Power to the People?

Tale of Two Power Stations While the Māori Land Court decision in Savage & Ors v Adlam, 95 Waiariki MB 176, is subject to appeal, the decision is of legal interest as it illustrates established principles that trustees (whether of charitable or of other trusts) may be liable for breach of fiduciary duties and for profits made by a trustee at the expense of a trust.  In principle, the same duties apply to officers of societies. Ms Beverly Adlam proposed the idea of developing two power stations, TG2 and GDL, on a block of Māori land owned by the Bath Trust of which she was one of the trustees.  The well for TG2 was on the Bath Trust block and the GDL well was on another trust’s land but the power station for it on Bath Trust land.  The decision of the Māori Land Court notes that “all parties agree that whatever the case against Mrs Adlam, absent her efforts, skill, knowledge and enterprise, there would be no other significant income for both Trusts.” Over about 16 years she received net $13,640,149 from the two projects, the amount at stake in this litigation. Conversion of funds in breach of fiduciary duty towards the Bath Trust In proceedings before the Māori Land Court, her fellow trustees, while recognising her contribution to the establishment of the power stations,sought full compensation and for Ms Adlam to account for the profits due to the trust, while Ms Adlam sought a developer’s fee or allowance. Judge Coxhead held that: [78] I … find that Ms Adlam, in taking money due to the Bath Trust...

A Revolution for Incorporated Societies

Sowing seeds for a revolution Four years ago the then Minister of Justice asked the Law Commission to undertake a “first principles” review of the Incorporated Societies Act 1908, commenting that it was “uncomfortably old.”  In August last year the Commission produced its Report 129, “A New Act for Incorporated Societies,” with 102 recommendations for new legislation.  The Government in February this year accepted all but one of the recommendations either in full or in principle. There is, of course, a General Election this year, so the present Government may not exist, either in its present manifestation or at all.  However, no Government is likely to deny the need for reform (i.e. replacement) of the Incorporated Societies Act 1908, but the shape of its replacement may differ depending on the nature of the Government proposing the Bill. What sort of revolution? What generations of lawyers, society members, and society committees have become used to will disappear, replaced by a statute that will bring societies’ law into the 21st century.  When its Report was tabled in Parliament the Commission issued a media release commenting that “As incorporated societies have evolved, so too must the legislation governing them.  Modern incorporated societies can be complex, often have substantial assets and may run significant businesses.”  That media release conveniently summarises what the revolution will look like: “Societies need to know what the minimum standards are for running and governing societies.” “Committee members need to know what they can, must – and must not do.” The new Act should set out “a set of basic duties for committee members and any other officers of...

Meetings and Emergencies

Two personal experiences On 22 February 2011 I was eight minutes into chairing a meeting a block away from Christchurch Cathedral. I had no hesitation in adjourning the meeting (it was resumed some three hours later when we found refuge elsewhere). More recently, a meeting of an organisation that had abandoned the previous meeting because of disorder was debating whether to appoint me as an independent chairman when one of those opposing my appointment had a heart attack, and the meeting was temporarily (but rather informally) adjourned for some 20 minutes while we waited for an ambulance to arrive to take the gentleman to hospital. A chairperson’s obligations in emergencies or in the event of disorder? A chairperson has ultimate responsibility for the proper conduct of and maintenance of order at a meeting. If someone disrupts a meeting the chairperson may ask them to leave or have them removed. According to the decision in a 1969 English High Court decision (John v Rees [1969] 2 All ER 274), in order of priority the chairperson’s obligations are as follows: To make “earnest and sustained efforts to restore order,” if necessary seeking assistance. To ask for a motion to adjourn, temporarily or for a longer period. If the meeting will not cooperate with the previous steps, “he should exercise his inherent power to adjourn the meeting for a short while,” in which event the chairperson must try to advise those present of the details of the adjournment (possibly difficult if the meeting is rowdy). If there is violence, similar steps should be taken, but “the greater the violence the less prolonged...

High Court Amending Charitable Trusts

Background Those who establish charitable trusts often impose conditions reflecting their personal background and preferences. Such was the case with the David Cummings Medical Trust (see Re Radich [2013] NZHC 2944, 7 November 2013). Mr Cummings had a Scottish heritage and having suffered injuries on the Western Front during WWI was impressed with the care he received from doctors who had studied at Edinburgh University. He established the trust to provide financial support for New Zealand medical graduates wishing to pursue post-graduate medical studies at Edinburgh University. In more recent years applications had dwindled, with the last application being in 2010 for limited assistance. The trustees sought approval for amended purposes, to allow study at any overseas university, and to allow computer-based and distance learning from overseas universities (including Edinburgh University). Part 3 Charitable Trusts Act 1957 Part 3 of the Act allows charitable trustees to seek approval to amend a charitable trust by proposing a “scheme” for the High Court’s approval. Section 56 of the Act provides that, for Part 3 Applications, the Court must be satisfied that “… the scheme is a proper one, and should carry out the desired purpose or proposal, and is not contrary to law or public policy or good morals; that the scheme can be approved under the Part of this Act under which the approval is sought; that every proposed purpose is charitable within the meaning of that Part of this Act and can be carried out; and that the requirements of that Part of this Act have been complied with in respect of the scheme …” The section is also...
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