Link: Case Summary Document
Citation:  NZHC 2516 (New Zealand High Court, Kós J.)
Acknowledgement:The Pemsel Case Foundation thanks The Australian Centre for Philanthropy and Nonprofit Studies for its contribution in the drafting of this Case Note.
In the Great War of 1914-1918 the Young Men’s Christian Association (YMCA) provided invaluable welfare assistance to soldiers of the First New Zealand Expeditionary Force. Libraries, cinemas and canteens were established at camps and hospitals, particularly on the Western Front, and in London and Paris. Soldiers later subscribed money to build the YMCA a memorial hall in gratitude for welfare services provided to them in the Great War.
A trust deed was entered and a hall was built in Petone, in the Hutt Valley. However, there is no longer a Petone YMCA, or indeed a Hutt Valley YMCA. The hall fell into disuse in the 1960s, and was later leased out. Eventually the building needed seismic and other maintenance work, so almost a century after the Great War’s end the trustee sold the building.
The proceeds were retained in a trust for the purpose of erecting a memorial hall. Since no hall is now needed, the trustee applied to the court for approval of a scheme under Part 3 of the Charitable Trusts Act 1957 (the Act) to vary the existing terms of the trust and to substitute a new trustee. The trustee submitted that the purpose of the trust could be fulfilled by means such as erecting a memorial, establishing an educational trust, or acquiring assets for youth work programs. It sought the flexibility and discretion to apply the trust capital of $430,000 (and income arising) to such ventures as it saw fit to fulfil the trust’s original purpose.
Specifically, the trustee sought orders varying the terms of the trust by substituting a new deed of trust pursuant to sections 32 and 33 of the Act:
(a) to preserve the original charitable purposes but not requiring them to be fulfilled in the same way as originally provided;
(b) replacing the National Council of the YMCA as the trustee with the National Board of the National Council of Young Men’s Christian Associations of New Zealand; and
(c) varying the powers of the trustees to administer the trust by the provision of powers of investment found in contemporary charitable trusts in New Zealand.
The Attorney-General of New Zealand did not oppose the proposed scheme. The three main issues arose under section 32 of the Act. These were:
Issue 1: Was it ‘impossible or impracticable or inexpedient’ (in the words of section 32) to carry out the trust’s original purpose, which was the erection of a memorial building at the site?
Issue 2: Was the proposed new trust deed directed to charitable purposes?
Issue 3: Were the new purposes sufficiently close to the charitable purposes in the original trust deed?
His Honour answered all these questions in the affirmative. On the first issue, the site had been sold to a bona fide purchaser, so it was no longer available. Moreover, the YMCA had no need for a hall at that site or elsewhere. On the second issue, the definition of charitable purposes in the Charities Act 2005 was the common law definition, adopting the long-established classifications of ‘charitable purpose’: relief of poverty, the advancement of education or religion, and any other matter beneficial to the community.
The National Council of the YMCA in New Zealand is a registered charity, as are most of the constituent member YMCAs. His Honour was satisfied that the original purpose for which the YMCA received the soldiers’ gift was charitable in nature, responding to the charitable services provided by the YMCA during the Great War. The proposed new purpose was to ‘use the capital and income of the Trust for the use and purposes of the YMCA in a manner that recognises the work of the New Zealand branch of the YMCA during the Great War in accordance with the Trustee powers…’ This respected the original purpose to commemorate those charitable services, but without the unnecessary constraint of doing so in the form of a particular building on a particular site (at ).
On the third issue, while the cy-prés doctrine did not apply, the purposes needed to be sufficiently close to the original. His Honour said that there were ‘notable differences’ between the purposes (at ). Nevertheless (at ):
‘The varied purposes will serve the interests of the same class of beneficiaries, being YMCA members and those who benefit from its activities. However, the trustee’s discretion is much wider. It simply requires the capital and income to be used for the purposes of the YMCA in a way that recognises the work of the New Zealand branch of the YMCA during the Great War. This would allow the trust property to be used for whatever purpose the trustee sees as fit, as long as that recognises in some way the contribution of the YMCA to that war effort. It has been suggested that this could take the form of an educational scholarship, a physical memorial or a youth work programme. These are far removed from the original purpose of a memorial building. However, the intentions of the soldier donors must primarily have been recognition and commemoration, and whether that takes the form of a physical building or a memorial scholarship, the wishes of the original donors will be met as best they can in today’s world.’
Therefore, the scheme was approved.
The case may be viewed at: http://www.austlii.edu.au/nz/cases/NZHC/2013/2516.html