New Zealand Guardian Trust Company Ltd v Presbyterian Support (Upper South Island)

• Jurisdiction: New Zealand
• Judge: Gendall J
• Judgment Date: 13 March 2015
• Neutral Citation: [2015] NZHC 468
• Docket Number: CIV-2014-409-000146
• Court: High Court
• Date: 13 March 2015

BETWEEN

The New Zealand Guardian Trust Company Limited

Applicant

and

Presbyterian Support (Upper South Island)

Respondent

[2015] NZHC 468

CIV-2014-409-000146

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

Application under s32 Charitable Trusts Act 1957 (property may be disposed of for other charitable purposes) to vary the purposes of a trust — the deceased had left property from her estate on Trust to the Green Gables Trust Board and the Green Gables Rest Home — at the relevant time, the Trust Board was not effectively in existence and the Rest Home had been sold by the respondent the day before the death of the deceased — variation to the will sought by the applicant was that the income to be paid to the Trust Board should instead be paid to the respondent for the purpose of benefitting the elderly in the Nelson Region — whether the gift to the Rest Home had lapsed and if yes, whether there was a general or paramount charitable intention to save the gift.

JUDGMENT OF Gendall J

(Dealt with on the papers)

Introduction

1 The applicant, the New Zealand Guardian Trust Company Limited, applies to this Court for orders pursuant to s 32 of the Charitable Trusts Act 1957 (the Act) to vary the purposes of a trust arising from the Will of the late Iris Maude Utterson- Kelso (the deceased), who died on 2 June 2001. 1 Her Will was dated 11 May 1995(along with a codicil dated 21 January 1999). Probate was granted on 25 June 2001.

2 The difficulty here is occasioned by a reference in cl 5 of the deceased's Will (the relevant part of which is attached as Annexure A) which states in cl 5(b)(iii)(3):

• 5. I GIVE DEVISE AND BEQUEATH the rest of my estate… UPON TRUST…to stand possessed of the residue… UPON TRUST…

• …

• (b) SUBJECT to the payment provided herein for my sponsored children I DIRECT my trustee to hold the residue UPON TRUST as follows:

  • …

  • (iii) TO divide the remaining net annual income as shall not be accumulated as foresaid into four (4) parts and to pay and apply such parts as follows:

  • …

  • (3) AS to one (1) such part for the GREEN GABLES TRUST BOARD at Christchurch to be used for the purposes of the Green Gables Home at Nelson;

  • …

3 In particular, the difficulty arises as a result of the gift in cl 5(b)(iii)(3) to the Green Gables Trust Board (the GGTB) and the Green Gables Home. At the relevant time the GGTB, it seems, may not have been effectively in existence and, in addition, the Green Gables Rest Home itself was sold by Presbyterian Support who had taken it over from GGTB with settlement taking place on the day before the death of the deceased.

4 The variation to the Will sought by the applicant is to the effect that the income to be paid under the trust to the GGTB should instead be paid to the respondent, Presbyterian Support (Upper South Island), (Presbyterian Support) for the purpose of benefitting the elderly in the Nelson Region.

5 With this dilemma it seems to be suggested on behalf of Presbyterian Support that there are three possible outcomes here:

• (a) The gift relating to the Green Gables Home has lapsed, in which case the bequest might fall into residue (but given other specific provisions in the Will the fact that it might fall into residue is not a real possibility here as I see it);

• (b) The charitable organisation GGTB has ceased to exist, in which case cl 5(b)(iii)(5) of the will would operate to vest the income in the remaining three charities referred to in cl 5 of the will (the Salvation Army, the Nelson Diocesan Trust Board and the Nelson Regional Hospice Trust;

• (c) The gift survives but with the sale of the Green Gables Rest Home it is no longer expedient to administer and accordingly a modification should be made under s 32 of the Act.

6 The application before me is one made in accordance with s 32 of the Act. No response has been received by any party directed to be served with this proceeding, including the three charities named in para [5](b) above, the Salvation Army, the Nelson Diocesan Trust Board and the Nelson Regional Hospice Trust, who stand to benefit pursuant to cl 5(b)(iii)(5) in the Will if the present application is unsuccessful. In addition, Presbyterian Support has indicated that it does not oppose the application. Accordingly there is effectively no opposition to this application.

7 Nonetheless, applications to vary wills require to be afforded consideration commensurate with their legal status and the respect the Courts have for atestamentary intent. 2 Therefore, it is on this footing that consideration of this application now proceeds.

The Will and orders sought

8 The relevant clauses of the Will, as I have noted, are annexed hereto marked “ A”. The applicant seeks to vary clause 5. The orders it seeks in order to achieved its desired outcome are as follows:

• (a) A declaration that the gift created by cl 5(b)(iii)(3) constitutes a valid charitable trust.

• (b) A declaration that cl 5(b)(iii)(3) has not lapsed.

• (c) A declaration that cl 5(b)(iii)(5) does not apply to cl 5(b)(iii)(3).

• (d) A declaration that the income to be paid to the Green Gables Trust Board pursuant to cl 5(b)(iii)(3) between the period 2 June 2001 to the present be paid to Presbyterian Support for the purposes of benefiting the elderly in the Nelson region.

• (e) To replace cls 5(b)(ii) and 5(b)(iii) as follows:

  To accumulate for a period of 80 years an amount equivalent to ten per centum (10.00%) per annum of the net annual income arising from my estate by adding the same to the capital thereof, whereupon the capital be divided into four parts and each transferred to:

  • i. the Salvation Army at Nelson for use amongst the people in need in the City of Nelson;

  • ii. the Nelson Diocesan Trust Board for the purpose of the Whareama Home at Stoke Nelson;

  • iii. Presbyterian Support for the purposes of benefiting of the elderly in the Nelson Region; and

  • iv. the Nelson Region Hospice Trust for the purposes of the hospice facilities and services within the Nelson health area.

Jurisdiction

The Charitable Trusts Act 1957

9 This application is expressly brought pursuant to s 32 of the Act. In cases where there is some failure of an original specified charitable purpose, s 32(1) of the Act provides for the application of property to another charitable purpose and expressly states that s 32(1) applies whether or not there is any general charitable intention. However s 32(1) cannot be used to dispose of property if s 32(3) applies. Section 32(3) preserves the doctrine of lapse. This doctrine of lapse applies only where the charitable purpose has failed before the Will came into effect and there is, what is described as, no general or paramount charitable intention.

10 Section 32 of the Act provides: 3

32 Property may be disposed of for other charitable purposes

• (1) Subject to the provisions of subsection (3) of this section, 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 of this Act.

• …

• (3) This section shall not operate to cause any property or income to be disposed of as provided in subsection (1) or subsection (2) of this section-

  • (a) If in accordance with any rule of law the intended gift thereof would otherwise lapse or fail and the property or income would not be applicable for any other charitable purpose:

  • (b) In so far as the property or income can be disposed of under Part 4 of this Act.

• (4) Subject as aforesaid, this section shall extend to cases where the charitable purpose affecting any property or income is defined by a

  scheme approved by the Court under this Part of this Act or otherwise, or approved by the Attorney-General under Part 4 of this Act, and in any such case the original purpose or purposes may be restored, with or without modifications.

• …

11 The requirements for this section to apply are therefore: 4

• (a) Property or income is given or held upon trust, or is to be applied, for any charitable purpose; and

• (b) It is:

  • (i) Impossible, impracticable or inexpedient to carry out that purpose; or

  • (ii) The amount available is inadequate to carry out that purpose; or

  • (iii) That purpose has already been effected; or

  • (iv) That purpose is illegal, useless or uncertain

12 Where the requirements of the section are made out, irrespective of whether there is a general charitable intention, the property or income is to be disposed of for some other charitable purpose. However, as I have mentioned, s 32(3) renders subs (1) inoperative to the extent that either (a) any rule of law would cause the intended gift to lapse or fail “and the property or income would not be applicable for any other charitable purpose”.; or (b) the income or property can be disposed of under Part 4 of the Act.

Procedural compliance

13 Because the applicant desires to utilise s 32, it has prepared a scheme for disposition of the property in accordance with the requirement to do so in s 34. This scheme has been laid before the Attorney-General in accordance with s 35, resulting in the production of a detailed report from the Attorney-General as required by s 35(1)(b). Following the release of the Attorney-General's report, the applicants also complied with the advertising requirements contained in s 36.

14 I have jurisdiction to approve the...