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Charitable trusts, Charitable Trusts, Charities, Variation

Charitable or not?

The decision in the Southland and Scottish Hall Community Trust case raises the important consideration of knowing what it is you are dealing with.  In this case a declaration was sought as to whether the trust was a trust under the Trustee Act 1956, or a charitable trust under the Charitable Trusts Act 1957.  The trust in questions was recorded in a deed.  However, questions arose as to whether the trustee (the Invercargill City Council) owned the trust property as a bare trustee.  The future ownership of the trust property required confirmation as to the nature of the trust.

While an application under the Declaratory Judgments Act is unnusual given the need to clarify trust powers, the court was satisfied that it was an appropriate application in the circumstances.

The first question for the court was whether the trust was a charitable trust.  While the terms of the deed did not specifically note any charitable purpose the court determined that the clear transfer of land provided for in the deed and the open ended obligations imposed on the Council as trustee in respect of this memorial for the Scottsh pioneers was sufficient to satisfy the court that the trust was charitable.

This determination was important as without knowing this, it cannot be determined what legislation to proceed under. This was because a variation of trust deed was required so that the hall could be properly managed moving forward.  As the trust was charitable the appropriate course of action would be an application for variation under s 32 and / or 33 of the Charitable Trusts Act 1957.

This case is a “small” case.  However, it provides a useful analysis of the steps to be taken where there is uncertainty whether a trust that requires variation is charitable.

References:

  • Trustee Act 1956
  • Charitable Trusts Act 1957
  • Declaratory Judgments Act 1908
  • Mandic v Cornwall Park Trust Board [2011] NZSC 135
  • Re Spence [1938] Ch 96
  • Morgan v Wellington City Corporation [1975] 1 NZLR 416
  • The AG and the Southland Scottish Hall Community Trust [2013] NZHC 2749

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