NEW ZEALAND GUARDIAN TRUST COMPANY LIMITED v PRESBYTERIAN SUPPORT (UPPER SOUTH ISLAND) [2015] NZHC 468

NEW ZEALAND GUARDIAN TRUST COMPANY LIMITED v PRESBYTERIAN SUPPORT (UPPER SOUTH ISLAND) [2015] NZHC 468 [13 March 2015]IN THE HIGH COURT OF NEW ZEALANDCHRISTCHURCH REGISTRYCIV-2014-409-000146[2015] NZHC 468BETWEEN THE NEW ZEALAND GUARDIANTRUST COMPANY LIMITEDApplicantAND PRESBYTERIAN SUPPORT (UPPERSOUTH ISLAND)RespondentJudgment: 13 March 2015JUDGMENT OF GENDALL J(Dealt with on the papers)Introduction[1] The applicant, the New Zealand Guardian Trust Company Limited, applies to this Court for orders pursuant to s 32 of the Charitable Trusts Act 1957 (the Act) to vary the purposes of a trust arising from the Will of the late Iris Maude Utterson- Kelso (the deceased), who died on 2 June 2001.1 Her Will was dated 11 May 1995 (along with a codicil dated 21 January 1999). Probate was granted on 25 June 2001.[2] The difficulty here is occasioned by a reference in cl 5 of the deceased's Will (the relevant part of which is attached as Annexure A) which states in cl 5(b)(iii)(3):5. I GIVE DEVISE AND BEQUEATH the rest of my estateUPON TRUSTto stand possessed of the residueUPON TRUST......(b) SUBJECT to the payment provided herein for my sponsored children I DIRECT my trustee to hold the residue UPON TRUST as follows:(iii) TO divide the remaining net annual income as shall not be accumulated as foresaid into four (4) parts and to pay and apply such parts as follows:(3) AS to one (1) such part for the GREEN GABLES TRUST BOARD at Christchurch to be used for the purposes of the Green Gables Home at Nelson;[3] In particular, the difficulty arises as a result of the gift in cl 5(b)(iii)(3) to the Green Gables Trust Board (the GGTB) and the Green Gables Home. At the relevant time the GGTB, it seems, may not have been effectively in existence and, in addition, the Green Gables Rest Home itself was sold by Presbyterian Support who had taken it over from GGTB with settlement taking place on the day before the death of the deceased.1 Charitable Trusts Act 1957, s 32(1) is the contemporary provision of the Charitable Trusts Extension Act 1886, s 3 and the Religious, Charitable, and Educational Trusts Act 1908, s 15 as amended by the Religious, Charitable, and Educational Trusts Amendment Act 1928 and the Religious, Charitable, and Educational Trusts Amendment Act 1951. See too Alacoque v Roache [1998] 2 NZLR 250 (CA) at 255.[4] The variation to the Will sought by the applicant is to the effect that the income to be paid under the trust to the GGTB should instead be paid to the respondent, Presbyterian Support (Upper South Island), (Presbyterian Support) for the purpose of benefitting the elderly in the Nelson Region.[5] With this dilemma it seems to be suggested on behalf of Presbyterian Support that there are three possible outcomes here:(a) The gift relating to the Green Gables Home has lapsed, in which case the bequest might fall into residue (but given other specific provisions in the Will the fact that it might fall into residue is not a real possibility here as I see it);(b) The charitable organisation GGTB has ceased to exist, in which case cl 5(b)(iii)(5) of the will would operate to vest the income in the remaining three charities referred to in cl 5 of the will (the Salvation Army, the Nelson Diocesan Trust Board and the Nelson Regional Hospice Trust;(c) The gift survives but with the sale of the Green Gables Rest Home it is no longer expedient to administer and accordingly a modification should be made under s 32 of the Act.[6] The application before me is one made in accordance with s 32 of the Act. No response has been received by any party directed to be served with this proceeding, including the three charities named in para [5](b) above, the Salvation Army, the Nelson Diocesan Trust Board and the Nelson Regional Hospice Trust, who stand to benefit pursuant to cl 5(b)(iii)(5) in the Will if the present application is unsuccessful. In addition, Presbyterian Support has indicated that it does not oppose the application. Accordingly there is effectively no opposition to this application.[7] Nonetheless, applications to vary wills require to be afforded consideration commensurate with their legal status and the respect the Courts have for atestamentary intent.2 Therefore, it is on this footing that consideration of this application now proceeds.The Will and orders sought[8] The relevant clauses of the Will, as I have noted, are annexed hereto marked"A". The applicant seeks to vary clause 5. The orders it seeks in order to achieved its desired outcome are as follows:(a) A declaration that the gift created by cl 5(b)(iii)(3) constitutes a valid charitable trust.(b) A declaration that cl 5(b)(iii)(3) has not lapsed.(c) A declaration that cl 5(b)(iii)(5) does not apply to cl 5(b)(iii)(3).(d) A declaration that the income to be paid to the Green Gables Trust Board pursuant to cl 5(b)(iii)(3) between the period 2 June 2001 to the present be paid to Presbyterian Support for the purposes of benefiting the elderly in the Nelson region.(e) To replace cls 5(b)(ii) and 5(b)(iii) as follows:To accumulate for a period of 80 years an amount equivalent to ten per centum (10.00%) per annum of the net annual income arising from my estate by adding the same to the capital thereof, whereupon the capital be divided into four parts and each transferred to:i. the Salvation Army at Nelson for use amongst the people in need in the City of Nelson;ii. the Nelson Diocesan Trust Board for the purpose of the Whareama Home at Stoke Nelson;iii. Presbyterian Support for the purposes of benefiting of the elderly in the Nelson Region; andiv. the Nelson Region Hospice Trust for the purposes of the hospice facilities and services within the Nelson health area.2 Re Presbyterian Support Central HC Wellington CIV-2009-485-140, 2 April 2009 at [10].JurisdictionThe Charitable Trusts Act 1957[9] This application is expressly brought pursuant to s 32 of the Act. In cases where there is some failure of an original specified charitable purpose, s 32(1) of the Act provides for the application of property to another charitable purpose and expressly states that s 32(1) applies whether or not there is any general charitable intention. However s 32(1) cannot be used to dispose of property if s 32(3) applies. Section 32(3) preserves the doctrine of lapse. This doctrine of lapse applies only where the charitable purpose has failed before the Will came into effect and there is, what is described as, no general or paramount charitable intention.[10] Section 32 of the Act provides:332 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.(3) This section shall not operate to cause any property or income to be disposed of as provided in subsection (1) or subsection (2) of this section—(a) If in accordance with any rule of law the intended gift thereof would otherwise lapse or fail and the property or income would not be applicable for any other charitable purpose:(b) In so far as the property or income can be disposed of under Part 4 of this Act.(4) Subject as aforesaid, this section shall extend to cases where the charitable purpose affecting any property or income is defined by a3 Western Australia provides a very similar regime in the Charitable Trusts Act 1962 (WA), s 7(1). Other Australian legislation creating what might be broadly termed statutory cy-près schemes, include the Charitable Trusts Act 1993 (NSW), ss 9–11; Trusts Act 1973 (Qld), s 105; Trustee Act 1936 (SA), s 69B; Variation of Trusts Act 1994 (Tas), s 5; Charities Act 1978 (Vic), s 2.scheme approved by the Court under this Part of this Act or otherwise, or approved by the Attorney-General under Part 4 of this Act, and in any such case the original purpose or purposes may be restored, with or without modifications.[11] The requirements for this section to apply are therefore:4(a) Property or income is given or held upon trust, or is to be applied, for any charitable purpose; and(b) It is:(i) Impossible, impracticable or inexpedient to carry out that purpose; or(ii) The amount available is inadequate to carry out that purpose; or(iii) That purpose has already been effected; or(iv) That purpose is illegal, useless or uncertain[12] Where the requirements of the section are made out, irrespective of whether there is a general charitable intention, the property or income is to be disposed of for some other charitable purpose. However, as I have mentioned, s 32(3) renders subs (1) inoperative to the extent that either (a) any rule of law would cause the intended gift to lapse or fail "and the property or income would not be applicable for any other charitable purpose"; or (b) the income or property can be disposed ofunder Part 4 of the Act.4 It is useful to contrast the statutory formulation with the cy-près doctrine. Hubert Picarda in The Law and Practice Relation to Charities (4th ed, Bloomsbury Professional, West Sussex, 2010) at 437, provides the following definition taken from the American Restatement of Trusts (2d), s 399:If property is given in trust to be applied for a particular charitable purpose, and it is or becomes impossible or impracticable or illegal to carry out the particular purpose, and if the settler manifested a more general intention to devote the property to charitable purposes, the trust will not fail but the court will direct the application of the property to some charitable purpose which falls within the general charitable intention of the settlor.Procedural compliance[13] Because the applicant desires to utilise s 32, it has prepared a scheme for disposition of the property in accordance with the requirement to do so in s 34. This scheme has been laid before the Attorney-General in accordance with s 35, resulting in the production of a detailed report from the Attorney-General as required by s 35(1)(b). Following the release of the Attorney-General's report, the applicants alsocomplied with the advertising requirements contained in s 36.[14] I have jurisdiction to approve the scheme proposed, with or without modification, as I see fit.5 However, no scheme may be approved by this Court under Part 3 of the Act (of which s 32 is a relevant section) unless I am satisfied that the criteria in s 56(1)(a) are made out. Moreover, when the Court approves or declines to approve a scheme, that outcome must be gazetted as soon as possible thereafter.6Did the gift to the Green Gables Trust Board lapse (was there initial failure)?History of the Green Gables Trust Board[15] The history of the GGTB, and the deceased's relationship with it, was set outin some detail in the report of the Attorney-General. I outline the relevant material below.[16] Presbyterian Support purchased the Green Gables Rest Home in Nelson in 1957. It operated the home as part of its broader charitable function until around 1971. In the early 1970s, Presbyterian Support entered into a joint venture with the Methodist Central Mission, so the two churches could combine resources for the purpose of benefiting the elderly. The GGTB was established to this end. The GGTB discharged its charitable functions in the Nelson region for the next two decades.[17] Over time, however, the Methodist Central Mission and Presbyterian Support Services began to have philosophical differences. The former came to focus more on5 Charitable Trusts Act 1957, s 53(c).6 Section 54.rest home care, while the latter saw a need to expand services to assist the elderly in their own homes.[18] In 1996, a joint decision was made to discontinue the operation of the Green Gables Rest Home. Indeed, in the minutes of the 1996 meeting, where discontinuance was agreed, the following is recorded:General discussion took place on the points raised and what could be possible courses of action.John put the question: Is it an appropriate time to look at the dissolution of Mission and SUPPORT involvement in Green Gables? All present agreed that it was.[19] So, it is clear that dissolution was contemplated as long ago as May 1996. In June 1998 the two organisations resolved to dissolve the GGTB, effective from 5 December 1996. A document dated 25 June 1998, signed by the executive director of Presbyterian Support and the Superintendent of Methodist Mission records:From 1973 to 1996, Presbyterian Support Services and the Christchurch Methodist Mission developed and operated a rest home in Nelson ("Green Gables"), established by Presbyterian Support in 1957.In response to the health reforms of the early 1990s and a desire to develop additional social services in the Nelson region, the two participating organisations considered the establishment of a new trust ("the Nelson Social Services Trust") and appointed a regional manager.Following a report from the regional manager, and with the endorsement of the Nelson Social Services Trust, Presbyterian Support in June 1996 resolved to dissolve the Green Gables Trust Board, effective from 5 December 1996.Green Gables Home and Hospital continues to be operated by Presbyterian Support.A satisfactory agreement as to the discontinuance of the Christchurch Methodist Mission's involvement in Green Gables has been reached.[20] The GGTB was vested with the power of dissolution in cl 16 of its constitution:16. THE Board may dissolve and shall so dissolve at the expiration of six calendar months after notice in writing shall have been given to it so to do by any of the participating organisations.[21] Methodist Mission was paid out by Presbyterian Support in proportion to its original capital contribution to the Green Gables Rest Home venture. Presbyterian Support then took over sole management of the Green Gables Rest Home. Thisincluded the "entire operation" being "incorporated into the books and accounts of Presbyterian Support". It seems clear, therefore, that all parties treated andconsidered the GGTB as being dissolved. This notwithstanding, for reasons not apparent, it was not until 9 June 2005 that the GGTB was removed from the Register of Incorporated Societies.[22] Later, it seems because of issues with competition from other services provided to the elderly, Presbyterian Support made the decision to sell Green Gables Rest Home. The sale settled on 1 June 2001, the day before the deceased died. Nonetheless, Presbyterian Support Services has continued to be involved in elderly care in the Nelson region.[23] On 30 November 2010, the GGTB was restored to the Register of Incorporated Societies following a declaration revoking the dissolution. Byoperation of s 26(6) of the Act, the GGTB was "revived" as if no dissolution hadtaken place, with effect from the date of original dissolution, being 9 June 2005.[24] During her life, the deceased received day-care services from Presbyterian Support and took part in their Motivational Activities Club. These services were run initially from the Green Gables Rest Home.Was there lapse/initial failure of the gift?[25] Whether or not there has been an initial failure is a factual issue. Before I come to my assessment, I note the position of Crown Law on behalf of the Attorney- General in its correspondence with the applicant, along with the position of the Attorney-General in his report. In a letter dated 25 January 2008, Crown Law responded to the first set of draft documents seeking approval for the scheme. After addressing various inadequacies with those documents, and highlighting certain other matters, it was stated, inter alia:It appears that the issue is, at best, finely balanced.[26] Wynn Williams, the solicitors for the applicant, on 7 March 2012, replied to the above letter with a lengthy and comprehensive 14 page letter addressing the concerns raised. In a further response, Crown Law maintained that there were difficulties with the application. This culminated in the Attorney-General's reportcommenting as follows:718. Mrs Utterson–Kelso's will was made in 1995 and she died on 2 June2001. Prior to Mrs Utterson Kelso's death:18.1 The GGTB purported to dissolve itself (in accordance with its constitution);18.2 Presbyterian Support Services took over the operation of Green Gables Home; and18.3 Presbyterian Support Services itself sold Green Gables to a private concern.19. At the time of Mrs Utterson–Kelso's death neither GGTB norPresbyterian Support Services was able to apply the money to the purposes nominated in the will. Prima facie there would appear to be an initial failure of the charitable purpose which raises the issue of lapse in relation to the gift to GGTB.28. I am not convinced that the applicant's argument that lapse doesnot arise because the gift was not to the rest home but for its purposes is correct.[27] For my part it seems clear that there has been a lapse. The reasons largely follow those of the Attorney-General. First, the will describes the gift as follows:AS to one (1) such part for THE GREEN GABLES TRUST BOARD at Christchurch to be used for the purposes of The Green Gables Home at Nelson;[28] This poses two immediate issues. First, the gift is directed to the GGTB. The difficulty occasioned by this is that at the time the deceased died, the GGTB was dissolved in all but form. In 1996 it was agreed that dissolution was desirable and in1998 it was resolved that dissolution would occur. To that end cl 17 of GGTB'sconstitution became operative and the Methodist Mission was paid out. From that7 Virginia Hardy (Deputy Solicitor-General) Report of the Attorney-General under the Charitable Trusts Act 1957 on a Proposed Scheme under the Last Will and Testament of Iris Maud Utterson- Kelso (23 May 2014).point forward the Green Gables Rest Home was managed under the auspices of Presbyterian Support.[29] It is abundantly clear that all parties considered the dissolution effective, at least in substance. Through nothing other than anomaly the GGTB was not removed from the register. On this basis alone I would incline to the view that there has been an initial failure – despite the shell of the GGTB remaining in existence, its substance had been eroded by agreement. However, there is yet further indicia of initial failure.[30] The latter part of the gift stipulates that it is "to be used for the purposes ofthe Green Gables Home at Nelson". The clear problem with this specific direction isthat the day before the deceased died, Presbyterian Support had sold the home to a private concern. So, not only have I found that the GGTB did not exist in any substance at all, but also the gift could not be applied to the purpose for which it was made.[31] I therefore find that there has been an initial failure of the gift. But, it is clear that an initial failure will not lead to lapse where the Court can find the existence of a general or paramount charitable intention. I now turn to consider that aspect.Was there a general (or paramount) charitable intention?[32] The gift in cl 5(b)(iii)(3) of the will evinced a charitable intention. Of that there can be little doubt. This is supported both by the Statute of Charitable Uses1601 (Eng) and Lord McNaughton's outline of the various heads of charity inCommissioner of Income Tax v Pemsel.8 While this is enough in cases solely invoking s 32(1), where there was initial impossibility or impracticability, a paramount charitable intention is required. Thus, having affirmed the existence of a charitable intention simpliciter, the next question that must be resolved is whether there is a paramount charitable intention.9 This is because, I have found that, the gift8 Statute of Charitable Uses 1601 (Eng) 43 Eliz I c 4, Commissioner of Income Tax v Pemsel[1891] AC 531 (HL), drawing upon the categories adumbrated in Morice v Bishop of Durham(1805) 10 Ves 522, 32 ER 947 (Ch) at 532. I also note the definition of "charitable purpose" inthe Charitable Trusts Act 1957, s 38.9 As to the rationale of the idea that a paramount charitable intention can save a gift see Attorney-in cl 5(b)(iii)(3) had lapsed (as the GGTB purported to dissolve itself and the Green Gables Home was sold at the date of the death of the deceased), and its charitable purpose had failed.[33] The applicant sought to argue that there was a paramount charitable intention here by asserting that:(a) the accruer clause (clause 5(b)(iii)(5)) was inserted only to ensure that there was no intestacy.(b) the other three gifts in the will (apparently notwithstanding their specificity) support a conclusion that there was a paramount charitable intention.(c) It is likely that the deceased knew and intended another institution would provide maintenance and care for the elderly of Nelson should the Green Gables Rest Home cease to exist.[34] The report of the Attorney-General addressed the issue of paramount charitable intention by stating:10The fact that the donor has been reasonably specific about the charitable purposes that he or she intended to benefit does not preclude a finding of general[/paramount] charitable intention.[35] In seeking to ascertain what amounts to a paramount charitable intention, perhaps the most oft-cited decision is that of Parker J in Re Wilson:11For the purposes of this case I think the authorities must be divided into two classes. First of all, we have a class of cases where, in form, the gift is given for a particular charitable purpose, but it is possible, taking the will as aGeneral v Lady Downing (1767) Wilm 1, 97 ER 1 (KB), and as to the evolution of the notion of general charitable intent, refer Jean Warburton (ed) Tudor on Charities (9th ed, Sweet & Maxwell, London, 2003) at [11–031]–[11–033], citing, inter alia, Moggridge v Thackwell (1803) 7 Ves 36, 32 ER 15 (Ch) at 39; White v White (1778) 1 Bro CC 12, 28 ER 955 (Ch).10 Virginia Hardy (Deputy Solicitor-General) Report of the Attorney-General under the Charitable Trusts Act 1957 on a Proposed Scheme under the Last Will and Testament of Iris Maud Utterson- Kelso (23 May 2014) at [28]. There is also a comment at [40], that "[i]t is arguable that [theexistence of four gifts to a range of charitable organisations] evidences a general charitableintention"11 Re Wilson [1913] 1 Ch 314 (Ch) at 320–321.whole, to say that, notwithstanding the form of the gift, the paramount intention, according to the true construction of the will, is to give the property in the first instance for a general charitable purpose rather than a particular charitable purpose, and to graft on to the general gift a direction as to the desires or intentions of the testator as to the manner in which thegeneral gift is to be carried into effect.Then there is the second class of cases, where, on the true construction of the will, no such paramount general intention can be inferred, and where the gift, being in form a particular gift, - a gift for a particular purpose - and it being impossible to carry out that particular purpose, the whole gift is held to fail. In my opinion, the question whether a particular case falls within one of those classes of cases or within the other is simply a question of the construction of a particular instrument.[36] Over the years there have been many judicial attempts to articulate further definitions.12 The authors of The Law of Charities, favour the "excellent descriptionof the meaning of 'general charitable intention'" suggested by Sheridan andDelaney:13So far as the general various authorities considered up to now are concerned,a general charitable intent can be defined as "an intent to benefit any or atype of charity, however narrow or unlimited, which is wide enough to include the stated (impossible) purpose (if any) and at least one otherpossible purpose."[37] It seems to accord with common sense that a paramount charitable intent requires something beyond the particular, but nothing more than that. There is no requirement that the will-maker evince an intention to benefit charity generally.14 If it can be said that the will-maker was desirous of furthering their purposes, but not in a specific way, then they can be said to have a paramount charitable intent.15 In other words, was the gift in question the mechanism for achieving the charitable intent, or was it the only way the deceased wanted to manifest a charitable intent?12 Attorney-General (NSW) v Perpetual trustee Co Ltd (1940) 63 CLR 209 at 225 and 227; Re Willis [1921] 1 Ch 44 (CA) at 54; Re Lysaght (deceased) [1966] Ch 191 (Ch) at 202; Re Barry (deceased) [1971] VR 395 (SC) at 399; Re Woodhams [1981] 1 WLR 493, [1981] 1 All ER 202 (Ch) at 502–503, 210; Re Pettit [1988] 2 NZLR 513 (HC) at 546–552; Weninger Estate v Canadian Diabetes Association (1993) 109 DLR (4th) 232 (ONCJ) at 236–242; Re Estate of Pitt (deceased) (2002) 84 SASR 109 (SC) at 116; Peggs v Lamb [1994] Ch 172 (Ch); Alacoque v Roache [1998] 2 NZLR 250 (CA) at 254; Re Taylor (1888) 58 LT 538 at 542–543 (CA); Re Templemoyle Agricultural School (1869) IR 4 Eq 295 at 301.13 P Luxton The Law of Charities (1st ed, Oxford University Press, Oxford, 2001) at [15.44], citing L A Sheridan and V T H Delaney The Cy-près Doctrine (1st ed, Sweet & Maxwell, London, 1959) at 36.14 Re Templemoyle School (1869) IR 4 Eq 295 at 301; Governors of Erasmus Smith's Schools vAttorney-General (1932) 66 ILTR 537.15 The term will-maker is defined in s 6 of the Wills Act 2007.One touchstone of this might be to postulate whether, on the available evidence, the will-maker, at the time of their death, would have minded if an entity other than that named benefitted under their will. This is a matter of judgment, assessment and construction to be applied in each case.16[38] That said, there is some guidance that can be gleaned from the authorities. The greater the specificity with which the charitable aspect of the will is detailed, the more difficult the Courts will find it to attribute some paramount charitable intent.17For example, it has been held in cases where the intended beneficiary existed at the time the will was made, but has ceased to exist before the death of the will-maker, that it is more difficult to find a paramount charitable intention.18 In re Spence, this point was made in the following terms:19 the court is far less ready to find such [a paramount charitableintention] where the gift is to a body which existed at the date of the will but ceased to exist before the testator dies.[39] The natural corollary of this is that where the gift is for the purposes of an institution, rather than to a specific institution, then the Courts may more readily find a paramount charitable intention.20 In similar vein, where the gift is of a residue, rather than a determinate sum, it may be more difficult to ascertain a general intention.21 There is also the principle that the Courts will lean in favour of a paramount charitable intention, where a failure to do so would lead to an intestacy.22[40] Plainly, no rote formulation is competent to distinguish, in every case, between a paramount and a specific charitable intention. It is a matter of judgment, informed by the background narrative. The ultimate question will always be whether it can be said genuinely that an objective analysis of the evidence supports an inference that the testator intended to benefit parties other than those specified in his16 Re Wilson [1913] 1 Ch 314 (Ch) at 320.17 Australian Executor Trustees Ltd v Ceduna District Health Services Inc (2006) 245 LSJS 371 (SA SC) at [33]; Re Good's Will Trusts [1950] 2 All ER 653 (Ch).18 Re Harwood [1936] Ch 285 (Ch); Re Spence [1979] Ch 483 (Ch); Re Rymer [1895] 1 Ch 19 (CA); Re Davis [1902] 1 Ch 876 (Ch) at 880.19 In re Spence, decd [1979] Ch 483 (Ch) at 495.20 Sir Moses Montefiore Jewish Home v Howell and Co (No 7) Pty Ltd [1984] 2 NSWLR 406 (SC) at 416–417.21 Re Goldschmidt [1957] 1 WLR 524 (Ch) at 528; Re Royce [1940] Ch 514 (Ch); Re Raine [1956] Ch 417 (Ch) at 423.22 Re Collier [1998] 1 NZLR 81 (HC) at 95.or her will.23 If, on balance, this cannot be said, then there will be no general paramount intention. A different genus of this analysis was favoured by M Chesterman:24The issue is whether [the testator] would want the property to be applied nonetheless to charitable purposes or to revert to him or his estate. In the former instance, he is deemed to have a general charitable intention, in the latter a particular charitable intention. In practice, a decision on this issue is often very artificial. The court has to rely on very slight indications in the terms of the gift or bequest itself and any other disposition (for example, legacies, residuary bequests) with which it is associated in the same document.[41] Turning back to the facts of the present case, I am of the view that I have not been taken to a position where I can safely suggest that the deceased had a paramount charitable intention. Before explaining why, I note that the Attorney-General's report although leaning in favour of a paramount charitable intention, did express some equivocation about this broad proposition:25It is arguable that Mrs Utterson-Kelso was not intending to benefit just the named organisations and no others, but rather that the will indicates that she was looking to provide for needy people generally in her home region, with the nomination of the four institutions reflecting her desires as to the manner in which her gift should be carried out. The wording of clause 5(b)(iii)(6) also indicates a degree of flexibility in how she saw the charitable purposes being carried out, as she makes a request without imposing any binding trust that the income be used for the establishment and/or maintenance of self- contained units and/or hospital wings.[42] As I have stated, I do not think that there is such a paramount charitable intention here, and I disagree with the report of the Attorney-General to the extent that it contends otherwise. First, the deceased made a specific gift to the GGTB, tobe used "for the purposes of" and to benefit only the Green Gables Rest Home. Hammond J made the following insightful comments on specific gifts in Re Collier:2623 St John of God Health & Elder Care Services Trust Board v Little Sisters of the Poor (NZ) Trust Board (2008) 28 FRNZ 219 (HC) at [33], citing, inter alia, Perrin v Morgan [1943] AC 399 (HL) at 420.24 M Chesterman Charities Trusts and Social Welfare (Weidenfeld and Nicholson, London, 1979) at 210.25 Virginia Hardy (Deputy Solicitor-General) Report of the Attorney-General under the Charitable Trusts Act 1957 on a Proposed Scheme under the Last Will and Testament of Iris Maud Utterson- Kelso (23 May 2014) (emphasis added).26 Re Collier [1998] 1 NZLR 81 (HC) at 95 (emphasis added).It has to be said that will draftsmen have much to answer for when a bequest is lost to the public domain. Prefatory words expressing a paramount charitable intention are not dispositive, but can be of assistance to a Court. But highly detailed, specific bequests aimed at a singular objective have too often been the death knell to a finding of a paramount charitable intention.[43] Second, the accruer clause contained in cl 5(b)(iii)(5) of the Will in my view tends against a paramount charitable intention. This clause manifests an intention that should any gift or gifts fail, the value of the remaining valid gifts shall increaseproportionately. This is clear evidence of the deceased's intent to ensure that, shouldone of her gifts fail, only the remaining gifts specified were to benefit from such failure. This point was well made by Sir Robert Megarry V-C, in Re Spence:27If a particular institution or purpose is specified, then it is that institution or purpose, and no other, that is to be the object of the benefaction. It is difficult to envisage a testator as being suffused with a general glow of broad charity when he is labouring, and labouring successfully, to identify some particular specified institution or purpose as the object of his bounty. The specific displaces the general. It is otherwise where the testator has been unable to specify any particular charitable institution or practicable purpose, and so, although his intention of charity can be seen, he has failed to provide any way of giving effect to it. There, the absence of the specific leaves the general undisturbed.[44] An accruer clause, as I have noted, has also been said to have the effect of avoiding an intestacy. If this were not the case, this would have been a relevant, though not sufficient, factor in indicating that there may have been a paramount charitable intention. Though, by itself, this would be quite insufficient to convert what is plainly a specific charitable intention into a paramount one.[45] Third, the selection of the entities which the deceased provided for in her will was methodical. This likely stems from the ties between the deceased and her intended beneficiaries. The Attorney-General's report expressed the connectionbetween the deceased and the Green Gables Rest Home thus:2817. During her lifetime, Mrs Utterson-Kelso received day care services provided by Presbyterian Support Services and took part in their Motivational Activities Club. These services were run from theGreen Gables Home, although in the late 1990s the GGTB was in27 Re Spence [1979] Ch 483 (Ch) at 493.28 Virginia Hardy (Deputy Solicitor-General) Report of the Attorney-General under the Charitable Trusts Act 1957 on a Proposed Scheme under the Last Will and Testament of Iris Maud Utterson- Kelso (23 May 2014).fact defunct and all services were provided by Presbyterian Support. Mrs Utterson-Kelso did not reside at Green Gables. She eventually received rest home care at Whareama Rest Home, however, she continued to attend the Motivational Activities Club at Green Gables until she died.[46] Again, this connection indicates that, at least the gift in cl 5(b)(iii)(3) was only intended for the Green Gables Rest Home, at least in part as a result of the close connection between the deceased and the rest home. But, in this respect, I need to say that I am of the view there is little in the applicant's contention that there is a distinction, in this case, between a gift "for the purposes of" and simply "for" the Green Gables Rest Home. The deceased's intention here was clearly to benefit the Green Gables Rest Home, and only the Green Gables Rest Home.[47] For these reasons I have been unable to discern any thread that would indicate that the deceased intended to benefit any entity other than the Green Gables Rest Home named in cl 5(b)(iii)(3). In my view there is therefore only a specific charitable intention here and not a paramount charitable intention. For the avoidance of doubt, I observe that this proposed scheme only relates to the gift contained in cl 5(b)(iii)(3). It is that gift on which I have focused in determining whether the deceased had a paramount charitable intention. It is that gift too that has failed to evince any indication of paramount charitable intention.The counterfactual.[48] Because of the conclusion I have reached in respect of both the initial failure of the gift and the paramount charitable intention, this proceeding is ultimately disposed of. The principal thrust of the application before me fails. It is therefore somewhat otiose for me to consider, hypothetically, what would occur were there to be a general charitable intention here. Nonetheless, in the event my assessment concerning paramount charitable intention is incorrect, I will consider the interrelationship between initial failure and such paramountcy.[49] The starting point is that in the absence of some general charitable intention, a gift to an entity which once existed, but has ceased to exist before the death of thetestator, will result in an initial failure, or lapse, of the gift.29 Only where a broader charitable intention exists can the gift be saved and applied cy-près (as near as possible).30[50] This does, however, raise a curious jurisprudential point. Namely, whether a gift saved from lapse through general charitable intention is to be applied cy-près, or, alternatively, whether it is simply saved by the cy-près doctrine, with s 32(1) becoming operative once more. While it is clear that a paramount charitable intention will operate to save the gift, the distinction is nonetheless important. Under the inherent cy-près jurisdiction, only impossibility or impracticability will suffice. Under s 32(1), inexpediency is also a sufficient threshold. For the two reasons that follow, I incline to the latter statutory position.[51] First, the words of s 32(3)(a) support this conclusion. I repeat them now for convenience:31(3) (a) If in accordance with any rule of law the intended gift thereof would otherwise lapse or fail and the property or income would not be applicable for any other charitable purpose;[52] There are two requirements of the saving provision of subs (3)(a). First, there must be a rule of law that would result in the intended gift failing or lapsing; and second the property or income would not be applicable for any other charitable purpose. The second limb of this bipartite regime is what s 32(1) bites on to again29 Re Rymer [1895] 1 Ch 19 (CA); Re Jones [1907] SALR 190 (SC); Re Mills [1934] VLR 158 (SC) at 163–164; Re Weiss [1934] VLR 269 (SC); Re Guidi (deceased) [1948] SASR 207 (SC);Re Wilson [1913] 1 Ch 314 (Ch) at 320–321; Re Ellis Estate (1985) 43 Sask LR 38; Attorney- General for New South Wales v Perpetual Trustee Co Ltd (1940) 63 CLR 209; Re Mulachy[1969] VR 545 (SC); Re Joseph's Will Trusts (1907) 26 NZLR 504 (SC); Re Macklin [1931] GLR 152 (SC); Re Roberts [1963] 1 WLR 406 (Ch)30 Biscoe v Jackson (1887) 35 ChD 460 (CA); Re University of London Medical Sciences Institute Fund [1909] 2 Ch 1 (CA); Re Richardson's Will (1887) 58 LT 45 (Ch); Re Reed (1893) 10 TLR 87 (Ch); Re Robinson [1923] 2 Ch 332 (Ch). As to the definition of cy-près, refer B Garner (ed)Black's Law Dictionary (9th ed, Thomson Reuters, 2009). In H Picarda The Law and Practice Relating to Charities (4th ed, Bloomsbury Professional, West Sussex, 2010) at 437 it is noted that the origin of the term is not clear, but that the term may be a corruption of the French ici pres(near here) or aussi pres (que possible) (as near as possible).31 Emphasis added.become operative. On this basis alone, it could be said that where the doctrine of cy- près operates to save a gift, both limbs of subs (3)(a) are not met, with the result that the gift falls to determined within the subs (1) rubric.[53] Quite apart from the section itself, this position has tacit support from the case law. In Alacoque v Roache, Somers J, delivering the judgment of the Court of Appeal, remarked:32A charitable gift, the expressed purposes of which had failed before the death of the testator, could only take effect and be held for charitable purposes where, under the principles already mentioned, which owe nothing to statute, there was a general charitable intent.[54] Similarly, in Re Collier, Hammond J commented:33The next issue is, how far if at all, were the common law principles on initial failure of a charitable trust affected by the enactment of s 32 of the Charitable Trusts Act 1957? This point was before the Court of Appeal inAlacoque v Roache (supra). That Court held that the statutory provisions in s 32(1) only apply to trusts which have come into existence, and subsequently failed. To put it another way, s 32(1) does not apply to gifts which never take effect so as to be held for charitable purposes. In a case of that kind, the common rules as to lapse which I have noted are to be applied; therefore a paramount charitable intention must be shown before the property can be applied for another charitable purpose.[55] Further guidance can be gleaned from the comments of Chilwell J in Re Pettit, where it was observed:34At law the bequest to an institution which never existed would fail and the bequest would lapse unless there is a general charitable intention which enables it to be applied cy-près. In New Zealand the Court is required toapply s 32(1) if the case falls within that section; to that extent the section has replaced the cy-près doctrine.[56] Perhaps more unequivocally, in Re McElroy Trust, O'Regan J held that:3532 Alacoque v Roache [1998] 2 NZLR 250 (CA) at 256.33 Re Collier, above n 22, at 96.34 Re Pettit [1988] 2 NZLR 513 (HC) at 546.35 Re McElroy Trust [2002] 3 NZLR 99 (HC) at [15]. Although this decision was affirmed on appeal, there was no comment on this finding: Trustees of the McElroy Trust v Objectors [2003] 3 NZLR 289 (CA). See too Williams v New Zealand Red Cross Inc [2013] NZHC 3460, [2014] NZAR 673 at [9]; St John of God health & Elder Care Services Trust Board v Little Sisters of the Poor (NZ) Trust Board (2008) 28 FRNZ 219 (HC) where Asher J stated at [20] that"[s]ection 32 and Parts 3 and 5 of the Act together achieve in New Zealand what was previouslyachieved by the doctrine of cy-près"; Re Gift for Life Trust HC Hamilton M152/00, 9 November 2000 at [9]; Re Pettit [1988] 2 NZLR 513 (HC) where Chilwell J described s 32 as "the statutorySection 32 of the [Charitable Trusts] Act [1957] establishes the Court'sjurisdiction to make orders varying a charitable trust in certain circumstances. This supersedes the common law doctrine of cy-près[57] I note that in Alacoque v Roache, the Court of Appeal reserved its position on the decision Re Palmerston North Halls Trust Board, where it was held, inter alia, that any case falling within s 32(1) of the Charitable Trusts Act must be disposed of pursuant to its provisions, and not by resort to the inherent jurisdiction.36 This is not an issue that arises here as I have found both the statutory regime and the common law regime to be inapplicable.[58] To summarise, in cases of initial failure, where a paramount general intention is distilled, s 32(1) remains the appropriate vehicle for determining an application precisely because s 32(3)(a) does not apply. While there is a prima facie lapse, the cy-près doctrine steps in to save the gift, rendering the gift applicable "for any other charitable purpose". As a result, s 32(1) is not excluded by subs (3)(a) as both elements of the subs are not met. The common law is therefore relevant in determining whether s 32(3) applies. Where both limbs of s 32(3) are not satisfied, s 32(1) will operate; cy-près will save the gift precisely for this purpose. I therefore disagree with Charles Rickett to the extent he postulates:37In respect of initially failing charities, s[ub]s (3) saves the application of common law of cy-près in defining whether there is a case for salvation, and thereby (perhaps unwittingly) excludes cases of initial failure from the reach of the section.[59] Had I been required to apply s 32 to this case, I think the matter in any event would have remained finely balanced. This is because, despite the cy-près doctrine not applying to s 32 situations, New Zealand Courts have consistently held that the will-maker's intent must nonetheless be followed as closely as possible.38 Asher Jsubstitute for the cy-près doctrine".36 Alacoque v Roache [1998] 2 NZLR 250 (CA) at 256, citing Re Palmerston North Halls Trust Board [1976] 2 NZLR 161 (SC) at 165.37 Charles Rickett "Failure of Charities and the Conundrum of s 32" [2003] NZLJ 59 at 61.38 See for example Re Twigger [1989] 3 NZLR 329 (HC), citing Re Door of Hope (1905) 26 NZLR 96 (SC) at 100; Public Trustee v Attorney-General [1923] NZLR 433 (SC) at 442; Re WhatmanSC Wellington, 16 July 1965; Re Palmer [1939] NZLR 189 (SC) at 193 (cited with approval inRe Goldwater [1967] NZLR 754 (SC) at 755). See too Re Centrepoint Community growth Trust[2000] 2 NZLR 325 (HC) at [32].summarised this position in St John of God Health & Elder Care Services Trust Board v Little Sisters of the Poor (NZ) Trust Board:39 The approach of the Court to approving a proposed scheme wassummarised by Tipping J in Re Twigger [1989] 3 NZLR 329 (HC) at 342:Part III does not make a cy-près approach mandatory. However, this Court has held in the series of decisions, which I have traversed, that those promoting a scheme under Part III should seek to substitute beneficiaries or purposes resembling as closely as possible in the changed circumstances those which originally commended themselves to the person who established the trust. That is simply another way of saying, as did Holland J in Erskine's case, that the wishes of the testator must be followed as far as possible by the scheme.To achieve that objective it is obviously necessary as a first step to identify those wishes as exemplified by the original trust which ex hypothesi has failed or become inexpedient or impracticable. Trusts of a charitable nature will be expressed or established with differing degrees of detail or specificity. In seeking to derive the settlor's intention, one should in my view endeavour to establish what one might call the essential elements of the original trust.[60] Without deciding the issue, I express some reservations as to whether the proposed scheme would carry out the intention of the deceased as closely as possible. My principal reservation is the existence of the accruer clause, which seeks to proportionately increase the shares of the other intended charitable beneficiaries in the case of failure. It therefore seems that the deceased made express provision for a scenario of this kind arising.Residual matters[61] Having determined the first two orders sought against the applicant here, I must nonetheless consider whether I should make orders (c)–(e), referred to above at[8].[62] The proposed order referred to in (c) was for a declaration that the accruer cl 5(b)(iii)(5) in the Will does not apply. For the reasons I have given above with respect to the first two orders sought, it will be apparent that this order cannot be made. Indeed, I consider that the accruer clause does apply here. Even if, however,39 St John of God health & Elder Care Services Trust Board v Little Sisters of the Poor (NZ) Trust Board (2008) 28 FRNZ 219 (HC) at [51].I had concluded otherwise, difficulties remain with proposed order (c). These issues were addressed in the Attorney-General's report:4045. The applicants argue that the accruer clause does not apply because the GGTB has been restored to the Register and is therefore deemed to have existed at all relevant times. In my view there are some difficulties with this argument. I am not convinced that the GGTBhad not "ceased to exist" in the sense intended by Mrs Utterson- Kelso. Further, even if GGTB is considered to be in existence at the time of Mrs Utterson-Kelso' death (thus avoiding both lapse and theapplication of the accruer clause), the applicants still need to establish that it is now appropriate for Presbyterian Support to receive the gift instead of the GGTB.[63] The Attorney-General then analysed the matter by reference to previous authorities, before concluding:4151. Accordingly, in this case, it may be argued that the trust has not failed. Presbyterian Support Services both set up the charity and continued as the successor of the GGTB after the board dissolved. This continuity in service suggests that the trust has not failed.[64] Though I need not reach a conclusion, I think it is plain that, at best, the position is uncertain. For the reasons discussed, it follows that both of proposed orders (c) and (d) will not be granted.[65] The final order sought as outlined at [8](e) above, dealing with accumulation, is more troublesome. While I have concluded that none of the other orders sought should be made, I nonetheless retain inherent jurisdiction, or jurisdiction pursuant to s 10 of the Perpetuities Act 1964, to reform the accumulation clause, cl 5(b)(ii).42 This is necessary in this case as cl 5(b)(ii), as it stands, infringes s 21 of the Perpetuities Act 1964 dealing with accumulation. I note that the Attorney-General does not support the order as currently sought by the applicant.40 Virginia Hardy (Deputy Solicitor-General) Report of the Attorney-General under the Charitable Trusts Act 1957 on a Proposed Scheme under the Last Will and Testament of Iris Maud Utterson- Kelso (23 May 2014).41 At [46]–[50] (emphasis added), citing Re Watt [1932] 2 Ch 243 (CA); Re Withall [1932] 2 Ch 236 (Ch).42 See Perpetual Trust Ltd v Roman Catholic Bishop of Christchurch [2006] 1 NZLR 282 (HC) at 287.[66] The mere fact that the accumulation concerns a charitable trust does not alter the infringement of the rule against accumulation. As was said by Chisholm J inPerpetual Trust Ltd v Roman Catholic Bishop of Christchurch:43 To me it is entirely logical that accumulations that are to be held in perpetuity do not fall within the umbrella of a charitable trust because they cannot be used by the charity. That situation is distinguishable from a situation where the corpus is in existence at the time the trust is created.[67] The maximum perpetuity period permitted is prescribed by s 6 of the Perpetuities Act 1964 as 80 years. In light of the clear intention of the deceased to benefit charity, and the current infringement against the Perpetuities Act 1964 and the comments of the Attorney-General, I am inclined to make an order altering the accumulation clause. However, I do not necessarily agree that it should be that which is proposed by the applicant.[68] However, having received only limited submissions on the appropriate wording of an alternate clause, I invite further submissions from the parties on this point before making such an order.Outcome[69] The application fails as to the orders sought as outlined at [8](a), (b), (c), and (d) above. There was no general charitable intention and there was initial failure of the gift. Accordingly, the gift in cl 5(b)(iii)(3) fails and the accruer clause applies.[70] As to the perpetuity period, parties are to file any further submissions they may wish on the wording of a clause to replace cl 5(b)(ii) in accordance with the following timetable:(a) Applicant within 15 working days (not exceeding five pages in length); and43 At [13], citing Trustees Executors and Agency Co Ltd v Bush (1908) 28 NZLR 117 (SC) at 119–120, where Denniston J stated:But where there is a trust for charitable purposes and a direction to accumulate the income or a portion of it indefinitely, or for any period in excess of that allowed by the rule against perpetuities, such direction is not a trust in favour of the charity, but is a fetter on the charitable trusts and prevents the use of the property for charitable purposes during theperiod for which the accumulation is directed(b) Respondent within 10 working days thereafter (not exceeding five pages in length).(c) Attorney-General within a further 10 working days thereafter (not exceeding five pages in length).[71] I will then consider all the submissions and make an order on the papers as to the clause that is to replace cl 5(b)(ii).Costs[72] Costs lie where they fall, except that the estate is to bear the Attorney-General's costs of $750.44[73] This decision is to be gazetted in accordance with the requirement to do so in s 54 of the Charitable Trusts Act 1957....................................................Gendall JSolicitors:Wynn Williams, ChristchurchSaunders Robinson Brown, ChristchurchCrown Law, Wellington44 This is not an unusual course. See for example, Williams v New Zealand Red Cross Inc [2013] NZHC 3460, [2014] NZAR 673 at [18]; Re Presbyterian Support Central HC Wellington CIV- 2009-485-140, 2 April 2009 at [20].Annexure A – clause 5 of the Will5. I GIVE DEVISE AND BEQUEATH the rest of my estate both real and personal of whatsoever situate unto my trustee UPON TRUST to pay thereout my just debts funeral expenses testamentary expenses and all death duty payable in respect of my dutiable estate and to stand possessed of the residue (hereinafterreferred to as "my residuary estate") UPON TRUST:(a) TO set side and invest the sum of TWENTY FIVE THOUSAND DOLLARS ($25,000.00) to be applied at the absolute discretion of my trustee in continuing and extending the financial assistance which I am at present giving for whatsoever children I shall be sponsoring through the SAVE THE CHILDREN FUND at the date of my death with the intent that my trustee shall maintain at least the usual measure of assistance for such children for so long as my trustee deems it desirable to do so so that any girl of marriageable age be provided with a suitable dowry and that any child be given the opportunity of university or other advanced education if suited for the same AND I DIRECT that any proportion of the said TWENTY FIVE THOUSAND DOLLARS ($25,000.00) not so expended under this clause at the absolute discretion of my trustee shall fall into and form part of my residuary estate.(b) SUBJECT to the payment provided herein for my sponsored children I DIRECT my trustee to hold the residue UPON TRUST as follows:(i) TO invest the same in perpetuity as is by law or this my will allowed;(ii) TO accumulate an amount equivalent to ten per centum (10.00%) per annum of the net annual income arising from my estate by adding the same to the capital thereof;(iii) TO divide the remaining net annual income as shall not be accumulated as aforesaid into four (4) parts and to pay and apply such parts as follows:(1) AS to one (1) such part for THE SALVATION ARMY at Nelson for use amongst people in need in the City of Nelson;(2) AS to one (1) such part for THE NELSON DIOCESAN TRUST BOARD for the purpose of the Whareama Home Stoke Nelson;(3) AS to one (1) such part for THE GREEN GABLES TRUST BOARD at Christchurch to be used for the purposes of The Green Gables Home at Nelson;(4) AS to the remaining one (1) such part for THE NELSON REGIONAL HOSPICE TRUST for the purposes of Hospice facilities and services within the Nelson health area;(5) IN the event of any of the charitable organisation contained in my will ceasing to exist for any reason then the share of the trusts that fail or the shares of the net annual income shall be added to the others or other of the said parts of thetrusts whereof do not fail in equal shares and shall be subject in all respects to the same trusts and provisions as herein appear concerning the parts or part to which the same shall attach;(6) IT is my request without imposing any binding trust that such parts of the net annual income arising from my residuary estate received by the said Salvation Army the Nelson Diocesan Trust Board and the Green Gables Trust Board should be used for the establishment and/or maintenance of self contained units and/or hospital wings.