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Supreme Court of Victoria Decisions |
Last Updated: 23 September 2008
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
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JUDGE:
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WHERE HELD:
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Melbourne
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DATE OF HEARING:
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CASE MAY BE CITED AS:
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TRUSTS – Charitable Gifts and Trusts – Trust including charitable and non charitable purposes – Charities Act 1978 s 7M.
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APPEARANCES:
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Counsel
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Solicitors
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For the Plaintiff
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Sullivan Braham Pty Ltd
Solicitors |
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For the Defendant
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Victorian Government Solicitor
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1 Beatrice Isabel a'Beckett died on 23 December 1938. She was survived by her husband, Arthur a'Beckett, who died a few months later. At the time of her death Mrs a'Beckett owned land at Inverloch, Bunyip and Raymond Island. The land at Raymond Island is known as a'Beckett Park. Under her will dated 22 December 1932 Mrs a'Beckett gave a'Beckett Park to her trustees to hold the land upon trust for her husband during his life and after his death to transfer the land to the Church of England Corporation for the Diocese of Gippsland. The life interest to Mr a'Beckett and the transfer to the church were not without conditions. Clause 9 of the will provides:
I GIVE AND DEVISE to my Trustees my property at Raymond Island... UPON TRUST to permit my said husband during his lifetime to use enjoy and reside on the same and to receive the net income arising there from subject to his allowing the said property to be used for a camp by the girls of the Church of England, Diocese of Gippsland, as at present and UPON TRUST after the death of my said husband to transfer the said property to the Church of England Trusts Corporation for the Diocese of Gippsland for use as a camp for the girls of the Gippsland Diocese of the Church of England and for such other purposes as the Council of the Diocese shall think fit provided that it must not be used as a camp for Boy Scouts or Girl Guides (individual Girl Guides not to be excluded however if eligible as Church girls). [Emphasis added]
2 In August 1943 the Corporation commenced occupation of a'Beckett Park, using the land as a campsite for a Church of England girls club, the St Ann's Church of England Girls School and other school and church groups.
3 The continued use of a'Beckett Park as a campsite is not viable. The cost of operating the site exceeds the income generated. The Corporation has found it necessary to advance money to cover the shortfall in revenue. Some of the land has already been sold to raise money for the maintenance and improvement of the balance of the land. The Bishop in Council resolved that the operation of the site would cease as at September 2006. Operations have since ceased. A'Beckett Park is presently leased at a modest rental of $1,000 per calendar month pending the determination of its future. Currently, the remaining land in a'Beckett Park is an area of approximately 1.560 hectares. It was valued in January 2007 at $1.2 million.
4 A question has arisen as to whether cl 9 of the will created a valid charitable trust and if not, what is to become of the land. The question is formulated by the Corporation as follows:
(a) In clause 9 of the Will, are the purposes for which the land referred to therein is to be held by the plaintiff charitable in nature so as to impress the land with a charitable Trust in the hands of the plaintiff?
(b) If the answer to question 1(a) is, No, what person or entity is now entitled to the land?
If the answer to question 1(a) is, Yes, the Corporation seeks an order pursuant to s 2 of the Charities Act 1978 that it bring a cy pres scheme into court for approval.
5 The plaintiff is the successor to the Church of England Trust Corporation for the Diocese of Gippsland. The respondent, the Attorney-General for the State of Victoria, represents the beneficial interests under a charitable trust and is a necessary party to the proceeding.[1]
6 It was common ground between the parties that cl 9 established two independent trusts, the first of which required the Corporation to use the land as a camp for girls of the Gippsland Diocese of the Church of England; the second, investing in the Council of the Diocese a discretion to apply the land for "such other purposes as [they] shall think fit," subject to a proviso prohibiting its use as a camp for Boy Scouts or Girl Guides. Thereafter, the position of the parties diverge.
7 The Corporation submits that the first purpose is not a charitable purpose, although the second is a valid charitable purpose. It submits that the purposes should be read as if independent one of the other so that the second purpose is not ancillary to or cumulative upon the first. It submits that the word "and" should be read as "or". The Corporation submits that s 7M of the Charities Act may be invoked to sever the first purpose from the second, saving the second purpose as a valid charitable purpose.
8 Section 7M of the Charities Act provides,
(1) A trust is not to be held to be invalid by reason that some non-charitable and invalid as well as some charitable purpose or purposes is or are or could be deemed to be included in any of the purposes to or for which that trust directs or allows the trust funds or any part of the trust funds to be applied.
(2) A trust referred to in subsection (1) is to be construed and given effect to in the same manner in all respects as if no application of the trust funds or of any part of the trust funds to or for the non-charitable and invalid purpose had been or should be deemed to have been so directed or allowed.
(3) This section does not apply to a trust declared before, or to the will of any testator dying before, 26 October 1914.
9 The Corporation submits that the answer to question 1(a) should be, Yes, but only insofar as the land is to be held for the second purpose. If the answer to question 1(a) is No, the Corporation submits that the land passes to it pursuant to c1 10 of the will which provides:
(i) and as to all the rest residue and remainder of my real and personal estate (herein called "my residuary estate") UPON TRUST to pay the nett income arising therefrom to my sisters Adelaide Renee Touzeau and Violet Wilkinson and my brother Godfrey Windsor and my cousins Florence a'Beckett and Matilda a'Beckett and the survivors or survivor of them during their joint lives in equal shares and UPON TRUST after the death of the last survivor to pay and transfer the corpus of my residuary estate to the Church of England Trusts Corporation for the Diocese of Gippsland.
The evidence establishes no surviving individual beneficiary mentioned in cl 10(i).
10 The Corporation further submits that it is only if the first purpose is a valid charitable purpose to which the second purpose is ancillary, that it would be appropriate for it to apply to the court, pursuant to s 2(1)(a)(ii) of the Act, for approval of a cy-pres scheme. This is because the original purposes can no longer be carried out, or at least not according to the directions given and to the spirit of the gift. Their primary position is, however, that the second purpose is not ancillary to or cumulative upon the first purpose, but is independent of it; and there is no need for the presentation of a cy-pres scheme because the charitable trust will not have wholly failed because the second purpose remains capable of implementation.
11 On behalf of the Attorney-General it was submitted that cl 9 discloses the same two separate purposes contended for by the Corporation. The Attorney-General submitted, however, that the first purpose - "for use as a camp for the girls of the Gippsland Diocese of the Church of England" - is a valid charitable purpose. It was further submitted that to extend the second purpose - "for such other purposes as the Council of the Diocese shall think fit" - permits a non-charitable use. The gift may be validated by the exercise of the power under s 7M of the Charities Act by qualifying the second purpose, confining it to "such other purposes charitable in law as the Council of the Diocese shall think fit".
12 Is the first purpose a valid charitable purpose? In my opinion it is not. It is not for the advancement of religion as the Attorney-General submits. The advancement of fellowship amongst girls who are practising members of the Church of England may incidentally advance their religious faith or experience. But the use of the land as a camp for girls more accurately resembles a secular activity or pursuit which, although inspired by a desire to encourage fellowship amongst girls of similar faith, is not a purpose which is directly and immediately religious. In Roman Catholic Archbishop of Melbourne v Lalor[2] Dixon J said,
In order to be charitable the purposes themselves must be religious; it is not enough that an activity or pursuit in itself secular is actuated or inspired by a religious motive or injunction: the purpose must involve the spread and strengthening of spiritual teachings within a wide sense, the maintenance of the doctrines upon which it rests, the observances that promote and manifest it... But whether defined widely or narrowly, the purpose must be directly and immediately religious. It is not enough that they arise out of or have a connection with a faith, a church or a denomination, or that they are considered to have a tendency beneficial to religion, or to a particular form of religion.
13 Is the second purpose ancillary to or cumulative upon the first purpose? In my opinion it is not. It hardly seems necessary to decide whether the word "and" should be construed as "or". What is important, in my view, is to decide whether Mrs a'Beckett intended that there were to be two purposes. The words "and for such other purposes as the Council of the Dioceses shall think fit" indicates, in my view, an intention to invest the council with the broadest possible discretion, not limited to use of the land as a campsite. The proviso is explained by the use of the land as a campsite. If it was to be used as a campsite it was not to be used for boy scouts and girl guides.
14 Is the second purpose a valid charitable purpose? In my opinion the second purpose would also fail but for the application of s 7M of the Charities Act. The second purpose confers on the council an apparently unfettered discretion, but for the proviso and the operation of cl 14 of the will which provides,
I DECLARE that any real or personal estate which I have directed to be paid or transferred to the Church of England Trusts Corporation for the Diocese of Gippsland shall save so far as hereinbefore expressly provided be held by the said Corporation to such uses for the Church of England within the Diocese of Gippsland as the Council or other governing body shall think fit. It is however my wish that none of the land left to the Church shall be sold unless the said Council or other governing body is convinced that no use can be found for the same. [Emphasis added.]
15 I do not accept the Corporation's submission that the discretion is to be limited to charitable work of the diocese. Uses for the Church of England within the Diocese of Gippsland may include charitable work but the Church of England within the Diocese of Gippsland may also undertake work that is not charitable. The use to which the land may be put is not confined to the advancement of religion or "church work".[3] In Queensland Trustees Ltd v Halse[4] the Full Court of the Supreme Court of Queensland was concerned with the validity of a gift, "to the Archbishop for the time being of the corporation of the Synod of the Diocese of Brisbane to apply the income thereof as he shall in his sole and uncontrolled discretion think fit for the benefit of the said diocese." The Full Court held that the gift did not constitute a good charitable trust. The Archbishop might devote the income to purposes which were not religious. McCrossen CJ said:[5]
Just as the words "for parish work" are of a very wide character and embrace not merely those limited functions in the parish which it is the duty of the vicar to perform, or the duty of the churchwardens to perform, so in the present case the words "for the benefit of the said diocese" are of a very wide character and would cover any activity in the diocese whether that activity be strictly a religious purpose or strictly a charitable purpose or whether it be a work considered to be conducive to the good of religion in the diocese or considered to be benevolent or generally useful to the members of the Church in the diocese.
It was not until 1973 that Queensland enacted the Trustee Act which included a provision similar to s 131 of the Property Law Act, the predecessor to s 7M of the Charities Act.
16 Is the gift in c1 9 saved by s 7M of the Charities Act? In my opinion it is. In Leahy v A-G (NSVV)[6] the Privy Council was concerned with the question whether s 37D of the Conveyancing Act 1919-1954 (which was expressed in very similar terms to s 7M of the Charities Act) -
only applies where the testator has expressly indicated alternative purposes, the one charitable, the other non-charitable or not necessarily charitable, or applies also where the gift is for a purpose described in a compendious expression which is apt to include both charitable and non-charitable purposes. In the latter case the further question will arise whether the section applies if the area of choice, however wide and indeterminate, admits of a charitable application or whether some specific indication of a charitable intention is demanded - a question of great nicety to which further reference will be made.
17 The trustee in Leahy v A-G had a complete discretion as to the order of nuns who might benefit. Some orders were not engaged in any activity regarded as charitable. The Privy Council explained the scope of operation of the section thus:[7]
But, though their Lordships are of opinion that the section may operate where there is a composite expression covering charitable and non-charitable purposes, and does so in the present case, it is clear that not every expression which might possibly justify a charitable application is brought within it. For instance in In re Hollole (dec'd) (1945) VLR 295 there was a gift to a trustee "to be disposed of by him as he may deem best". The trustee might presumably have deemed it best to dispose of it for a charitable purpose, and, if he had done so, could not be said to have exceeded his powers. Yet O'Bryan J. held that the gift was not saved by the section and his decision has been rightly approved in the High Court. This was a clear case because the testator did not designate any purpose at all but in effect delegated his testamentary power in a manner that the law does not permit. Greater difficulty will arise where the permissible objects of choice are described in a composite expression which, though not so vague and general as to amount to a delegation of testamentary power, does not very clearly indicate a charitable intention on the part of the testator. "In the present case", say the Chief Justice and McTiernan J., "... there is reference to a distributable class which, while not exclusively charitable, is predominantly charitable in character" (1958) 98 CLR, at p 559 . The same concept appears in a different form in the judgment of Williams and Webb JJ. "One can also agree with him" (i.e. Myers J.) they say "that in order to satisfy the section the application of the whole fund to charity must be one way of completely satisfying the intention of the testator. But, if the trust either directs or allows this to be done, the testator's intention will be completely satisfied if the trust funds are so applied ..." (1958) 98 CLR, at p 573 . Thus whether the gift be to orders of nuns, an object so predominantly charitable that a charitable intention on the part of the testator can fairly be assumed, or for (say) benevolent purposes, which connotes charitable as well as non-charitable purposes, the section will apply. Inevitably there will be marginal cases, where an expression is used which does not significantly indicate a charitable intention, and their Lordships do not propose to catalogue the expressions which will or will not attract the section. It may be sufficient to say that in the chequered history of this branch of the law the misuse of the words "benevolent" and "philanthropic" have more than any others disappointed the charitable intention of benevolent testators and that the section is clearly designed to save such gifts.
18 In McCracken v A-G (Vic)[8] JD Phillips J held that a "distinct or sufficient indication" of an intention to benefit charity (albeit not exclusively) was all that was required to invoke the operation of s 131 of the Property Law Act. His Honour said,[9]
It is true that in Donnelly Dixon C.J. and McTiernan J. went on to say that in that case the class was "predominantly charitable", thereby using the expression which, on appeal, was adopted by the Privy Council (sub. Nom. Leahy). But, when the test was articulated by Dixon C.J. and McTiernan J. in the passage adopted by Walsh J., all that was said to be required was "a distinct or sufficient indication of an intention to authorize the application" of the property or sufficient indication of an intention to authorize the application" of the property to charity. In terms, s. 131 is expressed to operate only if the gift fails for inclusion of non-charitable purposes with charitable, and so some indication of an intention to benefit charity is properly required, although necessarily in any case where the section operates that will not have been the whole intention of the testator. Where the testator expressly authorises the application of the fund to a charitable purpose and, separately, to a non-charitable purpose, no question of "predominance" arises. Where the testator authorises the application of the fund to a mixed purpose by employing a composite term, the intention to benefit charity will be present if the distributable class is "predominantly charitable" (according to Leahy and Stratton), but I see no reason why that must always be so before the section can be applied. In my opinion, a "distinct or sufficient indication" of an intention to benefit charity (albeit not exclusively) is all that is required and I think that that is present when, as here, the gift is expressed to be in favour of "Christian organisations and societies".
19 The Corporation supports its submission that the second purpose is a charitable purpose by reference to Re Garrard[10] and other cases referred to by the learned authors of Ford & Lee, Principles of the Law of Trusts.[11] In that case Joyce J, referring to earlier authority, held that a legacy to the vicar for the time being of a parish is a charitable gift for the benefit of the parish for ecclesiastical purposes. The issue in that case was whether the gift was inconsistent with a charitable gift because it implied that the vicar and church wardens were to take beneficially. The validation of the gift as charitable involved its reading down so as to limit the application of the funds to charitable purposes, subject always to the jurisdiction of the court.
20 Section 7M of the Charities Act has the effect of severing and saving the second purpose.[12] This is so whether the words creating the second purpose are construed as if confined to work for the advancement of religion or by reason of the application of s 7M of the Charities Act to those words. The effect is the same. In my opinion, Mrs a'Beckett gave a "distinct or sufficient indication" of her intention to benefit a charity thus permitting the application of s 7M to cl 9 to save the charitable gift to the Corporation. Her evident intention, when transferring land or other property to the Corporation, was to benefit the Church of England in Gippsland. There were gifts for specific uses, for example; the use of the Deaconesses and sisters of St Anne's Deaconesses house at Sale (cl 4); the support and benefit of a mission boy (c 17); a holiday home for the clergy of the diocese (cl 8); uses of the Church of England within the dioceses of Gippsland (cl 13). By cl 14 any gift to the Corporation not otherwise qualified by a prescribed use is to be held "to such uses for the Church of England within the dioceses of Gippsland". The second purpose in cl 9 is one such gift.
21 An overriding charitable intention is indicated in relation to the gifts to the Corporation and I propose to give effect to that intention. I do so by answering question 1(a) Yes, but only insofar as the land is held by the Corporation for such purposes as the Council of the Dioceses shall think fit provided that such purposes are charitable in law. In the circumstances the remaining questions are not applicable.
22 The evidence discloses that the Bishop in Council has decided that a'Beckett Park can no longer be used as a campsite. There appears to be a sound basis for that decision. It is also very likely that the land cannot be used for a purpose charitable in law. If that is so, cl 14 authorises the Corporation to sell the land.
[1] Ware v Cnmberlege (1855) 20 Beav 503; Wellbeloved v Jones (1822) 1 Sim & St 40.
[2] (1934) 51 CLR 1, 32; see also A-G (NSVV) v Cahill [1969] 1 NSWLR 85, 93.
[3] Westminster Bank v Farley [1938] ChD 482; Farley v Westminster Bank [1939] AC 430; Dunne v Byrne [1912] AC 407.
[4] [1949] StRQd 270.
[5] Ibid at 277.
[6] [1959] 101 CLR 611 at 616.
[7] Ibid at 618.
[8] [1995] 1 VR 67.
[9] 1 VR 67 at 81.
[10] [1907] 1 Ch 382.
[11] 3rd Edition Para 19.4670.
[12] Taylor v Taylor (1910) 10 CLR 218, 225; Hadaway v Hadaway [1955] 1 WLR 16, 19.
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