The Jocelyn Grattan Charitable Trust [2018] NZHC 2343 (7 September 2018)

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UNDER	the Trustee Act 1956
IN THE MATTER	of an application for directions under s 66 of the Trustee Act 1956 in relation to THE JOCELYN GRATTAN CHARITABLE TRUST
BETWEEN	THE JOCELYN GRATTAN CHARITABLE TRUST _Applicants

Hearing:	29 August 2018
Counsel:	AAH Low and TM Kelly for Applicants AJ Nelder and SJ Jones for Auckland Cricket Association Inc
_Judgment:	_{7 September 2018}

This judgment was delivered by me on Friday, 7 September 2018 at 11 am pursuant to r 11.5 of the High Court Rules.

[1] The Jocelyn Grattan Charitable Trust or, more simply the Trust, was incorporated under the Charitable Trusts Act 1957.¹The Trust seeks directions under s 66 of the Trustee Act 1956. More accurately, the Trust seeks answers to questions posed by it, answers the Trust says will assist it in discharging its functions. This observation highlights an unusual aspect of the case. The Trust does not seek approval to do or not do anything, or guidance on its powers. Neither does the Trust surrender its discretion, nor assert proposed acts or omissions are lawful. In short, the Trust seeks advice.

[2] Otago University Press and Auckland Cricket Association Incorporated, or Auckland Cricket, oppose the application on the basis “purely advisory” relief is beyond the Court’s jurisdiction, and undesirable even if within it.²The New Zealand Bird Rescue Charitable Trust also opposed the application. But, it now abides.

[4] Miss Grattan gave her Titirangi home to Bird Rescue Auckland Incorporated. The will provided her home be turned into a bird rescue centre and hospital, and the land retained as a bird sanctuary, “if possible”. The gift was generous: 74 Avonleigh Road, Titirangi, is a 5.7-hectare property, much still in native bush.

(b) 10 percent to the Caxton Press as publishers of Landfall, to fund an annual poetry award known as “The Kathleen Grattan Award”.

²New Zealand Maori Council v Foulkes [2015] NZAR 1441, [2014] NZHC 1777 at [47].

(c) Five percent to the Penwomen’s Club New Zealand Incorporated. Most of the gift was to be used for the club’s general purposes; the balance for an annual poetry award, “The Kathleen Grattan Prize for a Sequence of Poems”.

(d) 15 percent “for the purposes of benefitting cricket and cricketers”, a bequest to be known as “The Frank Grattan Scholarship”.

Mr Frank Grattan was Miss Grattan’s father. And, one assumes, a cricketing enthusiast. The will provided this scholarship was to benefit a young cricketer or cricketers, as selected by the President of the Auckland Secondary Schools Cricket Association Incorporated.

[6] The will invested the trustees with “absolute discretion” to “pay the same legacy or part thereof” to any society “established for any charitable purposes (preferably of a similar environment and charitable purpose)” if any charitable purposes failed. Three unquestionably did:

(a) Bird Rescue Auckland Incorporated was liquidated in 1999. And, removed from the Register of Incorporated Societies in 2002.

(b) The Penwomen’s Club New Zealand Incorporated was dissolved and removed from the Register in 2001.

[7] And, the Auckland Secondary Schools Cricket Association Incorporated did not exist. Consequently, the executors sought to identify alternative organisations, thereby encountering the other parties in this case.

[8] On 31 January 2007, the executors established the Trust. The executors became its trustees, and later incorporated as a board under the Charitable Trusts Act.

[9] In May 2008, the executors sought directions in respect of their proposed actions vis-à-vis Miss Grattan’s estate. They sought to:

(a) Distribute the assets of Miss Grattan’s estate to the Trust so the Trust may use them in accordance with its deed, and as below.

(b) Lease Miss Grattan’s home to the New Zealand Bird Rescue Charitable Trust, an organisation with similar aims as Bird Rescue Auckland Incorporated, and involving some common personnel.

[10] Andrews J heard the application on 7 August 2008.⁴It was unopposed. The Judge concluded the executors’ proposals reflected “Miss Grattan’s intentions”. Her Honour directed:⁵

(1) The trustees and executors of the estate of Jocelyn Jane Grattan are acting lawfully and properly in distributing the net assets of the Estate of Jocelyn Jane Grattan to the Jocelyn Grattan Charitable Trust so that that Trust may use those assets for the following purposes in accordance with the Jocelyn Grattan Charitable Trust Deed; namely

⁴Short & Legge as Executors of the Estate of Jocelyn Jane Grattan HC Auckland CIV-2008-404-

establishing and maintaining a bird rescue centre, bird hospital and bird sanctuary at the property; and

b) investing the remaining assets transferred to it for the purposes of earning income and utilising that income to make payments to the following persons after deducting permitted expenses:

(i) as to 70% of the net income, to the New Zealand Bird Rescue Charitable Trust for the purposes referred to in clause 5(a) of the will of Jocelyn Jane Grattan (the “Will”);

(ii) as to 10% of the net income, to the Oxford University Press for the purposes referred to in clause 5(b) of the Will;

(iii) as to 5% of the net income, to the International Writers’ Workshop NZ (Inc) for the purposes referred to in clause 5(c) of the Will; and

(iv) as to 15% of the net income, to the Auckland Secondary Schools Cricket Association (Inc) for the purposes referred to in paragraph 5(d) of the Will.

[11] Miss Gratton’s home was transferred to the Trust later that month, and the New Zealand Bird Rescue Charitable Trust given free possession to operate a bird rescue centre, hospital and sanctuary. The Trust has since made payments to the other parties.

[12] Sadly, the parties disagree how the Trust may exercise its discretion, and about related matters. One example should suffice. In 2016, New Zealand Bird Rescue Charitable Trust invited the Trust to transfer Miss Gratton’s home to it, on the basis it is the natural successor to Bird Rescue Auckland Incorporated. Understandably, the Trust declined to do so. However, immediate qualification is necessary. No live controversy exists, as the Trust has no intention to cease or vary existing arrangements. Rather, the Trust says it cannot exclude the possibility its intentions may change in the future, and, if they do, answers will then be helpful. Moreover, the Trust observes answers will provide immediate comfort, without which, live controversy may quickly erupt.

[13] As observed earlier, this aspect highlights an unusual aspect of the case. And, one to which I return shortly.

4.4.1 Are the trustees bound by the tenor of the Will, in circumstances where the executors of the Estate distributed the net assets to the Trust?

4.4.2 Are the trustees bound to apply the assets of the Trust only in accordance with paragraph 22 of the Andrews J judgment?

4.4.3 Do the trustees continue to have a discretion in accordance with the trust deed and the Trust’s stated objects?

4.4.4 Are the trustees required to provide information, upon request, to the parties named in paragraph 22 of the Andrews J judgment?

[15] The Trust acknowledges the fourth question “is hypothetical” and is content for it to remain unanswered, albeit at the risk of suffering further “bombardment” of requests for information. The Trust contends the three earlier questions are important to its operation, and answers necessary to stave off likely controversy, for example, perhaps with New Zealand Bird Rescue Charitable Trust in relation to Miss Grattan’s home. Put broadly, the Trust argues the trustees are not bound by “the tenor of the will”; may distribute more broadly than Andrews J’s judgment; and have discretion under the trust deed.

[16] Otago University Press and Auckland Cricket oppose the application on the basis all questions are hypothetical, and answers may serve only to aggravate existing differences by “adding a layer of complexity”.

[17] These parties offer different answers to those advanced by the Trust should jurisdiction exist and be exercised. For example, Otago University Press contends the first question poses a false choice: the trustees are bound by the will and the trust deed. Auckland Cricket advances a similar submission. It contends the will is the critical instrument, and the trust deed informed by it.

(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 of 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.

[19] The section has attracted much case law. However, the parties agree Kos J’s observations in New Zealand Maori Council v Foulkes constitute an authoritative statement of law.⁶

[46] First, s 66 may be used to resolve any live question of interpretation of the Trust Deed, as well as any uncertainty as to the exercise of a power. The former power necessarily must fall within s 66, as well as the other matters provided for expressly. It is, therefore, wider than the oft cited passage in Re Allen-Meyrick’s Will Trusts:

Wherever Trustees have some discretionary power of this kind, where it is properly described as a power or a pure discretion, and they are in doubt how, in the relevant circumstances, they ought to exercise their discretion, they are able to come to the Court and obtain directions what is the proper thing for them to do.

That might seem (although I do not believe it was intended) to confine the Court’s role to an advisory one on how powers may be exercised. But that is not in fact the position at all. Section 66 is a robust, parallel source of jurisdiction to resolve any substantial question of law concerning the meaning or administration of a trust. It is not, in my view, confined to points of “minor importance arising from the management of a trust”.

[47] Secondly, the existence of a dispute is not fatal to the exercise of the jurisdiction. Indeed the existence of a dispute, or at least a doubt, is essential. The Court’s function is not purely advisory, or to be invoked to resolve abstract hypotheses. In this case the parties are in dispute, but are at least united in seeking the Court’s ruling on questions of interpretation.

[48] Thirdly, the more profound the dispute, the more care must be taken that those with a legitimate interest in the outcome are represented. In particular, beneficiaries. That is the first caveat. That does not, however, preclude trustees in disagreement from seeking directions. But it may not represent the last word where a Court finds trustees have been acting in a

manner inconsistent with their obligations under the Trust Deed. In such cases an application under the ordinary inherent Equitable jurisdiction is likely to be more appropriate, and more cost-effective. Otherwise affected persons not party to the s 66 proceedings will be entitled to raise the same issues anew, and seek different outcomes.

[49] Fourthly, the relief sought must not involve resolution of any disputed issues of facts. That is the second caveat. Like the Declaratory Judgments Act

1908, the s 66 procedure is entirely unsuited to resolving such issues. A s 66 application proceeds on the basis of affidavit evidence. An agreed statement of facts will normally be presented to the Court.

[20] But, Foulkes involved a live dispute. Indeed, Kos J noted the underlying trust had “become a crucible for continued conflict”.⁷And, everyone in that case wanted the Court to exercise its jurisdiction under s 66.⁸So, while Foulkes provides a helpful statement of applicable principle, it is, factually, very different. All of which is to foreshadow my reasons for concluding that even if jurisdiction exists, it would be wrong to exercise it for four interrelated reasons.

[21] First, there is no live dispute between the parties. To employ the example given earlier, New Zealand Bird Rescue Charitable Trust may again seek an outright gift of Miss Grattan’s home. Or not. Second, the absence of a live dispute means there are no facts to inform the questions posed, which is why they present as sterile—even stark; see [14]. Or to borrow the language of Kos J, “abstract hypotheses”.⁹Third, it is intrinsic to common law method that legal questions are determined through a factual prism. Fourth, because of this, exercise of the jurisdiction may merely make matters worse. Judgments are always read with reference to their facts, for, as observed, these inform the problems Courts seek to resolve. Remove facts and ambiguity reigns.

[22] This is especially true of the questions posed. What is meant by the “tenor of the Will” in relation to the first question?¹⁰Or, by the term “information” in relation to the last? How is either to be interpreted in a factual void? The third question essentially invites attention to the boundaries of the Trust’s discretion; so too more elliptically the second. But how does a Court identify boundaries when there are no

facts to inform the parties’ positions as to where these even lie? To recapitulate, if jurisdiction exists, I decline to exercise it.

[23] This conclusion should not be understood as a criticism of the Trust for bringing the application, still less as encouragement for the parties to seek costs. Correspondence to (and from) the Trust was placed in evidence. Some exhibits a distinct sense of entitlement. Unreasonable requests of the Trust, whether for information or otherwise, will only diminish its resources to the benefit of lawyers. The obvious should also be stated: New Zealand Bird Rescue Charitable Trust and Otago University Press are not beneficiaries under Miss Grattan’s will.¹¹Both enjoy the Trust’s patronage only because charitable purposes under the will failed.

[25] At the hearing, Auckland Cricket said it wished to be heard on costs. If this remains so, it and any other party seeking costs may file and serve a submission of not more than four pages by Friday, 21 September 2018. The Trust is to respond with a submission of not more than four pages by Friday, 28 September 2018.

High Court of New Zealand Decisions

The Jocelyn Grattan Charitable Trust [2018] NZHC 2343 (7 September 2018)