Otago Museum Trust Board

[2023] NZHC 1427

IN THE HIGH COURT OF NEW ZEALAND DUNEDIN REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTEPOTI ROHE

CIV-2023-412-24

[2023] NZHC 1427

UNDER

The Trusts Act 2019

UNDER

Part 19 of the High Court Rules 2016

IN THE MATTER OF

An application for an order approving payment of remuneration to trustee

BETWEEN

THE OTAGO MUSEUM TRUST BOARD

as Trustee of the Otago Museum, a body corporate located in Dunedin and established by the Otago Museum Trust Board Act 1955 and continued by the Otago Museum Trust Board Act 1996

Applicant

Hearing:	29 May 2023
Appearances:	J W Cowan for Applicant
Judgment:	9 June 2023

JUDGMENT OF CULL J

[1]                The applicant, the Otago Museum Trust Board (the Board) is seeking an order approving payment of reasonable remuneration to the Chairperson of the Trust Board. The Board makes two applications: for permission to commence proceedings by way of originating application and for orders approving payment of remuneration to the Chair of the Board.

Otago Museum Trust Board [2023] NZHC 1427, 9 June 2023

The originating application

[2]                The Board applies without notice, under r 19.5 of the High Court Rules for permission to commence this proceeding by originating application. The Board submits that it is in the interests of justice to do so, to secure the just, speedy and inexpensive determination of the proceeding.

[3]                The Board records that r 27.37 of the High Court Rules 2016 applies to applications under s 139 of the Trusts Act. It acknowledges that it has not complied with r 27.37(2) by making an application rather than commencing the proceeding by a statement of claim in accordance with Part 5 of the High Court Rules. The Board submits that compliance with the rule appears unnecessary, as there is no defendant or interested party who may seek to oppose or defend the application. Associate Judge Paulson was satisfied that no directions as to service were required.

[4]                Under r 27.45, I am prepared to dispense with the observance of r 27.37(2) and Part 5 on the basis that the procedure followed by the Board is consistent with the Part 9 procedures in High Court Rules.

[5]                The application for the approval of remuneration is made under s 139 of the Trusts Act, and alternatively the High Court’s inherent jurisdiction. There is no procedure prescribed for this kind of application under the inherent jurisdiction of this Court.

[6]                The Board’s application is administrative in nature. It involves a narrow issue of whether remuneration for the chairperson in the modest sum of $10,000 per annum is just and reasonable. There is no opposition to the application, and the Board members unanimously approve the payment and the making of this application. There are no factual issues in dispute, no parties to be served with the application, no need for discovery, and no interlocutory applications could arise.

[7]                In these circumstances, I grant permission to commence the proceeding by way of originating application under r 19.5(1) as it is in the interests of justice.

Application for approval of remuneration

[8]                The Otago Museum Trust Board Act 1996 (the Act) governs the operation of the Board. The Board is the governing authority of the Otago Museum. Section 9 of the Act sets out the Board’s functions, which generally cover the administration and governance of the museum.

[9]                The Board proposes to pay reasonable remuneration to the chairperson in the amount of $10,000 per annum to recognise the time, commitment, skills, and services provided by the Chairperson. The application for the approval of the payment of remuneration to the Chairperson can proceed under s 139 of the Trusts Act.

[10]            The Board also seeks retrospective approval of payments already made to the Chairperson. The High Court has inherent jurisdiction to authorise, including retrospectively, remuneration for a trustee.1

[11]            Under s 139 of the Trusts Act, the Court may order that reasonable remuneration be paid out of trust property to a person who is or has been a trustee of the trust if the court is satisfied that it is just and reasonable to do so. Section 139 overrides s 37, which is the duty of a trustee to act for no reward.

[12]            In determining whether to grant an order under s 139, I must consider the matters set out in s 139(2). I consider these in turn.

[13]            I first consider the total amount that has already been paid to any trustee of the trust.2 The Board notes that payments of $10,000 per annum have been made to the Chairperson, since June 2019. No other amounts appear to have been paid to the Chairperson or any other trustee from the trust property,3 except for the travelling allowances and expenses in accordance with s 25 of the Act, and the Fees and Travelling Allowances Act 1951.

1      Ngai Tai Ki Tamaki Tribal Trust v Karaka [2012] NZCA 268 at [48]; In re Duke of Norfolk's Settlement Trusts; Perth (Earl) v Fitzalan-Howard [1982] Ch 61, [1981] 3 WLR 445 (CA).

2      Trusts Act 2019, s 139(2)(a).

3      Although I note that [28] of Dr Ian Paul Griffin’s affidavit states that the members of the Trust Board appointed by the Dunedin City Council are effectively already remunerated for their roles, because being a member of the Trust is part of their usual duties as councillors.

[14]            I now turn to consider the number and difficulty of the services provided by the trustee,4 the skill and success of the trustee,5 and the time and services reasonably required of the trustee.6 The Board submits that the Chairperson brings skill and success to administering the Otago Museum. In addition to the duties and responsibilities of the members of the Board, the Chairperson must undertake the following:

(a)chairing and setting the agenda of board meetings;

(b)attending and participating in Audit Finance and Risk Management Committee meetings;

(c)attending and participating in Staffing Committee meetings;

(d)representing the Board as required in the media and at functions and meetings; and

(e)ensuring the Board and Otago Museum meet legal obligations.

[15]            The Otago Museum is described as a “large and complex operation.” The Chairperson leads the Board of ten members. I accept the Board’s submission that these services are complex, time consuming and require specialist knowledge of the Otago Museum’s operations with a governance skill set. The sum of $10,000 per annum is modest in view of these duties and responsibilities.

[16]            It is also relevant that the Chairperson is exposed to personal liability.7 The value of the trust property is significant, with assets in excess of 26 million dollars, and its revenue in the last financial year being 9.3 million dollars.8 As the Board submits, it is in the interests of the beneficiaries of the Otago Museum that it is well- governed and lead by a capable, experienced and engaged Chairperson.

4      Section 139(2)(b).

5      Section 139(2)(d).

6      Section 139(2)(f).

7      For example, under the Health and Safety at Work Act 2015 and the Fair Trading Act 1986.

8      Sections 139(2)(c) and (e).

[17]            There is no suggestion that the payments for which approval is sought should be refused or reduced due to the conduct of the Chairperson in the administration of the trust.9 The application is supported unanimously by the Board members, and there is no opposition.

[18]            In these circumstances, I am satisfied that it is just and reasonable to order that the reasonable remuneration of $10,000 (plus GST, if any) per annum, as proposed, be paid out of the trust property to the Chairperson as a trustee of the Trust, under s 139 of the Trusts Act. I also consider it is appropriate to approve retrospectively the payments of $10,000 (plus GST, if any) per annum made to the Chairperson between June 2019 and the date of this application.

Result

[19]            Permission to commence proceeding by way of originating application is granted under r 19.5(1) of the High Court Rules 2016.

[20]The application for prospective and retrospective approval of remuneration,

$10,000 per annum (plus GST, if any), for the Chairperson of the Board is granted under s 139 of the Trusts Act 2019 and the High Court’s inherent jurisdiction.

Cull J

9      Section 139(2)(g).