|
|
Home
| Databases
| WorldLII
| Search
| Feedback
High Court of New Zealand Decisions |
Last Updated: 28 November 2018
|
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
|
|
CIV-2017-404-2984
[2018] NZHC 3014 |
|
IN THE MATTER
|
of an application under Section 66 of the Trustee Act 1956 and the
inherent
jurisdiction of the Court
|
|
IN THE MATTER
|
of a charitable trust established under the Will of Marianne Caughey
Preston dated 15 February 1934
|
|
BETWEEN
|
THE MARIANNE CAUGHEY SMITH- PRESTON MEMORIAL REST HOMES TRUST BOARD
Applicant
|
|
Hearing:
|
9 August 2018
|
|
Counsel:
|
BW Morley for applicant
V McCall/J Watson for Attorney-General as intervener
|
|
Judgment:
|
20 November 2018
|
JUDGMENT OF FITZGERALD J
This judgment was delivered by me on 20 November 2018 at 4 pm pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Date...............
Solicitors: Hesketh Henry, Auckland
Crown Law, Wellington
The Marianne Caughey Smith-Preston Memorial Rest Homes Trust Board [2018] NZHC 3014 [20 November 2018]
Introduction
[1] Marianne Caughey Preston was a devout Christian who, in Ireland, New York and eventually Auckland, committed her life to charitable acts. On her death in 1938, Marianne’s will settled the Caughey Preston Trust (the Trust). For 80 years the Trust has provided care for the infirm, aged or those suffering hardship. It has done so through the provision of residential accommodation and (from 1961) geriatric hospital facilities. But the expenses associated with providing such care have proved uneconomic. In 2017, the applicant (Trust Board) resolved to close the geriatric hospital. The Trust now seeks directions from the Court under s 66 of the Trustee Act 1956 (the Act) on the proper interpretation of the Trust Board’s powers and discretions, ultimately to determine how the Trust Board will meet the purposes of the Trust in the future.
Settlement and running of the Trust
[2] Marianne was born in Ireland in 1851. She became active in charitable work from an early age and continued that work in New York, where she moved in 1874 with her husband, William Smith. In 1880 the couple emigrated to Auckland. They established a successful business with Marianne’s brother, Andrew Caughey, known as Smith & Caughey’s.
[3] In New Zealand, Marianne was instrumental in establishing and helping to run several charitable organisations that provided “indoor relief” (residential services) to those in need — particularly women. Other organisations with which she was involved provided “outdoor relief” (non-residential or community-based assistance), for example, providing money, food, clothing or other means of support and care. Marianne also made large donations to charities and the people of Auckland before her death on 1 September 1938.
Settlement of the Trust
[4] Evidence on this application has been given by affidavit by Marianne’s great, great nephew, and Chair of the Trust Board, Andrew Stuart Caughey (who I will refer
to as Mr Caughey, not to be confused with Marianne’s brother) and by Gloria Budgen (General Manager of the Trust).
[5] The Trust was established by cl 5(53) of Marianne’s will. Its original trustees were the executors of the will. The endowment comprised most of Marianne’s estate and was valued at around £325,000 at the time of settlement (approximately $40 million when adjusted for inflation today). It included extensive property holdings, cash in excess of £20,000 and a large shareholding in Smith & Caughey’s. I will refer to the Trust’s assets as the Trust Fund.
[6] The will initially contemplated that a property in Ponsonby would be used to establish a rest home. But the trustees had power to sell or lease land (and acquire other property) to meet the purposes of the Trust. The Ponsonby property was sold and a Remuera property bought in its stead.
[7] The Remuera property (Upland Home) opened in October 1950 (two years before the Trust Board was incorporated in March 1952). It provided accommodation, board and lodging to aged and impecunious women. Upland Home was subject to high demand and a new wing was opened in 1958. A second residential facility on the property was opened in 1972.
[8] In conjunction with the operation of Upland Home, the Trust provided “outdoor relief” from 1950. In 1961, the Trust Board sought from the High Court, and was granted, an extension of its powers to establish a geriatric hospital. The hospital opened at Upland Home in 1964 with the support of a £120,000 government grant. It was further extended in 1970 and 1979. In 1993 changes to government policy concerning geriatric hospitals led to a decline in the number of occupants at Upland Home. To reduce costs and boost occupancy rates, the Trust Board obtained further Court orders in 1994 permitting it to admit male residents and patients.
Decline and closure of Upland Home
[9] Though the admission of male patients and residents was hoped to increase the occupancy of Upland Home and reduce costs, the Trust Board has incurred operating deficits since 1990. Ms Budgen explained several reasons why that was the case:
- (a) Modern residential aged care facilities are expected to provide a full range of services, including hospital, palliative care and dementia services. These are expensive and subject to strict regulatory control, resulting in additional costs.
(b) The costs of care have become “mismatched” from available government funding models and subsidies.
(c) The Trust does not operate a model that would maximise profits, rather it seeks to meet the purposes of the Trust.
(d) There is an oversupply of residential aged care facilities and the Trust’s dated facilities simply cannot compete.
[10] Deficits from operating Upland Home increased in recent years from $1.1 million (2014) to $3.76 million (2016). As a result, the Trust Board concluded that methods of meeting the Trust’s purposes that worked well from the 1950s to the 1990s are no longer appropriate. The Trust Board emphasises that it was Marianne’s wish to provide help to aged, infirm and impecunious women “in perpetuity”. In July 2017, it resolved to close the facilities at Upland Home. The facilities were decommissioned and now stand empty.
Relief sought
[11] The Trust Board has applied under s 66 of the Trustee Act for directions that:
(a) The words “aged infirm or impecunious” in Marianne’s will are used disjunctively; so the Trust may provide for those who are aged and/or infirm and/or impecunious.
(b) The Trust Board has power to apply the whole or any part of the Trust Fund to meet the purposes of the Trust, “by owning and/or operating residential or non-residential rest home and/or geriatric hospital facilities to assist and provide for women and men who are aged and/or infirm and/or impecunious, irrespective of religious beliefs”.
(c) The Trust Board has power to apply the Trust Fund (in whole or part) to meet the purposes of the Trust other than by the means in (b) above, for example, by providing “outdoor relief”.
(d) The Trust Board has power to deal with or dispose of, in its absolute and unfettered discretion, the Trust Fund and in the case of Upland Home it may, without limitation:
(i) sell off or lease the whole or part of Upland Home on such terms and conditions as it thinks fit; and
(ii) any moneys derived from such sale or lease shall augment the general funds of the Trust and shall be held to meet the purposes in the manner set out above.
[12] The Trust Board also seeks a direction that its costs associated with these proceedings be paid out of the Trust Fund.
Involvement of Attorney General
[13] At an early stage of the proceedings, the Trust Board sought directions for service of the proceedings on the Attorney-General who, on behalf of the Crown, superintends the administration of charities in New Zealand. Orders to that effect were granted by Toogood J in December 2017.
[14] The Attorney-General has accordingly made submissions on this application. He takes no issue with the facts presented in the affidavits of Mr Caughey and Ms Budgen.1 Nor does the Attorney-General dispute the appropriateness of the relief sought at [11](a) and (b) above. The Attorney does, however, differ from the Trust Board on the relief sought at [11](c) above and the consequent relief sought at (d). As will be seen from the discussion later in this judgment, the Attorney says that properly construed, the Trust’s purpose is the provision of a rest home or homes, and that it
1 An agreed statement of facts was also filed.
does not extend to the provision of outdoor relief instead of the provision of a rest home or homes.
The key issue for determination
[15] Key to determining whether the relief sought at [11](c) and (d) above is appropriate is to ascertain the Trust’s purpose. This turns on the proper interpretation of the relevant aspects of Marianne’s will establishing the Trust. That issue was the focus of the parties’ written and oral submissions.
Relevant principles — scope of s 66 and interpretation of trust deeds
[16] Counsel for the Trust Board and for the Attorney-General have identified two legal issues on this application. The first concerns the scope of the Court’s power or jurisdiction under s 66 of the Act. The second concerns the legal principles governing the interpretation of trust deeds.
Court’s jurisdiction under s 66 of the Act
[17] Section 66 provides:
66 Right of trustee to apply to court for directions
(1) Any trustee may apply to the court for directions concerning any property subject to a trust, or respecting the management or administration of any such property, or respecting the exercise of any power or discretion vested in the trustee.
(2) Every such application shall be served upon, and the hearing may be attended by, all persons interested in the application or such of them as the court thinks expedient.
[18] In New Zealand Māori Council v Foulkes, Kós J described the section as “simply an enactment of a broad Equitable jurisdiction that has long resided in the Chancery Courts.”2 It is not confined to mere points of minor importance but rather provides a “parallel source of jurisdiction to resolve any substantial question of law
2 New Zealand Māori Council v Foulkes [2014] NZHC 1777, [2015] NZAR 1441 at [44].
concerning the meaning or administration of a trust.”3 But s 66 is generally not an appropriate avenue to resolve disputed issues of facts.4
[19] An appropriate invocation of the s 66 jurisdiction is where the issue “involves a pure question of the interpretation” of trust documents.5
[20] Ultimately, there was no real dispute that the application for directions in this case properly falls within the scope of s 66 of the Act. The Trust Board seeks directions on the interpretation of the Trust deed, an orthodox example of the purpose of a s 66 application. I am satisfied I have jurisdiction to make the directions sought.
Interpretation of trust deeds
[21] In Foulkes, Kós J also made the following points about the interpretation of trust documents:6
[71] First, in essence similar principles should apply to the construction of trust deeds as to the construction of contracts. This approach has been endorsed on more than one occasion by Judges in the High Court of Australia, including Mason CJ and Deane J in Gosper v Sawyer and more recently by Heydon and Crennan JJ in Byrnes v Kendle. The latter found compelling the idea that instruments, whether statutory, contractual or trust should be construed according to broadly common rules. Particularly as to the admission of parol evidence to illuminate meaning:
The authorities establish that in relation to trusts, as in relation to contracts, the search for “intention” is only a search for intention as revealed in the words the parties used, amplified by the facts known to both parties.
[72] In this country similar observations have been made in this Court. The proposition that the principles of construction of wills, trusts, contracts and statements are the same is more easily expressed than explained. Restraint in the receipt of parol evidence is even more desirable in construing trusts than it is in the case of contracts. What, for instance, is to happen in this case where the Trust Deed is the direct product of a unilateral settlement by the Crown, but the indirect product of tripartite (or more) negotiations? That is true of trusts generally. Trust deeds are often the product of wide ranging family discussion. Whose intent is relevant? Why should it matter? Whose background knowledge is to be taken into account? Where an instrument does not have “parties”, but has been the product of somewhat diffuse negotiation,
3 At [46].
4 At [49].
6 New Zealand Māori Council v Foulkes [2014] NZHC 1777, [2015] NZAR 1441.
the principles in cases such [as] Investors Compensation Scheme v West Bromwich Building Society and Vector Gas Ltd v Bay of Plenty Energy Ltd, themselves not without complexity in the contract field, are not easy to apply.
(Footnotes omitted).
[22] Kós J’s observations in Foulkes were adopted by Gendall J in Re Burnett Mount Cook Station Charitable Trust.7
[23] Though there have been further developments in the law of contractual interpretation since the Judge’s comments in Foulkes, I consider those comments represent the general approach the Court should take to interpretation in this case. Again, there was no real dispute between the Trust Board and the Attorney General on these matters.
Brief scheme of Marianne’s will
[24] Before addressing the competing submissions on the Trust’s purpose, it is useful to set out briefly the scheme and relevant provisions of Marianne’s will.
[25] The will is lengthy. At cl 5, Marianne “divise[d] bequeath[ed] and appoint[ed] to [her] trustees all [her] property both real and personal whatsoever and wheresoever situate upon trust”. There follows 57 sub-clauses, directing the Trustees to make certain gifts from and take certain steps with the Trust Fund. Sub-clauses 1 to 52 comprise detailed instructions on gifts to be made to various individuals, as well as a range of charitable and religious institutions.
[26] Sub-clause 53 is the crucial clause for present purposes. It too is lengthy. The starting point is the introductory paragraph to subcl 53 itself. It provides:
AS to the whole of my property situate at Clifton Road and Masons Avenue Ponsonby Auckland ... I DIRECT my trustees TO HOLD the same as or for
the purposes of a Rest Home or Homes or the site for such Home or Homes to be known as the “MARIANNE CAUGHEY SMITH-PRESTON
MEMORIAL REST HOMES” for ever or for the longest period as shall be allowed by law for aged infirm or impecunious women whose financial position is for the time being less favourable than it formerly was and irrespective of any religious beliefs AND IN CASE there be any reason why the same may not be held or given for an indefinite period or the period
abovementioned or for ever THEN my trustees shall hold the same for such abovementioned use and purposes during the lives of the issue whether children or remoter issue now living of Her late Majesty Queen Victoria and the lives or life of the survivors and survivor of such issue AND ...
[27] Sub-clause (53)(a) states:
I DECLARE that by “ REST HOMES” I mean a Home or Homes in or from or by which the inmates or beneficiaries can be temporarily or permanently lodged and boarded or lodged boarded and/or clothed and/or provided for as the case may be ...
[28] Sub-clause 53(b) provides:
I DIRECT AND DECLARE that my Trustees may make all such rules and regulations as they may in their absolute discretion think fit for the management or control of the said Home or Homes and as to who shall be eligible for admission or to the use and privileges thereof and on what terms and subject to what conditions the use or privileges may be enjoyed or forfeited or the persons who may have been admitted thereto may be expelled therefrom or denied the privileges or any of them and generally to act in all matters whatsoever in relation to the affairs of the said Homes as fully in every matter or thing as I myself could have done or made such rules and regulations or as if I had embodied the same in this my Will IT BEING MY DESIRE to leave everything connected with the management establishment and control of the said Home or Homes and/or privileges connected therewith and the rules and regulations affecting the same to the full and absolute control and discretion of my trustees SUBJECT ALWAYS to my expressed general desire and direction that the said Rest Home or Homes and the benefits and privileges connected therewith are for the benefit and use of aged infirm or impecunious women whose financial position is for the time being less favourable than it formerly was AND PROVIDED ALWAYS that no distinction shall be made in any way on account of denomination or religious belief.
[29] In terms of subsequent sub-clauses:
(a) Sub-cl (53)(c) empowers the trustees to appoint a Board of Managers to manage the rest homes;
(b) Sub-cl (53)(d) sets the quorum of the Board of Managers;
(c) Sub-cl (53)(e) empowers the Trustees or members of the Board to sell any part or all of the rest home property and use the proceeds to build new rest homes or enlarge the existing home(s);
(d) Sub-cl (53)(f) empowers the Board to accept donations towards the “maintenance upkeep or furtherance of this scheme or Home”; and
(e) Sub-cl 5(53(g) concerns the incorporation of the Board of Managers.
[30] Sub-clause (53)(h) is of particular relevance, being central to the Trust Board’s argument as to the Trust’s purpose. It provides in full:
I GIVE to my Trustees the sum of TWENTY THOUSAND POUNDS free of succession and other duties for them to invest the same and to apply the net income therefrom and if need be the capital thereof or part of the capital thereof from time to time in or towards building repairing replacing improving enlarging managing supporting maintaining and paying the expenses of or incidental to the said Rest Home or Homes or in connection with the appointment of the Board of Managers aforementioned or the transfer to the said Board of the property or properties or any part or parts thereof or the framing of a Constitution for the said Homes or the incorporation of my Trustees or the said Board under any Act or in any way in connection with the instituting or the conducting or running of the said Rest Home or Homes AND
I DECLARE that without in any way limiting this clause or the powers hereby given that the expenses of the Home or Homes shall include the wages or salaries of the Manager or other servants of my Trustees or of other servants of the Board aforementioned and allowances by way of reasonable remuneration to members of the said Board as such including in the case of my Trustees allowances in addition to what they may receive as Trustees hereunder and all such other reasonable outgoings and expenses as may be found necessary or expedient AND I ALSO FOR SPECIAL CLEARNESS
DECLARE but without in any way limiting the generality of any of the powers or discretions of my Trustees or of the Board that residence in or use of any of the Rest Homes shall if my Trustees or the Board as the case may be think fit include board lodging clothing and/or care and help generally and that if on account of all the Home or Homes being filled or occupied or for other cause it seems desirable to my Trustees (or the Board as the case may be) so to do the ancillary benefits or any of them apart from actual residence (in other words what is generally termed outdoor relief) can be granted to or provided for any woman or women from time to time.
[31] Finally, subcl 53(i) provides that if the trustees/Board are no longer lawfully able to hold the property mentioned in subcl 53, including the rest home or homes, for the uses or purposes described, the property is to pass to the Auckland Hospital and Charitable Aid Board to be used by it “for the relief of aged infirm or impecunious women ...”.
Overview of the Trust Board and Attorney-General’s submissions
[32] The Trust Board’s arguments in favour of the directions sought are premised on its analysis of the Trust’s purpose. The Trust Board says, rightly, that its obligation is to give effect to and comply with the terms of the Trust and in so doing, “the Board must exercise its powers and discretions for the charitable purposes and objects set out in clause 5(53)” of Marianne’s will.
[33] The Trust Board says that ascertaining the purpose of a trust is not always straightforward and, importantly in the context of the present case, should not be confused with the activities the trustees may undertake in the exercise of their powers and discretions. In that context, the Trust Board says that, while one’s eye is initially drawn to the opening section of cl 5(53)8 in defining the Trust’s purpose, cl 5(53) must be construed as a whole. On that basis, the Trust Board says the Trust’s purpose is to assist and provide:
... for ever or for the longest period as shall be allowed by law for aged infirm or impecunious women whose financial position is for the time being less favourable than it formerly was and irrespective of any religious beliefs....
[34] This purpose is drawn from the balance of the opening paragraph to cl 5(53) of the will, set out at [26] above.
[35] The Trust Board says that its interpretation of the purpose of the Trust is consistent when cl 5(53) is read as a whole, including, in particular, cl 5(53)(h) ([30] above), which it says demonstrates Marianne’s will contemplates both “indoor” and “outdoor” relief, with the latter not necessarily connected with a rest home or homes. In light of what it says is the Trust’s purpose, the Trust Board submits there are diverse avenues and means by which it may assist the aged or infirm or impecunious in modern society — not dependent on or connected with the operation of a rest home.
[36] The Trust Board submits the effect of cl 5(53), properly construed in its context, is therefore to allow the Trust Board to provide the classes or objects with:
8 Set out at [26] above.
(a) a rest home or homes, temporary or permanent residential lodging, board, clothing, and/or other provision;
(b) care, provision, benefits and/or privileges connected with rest homes;
or
(c) ancillary benefits apart from actual residence, being what is generally termed outdoor relief and including assistance with board, lodging, clothing and/or care and help more generally.
[37] Turning to the Trust Board’s submissions on the particular directions sought:
(a) First, the direction sought at [11](a) above, seeks to interpret the phrase “aged infirm or impecunious” disjunctively: “aged and/or infirm and/or impecunious”. It is submitted this is the natural and appropriate interpretation. It is also submitted a disjunctive reading is consistent with the broader charitable purposes of the Trust.
(b) Second, the Trust Board submits the direction sought at [11](b) above confirms that it has a clear power and discretion to apply the Trust Fund to the purposes of the Trust (as it defines them), as it has been doing up until recently.
(c) Third, on the basis that the Trust Board’s preferred interpretation of the Trust’s purpose is accepted, then the direction sought at [11](c) would follow — the power and discretion confirmed by [11](b) would not be limited to the way the Trust Fund has until recently been applied.
(d) Fourth, the direction sought at [11](d)(i) above would allow the Trust Board “to deal with any real property acquired”. It says s 14(1) of the Act, which allows a trustee to sell trust property to the extent allowed in the trust deed, provides for this power. Second, it is submitted the will gave broad powers to “sell off or lease the whole or any part of the said Rest Home property” and this could be said to apply also to any
property held by the Board. Third, it is submitted it would be incongruous if Marianne had allowed the trustees to sell her own home (initially part of the Trust Fund), but would later take issue with the sale of other less personal assets. Finally, the direction sought at [11](d)(ii) above will turn on whether the direction sought at [11](c) can be made.
Attorney-General’s submissions
[38] The Attorney-General did not differ from the Trust Board on the issue of the first two directions sought, but made detailed submissions on directions (c) and (d). The Attorney says that under an alternative (preferred) interpretation of cl 5(53) of the will, the application for directions at [11](c) and (d)(ii) is beyond what the Court can direct on an application under s 66 of the Act.
[39] Ms McCall, for the Attorney, submits the Trust’s purpose is to provide for residential accommodation in the form of rest homes. A general charitable intention is not the object of the benefaction; rather, the provision of rest homes is the essence of the Trust.
[40] Proceeding from that interpretation, the Attorney-General submits cl 5(53) does not appear to contemplate, enable or empower the trust to provide outdoor relief simpliciter. Rather, he says that on a proper interpretation of cl 5(53), the Trust Board is empowered to provide indoor relief and any outdoor relief is an adjunct to that primary purpose. The Attorney-General criticises the Trust Board’s interpretation of cl 5(53)(a), (b) and (h), saying those clauses need to be read as a whole: extracting sections from them removes useful context that does not support the Trust Board’s argument. In relation to cl 5(53)(h), for example, the Attorney-General says:
28. Clause 5(53)(h) does not empower the Trust to provide ‘care and help generally’ instead of providing of [sic] rest homes. The reference to ‘care and help generally’ in cl 5(53)(h) must be read in conjunction with the earlier phrase in cl 5(53)(h) ‘residence in or use of any of the Rest Homes’. When that is done, it is evident that this clause allows for ‘care and help generally’ to be provided to residents of the rest homes which the Will sought to establish.
[41] The Attorney-General accepts that even when it appears on the face of a will that the deceased intended to benefit a specific institution, the Court may find a broader
charitable intention.9 But here, the Attorney says cl 5(53) does not empower the Trust to provide standalone and generalised help to the relevant class outside a rest home context.
[42] If that interpretation is accepted, the Attorney-General submits the best approach would be for the Trust Board to prepare a scheme under pt 3 of the Charitable Trusts Act 1957, on the basis that operating rest homes has become “inexpedient”.10 It is submitted the application for directions (c) and (d) is effectively inviting the Court to exercise its cy-près jurisdiction,11 but that has since been replaced by the Charitable Trusts Act.12 If that approach were taken, the Trust Board could then seek a variation to allow the Trust to provide for outdoor or other relief considered appropriate under a scheme. The Attorney General submits that s 66 of the Trustee Act is not suited to applications to vary trust purposes, but the Charitable Trusts Act provides a public, transparent process to make that change.
Discussion — what is the Trust’s purpose?
[43] I start by considering the central issue, namely the competing arguments on the Trust’s purpose.
[44] In this context, leading authorities have commented on the task of ascertaining whether:
(a) the deed or instrument in question specifies a general charitable intention or purpose, and then specifies the means or vehicle through which that general intention or purpose is to be effected; or
10 Charitable Trusts Act 1957, s 32.
11 Cy-près means as close to or near as possible. A cy-près modification allows the Court to find a purpose as close as possible to the settlor’s original purpose for a charitable trust.
12 The Attorney-General does not cite authority for this proposition, but the position is confirmed by Re McElroy Trust [2002] 3 NZLR 99 (HC), where O’Regan J found that s 32 of the Charitable Trusts Act 1957 “supersedes the common law doctrine of cy-pres” (at [15]).
(b) the means or vehicle specified is itself the intent or purpose of the trust.
[45] For example, in Re Wilson, Parker J stated the following:13
First of all, we have a class of cases where, in form, the gift is given for a particular charitable purpose, but it is possible, taking the will as a whole, to say that, notwithstanding the form of the gift, the paramount intention, according to the true construction of the will, is to give the property in the first instance for a general charitable purpose rather than a particular charitable purpose, and to graft on to the general gift a direction as to the desires or intentions of the testator as to the manner in which the general gift is to be carried into effect.
...
Then there is the second class of cases, where, on the true construction of the will, no such paramount general intention can be inferred, and where the gift, being in form a particular gift, — a gift for a particular purpose — and it being impossible to carry out that particular purpose, the whole gift is held to fail.
[46] Similarly, in Re Willis, Younger LJ said:14
If on the proper construction of the will the mode of application is such an essential part of the gift that you cannot distinguish any general purpose of charity but are obliged to say that the prescribed mode of doing the charitable act is the only one the testator intended or at all contemplated, then the court cannot, if that mode fails, apply the money cy pres.
[47] And in Re Spence (dec’d) Sir Robert Megarry VC stated:15
If a particular institution or purpose is specified, then it is that institution or purpose, and no other, that is to be the object of the benefaction. It is difficult to envisage a testator as being suffused with a general glow of broad charity when he is labouring, and labouring successfully, to identify some particular specified institution or purpose as the object of his bounty. The specific displaces the general. It is otherwise where the testator has been unable to specify any specific charitable institution or practicable purpose, and so, although his intention of charity can be seen, he has failed to provide any way of giving effect to it. There, the absence of the specific leaves the general undisturbed.
13 Re Wilson [1913] 1 Ch 314 (Ch) at 320.
14 Re Willis [1921] 1 Ch 44 (CA) at 54.
15 Re Spence (dec’d) [1979] Ch 483 (Ch) at 493.
[48] A New Zealand example of these principles at play is Baptist Union of New Zealand v Attorney-General.16 In that case, the trust instrument declared the trustees were to hold the land given to the trustees:17
... upon trust that the same shall be ever hereafter occupied set apart appropriated and used under the name of the Remuera Children’s Home for the residence and use in manner hereinafter appearing of poor and indignant children.
[49] A key issue in that case was the trust’s purpose. Woodhouse J stated:18
On the one hand Mr Salmon submits that the real purpose is the amelioration of the lot of orphans or indigent children in terms of their residential living and educational arrangements. The other argument is that the trust purpose is to set up what I will describe as an orphanage for young children in the form of an appropriately organised single institution. Undoubtedly the objective in the mind of the donors in an ultimate sense was the human element and it might seem, looking at that ultimate objective, that the vehicle chosen by them to give effect to it is entirely secondary. I accept that argument looked at in that general way but I am in no doubt that in the legal sense the charitable purpose of these donors was to establish on a permanent basis an orphanage for young children as one coherent institution.
[50] For those reasons, Woodhouse J observed that the proper course in that case would be for the proposals to be put forward by way of a scheme pursuant to the Charitable Trusts Act.19
[51] While that case and his Honour’s observations have some parallels with the present case, only so much can be drawn from earlier decisions. Identity of the true purpose of a trust will turn on the proper interpretation of the words used in the trust deed or instrument: each case will therefore turn on its own facts.20
[52] Having carefully considered the terms of Marianne’s will, the affidavit materials filed on the application and counsels’ careful submissions, I have reached the conclusion that the interpretation advanced by the Attorney is to be preferred. It is not possible, on this application at least, to make the directions sought at [11](c) and (d)(ii) above. I have reached this conclusion for the following reasons.
16 Baptist Union of New Zealand v Attorney-General [1973] 1 NZLR 42 (SC).
17 At 42.
18 At 43.
19 At 44.
20 Re Utterson-Kelso (deceased) [2016] NZCA 556, [2017] NZAR 84 at [46].
The terms of the will
[53] The plain words of Marianne’s will, and its overall scheme, support the conclusion that the provision of a Rest Home or Homes is the essential purpose of cl 5(53) of the Trust. To put it another way, I do not consider the establishment and operation of a Rest Home or Homes is merely a means, or vehicle, for delivery of Marianne’s intention, “grafted onto” a more general purpose of the Trust.
[54] Sub-clause 53 is one of 57 sub-clauses containing detailed instructions as to the basis upon which the trustees are to hold and deal with the Trust Fund. Sub- clause 53 is specifically directed to particular real property owned by Marianne at the time of her will. It directs the trustees to hold the property “as or for the purposes of a Rest Home or Homes or the site of such Home or Homes...”. Rather than as the Trust Board submits, the balance of that opening clause is, in my view, a descriptor of the class of persons eligible to benefit from the Rest Homes or Home (and associated services), rather than a purpose independent of the provision of a Rest Home or Homes.
[55] The following sub-clauses all deal with or assume the Trust’s ongoing provision of a Rest Home or Homes. I fully accept these could be viewed as simply mechanism provisions, setting out the details of the vehicle or means by which Marianne identified her true charitable purpose would be delivered. However, read carefully, it is clear that the overall scheme or effect of cl 5(53) is premised on the provision of a Rest Home or Homes and, in that context, the provision of ancillary or connected benefits.
[56] Turning to key supplementary provisions:
(a) Clause 5(53)(a)21 provides a definition of the concept of “Rest Home or Homes”. I consider the clause is properly read as “a Home or Homes in or from or by which the inmates or beneficiaries can be temporarily or permanently [lodged] or [lodged and boarded] or [lodged, boarded and/or clothed and/or provided for].” It is correct the definition
21 Set out at [27] above.
envisages assistance which extends beyond accommodation in the Home (reinforced by the distinction between “inmates” and “beneficiaries”). But all other benefits (be they board, clothing and/or being provided for) are connected with the provision of a Home or Homes. The opening words to the definition confirm this by referring to a Rest Home being a “Home or Homes in or from or by which....” the “inmates or beneficiaries” can receive the benefits referred to above. The definition therefore recognises that not all benefits provided by the Home or Homes need to be ancillary to residing at the Home, but are nevertheless ancillary to the existence and operation of such a Home.
(b) Clause 5(53)(b)22 again proceeds on an assumption of the existence of the Home or Homes, and the making of rules “as to who shall be eligible for admission or to the use and privileges thereof”. Again, the clause distinguishes between admission to (presumably residence in) the Home and other use and privileges, but those other use and privileges are framed by the reference to being “thereof”, again connecting them with the Home or Homes. This is reinforced later in the clause, in which Marianne expresses her desire that everything to do with the “management establishment and control of the said Home or Homes and/or privileges connected therewith ...” (emphasised added) should be within the control and discretion of her trustees. In a similar vein, the clause goes on to state:
... subject always to my expressed general desire and direction that the said Rest Home or Homes and the benefits and privileges connected therewith are for the benefit and use of aged infirm or impecunious women ... .
(Emphasis added)
(c) Clause 5(53)(e)23 confers upon the trustees, or members of the Trust Board, power to sell off or lease the whole or any part of the Rest Home
22 Set out at [28] above.
23 See [29](c) above.
property, and buy or lease further or other property. The clause directs that “any moneys derived from any such sale or least shall augment the general funds of such Rest Home or Homes and shall be held upon the trusts relating thereto”. Accordingly, the clause does not envisage the proceeds being directed to general charitable works to benefit aged, infirm or impecunious women.
[57] Clause 5(53)(h)24 is, as noted, of particular importance to the Trust Board’s argument on interpretation. It is in three parts.
[58] The first part addresses the gifting of £20,000 to be invested or applied “in or towards” a range of different matters, but all connected with the Rest Home or Homes. The first part of this clause concludes with the catch-all that the funds may be used “in any way in connection with the instituting or the conducting or running of the said Rest Home or Homes”. There is nothing in this part of the clause which indicates the funds, or any income derived from them, is to be used to benefit aged, infirm or impecunious women generally.
[59] The second part of the clause (commencing “AND I DECLARE”) is directed to the payment of the wages of those running the Homes, or of Board members themselves.
[60] The third part, on which the Trust Board places greatest emphasis, provides further directions as to the benefits to be provided under this part of Marianne’s will. As noted at [35] above, the Trust Board emphasises that the clause, particularly through the words “for other cause” envisages the provision of benefits (outdoor relief) unconnected with the operation of a Rest Home or Homes.
[61] I agree with the Trust Board that this sub-clause provides the strongest support for its preferred interpretation. The opening words to this part of the clause, however, are framed by reference to “residence in or use of any of the Rest Homes”, which again, like the definition of Rest Homes itself (at cl 5(53)(a)), does not limit the benefits to be provided to residents in the Rest Homes, but also contemplates use of
24 Set out at [30] above.
those Homes. The clause goes on to make clear that “residence in or use of” the Rest Homes is to include “board lodging clothing and/or care and help generally”. This is again connected with the existence and operation of a Rest Home.
[62] The balance of the clause contemplates a scenario where, because the Rest Home is filled or occupied, or where “for other cause” the Trustees or Board consider it desirable, any of the “ancillary” benefits “apart from actual residence” can be granted to “any woman or women from time to time”. Two points emerge from this:
(a) First, in my view, this aspect of the clause still envisages or is premised on the existence and operation of a Rest Home or Homes; but contemplates there may be circumstances other than the Home(s) being full in which the trustees or Board consider it desirable to provide the “ancillary” benefits in the absence of actual residence. The benefits, being described as “ancillary”, must be ancillary to something. In my view, that is ancillary to the operation of a Rest Home. I do not see this clause as conferring a power to provide outdoor relief generally, that is, irrespective of the ongoing existence and operation of a Rest Home.
(b) Second, the clause contemplates such “ancillary benefits” being granted or provided to “any woman or women” from time to time. It is not framed by reference to aged, infirm or impecunious women. I do not consider the former to be shorthand for the latter. Other clauses referencing the beneficiaries of the Rest Home or Homes carefully repeat the more fulsome descriptor of the class of beneficiaries used in the opening paragraph to c 5(53).25 Accordingly, this aspect of the clause envisages a scenario in which the trustees or Board may grant or provide ancillary benefits to women generally, but in a secondary way to the primary purpose, being residence in or use of the Rest Home or Homes by aged, infirm or impecunious women. I do not read this last aspect of cl 5(53)(h) as elevating the provision of outdoor relief generally to the very purpose of the Trust itself.
25 See the last part of cl 5(53)(b) (above at [28]) and cl 5(53)(i) (described at [31] above).
[63] The Trust Board also relies on cl 5(53)(i), which provides that if the trustees or Board cannot lawfully hold the property the subject of cl 5(53) for the uses or purposes set out in the clause, the property is to be vested in the Auckland Hospital and Charitable Aid Board to be used “for the relief of aged infirm or impecunious women”. The Trust Board says this reinforces that, when looked at as a whole, the relief of aged, infirm or impecunious women generally is the purpose of the Trust.
[64] Again, I accept that Marianne’s intention was certainly aimed at improving the lot of aged, infirm or impecunious women. Nevertheless, standing back and looking at the wording of cl 5(53) as a whole, and adopting Younger LJ’s words in Re Willis, the establishment and operation of a Rest Home or Homes is “such an essential part of the gift” that I do not consider it can properly be characterised as the mere vehicle or means through which a broader charitable purpose was to be carried out.26
[65] Other aspects of the will, outside cl 5(53), support this conclusion. Clause 7 is the residue clause, pursuant to which Marianne directed her residuary estate to be held:
... upon the trusts hereinbefore mentioned concerning and to augment the sum of Twenty thousand pounds referred to in sub-clause (h) of sub-clause (53) of Clause 5 of this my Will which is given to and is to be held by my Trustees regarding the endowment of and advancement of the aforementioned
MARYANNE CAUGHEY SMITH-PRESTON MEMORIAL REST HOMES
and is in the event of the failure of all other trusts declared by my will to be held by the Auckland Hospital and Charitable Aid Board for its general purposes.
[66] The residuary estate is again directed to the establishment and operation of a Rest Home or Homes, rather than to a more general purpose. Only when all trusts fail does Marianne direct the Trust Fund to be directed to more general charitable purposes.
[67] For completeness, I observe that unlike many cases in which similar issues arise, this case does not turn on whether the gift is to a specific institution or a more general charitable purpose. Marianne does not, for example, direct cl 5(53) to a particular site or named institution; in other words, the gift is not directed to specific
26 Re Willis [1921] 1 Ch 44 (CA) at 54.
“bricks and mortar”.27 Rather, Marianne’s intention was directed to an overarching purpose — the establishment and operation of a Rest Home or Homes for the benefit of a certain class of women. While Marianne certainly envisaged the Home would first operate from her Ponsonby property, her vision was broader than that. She envisaged her trustees may, and empowered them to, sell off or lease the whole or part of the “Rest Home property” and buy or lease other property for establishing and operating a Rest Home or Homes.28 And that is of course what happened when the original trustees came to implement Marianne’s will. They formed the view that the Ponsonby site was unsuitable for a rest home and it was sold and the Remuera property purchased in its place.
The context and factual circumstances known to Marianne
[68] Having considered the plain words of the will itself, the second step is to cross- check the interpretation arrived at against the relevant context in which the instrument or trust deed was created, and the facts and circumstances known to be operating on Marianne’s mind.29
[69] No independent expert evidence is before the Court as to the facts and circumstances existing at the time of Marianne’s will. Mr Caughey and, in a more detailed fashion, Ms Budgen nevertheless provide some commentary on the circumstances existing in the mid-1930s.
[70] Mr Caughey states that in Marianne’s day, the term “Rest Home” meant board or lodging and accommodation provided to residents who could essentially care for themselves. He also explains that the concept of “outdoor relief” included grants and financial assistance and support to those not necessarily living in the home itself. Both these concepts are of course consistent with their use in Marianne’s will.
27 As in, for example Re Utterson-Kelso (deceased) [2016] NZCA 556, [2017] NZAR 84, where the issue was whether the gift was for the Green Gables Home only, or for some broader charitable purpose.
28 Clause 5(53)(e).
29 Re Burnett Mount Cook Station Charitable Trust [2016] NZHC 2669, (2016) NZTR 26-024 at [103](b).
[71] Mr Caughey also speaks to the very different role in today’s society of state- funded social welfare, pensions and other benefits, which was lacking in Marianne’s day. The absence of such services clearly drove the need for the provision of residential accommodation and related benefits by private organisations, such as charities and religious organisations.
[72] Ms Budgen explains that she has researched Marianne’s life and the social context of her time, confirming that in the 1930s, the state provided little by way of social welfare. As a result, the only resort of the less fortunate members of society was to private organisations such as churches and charities. Ms Budgen explains these organisations provided the most basic of life’s necessities, such as accommodation for those who had nowhere to live, as well as food, clothing and other assistance to those who had a place to live but were without other essentials. She explains that operating “homes” in which those in need could live was common, and was known as “indoor relief”. Commonly, the residents were expected to look after themselves, in terms of day-to-day cooking, cleaning and maintaining the home. Ms Budgen notes that Marianne was very familiar with the concept of such homes, as she had been an integral figure in establishing and maintaining The Door of Hope, which provided residence and assistance to women from a house on Cook Street in central Auckland.
[73] Ms Budgen also explains that assistance other than residential support was also common, and was known as “outdoor relief”, another concept utilised by Marianne in her will. Such outdoor relief could take the form of money, food, clothing, goods or other means of care and support. Ms Budgen confirms that Marianne would also have been familiar with outdoor relief, including through her involvement with the Sisters of the Poor/the Visiting Sisters, organisations for which she served as president for a time.
[74] Having considered these aspects of Mr Caughey and Ms Budgen’s affidavits, and what light they shed on the facts and circumstances likely to have been operating on Marianne’s mind at the time, I do not consider they cause or require the meaning ascribed above to the plain words of the will to be altered. Those facts and circumstances, and the broader context existing at the time Marianne executed her
will, are consistent with the concepts adopted in it and, in particular, the concepts of indoor and outdoor relief.
[75] Accordingly, I conclude that the primary purpose, or essence, of the Trust,30 is the establishment and operation of a rest home or homes for the benefit of aged, infirm or impecunious women whose financial position is for the time being less favourable than it formerly was and irrespective of any religious beliefs. The Trust Board is clearly empowered to provide outdoor relief (in the sense described in this judgment), as an adjunct to that primary purpose. But the Trust does not empower the Trust Board to provide outdoor relief to persons generally, instead of the establishment and operation of a Rest Home or Homes.
[76] With that conclusion in mind, I turn now to the directions sought by the Trust Board.
Direction (a) – disjunctive reading of “aged infirm or impecunious”
[77] As noted earlier, there was no real dispute in relation to this direction.
[78] I agree with the Trust Board’s approach, namely that the words “aged infirm or impecunious” mean “aged and/or infirm and/or impecunious”. The interpretation issue arises in part from the distinct lack of commas between many listed items or concepts in Marianne’s will, as can be seen in the various clauses cited in this judgment. But I accept the Trust Board’s argument that the interpretation advanced is supported by the use of the word “or” between the word “infirm” and “impecunious” and is both the natural and in my view intended interpretation.
[79] The Trust Board points to the absurd consequences if its preferred interpretation were not adopted. As it notes, on one reading, the Trust Board could assist “aged infirm” women, or “impecunious” women, but not a woman who had the misfortune to suffer from all three predicaments. That would plainly be inconsistent with the overall intent of c 5(53) of the will.
30 As it was prior to the two sets of Court orders on schemes advanced by the Trust Board.
[80] I will therefore make a direction in the terms sought.
Direction (b) - scope of Board Powers and discretions
[81] Given the above discussion of the Trust’s purpose, and the two earlier Trust schemes approved by this Court, this direction can plainly be made, though noting that its reference to the Trust’s “Purposes” is to the purpose as confirmed in this judgment.
Direction (c) - scope of Board powers and discretions
[82] Given the conclusion reached on the Trust’s purpose, it is not appropriate to make this direction.
[83] I should make it clear, however, that this is not to suggest the Trust Board does not have any power to provide “outdoor relief” at all. Marianne clearly envisaged the provision of such relief, though as an adjunct to the provision and operation of a Rest Home or Homes.
Direction (d) – dealings with the Trust Fund
[84] This direction has two parts:
(a) first, that the Trust Board may sell off the whole or part of Upland Home on such terms and conditions as it thinks fit; and
(b) second, the proceeds from sale shall augment the general Trust Fund and shall be held for the Purposes (as defined in the originating application) and may be applied in the manner set out in directions (b) and/or (c) above.
[85] I have no doubt that it is appropriate to make the first part of this direction.
[86] First, under s 14(1)(a) of the Trustee Act, a trustee may sell trust property, provided that the power to do so applies if, and only to the extent, there is no contrary intention in the trust deed. Similar powers exist under s 14(1)(d) and (e) of the Act in relation to leasing or subletting trust property.
[87] Clause 5(53)(e) of Marianne’s will contemplates the trustees selling or leasing any part or whole of the “said Rest Home property”. The Trust Board responsibly notes it could be argued the “said Rest Home property” applies to the original Ponsonby property only, rather than to any property held by the Trust Board on which it operates a Rest Home or Homes. But as the Trust Board notes, it is not strictly necessary to decide that point as, on its face and in the context of ss 14(1)(a) and (d) of the Act, cl 5(53)(e) does not purport to limit the Trust Board’s power to buy and sell property. As such, the Trust Board has power pursuant to s 14 of the Act to sell and lease trust property.
[88] But had I been required to determine the point, I would have concluded cl 5(53)(e) permits the sale of the whole or part of any property on which the Trust Board operates a Rest Home or Homes in any event. It would be most odd if Marianne had envisaged the sale of the Ponsonby property and alternative property purchased in its place, but did not empower the trustees to sell that second property. That is particularly so given Marianne envisaged the Rest Home or Homes being operated in perpetuity.31
[89] I am therefore satisfied clause 5(53) of the will and s 14 of the Act provide the Trust Board with the power and discretion to deal with Upland Home. Direction (d)(i) can therefore be made. Obviously the proceeds of any sale must be directed to the Trust’s purpose as identified in this judgment, or as may be modified by way of further scheme.
Direction (e) – costs of these proceedings to be paid from the Trust Fund
[90] Finally, the direction as to costs is appropriately made. These proceedings are a proper function of the Trust Board’s powers and duties. Indeed, the Trust Board has acted quite properly and responsibly in bringing these proceedings, as it (potentially) embarks on a new phase of the Trust’s life.
31 Clause 5(53). See [26] above.
Result
[91] I therefore make directions in accordance with paragraphs 11(a), (b), (d) and
(e) of the originating application dated 14 December 2017, save that the order in terms of paragraph 11(d)(ii) is by reference to the Trust’s purpose as identified in this judgment, rather than the purpose as defined at paragraph 5 of the application.
[92] I decline to make the direction sought at paragraph 11(c) of the application.
Fitzgerald J
NZLII:
Copyright Policy
|
Disclaimers
|
Privacy Policy
|
Feedback
URL: http://www.nzlii.org/nz/cases/NZHC/2018/3014.html