Hearing Association Whangarei Branch Incorporated (in liquidation) [2018] NZHC 3059 (26 November 2018)

Last Updated: 6 December 2018

IN THE HIGH COURT OF NEW ZEALAND WHANGAREI REGISTRY I TE KŌTI MATUA O AOTEAROA WHANGĀREI-TERENGA-PARĀOA ROHE

CIV-2018-488-129 [2018] NZHC 3059

UNDER	the Incorporated Societies Act 1908 and the Companies Act 1993
IN THE MATTER	of the HEARING ASSOCIATION WHANGAREI BRANCH INCORPORATED (IN LIQUIDATION)
AND
IN THE MATTER	of an application by STEPHEN KIM BENNETT and TIMOTHY JOHN HOYLE as Liquidators of the HEARING ASSOCIATION WHANGAREI BRANCH INCORPORATED (IN LIQUIDATION) that the surplus assets of the HEARING ASSOCIATION WHANGAREI BRANCH INCORPORATED be vested in the NORTHLAND FOUNDATION

On the papers
Counsel:	N Hartwell for Applicants
Judgment:	26 November 2018

JUDGMENT OF TOOGOOD J

This judgment was delivered by me on 26 November 2018 at 3.00 pm Pursuant to Rule 11.5 High Court Rules

Registrar/Deputy Registrar

HEARING ASSOCIATION WHANGAREI BRANCH INC (IN LIQ) [2018] NZHC 3059 [26 November 2018]

[1] On 25 October 2007, Asher J held that the affairs of the Hearing Association Whangarei Branch Incorporated had been grossly mismanaged and that the Court had no confidence in its future conduct and management. He ordered that the Association should be put into liquidation under the provisions of the Incorporated Societies Act 1908 on the just and equitable ground under s 25(e).¹ Stephen Kim Bennett and Timothy John Hoyle, the present applicants, were appointed as liquidators.

[2] In his judgment, Asher J referred to an ongoing valuable bequest to the Association made in the will of a Mrs O'Keeffe which was, at that time, producing an annual income of $8,500 with the capital from the bequest becoming available to the Association in 2017. The funds comprising Mrs O'Keeffe’s $230,000 bequest, now valued at around $255,000, were expressed to be for the purpose of funding "hearing aids to less fortunate people who cannot afford them". The evidence indicates that the advance of hearing assistance technology means that confining the use of the funds to the supply of hearing aids is unlikely to result in the full achievement of the original purpose of the bequest.

[3] The liquidators wish to complete the winding up of the Association’s affairs. They apply by originating application under Part 19 of the High Court Rules for orders under the Incorporated Societies Act and the Companies Act 1993 distributing the surplus funds and assets of the Association to the Northland Foundation, a charitable trust serving the Northland community, and Deaf Aotearoa Holding Limited, known as Deaf Aotearoa New Zealand, an organisation committed to providing education and resources for the benefit of deaf people in New Zealand.

[4] The Northland Foundation was established in 2004 for the purposes of:

(a) providing a vehicle for people to leave a gift to their community, generally for a specific purpose;

(b) to pool and invest funds in perpetuity, with the interest earned from the accumulated funds to be distributed; and

1. Registrar of Incorporated Societies v Hearing Association Whangarei Branch Incorporated HC Whangarei CIV 2007-488-406, 25 October 2007.
   • (c) to ensure a strong and caring organisation for the benefit of the community.

[5] Since it was established in 2004, the Foundation, among other things, has supported the Northland District Health Board with fund raising and sponsorship. As at February 2017, the Foundation had approximately $1 million under management, with a further $12 million promised through bequests. The Foundation's funds are invested through Craig's Investment Partners, which currently manages approximately
$500,000 invested at a return of between 5 per cent to 6.2 per cent per annum. On the evidence before me it is clear that the Foundation would be a responsible repository for the funds distributed by the liquidators, and a conduit for achieving the objectives formerly met by the Hearing Association.

[6] By this application, the liquidators seek to distribute approximately $420,000 representing the Association's assets, including the O’Keeffe funds. It is proposed that the funds generated by Mrs O'Keeffe's bequest would be separated from the general pool of funds from the Association and applied in a manner consistent with, although not identical, to Mrs O'Keeffe's wishes. It is suggested that the general purposes of the bequest can be met in a modern environment if it was dedicated to fund "hearing aids/hearing assistive technology to less fortunate people who cannot afford them in the Whangarei district". A memorandum of understanding between Deaf Aotearoa and the Northland Foundation will result in both a reasonable income return and capital appreciation, which will ensure the continued flow of benefits from the bequest. Although it is not suggested that Deaf Aotearoa is likely to cease its valuable work among the deaf community, I consider it prudent to expand the order to enable the funds from the O’Keeffe bequest to be made available to any successor or charity with similar purposes in the event that the organisation should cease to exist. That may avoid the need for a further application to the Court.

[7] The liquidators seek the Court's approval for the proposed distribution and payment of their reasonable costs out of the Hearing Association's assets prior to distribution. The application has been publicly advertised and I am satisfied on the papers that there are no interested parties who should be served with the proceeding. I direct that service be dispensed with accordingly.
[8] I am satisfied that the original charitable purposes of the Association and of Mrs O'Keeffe's bequest will be met in the future by the arrangements set out in the affidavits and in the memorandum of understanding, and that it is appropriate for the Court to mark its approval of the proposed arrangements.

[9] Accordingly, I order:

(a) The surplus funds and assets of the Hearing Association Whangarei Branch Incorporated (in liquidation) shall be distributed to the Northland Foundation for investment in accordance with its Statement of Investment Policy and objectives.

(b) The return on the investment proportionate to:

(i) Alice O'Keeffe's bequest of $255,184 ("the Alice O'Keeffe bequest"); and

(ii) the balance of the Hearing Association's assets ("the Hearing Association's surplus assets")

be distributed annually to Deaf Aotearoa or, if that organisation ceases to exist, to a suitable charitable organisation having similar objects to those of Deaf Aotearoa.

(c) Deaf Aotearoa or its successor shall distribute to persons in the Whangarei district:

(i) in relation to the Alice O'Keeffe bequest, to fund hearing aids/hearing assisted technology to less fortunate people who cannot afford them; and

(ii) in relation to the Hearing Association's surplus assets, for the benefit of persons with hearing loss.
(d) The costs associated with the disposal of this application shall be met from the surplus funds of the Hearing Association.

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Toogood J