THE ROYSTON HOSPITAL TRUST BOARD v ATTORNEY-GENERAL [2015] NZHC 1753

THE ROYSTON HOSPITAL TRUST BOARD v ATTORNEY-GENERAL [2015] NZHC 1753 [29 July 2015]IN THE HIGH COURT OF NEW ZEALANDNAPIER REGISTRYCIV-2015-441-53[2015] NZHC 1753UNDER The Charitable Trusts Act 1957IN THE MATTER OF An application under Part III of that Actfor approval of a Scheme of CharitableTrustBETWEEN THE ROYSTON HOSPITAL TRUSTBOARDApplicantAND HER MAJESTY'S ATTORNEY-GENERAL FOR NEW ZEALANDRespondentHearing: On the papersCounsel: G D Clews for ApplicantJudgment: 29 July 2015JUDGMENT OF KEANE JThis judgment was delivered by me on 29 July 2015 at 10.30ampursuant to r 11.5 of the High Court Rules.Registrar/Deputy RegistrarSolicitors:Gifford Devine, Hastings[1] In 1953 the Royston Hospital Trust was settled to own and operate the Royston Hospital, a private hospital in Hastings. Shortly after the trust was incorporated under the Charitable Trusts Act 1957: for the purposes of a private hospital primarily intended for the reception of paying patients but with a right to the Trustees to receive a limited number of non-paying patients [2] Until 1993 the hospital was owned and operated by the Board consistently with that charitable purpose. Then on 15 March 1993 the Board entered into a joint venture with local medical practitioners. They incorporated Royston Hospital Limited, in which the Board took half the shares, to purchase the hospital anddevelop its amenities and services consistently with the Board's charitable purposes.On 14 August 1997 a scheme was approved amending the Board's objects, powers,authorities and discretions.[3] In January 2006, in response to changing conditions in health care and the need to sustain the hospital, the Board approved a proposal to amalgamate RHL with a publicly listed company, Wakefield Health Limited, in which it took shares. Wakefield then assumed responsibility for the hospital, subject to agreements Wakefield then entered into with the Board.[4] In 2012, to protect its Wakefield investment, and its indirect interest in the hospital, the Board invested, alongside private interests, in a joint venture to acquire the majority interest in Wakefield, advanced through a joint venture company, Austron Limited, in which it took 41.24 per cent of the shares. Wakefield was then renamed Acurity Health Group Limited.[5] In July 2014, to protect its indirect investment in Acurity, the Board joined in a bid for the minority shares by Connor Health Care Limited, then a minorityshareholder, owned by Evolution Health Care Limited. In approving that bid theCommerce Commission required Austron to take almost 90 per cent of the shares inConnor; and the Board's interest remained confined to its Austron shareholding.[6] As a result of these transactions, the Board has ceased to own any direct or indirect interest in the hospital and, for reasons I will mention shortly, applies for anorder approving a scheme freeing itself from its original purpose, which assumes a continuing interest in the hospital, to enable it to engage in a wider range of health services in the Hawkes Bay under the name The Royston Health Trust Board.[7] This application has been advertised without evoking any objection and the Attorney-General considers that the variations the Board seeks to its purposes and powers are justifiable and appropriate. I agree.Trust purposes[8] Section 32 of the Charitable Trusts Act 1957 enables the charitable purposes on which property is held to be varied where the original purposes, as is the case here, have become impracticable or inexpedient.[9] The new purposes, like the old, must be charitable purposes, and, as the cases say, the old purposes are not formally limiting. The new purposes must, however,"accord as closely as is reasonably possible in the changed circumstances to the terms of the original trust" and "best serve the interests of those intended to bebeneficiaries and the public".1[10] I am satisfied, firstly, that the original purposes have become impracticable and inexpedient:(a) The Board no longer owns the hospital and has ceased to hold shares itself in the owner of the hospital, Acurity Health Group, and the hospital is only one of a number of hospitals owned by Acurity.(b) To protect the value and utility of its assets, it is likely that the Board will have to sell some or all of its indirect interests in Acurity and will not be able to insist on Acurity shareholders supporting the hospital ina manner consistent with the 1997 scheme.(c) The Board does not have, and will not obtain from a sale of its interest in Acurity, the ability to re-purchase the hospital or to maintain it as1 Re Tennant [1996] 2 NZLR 633 at 636.the law requires, especially as to seismic strength, or to continue the medical and surgical services it offers.[11] I am satisfied equally that the varied charitable purposes that the Board seeks to have approved are closely consistent with its original purposes, although no longer linked to a particular hospital facility. Under the scheme the Board would:For the benefit of the people and community of Hawkes Bay, promote,support, maintain or procure:(a) Hospital services, including services delivered in or through the Royston Hospital;(b) Health services;(c) Health research;(d) Health education;(e) Professional learning and development for health practitioners;(f) Assistance to and co-operation with the Hawkes Bay District Health Board or any successor entity, Whakawateatia, in the provision of its services.[12] Under these varied purposes, I agree with the Attorney-General, the Board will be freed to assist in the Hawkes Bay with a wider range of complementary services, extending beyond the care of the acutely ill to preventive and ongoing care, and to related services, consistent with its original purposes.Administrative powers[13] Section 33 permits the powers of a charitable trust to be extended or varied, and thus the way in which is to be administered equally, as long as that will"facilitate" the carrying out of the purposes of the Trust; that is to say will promote those purposes and make them easier to accomplish.2[14] Under the scheme proposed, as the Attorney-General says, the trust will obtain powers more in keeping with the commercial complexities with which it has been confronted since it entered into the second joint venture in 2006. The only2 Re Melanesian Mission Trust Board HC Auckland M-1140/98, 24 September 1998.power, which calls for comment, is that enabling the Board to pay trustees for their services, including professional services.[15] This is a material change. The 1997 scheme only allowed trustees to be paid their costs and expenses. However, the reality is that to engage trustees with the expertise essential, the Board must be able to pay them for their services, extending to professional services, when that is essential; a reality that is increasingly recognised.3Orders[16] For those reasons I approve the scheme proposed under Part III of the Charitable Trusts Act 1957. The costs of and incidental to the application are to be paid out of the fund administered by the Board, as are those of the Attorney-General._____________P.J. Keane J3 Above, n 2.