SUPREME COURT

Hawke's Bay Tribune, Volume XXI, Issue 214, 24 August 1931, Page 5

SUPREME COURT

NAPIER SESSIONS AN INTERESTING CASE. RETURNED SOLDIERS’ ASSN. PETITION. It is not generally known that under the will of the late Mr. G. P. Donnelly, a well-known sheep-farmer of Hawke’s Bay, a substantial sum that will eventually amount to about £9OOO was left for the purpose of assisting necessitous soldiers’ families. Immediately after the Great War, Mr. Donnelly generously invited a number of soldiers to take up holdings in tho Kaiwaka district. Of the amount advanced by Mr. Donnelly, £5OOO has already been paid, and a further £4OOO is expected when the repayments are completed. These repayments form a fund left by Mr. Donnelly for assisting soldiers’ families, the trustees being the Y.M.C.A. and the Salvation Army, in whom the testator conferred wide discretionary powers. Arising out of this fund, various branches of the Returned Soldiers’ Association in Hawke’s Bay, at the Supreme Court, Napier, to-day, petitioned to His Honour, Mr. Justice Reed, to have the fund administered. They askod for a scheme to be formulated and approved of by the Court for the distribution of the fund. After the hearing, His Honour reserved his decision.

Mr. John Mason, with Mr. G. C. Harker, appeared for the various returned soldiers ’ associations, while Mr M. R. Grant appeared for the National Council of the Y.M.C.A., and Mr. H. B. Lusk for the Salvation Army.

DEED OF TRUST. Mr Mason, in opening the proceedings, said that the application was of considerable importance to returned soldiers, and arose out of a deed of trust of the estate of the late Mr G. P. Donnelly. His Honour pointed out that provided the trust was being properly carried out it was not for the Court to interfere. Mr Mason submitted that it was a case in which the Court could direct a scheme. In pursuance of the trust a sum of £3OOO was paid in August, 1929, to the Y.M.C.A. and Salvation Army, and a further £2OOO was paid in January last, making a total of £5OOO. On April 2 both bodies were written to by the Returned Soldiers’ Association, stating it was aware of the fund and wished to co-operate in the scheme for the handling of the fund. Up to the present none of the beneficiaries had received one penny as assistance from the fund.

On April 29 the Salvation Army, in reply, stated that they were determined to act, not only in the conditions of the late Mr Donnelly’s will, but also in the spirit of it. No attempt had, however, been made to handle the trust.

Mr Mason submitted that the Returned feoiuiers' Association was enutleu not only to know of the couuitious relative to that portion of the will, but also of what the trustees proposed to do with it. As far as Uie Y.M.C.A. was concerned, no money was distributed in 1928 or in 1929, and only £32 in 1930, showing that here hud not been any attempt to handle the money in pursuance of the trust. As he had received an assurance that there was a sum of money for the assistance of sons of soldiers, the headmaster of the High School had written to the general secretary of the Y.M.OiA., pointing out that owing to the’ 4 earthquake there had been distress, in reply, it was pointed out that only the interest on the capital could be expended, and that was already being expended. NO INTIMATION.

Counsel submitted that there had not been any intimation from the trustees that the money wak available for the benefit of educating the sons of returned soldiers.

His Honour expressed the opinion that if the Returned Soldiers’ Association thought that the fund was not being’properly administered they should draw the attention of the At-torney-General to it. Mr Mason, continuing, said that the Y.M.C.A. had said that it had cooperated with the various branches of the Returned Soldiers’ Association in Hawke’s Bay, and with the Hawke’s Bay War Relief Association, but counsel contended that such was not the case. It was not until May 22 last that he War Relief Association heard of the fund, when the National Council of the Y.M.C.A. had agreed to accept service for these proceedings. Mr Mason pointed out that the Y.M.C.A. had stated that it was extending assistaace all over Hawke’s Bay, but in over 2} years it had assisted only two families to a small amount. Mr Mason submitted that the beneficiaries were entitled to know the conditions of the fund, and he proceeded to quote legal authorities in support of his argument. ■OTHER GROUNDS.

Mr. Mason, continuing, said that there were other grounds upon which the Court might direct a scheme. In this case both trustees had adopted a policy of masterly inactivity, and little or nothing has been done by them in terms of the trust. Further, their conduct had been improper in that they had failed to notify the beneficiaries of the fund of its purposes. In reply to His Honour, Mr. Mason said that the War Relief Association and Returned Soldiers’ Association were co-operating in the question of relief. Further, it was not desirable that the fund should bo allowed to accumulate, as it would mean that the families of soldiers who were in need would ho deprived of that assistance. Counsel pointed out that in many eases n small grant woule be of considerable assistance in keeping children at school for a little longer, giving such children an advantage which the testator undoubtedly intended should be the case. Further, there were soldier settlers who. with assistance, would he enabled to send their children to school, which otherwise could not be afforded. Mr. Mason submitted that it would

be better that the fund be exhausted earlier than that it be retained inactive. . . Mr. Harker submitted that if it was intended that only the. interest on the capital was to be utilised for relief then the full benefit from the fund could not take place. Counsel submitted that a scheme was essential so that some machinery could be decided upon to enable the beneficiaries in the country areas to receive benefit equal to those in the towns. In reply to His Honour, Mr. Harker stated that all the War Belief Associations in the Dominion had adopted the policy that a soldier belonged to the district in which he enlisted. In regard to the definition of families, counsel submitted that it should apply to only the wives and children of soldiers. Counsel for both trustees agreed to these definitions being accepted. Mr. Grant, on behalf of the Y.M.C.A., said he agreed that the recipients of a trust should be defined by a Court.. Proceeding, Mr. Grant held it was felt that the fund was a trust of capital as well as one of income. It was also felt that the capital should not be expended, as it would mean that if the whole was absorbed on necessitous cases a hardship might bo imposed on a soldier who though today was comfortably off might have hardship fall upon him in the near future.

Counsel suggested that there possibly should be a final winding up of the fund in ten years’ time. If a percentage of the capital, plus all the income was expended, the fund would soon be exhausted. Counsel suggested that a measure of elasticity should be left to deal with special cases and to spread the fund over a definite period.

APPLICATION OBJECTED TO.

Counsel submitted that the testator, who had faith in the trustees in carrying out his will relative to the fund, had left them an unfettered discretion, and on those grounds the trustees objected to the application before the Court. If a scheme was determined by the Court the trustee* might not then have the elasticity given them by the testator. The trustees did not object to the accounts being audited, nor of them being placed before the Court. Counsel did not think that a scheme should be ordered. The lata Mr. Donnelly had left the fund practically unfettered in the hands of the trustees.

Counsel submitted that neither of the trustees could be blamed for the returned soldiers not knowing of the existence of the fund. The Tate Mr. Donnelly assisted fourteen soldiers several rears ago, and this fund was dependent upon the repayment of those moneys. To His Honour: Counsel said there was no reason why the trustees could not co-operate with the War Relief Association in that the latter body could be invited to submit the names of applicants which could be considered by the trustees. His Honour pointed out that the War Relief Association, in having dealt with so many applications for assistance, would be m a better position to know the wants of applicants than the trustees would, and that the association could recommend the allocating of an amount agreed upon as a scheme for each year. Mr. Grant considered that such a course would mean the handing over of the trust to the War Relief Association, which would not be in pursuance of the testator’s intentions.

SALVATION ARMY’S CASE. Mr. Lusk, on behalf of the Salvation Army, said that it was plain that the trustees were granted wide powers in their discretion for the extending of assistance. The Salvation Army was not desirous of any scheme being laid down, as it would interfere with the carrying out of the full intention of the testator. The trust, being a charitable one, did not render a scheme necessary. The Salvation Army was a permanent institution, having as one of its main offices the assistance of the poor and distressed, and he quoted legal authority holding that in this case a scheme was unnecessary. Counsel submitted that unless there had been improper conduct on the part of trustees, there should not be any scheme laid down. He submitted that the trustees had a perfect right in controlling the fund ns they had done. If the AttorneyGeneral h»I thought there had been good ground for a scheme, it would have beeu for him to bring forward these proceedings. TRUSTEES’ OBJECTIONS. Continuing, Mr. Lnsk objected to any limit being placed on their discretion, as in a few years ’ time necessitious cases deserving of assistance might arise. They had no objection to accounting to the Court of the position of the funds, but were opposed to such information being published. They objected also to being hampered or restricted in control of the fund.

Mr. Mason in answer to Mr. Lusk, submitted that the Returned Soldiers’ Association was properly before the Court in its application once the At-torney-General had been served with notice of the proceedings. Mr. Mason submitted that a case cited by Mr. Lusk dealt with a sum of money that was donated to ths general funds of an institution, whereas, in this case, tho fund was not .■riven to the general funds of either the Salvation Army of the Y.M.C.A., but for a special purpose of giving assistance. Counsel submitted that it was a case for a scheme to give uniformity and to carry out the full intentions of tho late Mr. Donnelly. Ho submitted that if tho fund was under a formulated scheme a considerable amount of benefit could be conferred on soldiers’ families. The Salvation Army had not expended any of the fund, and still desired to retain the fund without giving any direction as to how it proposed to expend it. His Honour reserved his decision.