Will of Curl

[2018] NZHC 3422

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

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

CIV-2018-485-673 [2018] NZHC 3422

IN THE MATTER

of Part 18 of the High Court Rules

AND IN THE MATTER

of Part III of the Charitable Trusts Act 1957

AND IN THE MATTER

of an application by PUBLIC TRUST in relation to certain charitable trusts declared by the Will of SAMUEL MATTHIAS

CURL, late of Waverley, New South Wales,

Commonwealth of Australia, Retired medical Practitioner, deceased

Hearing:	3 December 2018
Appearances:	J Upton QC for Public Trust
Judgment:	19 December 2018

JUDGMENT OF GRICE J

[1]                 The Public Trust applies to vary the charitable purposes of a charitable trust created by the Will of Samuel Matthias Curl under s 32 of the Charitable Trusts Act 1957 (the Act).

[2]                 Approval is sought for a proposed scheme under the Act. The Attorney-General has provided a report as required under ss 35 and 56 of the Act.1 The proposed scheme has been advertised. No responses have been received to the advertising. The advertising was carried out by publication in the following newspapers:

1      Report of the Attorney-General dated 16 May 2018.

RE WILL OF SAMUEL MATTHIAS CURL [2018] NZHC 3422, 19 December 2018.

(a)        In the Dominion Post on 20 October 2017 and 3 November 2018;

(b)In the New Zealand Gazette on 10 October 2018.

[3]                 The Public Trustee explained that advertising had not been undertaken for the following reason:

10.Bearing in mind that the original proposal was very much grounded  in the United Kingdom, if advertising were required, it would have to be through the English media in some way – and at a cost, it is suspected, which would be far in excess of the income available from the trust fund. For that reason, Public Trust does not favour advertising or other steps to try and locate a substitute beneficiary. Certainly, as matters stand at the moment, Public Trust does not see any obvious substitute to the Royal Society as available in the United Kingdom.

[4]                 The background to the application is set out by the Public Trust in its statement of facts, submissions and scheme dated 29 August 2018. I base the following summary on that statement of facts:

1.     By his will dated 18 July 1906 the late Samuel Matthias Curl (who died on or about 17 April 1911) provided (after in effect a life interest to his widow) that the whole of his estate should be held in trust on the basis that:

(a)The Royal College of Physicians in London were to offer as a prize

£300 each year (payable from the interest from the estate) for the best essay or thesis related to the connection of the life principle or force with the power or force styled Electricity;

(b)The balance of the income was to be payable each year to the Royal Anthropological Institute of Great Britain and Ireland (as named in the will) as a prize for the best essay on discoveries in anthropology during the previous two years;

(c)That if the College and Institute aforesaid objected to carry out the conditions set out in the will, then the executors of the deceased were to offer the money to the Royal Society in London or other scientific society on the same trusts.

2.     The widow of the deceased (one of the two appointed executors of the will) died on 2  October  1929  and  the  remaining  executor  died  on 22 September 1935.

3.     Thereafter there was no executor or trustee to take charge of and control and preserve the estate of the deceased and the President of the Royal College of Physicians in London and the President of the Royal Anthropological Institute of Great Britain and Ireland in London (so

named) executed renunciations of all and any of their rights and title to probate of the will.

4.     Accordingly, on 11 June 1937 the then Supreme Court of New Zealand appointed the Public Trustee to be the trustee of the will of the deceased.

5.     By  order  dated  1  December  1941  the  then  Supreme  Court  of  New Zealand on the application of the Public Trustee answered various questions arising out of the will of the deceased and approved a scheme which varied some of the conditions specified in the will.

6.     One of the conditions of the order was that the Royal Society was entitled to the trusteeship of the will and of the estate of the deceased rendered vacant by the renunciation of the Royal College of Physicians and to the bequest renounced by the Royal College of Physicians upon condition that the Royal Society carried out the terms of the bequest subject to the modifications set out in the scheme relating to the bequest.

7.     On 7 July 1944 the Royal Society formally disclaimed its interest under the will but subsequently resiled from that stance and was reinstated as a beneficiary by the then Supreme Court of New Zealand on 19 June 1959. In addition, a revised scheme was then approved by the Court. The main points of that scheme were:

(a)The accumulated income which had not been paid to the Royal Society because of the renunciation (after meeting half the cost of proceedings) was then to be invested with the income payable by the Public Trustee on instructions from the Royal Society;

(b)The Royal Society was limited to the use that that money could be put to (scientific lectures in the United Kingdom, New Zealand or elsewhere, publication of such lectures and other scientific writings or publications);

(c)If the money could not be used in any particular year it was to be reinvested and available for use in subsequent years;

(d)Similar provisions were laid out for the income to be payable to the Royal Anthropological Institute.

8.     Payment to the Royal Anthropological Institute has not caused any difficulty. Payments have continued to be made each year. However, the Royal Society has consistently declined to put forward any candidates for receipt of the money allocated to the Society. For many years, therefore, the income otherwise payable to the Royal Society has simply been accumulated.

9.     In practical terms, the current scheme (as revised and approved in 1959) is unworkable because of the fact that the Royal Society has refused to put up candidates for the prize. Reading between the lines, the reason for the lack of interest in the scheme by the Royal Society is likely to be the small prize money available, coupled with the administrative cost of locating and putting forward a suitable candidate on what can be fairly described as a somewhat obtuse subject. There have been ongoing discussions with the Royal Society as to what should be done. The Royal

Society has now formally renounced any further interest in the scheme and is happy to transfer its entitlement to the Royal Anthropological Institute on the basis that the Royal Anthropological Institute will then be the sole beneficiary of the benefits available under the scheme.

…

11.      A revised scheme has been proposed and approved by both the Royal Society and the Royal Anthropological Institute.

12.      The proposed scheme is as follows:

(a)All the remaining funds (capital and income) of the Trust as at the date of approval of the scheme be amalgamated into one reconstituted trust fund to be held by Public Trust. That fund to be invested in accordance with the law relating to the trustee investments from time to time;

(b)The whole of the income each year is to be paid to the Royal Anthropological Institute (“the Institute”) on its undertaking to apply the money for scientific publications or lectures in the United Kingdom, New Zealand or elsewhere;

(c)Where reasonably possible, the Institute is to give preference to essays, publications or lectures on the life sciences (encompassing such fields as biology and medicine) and scientific research into the relationship between Electricity and the life sciences, but (where that is not reasonably possible) then for essays, publications or lectures on discoveries in anthropology made in the last two years;

(d)If the Institute declines to receive the income from the fund at any time, or is unable or unwilling to give the appropriate undertaking as set out above, then that income is to be accumulated and added to the capital of the trust fund. If after a period of five years no payment had been made to the Institute, then Public Trust is authorised to make arrangements for payment of that income to the Royal Australian College of Physicians, the Royal Society of New Zealand or some other similar body (eg a University) in  New Zealand, the United Kingdom or Australia which Public Trust is satisfied will apply that income for scientific publications, research and/or lectures.

Report of the Attorney-General

[5]                 The Attorney-General comments that the proposed scheme is as close as possible to the original bequest and subsequent variations for the following reasons:

(a)The proposed variation is consistent in the present circumstances with the provisions of the Will to study and explore the connection of the life principle or force with the power or force styled electricity.

(b)It follows as closely as present conditions allow the original interests of the deceased as varied by orders of the Supreme Court in subsequent years;

(c)The original trust under the Will was for a charitable purpose, subsequent variations approved by the Supreme Court constituted a charitable purpose, what is currently proposed constitutes a charitable purpose, and the proposed scheme meets the criteria set out in the Charitable Trusts Act.

[6]                 The Attorney-General in his report sets out the principles relating to the variation of the Trust purposes in some detail. I base the following outline on that report:

18.In varying the trust, the Court’s jurisdiction is based on s 32 of the Charitable Trusts Act 1957, which supersedes the common law doctrine of cy-pres. That point is illustrated in Public Trustee v Attorney-General where the Court, referring to the earlier equivalent jurisdiction under s 15 of the Religious, Charitable and Educational trusts Act 1908, held that the legislative scheme was not hampered by any such limitation as is involved in the doctrine of cy-pres. The only mandatory requirement is that the new purpose is charitable; however, it is important that the disposition of trust property reflects as closely as is possible the intentions of the settlor.

19.The classic statement of this guiding principle appears in Re Whatman where Tompkins J stated although the Court is not bound by the cy- pres doctrine, it does owe a duty to the settlor when disposing of the trust property to accord as closely as possible with the intentions of the settlor. Additionally, Tompkins J stated that the Court owes a duty to proposed beneficiaries and the public generally to dispose of trust property in close accordance with the charitable purposes of the trust, and in such a way that will best serve the interests of proposed beneficiaries.

20.Gresson J in Re Goldwater (Deceased) approved and adopted Tomkin J’s approach in Re Whatman, stating that the scheme should “accord as closely as is reasonably possible in the changed circumstances to the terms of the original trust”.

21.Those decisions were traversed in Re Twigger by Tipping J who concluded that while the doctrine of cy-pres is not mandatory under the Act, proposed variations to charitable schemes should “seek to substitute beneficiaries or purposes resembling as closely as possible in in the changed circumstances” to the settlor’s original intentions. To derive the settlor’s intentions, Tipping J stated that the first step is to identify the essential elements of the original trust. Those are not

impossible, impracticable or inexpedient should be carried forward into the new scheme.

22.More recently in Re Tennant Hammond J outlined the process in four steps:

22.1First, the application must come within the statutory jurisdiction, including having a charitable purpose at the date of settlement;

22.2Second, the substituted arrangements must also be charitable;

22.3Third, in order to be approved, the new scheme should accord “as closely as is reasonably possible in the changed circumstances” to the terms of the original trust; and

22.4Fourth, the new disposition should best serve the interests of the proposed beneficiaries and the public.

“Impossibility” and “impracticability” under the Act

23.“Impossible” and “impracticable” have a plain meaning. Impossibility may cover situations where, for example, a trust requires the support of a charitable institution such as a hospital, school, or orphanage, which no longer exists. Examples of impossibility in case law have included situations where the site on which the trust mandated a memorial to be built had been sold to a bona fide purchaser, and where the bequest specified the delivery of care by an organisation in a particular area but the organisation had ceased to operate those services there.

24.“Impracticable” on the other hand may cover instances where it is not impossible to carry out the original purpose mandated, but doing so involves practical difficulties. Distinctions between the two grounds are not often made in judgments.

“Inexpedient” under the Act

25.The Court of Appeal in Re McElroy Trust explained the meaning of “inexpedient”:

The general connotation of the word “inexpedient” in its present context is of the original charitable purposes having become unsuitable, inadvisable or inapt. Parliament’s wish to expand the concepts of impossibility and impracticability should not be inhibited by too narrow an interpretation of the word “inexpedient”. Clearly Parliament wished to give the Courts power to approve a scheme of variation in circumstances beyond those where the original purpose could no longer be carried out. The concept of inexpediency introduced a value judgment rather than simply an assessment of feasibility. It may remain possible and practicable to carry out the original purpose but it may have become inexpedient to do so …

26.The Court of Appeal also emphasised that the Court should not compare the merits, utility or expediency of the proposed trust scheme with the existing scheme. The focus is purely on whether the existing scheme is inexpedient.

27.As such, the proposed trust variation is only considered once the existing trust purpose has been found “impossible or impracticable or inexpedient to carry out”.

Examples of inexpediency/the absence of it

28.In Re McElroy Trust, an object of the trust settled in 1956 was to provide a home for the elderly within the Auckland Dioceses of the Church of England. A foundation existed to provide such accommodation, however the trustees sought a variation and argued inexpediency on the basis of changed social conditions from institutional care of the elderly to care in their own homes. The Court of Appeal accepted this social change but did not think this made it inexpedient for the objects of the trust to be carried out in favour of the foundation which was already providing the kind of accommodation the settlors wished to endow. The fact that the foundation was subsidised by central government did not change that analysis.

29.In re Tatum (Deceased), the Court varied at rust on the inexpediency ground. The trust will had provided for a property to be set aside for the benefit of boys and their training in good citizenship and loyalty to the British Empire or Commonwealth of Nations, by an organisation which would “at all times promote and safeguard the interests of the Protestant faith”. The Court approved all three requests for variation: to change “boys” to “young persons”, as girls had become too involved in the Association’s activities for the support to be directly exclusively to boys; that the reference to the British Empire be removed, holding that the constitutional framework had altered since the making of the will and inclusion now would be inexpedient; and that the general scheme of the will allowed for a broadening of the faith requirement.

30.The Court made a similar decision in re Radich. Mr Radich had been a solider during the War. Greatly impressed by the care he received from doctors who had graduated from Edinburgh University, he settled a trust upon death providing financial support in the form of scholarships to New Zealand medical graduates wishing to pursue post-graduate medical studies at the University. With the passage of time, however, the University was no longer considered an attractive post-graduate institution for medical graduates and the trustees had struggled to acquire applicants. As a result, no scholarships had been paid out by the trust for several years. The Court applied the McElroy definition and was satisfied that it had become “unsuitable, inadvisable, or inapt” to confine the trust in this way. It varied the trust accordingly.

31.In Re Merton Trust, Lang J considered an application to vary the charitable scheme of the Merton Trust. The object of the trust was broadly to promote classical music in Papakura. A valuable cello was

bequeathed to the trust to be used and played by recommended persons. The trustees later sought to sell the cello. Justice Lang acknowledged the settlor’s wish that the cello be retained and loaned out but considered that this particular purpose had become inexpedient: the risks involved in the use of the cello by third parties were too great and the ongoing and considerable costs in storing, insuring and safely transporting the cello were such that they were materially affecting the ability of the trustees to carry out the other objects of the trust. The trustees were permitted to sell the cello.

32.Finally, in Re Presbyterian Support Central, Justice Dobson considered an application to vary the charitable purpose of the Ann Sinclair Charitable Trust which, originally, was to use Miss Sinclair’s farm as a boys’ home and farm training institution; and later, was to use trust funds (from the sale of the farm property) to grant assistance to boys for education in farming. The trustees sought a variation so as not to discriminate on the basis of gender. The Court was content to remove a constraint that was once expedient but had become inexpedient. In doing so, the Judge was influenced by the concern about making the best use of funds, as the trustee was confident that better use of the money would be obtained by removing the gender constraint.

…

33.The proposed scheme requires consideration of four issues:

33.1Is the property or income being held upon trust for a charitable purpose ie is the trust’s original purpose charitable?

33.2Is it impossible or impracticable or inexpedient to carry out that purpose?

33.3Is the varied trust deed directed to charitable purposes?

33.4Are the new purposes sufficiently close to the charitable purposes in the original trust deed?

34.As indicated by Tipping J in Re Twigger while the cy-pres approach is not mandatory, it is generally desirable for proposed variations to accord as closely as is reasonably possible to the terms in the original trust. The information in the documents provided to me by the applicant’s counsel leads me to conclude that it is impossible, impracticable or inexpedient for the applicant to carry out the charitable purposes.

Issue 1: Is the trust’s original purpose a charitable one?

35.In this case the original purpose was clearly charitable under the head of the advancement of education, which includes the advancement of certain areas of science through financial support. From the information provided it appears that the charitable purposes were able to be carried out at the date of statement, however, this quickly changed with respect to some beneficiaries and it became impossible, impractical and inexpedient to carry out the trust purposes, leading to

variations in 1944 and 1959. The Public Trust indicate that despite these variations, they have been unable to meet the charitable purpose of the trust with respect to one of the beneficiaries.

Issue 2: Is it impossible, impracticable, or inexpedient to carry out that purpose?

36.The grounds cited by Public Trust in support of applying the funds in the proposed varied manner are:

36.1That the current scheme is unworkable because the Royal Society has refused to put up candidates for the Prize. The applicants stipulate that this is because of small prize money available combined with the administrative costs of locating a suitable candidate on a fairly abstruse subject;

36.2That the Royal Society have now disclaimed any interest in the trust and wish to transfer their entitlement to the Royal Anthropological Institute, making future grants to the Royal Society impossible; and

36.3That locating a substitute for the Royal Society would be costly, impracticable and inexpedient. This is because the original   proposal   was   heavily   grounded   in    the United Kingdom and if such intents were to be followed, advertising in the United Kingdom would be required. Public Trust suspects such costs would be far in excess of the income available to the trust fund.

37.In my view, there is sufficient evidence that it is impossible, impracticable and inexpedient for the applicant to carry out the charitable purposes in the manner envisaged by the settlor and varied by the Supreme Court of New Zealand.

38.The declination of the Royal Society to put forward candidates in past years and its renunciation of future entitlements has made and will continue make it impossible for the Public Trust to issue grants from the trust fund to further the purposes attaching to the entitlements of the Royal Society.

39.Additionally, I am in agreement with the Public Trust that the focus of the original proposal was heavily grounded in the United Kingdom and should a substitute beneficiary need to be found, advertising overseas would be necessary. For the purposes of this report I have been provided with the Public Trust’s 2015 accounts for Dr Curl’s estate, where the total fund amounted to $252,888.31. In my opinion, the expenses involved in advertising for a new beneficiary would be inexpedient in the given circumstances, and the proposed variation of the Royal Anthropological Institute remaining the sole beneficiary is a practical and appropriate one.

Issue 3: Is the trust’s proposed purpose a charitable one?

40.The variations maintain the charitable purpose of the trust as they stipulate that the funds are to be applied for scientific publications, lectures, and essays in fields such as medicine, biology and anthropology, focussing – where possible – on recent discoveries. This still comes under the charitable aim of the advancement of education, as well as having the wider public benefits attributable to University research.

Issue 4: Are the new purposes sufficiently close to the charitable purposes in the original trust deed

41.The earlier variations to the trusts charitable purposes broadened the range of activities trust funds could be granted for. The activities for which the Anthropological Institute received funds largely remained the same, however, with respect to the Royal Society, the activities were extended from the offer of a prize for the best written works related to the “connection of the life force principle or force with the power of force styled electricity”, to the “use of scientific lectures in the United Kingdom, New Zealand or elsewhere”, and the “publication of other such lectures and writings”. These variations maintained the intention of the settlor to advance knowledge in the life sciences for the public benefit by encouraging research, presentation and publication of knowledge at the forefront of science. The variation simply attempted to make this aim workable for the beneficiary struggling to find candidates.

42.In my opinion, the current proposals have the same aims. After many years with no nominations from the Royal Society, the beneficiaries and Public Trust jointly seek its removal and the transfer of its interest to the Royal Anthropological Institute. This variation would allow the active beneficiary – the Anthropological Institute – to be more effective in their use of the trust fund for the mandated purpose.

43.Despite the removal of the Royal Society, the proposals ensure that both anthropological discoveries and developments in the field of the life sciences (such as biology and medicine) are accommodated and supported. The Anthropological Institute undertakes – as in the submissions of Mr O’Dea and the statement of facts, submissions, and scheme filed by the applicants – to do so by giving preference to essays, publications or lectures on the life sciences and scientific research into the late Dr Curl’s desired focus: the intersections of life sciences and electricity. Where this is not reasonably possible, the Institute may make disbursements supporting discoveries in anthropology in the last two years.

44.The applicants have sought to remain as close as possible not only to the spirit of the settlor’s purpose, but the wording of the original will. Date deadlines and phrases have been carried forward where feasible.

45.Finally, the proposal seeks to avoid situations of failure to offer prizes which have plagued the trust since its foundation. They authorise the Public Trust to make arrangements for the payment of the income to similar bodies and for similar purposes if the Anthropological

Institutes declines to receive income from the fund, or is otherwise unwilling or unable to carry out its undertakings noted above.

Conclusion

[7]                 I am satisfied that the proposed variation of the trust’s purpose to restructure the beneficiaries, broaden the scope of activities eligible for disbursement, and authorise the Public Trust to find alternative bodies should the Institute fail in its undertaking is as close as is reasonably possible to the original purposes set out in  Dr Samuel Matthias Curl’s request is one that should be approved by this Court.

[8]                 I am also satisfied that the service by advertisement as outlined above is appropriate. The use of trust funds for overseas advertising is not appropriate in the circumstances.

[9]Accordingly, the proposed scheme is approved as follows:

Proposed scheme

(a)All the remaining funds (capital and income) of the Trust as at the date of approval of the scheme be amalgamated into one reconstituted trust fund to be held by Public Trust. That fund to be invested in accordance with the law relating to the trustee investments from time to time;

(b)The whole of the income each year is to be paid to the Royal Anthropological Institute (“the Institute”) on its undertaking to apply the money for scientific publications or lectures in the United Kingdom, New Zealand or elsewhere;

(c)Where reasonably possible, the Institute is to give preference to essays, publications or lectures on the life sciences (encompassing such fields as biology and medicine) and scientific research into the relationship between Electricity and the life sciences, but (where that is not reasonably possible) then for essays, publications or lectures on discoveries in anthropology made in the last two years;

(d)If the Institute declines to receive the income from the fund at any time, or is unable or unwilling to give the appropriate undertaking as set out above, then that income is to be accumulated and added to the capital of the trust fund. If after a period of five years no payment had been made to the Institute, then Public Trust is authorised to make arrangements for payment of that income to the Royal Australian College of Physicians, the Royal Society of New Zealand or some other similar body (eg a University) in New Zealand, the United Kingdom or Australia which Public Trust

is satisfied will apply that income for scientific publications, research and/or lectures.

Grice J