was made by Mr Mulitalo at the request of the Tuasa group.
(Footnotes omitted)
Should the Trust Board be put into liquidation?
[7] For the Sanerivi Group, Mr Gault submitted that the role of the Mother Church had not been adequately addressed in previous submissions. He noted that the dispute resolution process of the Mother Church includes a five-step resolution procedure, which ends with the General Assembly of the Mother Church. He referred me to the Constitution of the Mother Church which provides:
Where any incidents occur affecting any part of the Church in relation to any person, the Minister and the Congregation in the village shall be firstly notified; in relation to a Congregation the Elder-Minister and the Sub- District must be notified first. From there notice must be given to the Elder- Ministers in the District. The District shall then communicate with the Church through the District Secretary to the General Secretary.
[8] Mr Gault submitted that the General Assembly is at the apex of decision- making within the Mother Church, being described in the Constitution of the Mother Church as “the Supreme Council of the Church and its decisions being described in the Constitution as “conclusive and binding on the whole Church”. Mr Gault submitted that whilst past attempts at reconciliation have failed, the involvement of the General Assembly means that a final attempt at reconciliation is worthwhile.
[9] However, I note that in his statement of evidence for the hearing which preceded the December 2010 judgment, Mr Sanerivi said:7
I am aware of at least four formal attempts; a personal approach by the Minister and his wife shortly after Tuasa and his followers left; an approach by the Elder-Minister of the District in which our Church is located in the beginning of 2007; an approach by the other Ministers from our District in about mid 2007; and an approach by the Elders of our Church in about August 2007. However, none of these approaches were successful.
[10] On behalf of the Tuasa Group, Mr Telle submitted that there is no prospect of reconciliation between the parties. He noted the involvement of the Elder-Minister some years ago and submitted that it is not credible that the Mother Church would, at this stage, have any interest in the dispute. A similar submission was made by Mr Stokes for the Public Trust, who noted that the Mother Church had been involved in the past, must have been aware of the proceeding, had had an opportunity to register an interest in the proceeding, but had not done so.
[11] In the December 2013 judgment I held:8
[42] I am satisfied, on the evidence, that the Tuasa and Sanerivi groups are so far apart that there is no prospect of reconciliation. The Tuasa group wishes to remain members of the Westmere Church, but has no confidence in Reverend Va’aelua or Mr Sanerivi. The Sanerivi group would accept the Tuasa group worshipping in the Westmere Church (at least for the proposed six months) but only as members of the Ekalesia LMS; that is, not as members of the Westmere Church.
…
[51] Finally, I do not accept Mr Perese’s submission that the Trust Board is not dysfunctional. The two groups of trustees have shown no ability or real inclination to work with each other. The Sanerivi group has excluded the Tuasa group from exercising any role as trustees, and the Tuasa group shows no willingness to work with the Sanerivi group. While Mrs Yandall- Vaega’s approach is to be commended, it is clear that she finds herself constrained by the niceties of the Church hierarchy.
…
[54] Notwithstanding my concerns, I have reached the conclusion that in the circumstances where it is now more than seven years since the dispute arose, and five years of Court intervention has failed to bring the groups any closer together, reconciliation between the two groups is not likely. In the circumstances, the point has been reached where it is just and equitable for the Trust Board to be wound up, and the only option is to exercise the last resort of winding up the Trust Board, and dividing the assets of the Trust.
[12] I am satisfied that the parties have already had recourse to the dispute resolution process, and it has not resulted in reconciliation. I remain satisfied that it
is just and equitable for the Trust Board to be put into liquidation.
8 Tilaima v Congregational Christian Church of Samoa (Westmere) Trust Board , above n 1, at
[42], [51], and [54].
Appointment of liquidator
[13] In the December 2013 judgment I noted that while Mr Stokes had indicated at the hearing that the Public Trust would accept appointment, counsel had not addressed me as to the formalities of liquidation, in particular as to whether s 280(1)(c)(b) of the Companies Act 1993 would preclude such an appointment.9 At the most recent hearing before me, Mr Gault submitted that it is not appropriate for the Public Trust to be appointed liquidator as, having acted as a trustee, it should be
treated as having been equivalent to a director of a company. Mr Gault did not object to the appointment of Mr David Ross, a chartered accountant in Auckland, who had been put forward on behalf of the Tuasa group as an alternative liquidator, and had provided written consent to appointment.
[14] Mr Telle submitted that the Public Trust could be appointed as liquidator, and had provided written consent to the appointment. He submitted that there is no risk of the Public Trust’s independence and ability to carry out its task professionally and effectively being compromised. Alternatively, he submitted, Mr Ross is a suitably qualified liquidator, who has provided consent.
[15] While I have no doubt that the Public Trust would carry out the duties of a liquidator professionally and with all requisite independence, I have concluded that, in order to avoid any perception as to a conflict of interest arising, Mr Ross should be appointed liquidator.
How should the assets be distributed?
[16] Determination of this question requires consideration of the following issues:
(a) Must the surplus assets be distributed according to the Constitution of the Congregational Christian Church of Samoa (Westmere) Trust (“the Constitution”), applying s 313 of the Companies Act?
(b) If the surplus assets must be distributed according to the Constitution,
does “the Church” mean the Mother Church or the Westmere Church?
(c) If the answer to question (a) is no, can the Court direct distribution as it sees fit under s 27 of the Charitable Trusts Act 1957, and is equal division between the two groups appropriate?
[17] Mr Gault submitted that an order should be made directing the liquidator to apply the proceeds in the winding up in accordance with clause 11 of the Constitution. Clause 11, as amended on 22 October 1987 reads:
Upon the termination or winding up of the Trust all the then assets subject to any existing liabilities, shall be applied for such charitable purposes as the Church may determine.
In seeking this order, Mr Gault submitted that funds were entrusted to the Trust for the charitable purpose set out in clause 3 of the Constitution:
The objects for which the Trust is established are for the furtherance in New Zealand of the religious, charitable, benevolent, educational and social work of the Church. …
[18] Mr Gault submitted that “the Church” in clause 11 means the Mother Church. He submitted that s 313(4) of the Companies Act 1993 applies by virtue of s 25(4) of the Charitable Trusts Act 1957, so that the liquidator must distribute the Trust’s assets in accordance with the Constitution. He submitted that, given the terms of the Constitution, it would be inconsistent with long-standing authority relating to charities to make any direction other than that surplus assets were to be distributed to the Mother Church. He submitted that the Court cannot tell the Mother Church how to distribute surplus assets and in particular, cannot direct that part of the Trust’s assets be transferred to the Tuasa group.
[19] Mr Telle submitted that references to the “Church” in clause 11 can only mean the Westmere Church. Accordingly, he submitted that the Court can direct equal distribution between the parties, and that an equal distribution between the two groups for the purposes of a charitable trust, would be consistent with the authorities. In the special circumstances of this case, he submitted, it is appropriate that the Court order the liquidator to distribute assets to the two groups, pursuant to s 27 of the Charitable Trusts Act.
[20] For the Public Trust, Mr Stokes submitted that the assets of the Trust cannot be vested in the Mother Church, because they must be applied in New Zealand. He submitted that the objectives of the Trust, as set out in the Constitution, are wide, and it is necessary only to see that the assets are applied within that objective.
[21] I deal first with the submission that “Church” in clause 11 of the Constitution of the Trust Board means the Mother Church. In the December 2010 judgment I considered the meaning of “the Church”, in the context of the Constitution’s provisions as to the appointment of trustees. I said:10
[33] “The Church” is defined to mean “The Congregational Christian Church of Samoa” — that is, the Mother Church. On behalf of Mr Tuasa’s group, Mrs Woodroffe submitted that Trustees must be appointed by the Mother Church. Mr Perese submitted on behalf of Mr Sanerivi’s group that the proper interpretation is that Trustees are appointed by the congregation of the Westmere Church.
[34] Again, the documents are not clear. There are specific references in the Constitution to “the Congregational Christian Church of Samoa (Westmere)”. For example, in cl 2 of the Constitution it is provided that the Trustees hold funds for “any religious, charitable, benevolent, educational and social purposes of the Congregational Christian Church of Samoa (Westmere)” which would suggest that where the word “Church” on its own is used, it is intended to refer to the Mother Church. That interpretation may be supported by cl 6(i) of the Constitution (on the powers of the Board) which provides that the Board is to receive moneys from the Trustees on trust for “religious, charitable, benevolent, educational or social trusts or purposes within the Church throughout New Zealand”. This contemplates “the Church” as having application beyond the Westmere Church.
[35] Clause 9(i) of the Constitution also supports that interpretation. It requires the Board to “conform to the laws of the Church” and not to do anything or use its resources “for any purpose which is liable to bring reproach upon the Church”. Clauses 6(i) and 9(i) sit better as references to the Mother Church which is the “umbrella” church for all Congregational Christian Churches of Samoa in New Zealand and elsewhere, and which has a Constitution (originally drafted in 1928) that, as stated in its Preamble:
... has been drafted in the hope that it will guide the whole Church in villages, sub-districts, and districts.
[36] Other references to “the Church” in the Constitution may be seen as being either to the Mother Church or to the Westmere Church. For example, cl 3 (“Objects”) provides (both in its original and amended form) that the objects of the Trust are “the furtherance in New Zealand of the [charitable] work of the Church”, and in cl 7 (“Funds”) it is provided at subcl (vi) that the Board “shall each year forward a report to the Church”.
10 Congregational Christian Church of Samoa (Westmere) Trust Board v Tilaima, Tilaima v
[37] There are also references in the Constitution to “the Church” which could only refer to the Westmere Church. For example, cls 3(i), (iii) (as amended) and (iv) refer to funds held for “the Church” or to be invested for “the Church”. I accept Ms Warburton’s submission that “the Church” in those subclauses can only refer to the Westmere Church, as the Trust has no power to invest, accept, or transfer funds for the Mother Church.
[38] Clause 5(i) (“Officers”) provides that the Executive Officer of the Trust shall normally “be the General Treasurer of the Church”. This could not be expected to be a reference to the General Treasurer of the Mother Church (the Constitution of the Mother Church refers to a “Treasurer” but not to a “General Treasurer”). Finally, cl 10 (“Amendments”) provides (both in its original and amended form) that the Constitution can be amended “by the Church in conference”. “Conference” is defined in cl 2 as meaning “The Congregational Christian Church of Samoa (Westmere) congregational meeting”.
[39] Notwithstanding her submission that the Constitution requires Trustees of the Trust to be appointed at a meeting of the Mother Church, Mrs Woodroffe did not refer me to any provision of the Constitution of the Mother Church which would support its appointing Trustees for the Trust established by the Westmere Church, or trusts established by any other congregation. I accept the submissions made by Mr Perese and Ms Warburton, that the Constitution supports an interpretation under which the Westmere Church congregation is autonomous in the administration of its own affairs.
[40] I take some support for that view from the judgment of Wild J in Apineru v Board of Trustees of the Congregational Christian Church of American Samoa in New Zealand (Porirua) Trust,11 in which his Honour rejected a submission that the mother church (in that case, the Congregational Christian Church in American Samoa) had a role in determining membership of the local church, on the grounds that there were no rules allowing intervention by the mother church and that intervention would be inconsistent with the autonomous (that is, congregation-controlled) nature of the church.
[41] Accordingly, I conclude that Trustees subsequent to the three original Trustees appointed under the Trust Deed are to be appointed by duly convened meetings of the congregation of the Westmere Church.
[22] I do not accept Mr Gault’s submission that the assets of the Trust can only be distributed to the Mother Church. While I did not refer to clause 11 of the Constitution in the December 2010 judgment, I consider that the better interpretation of “the Church” in clause 11 is that it refers to the Westmere Church. Such an interpretation is consistent with clause 3 as to objects, and its provision that the objects of the Trust are the furtherance in New Zealand of the religious, charitable, benevolent, educational and social work of the Church.
[23] Section 25(4) of the Charitable Trusts Act 1957 provides:
25 Liquidation of a board by court
…
(4) Subject to this Act and to any regulation made under this Act, Parts
16 and 17 of the Companies Act 1993 shall apply, with such modifications as may be necessary,—
(a) to the application for the appointment of a liquidator as if the application was an application under s 241(2)(c) of that Act; and
(b) to the liquidation as if the liquidator had been appointed under s 241(2)(c) of that Act.
[24] Section 27 of the Charitable Trusts Act provides:
27 Distribution of surplus assets
On the liquidation of a board or on its dissolution by the Registrar,
all surplus assets after the payment of all costs, debts, and liabilities shall be disposed of as the court directs.
[25] In the December 2013 judgment I indicated my view that the assets of the trust would be divided between the two groups:12
[52] Winding up the Trust Board and liquidating its assets is a serious step to take. There are families who are at present divided between the two groups, and winding up and liquidation may “cement” that division. Further, if winding up is ordered, the assets of the Trust will be divided between the two groups. In effect, the value of the Westmere Church facilities will be divided.
[53] Inevitably, both groups would end up with a much smaller asset base than they would have, together, if the Trust’s assets were not divided. Each group would have to undertake the task of establishing a separate Church – both in terms of legal structure and in terms of physical assets. The impact of winding up on members of the Church would be, to say the least, significant.
[26] It is to be noted that no submissions were made to me at the hearing preceding the December 2013 hearing in relation to the distribution of the Trust’s assets. Having now heard submissions on the point, I am not persuaded that I was wrong in that view. In particular, I do not accept Mr Gault’s submission that distribution of the Trust’s assets must be in accordance with s 313 of the Companies Act 1993. In my view, the words “subject to this Act” in s 25(4) of the Charitable Trusts Act means that s 27 of that Act applies, and distribution of the Trust’s assets
should be as the Court directs. Section 313 of the Companies Act does not apply. Further, I am satisfied that equal division between the Sanerivi and Tuasa groups would satisfy the objects of the Trust as set out in clause 3 of the Constitution, as long as the objectives of each group are as nearly consistent as possible with the original objective.
[27] Accordingly, I conclude that the Trust’s assets are not required to be distributed according to the Constitution by application of s 313 of the Companies Act and, in particular, clause 11 of the Constitution does not require the assets to be distributed to the Mother Church. Further, I conclude that the distribution of the Trust’s assets is to be as directed by this Court. I have concluded that equal division between the Sanerivi Group and the Tuasa Group is appropriate. The liquidator will have to be satisfied that each group has established a charitable trust with objectives which are as nearly consistent as possible with clause 11 of the Constitution.
Application to join trustees as second defendants’ in the proceeding
[28] Mr Gault submitted that in the event that an order was made to liquidate the Trust Board, an order should be made that Sarah Yandall Vaega and Taliaoa Efaraimo Sanerivi be added as parties to the proceeding. He submitted that this was appropriate so as to ensure that the Sanerivi Group would have standing to appeal against this judgment, should they wish to do so. No formal application for joinder has been filed. The issue of joinder was raised in Mr Gault’s written submissions filed shortly before the hearing.
[29] Mr Telle submitted that his initial instructions had been that an order for joinder would not be opposed. However, he had since received further instructions that there should be a formal application, supported by affidavits.
[30] Notwithstanding that no formal application has been filed, I am satisfied that it is appropriate to make an order joining Mrs Yandall Vaega and Mr Sanerivi as second defendants to the proceeding. It has been clear throughout all of the many hearings in this proceeding that Mr Sanerivi has represented one of the groups of Church members. I accept Mr Gault’s submission that, in the event that Mr Sanerivi’s group considers itself to have been adversely affected by the liquidation
decision, it should have the standing to challenge that decision by way of an appeal.13
Costs
[31] Mr Telle submitted that costs relating to the most recent hearing should be ordered in favour of the Tuasa Group. Mr Gault submitted that costs should lie where they fall. As I have held in previous judgments, I am satisfied that costs in this proceeding should lie where they fall. For the avoidance of any doubt, I repeat the direction made in previous judgments, that Trust funds are not be used for either group’s costs in relation to this proceeding.
Orders
[32] I order as follows:
(a) Sarah Yandall Vaega and Taliaoa Efaraimo Sanerivi are added as second defendants to this proceeding.
(b) The Congregational Christian Church of Samoa (Westmere) Trust
Board is put into liquidation.
(c) Mr David John Ross, Chartered Accountant of Auckland, is appointed to act as liquidator of the Congregational Christian Church of Samoa (Westmere) Trust Board. Mr Ross is entitled to charge for his services at the hourly rate of $300, plus GST and disbursements. I note Mr Ross’s advice in his consent to appointment that his hourly charge- out rate has previously been approved by this Court.
(d)All surplus assets of the Trust after payment of all costs, debts, and liabilities shall be paid in equal shares to the groups represented by Mr Sanerivi and Mr Tuasa, referred to in this proceeding as the
Sanerivi Group and the Tuasa Group respectively, upon the liquidator
13 See Aotearoa Kiwi Fruit Export Limited v ANZ National Bank Limited HC Tauranga CIV-2011-
470-697 at [14].
being satisfied that the group has established a charitable trust which has objects which are as nearly consistent as possible with the objects of the Congregational Christian Church of Samoa (Westmere) Trust.
(e) Until such time as the liquidator directs otherwise, the orders as to the use of the Westmere Church and hall, set out at [59](a) to (g) of the December 2013 judgment, shall continue to apply.
(f) The liquidator has leave to apply to this Court for directions in respect of any ancillary issues arising out of the above orders.
(g) The above orders are made at 1:00pm on 28 April 2014
(h) Costs shall lie where they fall. For the avoidance of any doubt, I
direct that Trust funds are not to be used for either group’s costs in
relation to this proceeding.
Andrews J
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