Kytherian Association of Queensland v Sklavos [1958] HCA 47; (1958) 101 CLR 56 (28 October 1958)

HIGH COURT OF AUSTRALIA

KYTHERIAN ASSOCIATION OF QUEENSLAND v. SKLAVOS [1958] HCA 47; (1958) 101 CLR 56

Will

High Court of Australia
McTiernan(1), Fullagar(1) and Taylor(1) JJ.

CATCHWORDS

Will - Construction - Charitable gift - Devise to trustee on trust for the erection and/or benefit of a sanatorium and/or hospital on the island of Cerigo - No hospital on island at the date of the will or of the death of testator - Trustee an unincorporated association at date of death but later incorporated - Object in foreign country - Trust fund and trustee within jurisdiction - Testator domiciled within jurisdiction - Whether association an essential part of the trust - Whether trust failed - Power to appoint trustee and settle a scheme - Parties - Attorney-General.

HEARING

Brisbane, 1958, June 24, 25, 26;
Melbourne, 1958, October 28. 28:10:1958
APPEAL from the Supreme Court of Queensland.

DECISION

October 28.
The following written judgment was delivered:-
McTIERNAN, FULLAGAR AND TAYLOR JJ. The question for our decision in this the disposition of the ultimate residue of the testator's estate constituted a valid charitable gift. The disposition of residue was in the following terms: - "As to the rest and residue of my estate I GIVE DEVISE AND BEQUEATH the same unto my said wife during her life and after her death as to the sum of one thousand pounds for Agia Triatha Ecclesia (in English known as Holy Trinity Church) in Metata aforesaid AND AS to the residue then remaining for the Kytherian Association of Queensland upon trust for the erection and/or benefit of a Sanatorium and/or Hospital in the said Island of Cerigo as the said Association in its discretion may think fit AND I DECLARE that the receipt of the Secretary and Treasurer for the time being of the said Association shall be a good and sufficient discharge to my trustees." Accordingly one problem is whether "the erection and/or benefit of a Sanatorium and/or Hospital in the said island of Cerigo" constitutes a charitable object in the legal sense. To this question the Full Court of Queensland gave a negative answer for, although the members of the Court were of the opinion that a trust to "found" a hospital, or to assist an existing hospital, might well be upheld as charitable, they appear to have considered that a trust merely to erect or build a hospital could not be so characterised. But where, as here, the object is the erection of a sanatorium and/or hospital, it was, they thought, impossible that the gift could stand because the expression "sanatorium" is equally descriptive of a form of institution which may be either charitable or non-charitable. As is so often the case in matters of this character the problem to be solved necessitates a number of independent enquiries. Initially, of course, it is necessary to ascertain the true meaning of the disposition under consideration and, thereafter, to determine whether the trust which the testator has attempted to create is entitled to recognition as a valid charitable trust. But it should be borne in mind that if a charitable object is fairly discernible it is no objection to the validity of the disposition that it fails to prescribe in detail the manner in which the object is to be accomplished. In appropriate cases a scheme may be settled and this may be done even in cases where the administration of the trust has been left in the discretion of specified trustees: Wellbeloved v. Jones [1822] EngR 518; (1822) 1 Sim & St 40 (57 ER 16) and Attorney-General v. Stepney [1804] EngR 307; (1804) 10 Ves Jun 22 (32 ER 751) . (at p66)

2. In the forefront of the argument upon the hearing of the appeal there was considerable debate concerning the meaning of the expression "sanatorium" and, in view of the fact that it was upon this point that the decision of the Full Court ultimately turned, it is as well that we should deal with this aspect of the case first of all. It was pressed upon us that that term may describe an institution conducted for the purpose of profit equally with an institution conducted on charitable lines for the reception of persons in need of various forms of medical attention and treatment. But when the terms of the disposition in question are considered it is seen that the word "sanatorium" is used in juxtaposition to the word hospital and the notion is inescapable that what the testator was seeking to describe was an institution for the reception and care of persons in need of medical attention. To speak in the circumstances of this case, as the testator did, of the erection of a sanatorium and/or hospital is not to refer to sanatoria of the type which, so counsel informed us, exist in various parts of Europe and are conducted as private institutions for the reception of wealthy guests and for the purpose of private gain. So much is obvious from the fact that the testator, himself a native of Cerigo, was desirous of making provision for some form of medical treatment for his compatriots in a locality where no facilities existed at the date of his will. It may be that the testator thought that it might not be possible to establish an institution on the island with the full facilities of a hospital and considered that a sanatorium, with some limited facilities for the reception and treatment of patients, might be the next best way of serving his purpose. But in any event, it is clear that his reference to "sanatorium" was intended to describe an institution not unlike a hospital and one which would provide some form of medical treatment for persons in need of it. (at p67)

3. It was conceded, on the authority of Taylor v. Taylor [1910] HCA 4; (1910) 10 CLR 218 and Perpetual Trustee Co. (Ltd.) v. St. Luke's Hospital (1939) 39 SR (NSW) 408; 56 WN 18) that a trust for the founding of a hospital would constitute a valid charitable gift and, upon the view which we have taken of the meaning of the word "sanatorium", it would follow that if the testator had directed the founding of a sanatorium and/or hospital the same conclusion would follow. Indeed, in such a case, reasons for upholding the object as charitable would be more readily perceivable than those which were thought sufficient to preserve trusts for the provision of "Homes of Rest" in In re Estlin (1903) 89 LT 88; 72 LJ (Ch) 687 ; In re Isabel Joanna James; Grenfell v. Hamilton (1932) 2 Ch 25 and In re Chaplin; Neame v. Attorney-General (1933) 1 Ch 115 . In those cases the dispositions under consideration were understood as describing institutions which, though not hospitals in the strict sense, served not unlike purposes. In the lastmentioned case, Maugham J. (as he then was), after pointing out that the testator's object was not merely to provide for the relief of poverty and that it was necessary, if the objects were to be held charitable, that they should be justified on grounds other than the relief of poverty, went on to refer to the facts in In re Isabel Joanna James; Grenfell v. Hamilton (1932) 2 Ch 25 . Thereafter he proceeded: - "In In re James (1932) 2 Ch, at p 31 the trust was for the establishment of a home of rest for the sisters of a community, the clergy of the Diocese of Truro, and such persons as the Mother Superior of the community should nominate and appoint; and the testatrix bequeathed money, the interest of which was to be applied to repair the house and maintain and support the inmates". Farwell J., following In re Estlin (1903) 72 LJ (Ch) 687 said: ". . . prima facie in my judgment the words 'Home of Rest' themselves indicate something in the nature of a hospital, although not strictly a hospital, that is to say, a home which is to provide relief for those who are in need of it, not by means of medicine or medical attendance, but by providing them with the means and possibility of rest, and that is in my view in a true sense providing for the impotent, and accordingly to provide a Home of Rest is, in my judgment, prima facie a good charitable object." (1933) 1 Ch, at pp 117, 118 But In re Chaplin; Neame v. Attorney-General (1933) 1 Ch 115 was, Maugham J. thought, a stronger case than In re Isabel Joanna James; Grenfell v. Hamilton (1932) 2 Ch 25 . He said: - "In the will with which he had to deal it was only by reasonable implication that it could be shown that the home intended was something in the nature of a hospital. In the present case the object of the home is to 'afford the means of physical and/or mental recuperation' to persons whose need is a real need of rest. Following Farwell J., I come to the conclusion that the home contemplated by the testator is a home such as is described in the judgment in In re James (1932) 2 Ch, at p 31 and I accordingly decide that the trusts are valid charitable trusts" (1933) 1 Ch, at p 118 . The present case is, in our view, an even stronger case, for the word "sanatorium", in the context in which it is used, must be taken to refer to an institution which, though not providing all of the facilities generally available at a hospital, provides at least some form of medical relief to persons in need of treatment. Moreover, that is the sense in which that expression has come to be understood in this country. (at p68)

4. On this view of the clause it becomes necessary to consider the significance of the word "erect". No doubt there may be much to be said for the proposition that a trust to erect a building, and to do no more, is not a good charitable object but to hold that the trust in this case was merely to erect a building and do no more, is to do less than justice to the testator's intentions. Clearly enough that intention was that a hospital or sanatorium should be erected for use by and for the inhabitants of Cerigo. (at p68)

5. But this is not the end of the matter for the devise of the ultimate residue, which included substantial parcels of realty, was a devise to an unincorporated association, namely, the Kytherian Association of Queensland and, as counsel for the appellant conceded, that association is not competent to take and hold the ultimate residue as trustee. Nevertheless, he contended, the terms of the trust were such that the court could appoint a trustee and, if necessary, settle a scheme for the administration of the trust fund. On the other hand, counsel for the respondent submitted that the discretion which the testator, in terms, reposed in the association was itself an integral part of the trust and, since the association could not act in the capacity of trustee, that no valid trust was created. (at p68)

6. In support of his contentions counsel for the respondent referred us to the case of Royal North Shore Hospital of Sydney v. Attorney-General (N.S.W.) [1938] HCA 39; (1938) 60 CLR 396 in which it became necessary for this Court to consider a like question. In that case the Court was concerned with a bequest for the perpetuation of a biannual award and the testator had declared that the trust should be administered by the committee for the time being of the Sydney Mechanics School of Arts. Thereafter he had formulated in considerable detail a scheme for the administration of the trust funds devoted to this purpose. The Sydney Mechanics School of Arts, however, disclaimed the supervision and management of the scheme and it became necessary to consider whether this portion of the trust failed. The relevant principles which were stated at some length by Dixon J. (as he then was), are set out (1938) 60 CLR, at pp 428, 429 and it is unnecessary to restate them. It is sufficient to say that, applying those principles, "the question whether the substantial intention of such provisions as those now in question is to advance the ultimate charitable purposes but by the particular means directed or, on the other hand, the intention is confined to giving effect to the particular plan as the main or essential object in view" (1938) 60 CLR, at p 428 must be resolved against the respondent. There can be little doubt that the nomination of the Kytherian Association as trustee, with some discretionary power, was indicative of nothing more than a subsidiary intention that the charitable purpose designated by the testator should be advanced through the intervention of the association. There are, no doubt, a number of indications that the testator particularly desired the co-operation of the Kytherian Association in the management and control of the trust funds for it is reasonably obvious that he selected that association as a body of persons, in Australia, who were acquainted both with the people and problems of the island of Kythera, or, as it is called in the will of the testator, Cerigo. No doubt the association was selected because it was, in a substantial measure, concerned with those problems. Again, one of the purposes to which the residuary estate may be devoted is the erection of a hospital or sanatorium, and the testator has made no express provision for the maintenance or conduct of the institution after its original establishment. No doubt he had in mind that this was a problem to which the Kytherian Association might feel disposed to devote itself. But although these considerations may furnish strong reasons for supposing that the testator thought it appropriate and desirable that the trust should be administered by the association, they do not enable it to be said that administration of the trust by the association was an end in itself, or, that its selection as trustee was anything more than a direction as to the manner in which the testator's more general and paramount intention should be carried into effect. The specified object - "the erection and/or benefit of a Sanatorium and/or Hospital in the said island" - was "the chief, principal, paramount, or substantial purpose" of the disposition, and there is no reason on the face of things why it should not be carried into effect. (at p70)

7. Mr. Gibbs in an interesting argument maintained that the trust must in any case fail because it could not be carried into effect without the settlement of a scheme by the court, and the court could not direct a scheme for the carrying into effect of a charitable trust in a foreign country. But, where both the trustees and the trust fund are within the jurisdiction, the authorities do not seem to bear out the second of these two propositions. Where the country in which the trust is to be performed has been Scotland, the English courts have on many occasions directed an application to a Scottish court for the settlement of a scheme; see e.g. Attorney-General v. Lepine [1818] EngR 320; (1818) 2 Swans 181 (36 ER 584) ; Emery v. Hill (1826) 1 Russ 112 (38 ER 44) ; In re Fraser; Yeates v. Fraser (1883) 22 Ch D 827 ; Forbes v. Forbes [1854] EngR 317; (1854) 18 Beav 552 (52 ER216) and In re Marr's Will Trusts; Walker v. Attorney-General (1936) Ch 671 . Scotland perhaps, as Mr. Gibbs suggested, is not to be regarded as a foreign country in the relevant sense, and it may be conceded that an English or Australian court would not direct that such an application be made to a court in Greece. But there are not wanting cases in which, the trustees and the trust fund being within the jurisdiction, English courts have themselves directed the application of the fund to charitable purposes in a foreign country. In New v. Bonaker (1867) LR 4 Eq 655 the circumstances were altogether exceptional, and we think that the real basis of that decision was that the carrying of the trust into effect was a matter of practical impossibility: see Re Geck; Freund v. Steward (1894) 69 LT 819 per Lindley L. J. (1894) 69 LT, at p 821 . The argument for the failure of the trust was put very forcibly by counsel (Mr. Pemberton) in Attorney-General v. Stephens [1834] EngR 654; (1834) 3 My & K 347 (40 ER 132) . He said: - "Where a charitable trust is to be executed abroad this Court neither can nor will undertake to superintend it; nor will it even direct the settlement of a scheme for the administration of the fund. And the reason is obvious; any officers or trustees whom the Court might appoint for that purpose, besides being necessarily exempt from its jurisdiction, could derive no authority from its orders, and would be amenable to foreign laws which might possibly be altogether hostile to the charity and its objects" (1834) 3 My & K, at p 350 (40 ER, at p 133) . But the argument does not appear to have prevailed with Sir John Leach. In In re A. Davis's Trusts (1889) 61 LT 430 Kay J. directed payment of the trust fund to trustees in England upon their undertaking to apply it to charitable purposes in Jerusalem. The case of In re Vagliano (1906) 75 LJ Ch 119 has a degree of kinship with the present case in that the charitable purposes were to be carried out in the Greek island of Cephalonia. Buckley J. directed the settlement of a scheme for the administration of the fund. In this case it was not proposed that the fund itself should go out of England. It appears from a passage in the judgment of the Privy Council in Mayor of Lyons v. Advocate-General of Bengal (1876) 1 AC 91, at pp 109, 110 that the Court of Chancery had assumed jurisdiction to approve a scheme for the application of a trust fund to charitable purposes in Bengal. Reference should also be made to the judgment of Smith J. in Re Piper (1951) VLR 42 and to In re Colonial Bishoprics Fund (1935) Ch 148 . (at p71)

8. We are of opinion that the trust cannot be held to fail on the grounds suggested by Mr. Gibbs. As to what is to be done with the fund, that will be a matter for the Supreme Court of Queensland to determine on proper material after the death of the deceased's widow (who has a life interest in residue and who is still living) and after conversion of residue which at present consists of realty. There are, of course, a number of possibilities. At the time of the deceased's death there was no hospital on the island of Cerigo, but since his death a hospital has been established there. The trust is for the "erection and/or benefit" of a hospital or sanatorium. It seems improbable that it will be desirable to erect another hospital or a sanatorium on the island. But the fund may be applied for the benefit of the now-existing hospital and the terms of the will literally carried out; there is, so far as appears at present, no need for the application of the cy-pres doctrine. It may be found desirable to appoint the now incorporated trustees of the Kytherian Association of Queensland to be trustees of the fund and to authorise payment of the fund to them on suitable undertakings. It may be thought proper to retain the corpus of the fund in Queensland and to pay the income from time to time to the governing body of the hospital in Cerigo. It may be thought proper simply to transfer the corpus to the governing body of the hospital to be used by it for the purposes of the hospital. But all these things are matters for further consideration on proper material and the second question asked by the special case ought not to be, and indeed cannot be, answered at this stage. (at p72)

9. In conclusion it should be observed that the Attorney-General for the State of Queensland should have been a party to the suit but in view of the conclusion which we have reached it is unnecessary that he should be added as a party at this stage. He should, however, be made a party to any further proceedings. (at p72)

10. The appeal should be allowed. The first question in the case stated should be answered: Yes. The second question should not be answered at present. The costs of all parties of the appeal, as between solicitor and client, should be paid out of the residue of the deceased's estate. (at p72)

ORDER

Appeal allowed. Order of the Full Court discharged and in lieu thereof order that the questions raised by the special case be answered as follows: - (1) Yes. (2) This question is premature. (3) It is unnecessary to answer this question.

Further order that the costs of all parties of the suit and of this appeal should be paid as between solicitor and client out of the residue of the testator's estate.