IN THE HIGH COURT OF NEW ZEALAND TIMARU REGISTRY

I TE KŌTI MATUA O AOTEAROA TE TIHI-O-MARU ROHE	
CIV-2022-476-2
[2022] NZHC 2118	

UNDER	the Trusts Act 2019 and the Charitable Trusts Act 1957	
IN THE MATTER OF	the Trevor Wilson Charitable Trust (No. 2)	
BETWEEN	TREVOR WILSON TRUSTEE LIMITED
Applicant	

Hearing:	On the papers	
Appearances:	J W A Johnson and T S Burtenshaw for Applicant T J Brown for the Order of St John
A J Hopping and E Tomblin for Presbyterian Support (Upper South Island)
B McKenna and R M McMenamin for Attorney-General	
Judgment:	24 August 2022	

JUDGMENT OF DUNNINGHAM J

This judgment was delivered by me on 24 August 2022 at 3 pm, pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar Date:

RE TREVOR WILSON TRUSTEE LIMITED [2022] NZHC 2118 [24 August 2022]

Introduction

[1]	This is an application brought by Trevor Wilson Trustee Ltd (the trustee), as trustee of the Trevor Wilson Charitable Trust (No. 2) (the No. 2 Trust), seeking to modify the terms of the No. 2 Trust’s deed. It does so on two alternative bases:

(a)	an application for directions under s 133 of the Trusts Act 2019 that it is entitled to amend the trust deed pursuant to a variation clause to make amendments to, among other things, a geographic restriction in the charitable purposes clause; and in the alternative;

(b)	an application for the approval of a scheme under Part 3 of the Charitable Trusts Act 1957 to make the same amendments.

[2]	For reasons set out later in this decision, I am satisfied it is more appropriate to treat this as an application for approval of a scheme under Part 3 of the Charitable Trusts Act 1957, and the application is dealt with on that basis.

Background

[3]	The full background to this application  is  set  out  in  the  affidavit  of Alister David Argyle, who is a director of the trustee, along with Trevor Croy and Gary Leech.

[4]	In his affidavit, Mr Argyle explains that the Trevor Wilson Charitable Trust (the  No.  1  Trust)  was  settled  by  Mr  Wilson,  a  successful  businessman,  on    12 October 1990. The No. 1 Trust held shares in Mr Wilson’s successful bulk cartage business. The objects and purposes of the No. 1 Trust were to provide for and benefit the Order of St John and Presbyterian Support Services, or their respective successors, “but only within the Mid-Canterbury provincial region in New Zealand”.

[5]	On 23 April 2008, the No. 1 Trust settled the No. 2 Trust by deed. Following settlement of the No. 2 Trust, the assets of the No. 1 Trust, which by this stage included the bulk cartage business, were sold to the No. 2 Trust. While it is unclear why the Trust’s assets were resettled on the No. 2 Trust, this was arranged by highly

experienced professional advisers, and it is assumed this was done to “tidy up” the No. 1 Trust’s relatively basic trust deed.

[6]	The objects and purposes of the No. 2 Trust are set out in cl 3.1 of the trust deed and are to provide for the charitable purposes or objects of the Order of St John and Presbyterian Support (Upper South Island). However, again, it may only do so “within the Mid-Canterbury provincial region in New Zealand”.

[7]	The No. 2 Trust has significant assets of approximately $24.5 million,1 and the capital base continues to grow because the trustee is required to retain one half of all income generated in each year.

The application

[8]	The application was prompted by the fact the trustee has in recent times experienced difficulty in identifying meritorious charitable purposes or objects which provide benefit to only the Mid-Canterbury region. The increased centralisation of charitable organisations has exacerbated this issue. As a result, the trustee has had to decline making distributions that would have provided a material benefit to the Mid-Canterbury region, because they would not benefit that region alone. By way of example, the trustee declined the request to construct a helipad at Christchurch Hospital because it would not be used for Mid-Canterbury exclusively. This is not withstanding the fact that it is residents of more rural parts of Canterbury, such as Mid-Canterbury, that are most likely to require transportation by helicopter to hospital. Similarly, St John, which is a named beneficiary, operates a national structure, and it is often not possible to separate out costs for Mid-Canterbury purposes alone.

[9]	As a result, the trustee wishes to amend the geographic restrictions so that it provides that a distribution may be made “so long as it provides a material benefit to the Mid-Canterbury provincial region in New Zealand and its residents”. The proposed change is that the word “only” is omitted, and the phrase “and its residents”

1	As recorded in the memorandum of counsel for the applicant dated 14 January 2022, presumably updating  the  earlier  affidavit  evidence  which  quantified   the  assets  at  $22.1  million   at   31 March 2020.

is added in order to enable distributions to be made for purposes which materially, but not exclusively, benefit residents in that region.

[10]	At the same time, the trustee wishes to define the Mid-Canterbury provincial region, which is not presently defined. It proposes that this be defined as “the Ashburton District as constituted by the Local Government (Canterbury Region) Reorganisation Order 1989”.

[11]	The trustee also proposes making other more minor changes as follows:

(a)	update the definition of “Advisory Trustees” in cl 1 to reflect the fact that no such persons will have been appointed as at the time the deed is restated or the scheme is approved;

(b)	add a new clause (to be cl 2) which acknowledges the formal approval of the scheme;

(c)	update the name of the No. 2 Trust in cl 2 to omit the word “the”;

(d)	clarify cl 5.1 which contains drafting errors regarding the maximum and minimum number of trustees;

(e)	update cl 5.2 to vest the power of appointment of trustees in the trustee of the No. 2 trust in anticipation of the settlor, the No. 1 Trust, being dissolved;

(f)	remove cl 5.5 to reflect the fact that the power of appointment would vest in the trustees of the No. 2 Trust collectively, so that the situation to which cl 5.5 is directed would not occur;

(g)	clarify cl 6.13.2(b) which contains a drafting error as to the authorisation to affix the seal of the trust;

(h)	update cl 9.1 so that the power to appoint advisory trustees’ vests in the trustees of the No. 2 Trust, not the settlor, in anticipation of the settlor, the No. 1 Trust, being dissolved;

(i)	update cl 10.3 to reflect the fact that the Canterbury Westland Branch of the Institute of Chartered Accountants no longer exists;

(j)	update the statutory references in cl 1, 5, 7 and 12 to their modern equivalents;

(k)	make consequential changes to the cross-references within the trust deed.

These amendments are not intended to make any material changes to the No. 2 Trust, but are to clarify or update the existing powers.

[12]	Mr Argyle, in his affidavit, explained that the trustee’s view is that these changes will not in any way change the general charitable purpose of the No. 2 Trust, or move away from Mr Wilson’s intentions when establishing the No. 1 Trust, which is to benefit Mid-Canterbury. Rather, they will give the trustee greater flexibility in making distributions to deserving causes and organisations in an era where charities are increasingly centralised.

The position of the Attorney-General

[13]	On 16 June 2021, the trustee’s solicitors wrote to Crown Law, on behalf of the Attorney-General, advising of the trustee’s proposed application and the scheme. On 10 December 2021, Crown Law provided a copy of the Attorney-General’s report on the proposed scheme. That report is annexed to Mr Argyle’s affidavit.

[14]	The report outlines the reasons for the trustee seeking the amendments to the trust deed, as set out above. It notes the trustee believes the combination of the power to vary the trust and the settlor’s intention is broad enough to make the amendments proposed, and there is no need for an application under Part 3 of the Charitable Trusts Act. However, the Attorney-General took a different view saying:

… given the Attorney-General’s role as protector of charities and the prescribed statutory protections in the Charitable Trusts Act, particularly the specific provision for variation of charitable purposes in s 32, I consider the broad power to vary in the No 1 Trust deed (notably not in the No 2 Trust deed) does not obviate the need for the Trustee to use the prescribed statutory procedures in respect of the proposed geographical limit variation to the purpose provisions in the No 2 Trust deed.

[15]	The report concludes that the proposed variation of the No. 2 Trust’s purpose to extend the geographic limit “is as close as is reasonably possible to the original purposes as set out in Trevor Wilson’s bequest and the No 2 Trust deed. Accordingly, it is one that may be approved by this Court”. In respect of the other proposed changes, the Attorney-General considers they “would be an improvement on the original trust deed and likely facilitate the Trust and its Trustees in the administration of the property and the carrying out of the Trust’s charitable purposes as required by s 33”.

[16]	The application was duly served on the Order of St John’s Southern Regional Ambulance Trust Board and Presbyterian Support (Upper  South  Island)  as  the  two named beneficiaries of the No. 2 Trust. Given the application under Part 3 of the Charitable Trust Act, it needed to be advertised in the Gazette and three times in a local newspaper. It was noted that there was no need for wider service as any person who wished to oppose the proposed scheme was entitled to oppose it by giving written notice to the Registrar, the trustee and the Attorney-General.2

[17]	St John served a notice of opposition recording that it did not oppose:

(a)	the proposed amendment to the geographic restriction as specified at paragraph 2(h) of the application; or

(b)	the proposed minor or administrative changes as specified at paragraph 2(g) of the application.

[18]	However, it noted that if a scheme is approved, any variation must be as close as reasonably possible to the terms of the original trust, and it said the variation proposed by the applicant went further than this. It also recorded that the current

2	Charitable Trusts Act 1957, s 37.

organisational head of St John in New Zealand is “The Priory in New Zealand of The Most Venerable Order of the Hospital of St John of Jerusalem”, and the Priory should be referred to in the Charitable Purposes Clause, not the Order of St John South Island Region Trust Board.

[19]	Presbyterian Support (Upper South Island) also filed a response. Mr Andrew Johnston, a trustee of that organisation, records that, having discussed the application with the trustee and being assured there was no intention to change the nature of its operations or the way in which it selects the charitable purposes it benefits, Presbyterian Services did not oppose the proposed variation, although it noted a concern that “any expansion in the geographical area in which the Trevor Wilson Trust operates could operate to dilute the funding [the organisation] receive for its charitable services”.

[20]	One further submission was received by email from Mr Gordon McNab. His submission objected to the reference to the new Trusts Act 2019 in both the intituling and content of the Court documents filed, saying that Act did not override or modify the long-established provisions of the Charitable Trusts Act 1957 in respect of charitable trusts registered under that Act. He also appeared to believe that the fact an Associate Judge made decisions as to service of the application prior to its public notification in accordance with s 36 of the Act, meant there had been a procedural error warranting refusal of the application for variation.

[21]	Unfortunately, prior to this matter being considered, Mr McNab died and so his objections could not be pursued. In any event, I consider he misunderstood the meaning of s 36(1) of the Act. Section 36(1) simply requires the proposed scheme to be advertised before an application to approve a scheme is considered by the Court. No substantive consideration of the application has occurred prior to the scheme being publicly advertised and there is no barrier to it being considered.

[22]	The application was scheduled to be heard on 1 November 2022, with a case management conference on 15 August 2022 at 2.30 pm. However, prior to that conference the parties advised that the opposition filed by the Order of St John had now been resolved on the basis that the applicant sought further amendments to the

proposed trust deed as set out in the draft annexed to the joint memorandum. The additional proposed amendments are:

(a)	Clause 1.1(j) and cl 4.1 are amended to clarify the precise entities referred to as St John in the trust deed to include both the regional and national bodies.

(b)	Clause 4.2(b) is amended to require the trustee to consider the needs of St John and Presbyterian Support, on at least an annual basis, but without limiting the trustee’s discretion, and clarifying that any distributions made to St John may or may not be made to either, neither or both the regional and national bodies.

[23]	Presbyterian Support and the Attorney-General recorded they took no issue with the proposed amendments, and all parties sought that the application be dealt with on the papers.

Discussion

[24]	As indicated at the outset, I consider the most appropriate route by which the amendments to the trust deed are made is pursuant to a scheme under Part 3 of the Charitable Trusts Act 1957. All the procedural requirements for consideration of the proposed scheme have been met and, as the report of the Attorney-General points out, although the settlor gave the trustee a power of variation, that does not necessarily obviate the need for the trustee to use the prescribed statutory procedures to approve the variation where they seek to amend the scope of the charitable purpose. Here, the proposal to amend the stated geographical limitation to which areas the charitable trust can benefit is such a change.

[25]	In taking that approach, I have not formally considered whether the changes could be introduced through the variation power alone, and I do not do so. I simply consider that the approval of a scheme under the Charitable Trusts Act is a formal public process, which avoids any future dispute over whether there was scope to amend the deed in the way proposed under the terms of the No. 1 Trust.

[26]	To advance the proposed scheme, the trustee relies on ss 32, 33 and 56 of the Charitable Trusts Act 1957. Section 32(1) of the Act provides:

32	Property may be disposed of for other charitable purposes

(1) Subject to the provisions of subsection (3), in any case where any property or income is given or held upon trust, or is to be applied, for any charitable purpose, and it is impossible or impracticable or inexpedient to carry out that purpose, or the amount available is inadequate to carry out that purpose, or that purpose has been effected already, or that purpose is illegal or useless or uncertain, then (whether or not there is any general charitable intention) the property and income or any part or residue thereof or the proceeds of sale thereof shall be disposed of for some other charitable purpose, or a combination of such purposes, in the manner and subject to the provisions hereafter contained in this Part.

[27]	Section 33 of the Act 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.

[28]	The jurisdiction provided by s 33 is designed to remedy difficulties encountered by charitable trustees in administering trusts that may thwart their ability to give effect to the trust’s objectives. The trustees must establish under s 33 that the proposed changes to trust deed powers will facilitate “the administration of a property or income or the carrying out of the trust”.

[29]	In approving, the scheme the Court must also be satisfied under s 56(1)(a) 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 moral; that the scheme can be approved under the Part of this Act under which the approval is sought; that every proposed purpose is charitable within the meaning of that

part of this Act and can be carried out; and that the requirements of that part of this Act have been complied with in respect of the scheme.

[30]	I am satisfied that there is jurisdiction under the Charitable Trusts Act 1957 as the assets of the trust are held for a charitable purpose. The purposes of the trust have for some time been frustrated by the strict geographic restriction in the Charitable Purposes clause, as has been explained in the affidavit of Mr Argyle. Indeed, I consider it is now impracticable or inexpedient to continue to administer the No. 2 Trust in a manner consistent with the geographic restriction in the Charitable Purposes clause.

[31]	The proposed amendments are also for charitable purposes and accord as nearly as is reasonably possible in the changed circumstances to the terms of the original trust.

[32]	The scheme complies with s 56 of the Charitable Trusts Act 1957 in that:

(a)	the scheme is a proper one;

(b)	it carries out the desired purpose of the trust; and

(c)	it is not contrary to law, public policy or good morals.

[33]	For all these reasons, I am satisfied that the proposed changes (as set out in the attachment to the joint memorandum of the parties dated 10 August 2022) meet the test under ss 32 and 33 of the Act and the requirements of s 56(1)(a). The scheme is accordingly approved by this Court under Part 3 of the Act.

Result

[34]	I make the following orders:

(a)	approving the scheme prepared by the trustee, a copy of which is set out in full in the annexure to the joint memorandum of counsel dated 10 August 2022; and

(b)	the costs of this application (including the Attorney-General’s costs of
$750) are to be met from the trust fund on an indemnity basis.

Solicitors:
Argyle Welsh Finnigan, Ashburton