PRESBYTERIAN SUPPORT CENTRAL HC WN CIV-2009-485-140

PRESBYTERIAN SUPPORT CENTRAL HC WN CIV-2009-485-140 2 April 2009IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY CIV-2009-485-140UNDER the Charitable Trusts Act 1957 IN THE MATTER OF an application to approve a scheme prepared under Part 3 in relation to a charitable trust created by deed of gift from Ann Sinclair to Presbyterian Orphanage and Social Service Trust Board and known as the Ann Sinclair Charitable Trust PRESBYTERIAN SUPPORT CENTRAL Applicant Hearing: 24 March 2009 Counsel: A L Holloway for applicant Judgment: 2 April 2009RESERVED JUDGMENT OF DOBSON J[1] These proceedings constitute an application under Part 3 of the Charitable Trusts Act 1957 (the Act) to authorise a variation of the charitable purpose of the Ann Sinclair Charitable Trust (the Trust), or to vary the trustee's powers. [2] Having been advertised as directed by the Court, the application has not drawn any opposition. In addition, the customary consideration of the proposal by the Crown Law Office on behalf of the Attorney-General has led to a thoroughly reasoned analysis of the issues it raises, ultimately leading to support for the application. That, however, is not an end of the matter. [3] The Trust was established by deed dated 12 April 1957. The settlor, Ann Sinclair, lived alone in Pirinoa in southern Wairarapa. The original trustee was thePresbyterian Orphanage and Social Service Trust Board and the current trustee, Presbyterian Support Central (PSC), has inherited the legal personality of the original trustee. The original gift was Miss Sinclair's farm, with the Trust contemplating that it would be used as a boys' home and farm training institution. Miss Sinclair died in September 1958. [4] The land was settled on the predecessor of PSC, subject to trusts including those in the following terms:1. TO establish and maintain on the said lands a home to be called "The Ann Sinclair Home". 2. TO receive into The Ann Sinclair Home such boys as it considers are most in need of such accommodation on account of the unsuitability of their existing environment, or their state of health, and are willing to be trained in farming and likely to benefit from such training. 3. TO establish and conduct upon the said lands a training farm for the purpose of teaching and training in farming practice such boys as may from time to time be residing in the Ann Sinclair Home. 5. TO establish and conduct camps either permanent or temporary for the use of Bible Classes, Orphanages and other organised bodies belonging to any Christian denomination for holidays or retreats.[5] The fourth of the stipulated trusts related to employing persons of appropriate skills to maintain and keep up the training farm and the home. [6] In March 1983, the Court approved a scheme to vary the Trust's objects and extend the trustee's powers. This enabled the trustee to sell the farm property and establish a fund to:Grant assistance to boys falling into three prioritised classes for education in any aspects of farming at suitable places and associated travel and accommodation costs. Grant funds to farm training institutions willing to take students in the three classes from the first object (above) but for general or special purposes of those institutions within the Trustee's discretion. Establish or conduct, or grant assistance to others or establish or conduct, camps for holidays or retreats by organised bodies belonging to any Christian denomination.[7] The present application is to expand the charitable purposes so that each reference to grants "to boys" should henceforth read "to boys and girls". After reflecting on the report prepared on behalf of the Attorney-General, the applicant abandoned the alternative of seeking a variation to the trustee's powers under s 33 of the Act, confining the application to one only under s 32 for variation of the purpose of the Trust. [8] Section 32(1) of the Act provides as follows: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.[9] The introduction into the scope of the jurisdiction to vary a charitable trust of the notion of it being "inexpedient" to carry out the original charitable purpose has been seen as expanding the circumstances in which the Court may authorise a variation. In Re McElroy Trust [2003] 2 NZLR 289, Tipping J for the Court of Appeal observed:[14] The general connotation of the word "inexpedient" in its present context is of the original charitable purpose or purposes having become unsuitable, inadvisable or inapt. Parliament's wish to expand the concepts of impossibility and impracticability should not be inhibited by too narrow an interpretation of the word "inexpedient". Clearly Parliament wished to give the Courts power to approve a scheme of variation in circumstances beyond those where the original purpose could no longer be carried out. The concept of inexpediency introduced a value judgment rather than simply an assessment of feasibility. It may remain possible and practicable to carry out the original purpose but it may have become inexpedient to do so. If that is so, a scheme of variation may be approved so long as it keeps as close as reasonably possible in the new circumstances to the original intention of whoever established the trust: see Re Twigger [1989] 3 NZLR 329 and the various cases there surveyed, and in particular the influential decision of Tompkins J in Re Whatman (Supreme Court, Wellington, 16 July 1965). It may be worth repeating here that the question is not whether the schemecarries out the purposes of the trust better. Rather it is whether it is now inexpedient to carry them out.[10] The recognition of the need for a value judgement certainly expands the Court's jurisdiction. Traditional values strive to uphold charitable donors' intentions. Even although the cy pres doctrine does not apply in its full rigour, respect for the intentions of a settlor such as in the present case means that the Court must be persuaded that intervention to change is clearly warranted, and then only to the least extent to render ongoing administration of the Trust expedient. That constraint is recognised in the last two sentences in the quotation from McElroy, which eschew any jurisdiction to intervene merely to make what would be in the eyes of the Court an improvement in the Trust, and confines intervention to those cases in which present circumstances make it inexpedient to carry out such purposes. [11] It is clear from Mr Playford's affidavit that PSC is uncomfortable administering a charitable trust that discriminates on the basis of gender. A commitment to gender equity is entirely laudable, and this unease is entirely understandable. However, it does not of itself render continued administration of the Trust on its present terms inexpedient. As acknowledged in the report for the Attorney-General, conferring of charitable benefits on a discriminatory basis is exempted from the forms of conduct potentially unlawful under Part 2 of the Human Rights Act 1993 (see s 150 that Act). Nor is it asserted for PSC that continued administration on the present terms of the Trust is impossible or impracticable. [12] Having put to one side the prospect of discrimination on the ground of sex as unlawful, Mr Holloway was inclined to suggest that it may nonetheless be inexpedient where it is contrary to social norms and expectations that a fund of this type should be administered on a gender-equal basis in today's society. However, charitable purposes inconsistent with widely accepted social norms are nevertheless to be respected. Inconsistency with social norms and expectations could only become "inexpedient" where those norms are so pervasive that the inconsistency constitutes continued administration on present terms as being "unsuitable, inadvisable or inapt" (per the Court of Appeal in McElroy). I accept that there is an element of that in persisting with gender discrimination here, but it is hardly sufficient on its own.[13] What is more relevant to the value judgement involved in assessing whether continued administration on present terms has become inexpedient is the nature of the assets being administered in the Trust. I accept Mr Holloway's argument that, when considering the future use of the property gifted to the Trust, the settlor was required to make an election on the gender basis because in the society of the time affording a residential base for farm training for both girls and boys would have been an anathema, and likely to be rejected by any responsible administrators as unworkable. The other original charitable purposes were not gender-specific and to that extent there was no consistent wish to benefit only boys. I accept the inference that the settlor directed that the residential facility be only for boys because any wider provision in relation to the use of her farm was unworkable. It can further be inferred that the settlor did not wish to positively exclude girls, but merely rationalised that if an election was necessary, there were likely, in the conditions applying at the time, to be more boys than girls who would be appropriate candidates for assistance. [14] Once the asset was transformed from the farm property to a fund representing the proceeds of its sale, then the rationale for confining those who might benefit by reference to their gender fell away. [15] I do not see this situation as directly analogous to the situation considered inRe The Evan Gibb Hudson Scholarship Fund HC AK M567/83 9 June 1983 Thorp J. In that case, the scholarship fund had been created in memory of the settlor's son who was killed in the First World War. Applicants for such scholarships had been limited to males serving in the Engineering Corps of the New Zealand Army. In approving the removal of the restriction to male applicants for scholarships, the Judge recognised that at the time of the donor's Will:it seems to me entirely unlikely that he would have contemplated either that there would be female engineering graduates from the University of New Zealand as it then was, or that there was any significant likelihood that there would be women members of the Engineering Corps.[16] The judgment continues:It is on that ground and not on any ground related to such matters as the current sensitivity over discrimination on the basis of sex that the amendment deserves the support of the Court.[17] What is different here is that the nature of the property vested in the Trust reasonably necessitated a restriction on gender, but a previously approved change in the nature of the Trust property removes the requirement for the constraint. Therefore in a similar way, it justifies recognition that continuing with the constraint is inexpedient. Like Thorp J, I do not see that based on any sensitivity over discrimination, but rather the removal of a constraint that was once expedient but is now inexpedient. [18] From the trustee's perspective, there is also a concern about making the best use of the funds. Not all the interest earned on the fund has been distributed, and the trustee appears confident that better use of the money would be obtained by removing the gender constraint. Again, that of itself is not sufficient – as the end of the quote from McElroy in [9] above points out, the Court cannot grant a variation because it will make the Trust work better. In the negative sense, however, this point may add to the extent to which the current mode of operation has become inexpedient. [19] I am accordingly satisfied that it is inexpedient to continue with the Trust on its present terms. Having established that criterion under s 32, I concur with the analysis on behalf of the Attorney-General that the extent of proposed changes are appropriate. I accordingly order that all references in the Trust Deed to granting of assistance to boys shall be expanded to refer to the granting of assistance to boys and girls.Costs[20] Mr Holloway advised that the Crown Law Office seeks an award of $750 for preparation of the report on behalf of the Attorney-General. I am satisfied that is both appropriate and reasonable, and so order.[21] The trustee also seeks reimbursement of all the costs it has reasonably incurred. Mr Holloway indicates that all costs including disbursements thus far incurred are approximately $20,000. I order that the trustee is entitled to charge the fund administered with all reasonable costs and disbursements, which amount is not to exceed $20,000, inclusive of GST.Dobson JSolicitors: DLA Phillips Fox, Wellington for applicant