Re AWATERE MULTI-CULTURAL SOCIETY HC GRY CIV 2012-418-154

Re AWATERE MULTI-CULTURAL SOCIETY HC GRY CIV 2012-418-154 [4 December 2012]IN THE HIGH COURT OF NEW ZEALANDGREYMOUTH REGISTRYCIV 2012-418-154[2012] NZHC 3263UNDER Section 27 Charitable Trusts Act 1957IN THE MATTER OF AWATERE MULTI-CULTURALSOCIETY, a duly incorporated societypromoting cultural and educationalactivitiesBETWEEN DANIEL JOHN BEDE MOLONEYApplicantHearing: On the PapersCounsel: M Harkness for ApplicantJudgment: 4 December 2012JUDGMENT OF FOGARTY J[1] This is an application under s 27 Charitable Trusts Act 1957 by the Awatere Multi-Cultural Society. Section 27 provides:27 Distribution of surplus assetsOn the liquidation of a Board or on its dissolution by the Registrar, all surplus assets after the payment of all costs, debts, and liabilities shall be disposed of as the Court directs.[2] The Society was incorporated on 6 October 1989. Its objects include:4. The objects of the Society include:(a) to establish a community centre in Westport for cultural education, social and recreational activities for all cultural and ethnic groups.(b) to foster the teaching, learning and appreciation of the cultures, languages, arts, crafts, customs and values of all peoples.(c) to encourage self-esteem in youth and particularly those of Buller.(d) to encourage, teach and train youth and in particular those of Buller in work skills which could assist in gaining meaningful employment.(e) to co-operate and cultivate relations with persons, Societies, Associations or bodies having objects similar or in part similar to the objects of the Society.(f) to deal with the funds of the Society in furthering the objects of the Society and to invest any funds not immediately required for such purposes in such manner and upon such terms and conditions as the Society may think fit.(g) to give donations, grants and gifts whether in cash or in kind to individual persons, clubs, groups or institutions whether public, statutory, private, religious or otherwise for the purpose of assisting and encouraging such persons or clubs etc. in furthering the aims and objects of the Society.(h) Generally to do all such other things as may be incidental or conducive to the attainment of the objects or any of them.[3] Between 1987 and 1989 the Department of Maori Affairs advanced funds to the Society which enabled the purchase of the building known as Saint Joseph's School located at 98 Queen Street, Westport ("the Property"). The Property was tobe used for cultural activities in the Buller community. This settlement was completed on 16 November 1989.[4] In or around the 1990's one of the committee members absconded with the funds in the bank account together with the Society records.[5] The Property was used for community purposes, including Kohanga Reo, a dance school, accommodation for the Buller Marathon, the Air Training Corps and other community groups.[6] The committee ceased to meet regularly. Two of the founding members; Fred Ratahi and Bill Stack managed the property and other aspects of the Society until 2010.[7] In 2010 Fred Ratahi entered into an agreement for sale and purchase to sell the Property without approval from the committee.[8] An executive committee was subsequently formed and the executive committee then ratified the agreement for sale and purchase and completed the sale.Assets[9] The Property was sold for $130,000 inclusive of GST. The net sale proceeds following payment of commission, rates and legal fees are held in an interest bearingtrust account ("Trust Fund") at Stevens Orchard Lawyers Limited.[10] The balance of the Trust Fund is $112,416.26 as at 6 November 2012.[11] The Society had a bank account with the ASB Bank which has been closed.[12] No financial records have been kept by the Society. To remedy this, the Society instructed Campbell & Associates, Business Developments Specialists, Chartered Accountants, to prepare financial statements for the 10 years immediately prior to 31 March 2011.[13] In 1996 Fayne Robinson ("Fayne") presented to the Society a Poupou he hadcarved. No payment was made to Fayne. However there is a dispute between Fayne and some committee members as to whether any payment would be made to Fayneon any change in the Society's financial arrangements. The Poupou was housed atthe Property. When the Property was sold Fred Ratahi gave the Poupou to Buller High School without consultation. The carving now hangs in the school hall.Expenses[14] During the period 1989 until 2010 Fred Ratahi ("Fred") and Bill Stack ("Bill") each contributed their own personal funds towards rates, maintenance andupkeep of the property as a top up to the funds that were received from the services that the Society provided to the community. There is no written evidence of what they paid on behalf of the Society.[15] A report prepared by Campbell and Associates estimates that Fred and Bill'scontributions were $2,064.78 and $1,764.95 respectively.[16] It has been resolved that Fred will receive $2,064.78 compensation for the payments he has made over the years.[17] It has been resolved that Jane Stack will received on behalf of the late Bill Stack the sum of $1,764.95 as compensation for the payments Bill has made over the years.[18] In order to settle the dispute it has been resolved that an additional $7,500 will be advanced to the Buller High School to enable the school to make payment to Fayne for his Poupou.Current Position[19] The executive committee has resolved to wind up the Society and distribute the trust fund in accordance with the rules.[20] Rule 18 'winding up' states:"In the event of a winding up of the Society, all assets shall be disposed of asmay be determined by the executive, and any money which may remain after payment of all debts and liabilities shall be disposed of as the society in general meeting shall decide subject to the approval of the High Court pursuant to section 27 of the Charitable Trusts Act 1957.[21] The executive committee has considered the distribution of the trust fund giving consideration to the objects of the Society.[22] It has been resolved to distribute the net balance of the trust fund to the six Buller District schools – Buller High School, St Canices School, Westport North School, Westport South School, Waimangaroa School and Granity School. The nature of these schools meets the objects of the Society. This motion was passed unanimously by the Executive Committee on 23 September 2011.[23] Each of the schools has submitted a statement of intent with respect to any funds that they may receive from the Society.[24] It has been resolved that each of the schools will receive a lump sum of $1,000.00 then a percentage of the Trust Fund based on the school roll as 1 July 2011.[25] The orders sought pursuant to s 27 of the Act are:...(b) Distribute the net balance of the Trust Fund after all expenses have been paid in accordance with the objects of the Rules of the Society; and(c) Distribute to Buller High School the sum of $7,500.00; and(d) Distribute to the six schools of Buller – Buller High School, St Canices School, Westport North School, Westport South School, Waimangaroa School and Granity School – a lump sum of $1,000.00 then a percentage of the Trust Fund based on the school roll as at 1 July 2011.(e) No order as to costs.[26] The plaintiff also seeks an order to wind up the Society. The Society was incorporated under the Charitable Trusts Act 1957 on 6 October 1989. This Court has the power to wind up the Society, now called a Board, because it is a society incorporated under the Charitable Trusts Act,1 by reason of a power given to the Court in s 25(1)-(3):25 Liquidation of a Board by Court(1) A Board may be put into liquidation by the appointment by the Court as liquidator of a named person or an Official Assignee for a named district if the Court is satisfied that it is just and equitable that the Board should be put into liquidation.(2) Any application to the Court to put a Board into liquidation may be presented by—(a) The Attorney-General; or(b) The Board; or1 Section 6.(c) A member; or(d) A creditor; or(e) The Registrar; or(f) Any other person who, in the opinion of the Court, should make the application.(3) All costs incurred by the Attorney-General or the Registrar in making the application shall, unless the Court otherwise orders, be a first charge on the assets of the Board.[27] An affidavit by Mr DJB Moloney of Westport has been filed in support of the application. It has been prepared thoroughly by Ms Margot Harkness, solicitor of Stevens Orchard Lawyers Limited. It confirms the pleadings in the statement of claim, and so are the facts that I have found set out above.[28] The proposed distribution of the funds is, I am satisfied, broadly consistent with the original purposes of the Board, and so an entirely suitable way of dealing with the assets of the Board upon being wound up.[29] For these reasons, judgment of the Court is as follows:(1) The Board is wound up pursuant to s 25 Charitable Trusts Act.(2) The costs of these proceedings are a charge on the assets of the trust fund.(3) All outstanding expenses are to be paid in accordance with the objects of the rules of the Society.(4) The net balance of the trust fund are to be distributed as follows:(i) Distribute to Buller High School the sum of $7,500.00.(ii) Distribute to the six schools of Buller –Buller High School, St Canices School, Westport North School, Westport SouthSchool, Waimangaroa School and Granity School – a lump sum of $1,000.00 and then a percentage of the Trust fundbased on the schools' rolls as at 1 July 2011.Solicitors:Stevens Orchard, Westport – margot@stevensorchard.co.nz