Trustees of Hawkes Bay Joan Fernie Charitable Trust found they had no legal authority to manage $131 million in trust assets because of a fifty year old legal mistake. The High Court came to the rescue, validating past errors.
In 1976, Joan Fernie established a charitable trust. For reasons no-one currently alive is aware, the trust deed was replaced one year later. Charities law required court approval for any change to the Trust. This was never done.
It was not until 1979 that Ms Fernie transferred farming properties to the Trust. It now holds some 8100 hectares. Trustees assumed the replacement deed was operative. It wasn’t. Assets were held under terms of the original 1976 deed. As a consequence, new trustee appointments made after Ms Fernie’s 2007 death were invalid because they did not follow the required 1976 procedure. Similarly, actions these new trustees took in running trust farming operations were invalid.
Charity Services current filings disclose several trustees earned income from the Trust and one former trustee had borrowings of $1.3 million. There are complaints Trust profits are not being distributed to local organisations as intended by the original trust.
Most recent Fernie accounts filed with Charities Services discloses annual revenue for year ended June 2022 at $6.2 million. The Trust made no donations. It holds about $700,000 in cash.
Interests associated with then trustee Malcolm Taylor are recorded as having a $1.3 million loan from the Trust at five per cent. Other trustees then on the board earned income from the Trust variously for legal advice, farm management and commission on livestock sales.
The High Court was asked to validate what has been some fifteen years of legal irregularities in Trust operations flowing from the fact trustees over these years were not validly appointed.
Using powers in the Charitable Trusts Act, Justice Grice approved the replacement trust deed as being the Trust’s operative deed and validated past non-compliance with trustee appointments.
re Joan Fernie Charitable Trust – High Court (3.10.23)
23.175