Trustees of the Crown Forestry Rental Trust

[2018] NZHC 2519

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

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

CIV-2018-485-708

[2018] NZHC 2519

UNDER

the Trustee Act 1956

AND

IN THE MATTER OF

an application under s 64 to amend the Trust Deed for the Crown Forestry Rental Trust

BY

The Trustees of the Crown Forestry Rental Trust

Applicants

On the papers:
Counsel:	D H Stone and T N Hauraki for Applicants
Judgment:	26 September 2018

JUDGMENT OF CHURCHMAN J

[1]                  The trustees of the Crown Forestry Rental Trust (the applicants) have filed two applications dated 18 September 2018. The first application is an interlocutory application without notice for an order seeking leave to bring proceedings by way of an originating application. The second application is an originating application without notice for an order pursuant to s 64 of the Trustee Act 1956.

Background

[2]                  The applicant was established pursuant to a Trust Deed dated April 1990. That Trust Deed was amended and restated following an order of the High Court on      16 April 2011.

THE TRUSTEES OF THE CROWN FORESTRY RENTAL TRUST [2018] NZHC 2519 [26 September 2018]

[3]                  The applicant was established to receive and hold rental proceeds from Crown Forest Land upon which Crown Forestry Assets are located and to make the interest earned from investment of those rental proceeds available to assist Māori in the preparation, presentation and negotiation of claims before the Waitangi Tribunal which involve, or could involve, certain Crown Forest Land.

[4]                  The investment powers of the trustees of the applicant are limited and the Trust Deed expressly excludes powers and duties set out in the Trustee Act 1956. The result is that the investment powers of the trustees of the applicant are significantly more constrained than the investment powers that apply to general trustees under the Trustee Act.

[5]                  The applicant therefore seeks amendments to broaden the investment powers of the trustees. The reasons put forward in support of the application for amendment are that:

(a)the investment options available to the Trust under the Trust Deed are very limited;

(b)the Trust Deed is inflexible and does not reflect the growth in low risk financial instruments available in the market today;

(c)the permitted investment options under the Trust Deed have historically low interest rates;

(d)the Trust has a diminishing investment base as Treaty of Waitangi settlements occur and the Trust draws down on retained earnings to make payments in accordance with those settlements.

[6]                  The applicant has filed an affidavit from Darrin Arthur Sykes in support of the applications. Annexed to that affidavit were letters of support from the Minister of Finance (appointor of three of the applicant’s six trustees), and the New Zealand Māori Council and the Federation of Māori Authorities Incorporated who jointly appoint the other three trustees.

The originating application

[7]                  High Court Rule 19.5 authorises the Court to permit a proceeding to be commenced by an originating application. HCR 19.5(2) provides that the Court’s permission may be sought to proceed without notice. HCRR 19.2-19.4 detail a number of types of proceedings to which such an application is appropriate. The Court also has the ability to permit the use of this procedure in other sorts of proceedings with the only criteria expressly referred to being the interests of justice.

[8]                  The caselaw1 confirms that this procedure will not be appropriate in a case which requires particularised pleadings, interlocutory steps such as discovery or involves disputed questions of fact.

[9]                  On the basis of the contents of the affidavit from Mr Sykes, I am satisfied that it is in the interests of justice to grant leave to commence these proceedings by way of originating application. I am also satisfied that it is appropriate for the application to have been made without notice to any other party on the grounds that the application:

(a)relates to an internal matter regarding the administration of the Trust; and

(b)the Trust sought and obtained the approval of affected parties to the proposed changes to the Trust Deed prior to making this application.

Application pursuant to s 64 of the Trustee Act 1956

[10]              The application for orders pursuant to s 64 of the Trustee Act 1956 was also brought without notice.

[11]              No powers of variation are contained in the Trust Deed, and in the absence of such a power, s 64 of the Trustee Act represents the only basis upon which the current provisions of the Trust Deed may be altered.

1      Cunningham v Cunningham [2016] NZHC 1075, Wason v Wason [2017] NZHC 1435, and

McKean v McKean [2017] NZHC 2212.

[12]              Section 64(1) of the Trustee Act confers upon the High Court the power to expand the range of investments trustees are authorised to make, if the Court is satisfied that it would be in the best interests of the persons beneficially interested under the Trust to make the expansion.

[13]              A schedule with the proposed amended investment clauses is set out as Exhibit A to the affidavit of Mr Sykes.

[14]              I am satisfied that it is in the best interests of the persons beneficially interested under the Trust for this Court to permit amendment of the investment clause of the Trust Deed in accordance with the proposed investment clauses set out at Exhibit A of Mr Sykes’ affidavit.

[15]              I am also satisfied that it was appropriate for this application to have been brought on a without notice basis. It is clear from Mr Sykes’ affidavit that the consent of the Minister of Finance, New Zealand Māori Council and the Federation of Māori Authorities Incorporated has been obtained and also that the applicant has engaged with Treasury in relation to the proposed changes to the authorised investments.

Outcome

[16]I hereby make the following orders:

(a)leave is granted for the applicant to proceed by way of without notice originating application; and

(b)the originating application without notice for an order pursuant to s 64 of the Trustee Act 1956 is granted and the investment powers in the Trust Deed are amended by incorporating the draft amended investment clauses (cl 7.11) set out as Exhibit A to the affidavit of Darrin Arthur Sykes.

Churchman J

Solicitors:

Kahui Legal, Wellington for Applicants