Re Cawthron Institute HC Nelson CIV-2011-442-276 [2011] NZHC 1393; [2012] 1 NZLR 427 (26 October 2011)

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IN THE HIGH COURT OF NEW ZEALAND NELSON REGISTRY

_{CIV-2011-442-276}

UNDER The Charitable Trusts Act 1957

IN THE MATTER OF An application to amended the terms of a charitable trust created by the will of Thomas Cawthron and incorporated by the Thomas Cawthron Trust Act 1924 (a Private Act)

BETWEEN CAWTHRON INSTITUTE Applicant

Hearing: 12 October 2011

Counsel: M J Logan for Applicant

P J Gunn for Attorney-General

Judgment: 26 October 2011 at 2:30 PM

_{I direct the Registrar to endorse this judgment with a delivery time of 2.30pm on the}

26^th day of October 2011.

_{RESERVED JUDGMENT OF MACKENZIE J}

[1] This is an application for an order approving a scheme under Part III of the Charitable Trusts Act 1957 to amend the terms of the charitable trust which is administered by the applicant board. There are two proposed amendments. The first is to increase the number of directors from five to seven. The second is to change the annual balance date from 31 March to 30 June. The Attorney-General has reported on the scheme, pursuant to s 35. That report accepts the rationale for the proposed variations and says that, but for an issue of jurisdiction which the Attorney-General raises, the variations are such as could properly be approved by the

_Court.

CAWTHRON INSTITUTE HC NEL CIV-2011-442-276 26 October 2011

[2] The issue of jurisdiction which the Attorney-General raises is as to the ability of the Court to amend the balance date as proposed. To describe why that question arises, some background is necessary.

[3] The Cawthron Trust was created by the will of Thomas Cawthron, a prominent citizen of Nelson who died in 1915. By his will he left the residue of his estate:

For the purchase of land and the erection and maintenance of an industrial and technical school institute and museum to be called the Cawthron Institute.

[4] The Trust was a substantial one, in that approximately £200,000 was available for the benefit of the institute. The trustees named in the will were the Bishop of Nelson, the Mayor of Nelson, the Chairman of the Waimea County Council, the members of the House of Representatives and Legislative Council for the city of Nelson and Waimea Electorate, the Chairman of the Nelson Harbour Board and one named individual.

[5] At an early stage, an issue arose as to whether the appointment of the trustees by reference to their office was a personal one, or an appointment of the office holder for the time being. That issue was addressed in the application for probate of the estate. In an oral judgment delivered on 12 November 1915, Stout CJ held that the naming of the executors by their office was sufficient to enable the then holders

of those offices to be appointed by name in the grant of probate. He went on to say:^[1]

... So far as the trust is concerned, I have not at present to deal with that. There will, however, be great difficulty with it. The question will arise, when a man has ceased to hold the office in virtue of which he was appointed, should he cease to be a trustee? The question is whether it was meant to include him as long as he lives or merely as long as he holds the office. A special Act seems to be required to make the matter clear, ...

[6] The suggestion by the Chief Justice was taken up, and a private Act, the

Thomas Cawthron Trust Act, was passed in 1924 (the 1924 Act). The 1924 Act went much further than addressing the issue which had been identified by the Chief

Justice in granting probate. The preamble, after describing in some detail the issue concerning the identity of the trustees, went on to say:

... And whereas it is desirable that the trustees should be constituted a body corporate with perpetual succession and a common seal, and that certain powers should be granted for the administration of the said trust: And whereas the objects of this Act are not attainable otherwise than by legislation: ...

[7] The Act then added considerable detail to the economically worded provision in the will by providing the necessary machinery provisions for the administration of the Cawthron Institute.

[8] From time to time, amendments to those provisions were found to be necessary, and there have been several amendments to the 1924 Act.

[9] Two amendments, made in 1979, are relevant to the present question. Section 14 of the 1924 Act provided for the board to prepare an annual balance sheet and accounts with a balance date of 31 December. By the Thomas Cawthron Trust Amendment Act 1979, the balance date was altered to 31 March.

[10] A second relevant amendment was also made by that Act. A new s 18 was added to the 1924 Act. That provided:

Application of Charitable Trusts Act 1957

Notwithstanding that the powers of the Board, the trusts established by the will of the said Thomas Cawthron, or the mode of administration of those trusts, may have been varied by this Act, it is hereby declared that Part 3 of The Charitable Trusts Act 1957 shall apply to the Board and to those trusts as if—

(a) The purposes for which the property held by the Board is so held were charitable purposes within the meaning of that Act; and

(b) The Board were trustees within the meaning of Part 3 of that Act;

and

(c) Those variations had been effected under Part 3 of that Act.

[11] Since then, the Trust has been varied by previous orders of this Court made under Part III of the Charitable Trusts Act. An order was made on 10 February 2003 making certain alterations, the most important of which was to appoint a board of

directors with commercial experience and expertise to provide governance of the institute’s commercial operations, which are substantial, and to report to the Trust Board.

[12] The short point which the Attorney-General raises on the present application relates to the proposal to alter the balance date from 31 March to 30 June. The essence of the Attorney-General’s concern is that, because the date is specified in s 14 of the Act, the Court’s powers under Part III of the Charitable Trusts Act do not extend to altering the date which Parliament has fixed, and that an amendment to the Act is necessary to achieve that.

[13] Counsel for the Attorney-General submits that s 18 does not permit the Court to approve an amendment which has the effect of altering a specific provision in the

1924 Act, and that the Court’s powers are limited to approving variations which are not specifically provided for in the 1924 Act. Counsel submits that s 18 does not empower the board to seek a variation which is at odds with another section of the Act and a variation under the Charitable Trusts Act cannot amend an Act of Parliament.

[14] Mr Gunn draws attention to the preamble to the 1979 Amendment Act which he submits is of significance. The relevant part of that preamble is:

(a) and whereas it would be more convenient if any further variation of the powers of the Board or of the mode of administration of said Trust were effected under Part III of the Charitable Trusts Act 1957:

[15] He submits that while the preamble states that one of the intentions of the

1979 amendment was to provide that future amendments would be undertaken under the Charitable Trusts Act, no mechanism to achieve this is contained in the Act. Section 18 is, in Mr Gunn’s submission, simply declaratory and not empowering.

[16] Mr Logan for the applicant submits that if a purposive approach is taken, the change to the balance date made by the 1979 amendment is to be treated as if it were a change made under Part III of the Charitable Trusts Act rather than a statutory variation, so that any subsequent change to the balance date would not be in conflict

with a statutory provision. Counsel submits that this would be an unusual interpretation but one which achieves the purpose of the Amendment Act.

[17] Both counsel referred to the Parliamentary debates on the 1979 amendment, but agreed that little assistance is to be derived from them.

[18] The correct interpretation of s 18 must be determined by applying the principles of statutory construction contained in the Interpretation Act 1999, including in particular s 5, by which a purposive interpretation is required. I consider that a clear Parliamentary purpose can be gleaned from the preamble to the

1979 Amendment Act, set out in [14]. Parliament noted that it would be more convenient if any further variation of the powers of the board or the administration of the Trust were effected under Part III of the Charitable Trusts Act 1957, rather than by a further amending Act. That clearly indicates that Parliament intended to empower the Court to make changes which would otherwise require legislation. The powers of the Board and the mode of administration of the Trust were in 1979 contained almost entirely within the 1924 Act. The provisions of the will were limited to the establishment of the Trust. The will did not address at all the powers of the Board (indeed it did not create the Board) or the mode of administration of the Trust. I do not discern from the objects of the Act as stated in the preamble any intention to reserve to Parliament, to the exclusion of the Court, the variation of some matters relating to the powers of the Board or the mode of administration of the Trust.

[19] I approach the interpretation of s 18 having regard to that declaration of Parliamentary intention in the preamble. When that is done, I consider that it is clear that the effect of s 18 is to apply Part III of the Charitable Trusts Act to the Board and the Trust so as to confer on the Court the powers under that part in respect of all, and not just some, aspects of the administration of the Trust.

[20] As to Mr Gunn’s submission that s 18 is merely declaratory, I do not read the words “it is hereby declared” in s 18 as limited to describing or declaring the pre- existing legal position. The statement that Part III of the Charitable Trusts Act is to

apply to the Board and the Trust must have force as an operative provision. Without that, s 18 does not correctly describe the legal position.

[21] Section 18 explicitly acknowledges that the mode of administration of the Trust has been varied by the 1924 Act, and specifically applies Part III of the Charitable Trusts Act 1957. Section 33, in Part III of that Act, provides that the mode of administering a charitable trust may be prescribed or varied. On its plain words, s 18 applied Part III to all aspects of the mode of administration of the Trust, including those provided for in the 1924 Act. If it had been the intention of Parliament in 1979 to preserve for Parliamentary determination any matters specified in the Act, leaving the possibility of a Part III application to the Court to apply only to the prescription of additional matters not inconsistent with the existing statutory provisions, then different words would, in my view, have been required to achieve that more limited object. Parliament has prescribed that the powers of the Board and the mode of administration of the Trust, as those are contained in the 1924 Act, may be varied, as well as extended or prescribed. There is no indication in s 18 that the power to vary does not apply to a matter which is specified in the 1924 Act. On the plain meaning of the words in s 18, the powers are not limited in this way.

[22] One aspect which might be thought to tell against that interpretation of the extent of the power conferred by s 18 is that there have been further statutory amendments since the 1979 amendment. That might be taken to suggest that powers of the Court are restricted in a way which made those amendments necessary. There is support for that view in the preamble to the Thomas Cawthron Trust Amendment Act 1993. That Act altered the composition of the Board. The preamble included a recital that “the objects of this Act cannot be attained otherwise than by legislation.” I give weight to that statement. However, I do not consider that the views of the promoters of the 1993 Act, or of Parliament at that time, as to the scope of the 1979 amendment can be determinative of the interpretation of the 1979 Act. They do not lead me to a conclusion which in my view is at variance with the plain words of the section.

[23] A useful statement as to the interrelationship between the roles of Parliament and the Court in relation to variation of trusts is contained in Parliamentary Practice in NZ.^[2]

Private bills are required to have a preamble and this must address why the promoter prefers legislation if the objects of the bill could be attained by invoking the general law as it already exists. This is a reminder that Parliament is reluctant to grant special legislative rights to private persons, unless there is a proven necessity. For example, while Parliament has, in general legislation, provided the machinery for the variation or revocation of trusts, it is also possible for the terms of a trust to be varied by private legislation. The promotion of a private bill is not prohibitively expensive; it may even be less expensive than applying to the court. However, having established a judicial procedure to deal with variations of trusts, Parliament is reluctant to create legislative exceptions to it for the benefit of individuals or small groups of persons unless compelling reasons can be advanced. In general, persons such as trustees must apply to the court where the law provides avenues for them to attain their objectives and not look to Parliament to play the role which has been given to the courts.

Usually, if machinery exists under the general law to accomplish what the party (whether a trustee or not) wishes to effect, this is the course that must be followed. Private legislation should be a last resort because what is intended is impossible to effect without it, or because to proceed under the general law would be not merely inconvenient but impracticable or manifestly unfair in some way. Promoters must address themselves to this question at the outset of their bill, in its preamble and in the petition they must present to the House seeking the introduction of the bill.

[24] That statement suggests that there is no general presumption that Parliament must have intended to retain control over matters which are specified in the 1924

Act.

[25] One consequence of the variation of the powers contained in the 1924 Act by order of the Court is that a provision which remains in the statute will no longer reflect the current position. So, if the balance date is altered, s 14 of the 1924 Act will not correctly state the current position. That appears to me to be a matter of administrative detail which is capable of being addressed by the production of a reprint of the 1924 Act which records the way in which the change has been made. It is not a sufficiently powerful consideration to justify a departure from what, in my

_{view, is the plain meaning of s 18.}

[26] I am therefore satisfied that the Court has jurisdiction to make the orders sought. I consider that the proposed amendments are proper ones. There will be orders in accordance with the draft filed with the application.

“A D MacKenzie J”

Solicitors: Pitt & Moore, Nelson for Applicant

Crown Law Office, Wellington for the Attorney-General

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^[1] Re Cawthron [1916] GLR 260 (SC) at 262.

^[2] David McGee Parliamentary Practice in New Zealand (3^rd ed, Dunmore Publishing Ltd, Wellington, 2005) at 312.