Aboriginal Housing Office v Jacky

[2022] NSWSC 916

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:

Aboriginal Housing Office v Jacky [2022] NSWSC 916

Hearing dates:

12 May 2022

Date of orders:

08 July 2022

Decision date:

08 July 2022

Jurisdiction:

Equity

Before:

Richmond J

Decision:

The Court declares that the trust known as the “Dunghutti Aboriginal Elders Tribal Council Trust”, the terms of which are contained in a trust deed dated 22 October 2001 as between the Dunghutti Aboriginal Elders Tribal Council (in liquidation) as settlor, the Aboriginal Housing Office as trustee and the then Aboriginal and Torres Strait Islander Commission (now succeeded by the Commonwealth of Australia) (“the Trust”) is not a charitable trust.

Catchwords:

EQUITY — trusts and trustees — charitable trusts — whether trust is a trust for persons or for purposes — whether a trust is a charitable trust for the relief of poverty — whether a trust is a charitable trust for other purposes beneficial to the community

Legislation Cited:

Aboriginal and Torres Strait Islander Commission Act 1989 (Cth)

Aboriginal Housing Act 1998 (NSW)

Statute of Charitable Uses 1601 (43 Eliz I, c 4)

Cases Cited:

Aboriginal Hostels Ltd v Darwin City Council (1985) 33 NTR 1

Alice Springs Town Council v Mpweteyerre Aboriginal Corp & Ors (1997) 115 NTR 25

Attorney-General (NSW) v Perpetual Trustee Co Ltd (1940) 63 CLR 209; [1940] HCA 12

Byrnes v Kendle (2011) 243 CLR 253; [2011] HCA 26

Cant v Kirby [2011] NSWSC 1193

Commissioner of Taxation (Cth) v Bargwanna (2012) 244 CLR 655; [2012] HCA 11

Dareton Aboriginal Land Council v Wentworth Council (1995) 89 LGERA 120

Davies v Perpetual Trustee Co Ltd [1959] AC 439

Dingle v Turner [1972] AC 601

Downing v Federal Commissioner of Taxation (1971) 125 CLR 185; [1971] HCA 38

Gartside v Inland Revenue Commissioners [1968] AC 553

Groote Eylandt Aboriginal Trust Inc v Deloitte, Touche & Tohmatsu (No 2) (2017) 169 NTR 1; [2017] NTSC 4

Income Tax Special Purposes Commissioners v Pemsel [1891] AC 531

Inland Revenue Commissioners v McMullen [1981] AC 1

Kauter v Hilton (1953) 90 CLR 86; [1953] HCA 95

Korda v Australian Executor Trustees (SA) Ltd (2015) 255 CLR 62; [2015] HCA 6

Lachlan v HP Mercantile Pty Ltd (2015) 89 NSWLR 198; [2015] NSWCA 130

Latimer v Commissioner of Inland Revenue [2004] 1 WLR 1466

Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104; [2015] HCA 37

Onesteel Manufacturing Pty Ltd v Bluescape Steel (AIS) Pty Ltd (2013) 85 NSWLR 1; [2013] NSWCA 27

Oppenheim v Tobacco Securities Trust Co Ltd [1951] AC 297

Re Compton [1945] 1 Ch 123

Re Estate Polykarpou [2016] NSWSC 409; 16 ASTLR 400

Re Evans (dec’d) [1957] St R Qd 345

Re Gillespie (dec’d) [1965] VR 402

Re Income Tax Acts (No. 1) [1930] VLR 211

Re Mathew (deceased) [1951] VLR 226

Re Mills (1981) 27 SASR 200

Re Muir (dec’d) [1964] VR 529

Re Niyazi’s Will Trusts [1978] 3 All ER 785

Re Scarisbrick's Will Trusts [1951] Ch 622

S&C Nicola Pty Ltd v Peter Holmes Investment Pty Ltd [2022] NSWCA 72

Shire of Derby-West Kimberley v Yungngora Association Inc [2007] WASCA 233; 157 LGERA 238

Stratton v Simpson (1970) 125 CLR 138; [1970] HCA 45

Thompson v Federal Commissioner of Taxation (1959) 102 CLR 315; [1959] HCA 66

Verge v Somerville [1924] AC 496

Victims Compensation Fund Corporation v Brown (2003) 77 ALJR 1797; [2003] HCA 54

YWCA Australia v Chief Commissioner of State Revenue [2020] NSWSC 1798

Texts Cited:

GE Dal Pont, Law of Charity (3rd ed, 2021, LexisNexis)

JD Heydon and MJ Leeming, Jacobs’ Law of Trusts in Australia (8th ed, 2016, LexisNexis Butterworths)

Scott, The Law of Trusts (3rd ed, 1967, Little, Brown and Company)

Scott, Fratcher and Ascher, Scott and Ascher on Trusts (5th ed, 2006, Aspen Publishers)

Category:

Principal judgment

Parties:

Aboriginal Housing Office (First Plaintiff)
Attorney General for the State of New South Wales (Second Plaintiff)
Mabel Mary Jacky (First Defendant)
Venus Maree White (née Dungay) (Second Defendant)
Josephine Maree Dungay (Third Defendant)
Cynthia Dungay (Fourth Defendant)
Robert Dungay (Fifth Defendant)
Campbell Dungay (Sixth Defendant)
Isabelle Moran (Seventh Defendant)
Racheal Dungay (Eighth Defendant)
Candice Dungay (Ninth Defendant)
Hilda Campbell (Tenth Defendant)
Richard Patrick Campbell (Eleventh Defendant)
George Douglas (Twelfth Defendant)
Andrea Douglas (Thirteenth Defendant)
Victor Wright (Fourteenth Defendant)
Rhonda Smith (Fifteenth Defendant)

Representation:

Counsel:
D Barlin (First Plaintiff)
P Singleton (Second Plaintiff)
A Greinke (First Defendant)
D Tang (Second Defendant and Third Defendant)
P Bolster (Fourth Defendant, Fifth Defendant, Sixth Defendant, Seventh Defendant, Eighth Defendant and Ninth Defendant)
G Watson SC (Fifteenth Defendant)

Solicitors:
Crown Solicitor’s Office (First Plaintiff and Second Plaintiff)
Clayton Utz (Second and Third Defendant)
Holding Redlich (Fifteenth Defendant)

File Number(s):

2021/00330123

Judgment

1. The issue in this case is whether the trust known as the “Dunghutti Aboriginal Elders Tribal Council Trust” established by a deed dated 22 October 2001 (the Trust) to hold certain land near Kempsey is a charitable trust.

2. In their written submissions and oral submissions, the plaintiffs, who are the trustee and the Attorney General respectively, took the position that the Trust was a charitable trust either as one for the relief of poverty or, alternatively, for other purposes beneficial to the community. During the course of the hearing on 12 May 2022, counsel for the plaintiffs indicated that ultimately what the plaintiffs sought was clarity from the Court as to whether the Trust was a charitable trust or a private trust as this would affect steps proposed to be taken by the trustee regarding the future use of the land. The defendants are various individuals who are “Beneficiaries” of the Trust and those who took an active role in the proceedings all advanced the view that the Trust was not a charitable trust.

Background

Overview

3. The Trust was established by a deed executed on 22 October 2001 (the Deed) between the Dunghutti Aboriginal Elders Tribal Council (in liquidation) (the DAET Council) as settlor, the Aboriginal Housing Office (AHO) as trustee (the Trustee) and the then Aboriginal and Torres Strait Islander Commission (ATSIC) (now succeeded by the Commonwealth of Australia). The Deed was registered in the Deeds Register on 3 April 2002.

4. The AHO, which is the Trustee, is a statutory body representing the Crown created by s 6 of the Aboriginal Housing Act 1998 (NSW). ATSIC, which is also party to the Deed, was established by the Aboriginal and Torres Strait Islander Commission Act 1989 (Cth).

5. Clause 2.1 of the Deed records that the DAET Council provided to the AHO at the time of execution of the Deed a duly executed transfer of certain real property known as Old Burnt Bridge (Land). It comprises 192 acres located along Euroka Creek at Burnt Bridge, near Kempsey in New South Wales.

6. The DAET Council first acquired the Land for the sum of $1 from the Aboriginal Development Corporation (ADC), a Commonwealth agency, for the purpose of settling the Land on the AHO as trustee of the Trust in the circumstances described below.

History of the Land

7. As at 1983, Old Burnt Bridge was owned in fee simple by Mr Cecil J Turner. Adjacent was land known as New Burnt Bridge, which was held by Ngaku Co-operative Ltd (Ngaku) pursuant to a 99-year lease. At that time, Ngaku and the DAET Council were in dispute in relation to the occupancy and control of New Burnt Bridge.

8. The ADC had proposed on 5 May 1983 that it would “purchase Old Burnt Bridge” and “hold the land title in accordance with the ADC’s present policy in regard to land titles which could mean eventual freehold ownership by the occupants”, in return for DAET Council providing a written undertaking that it would cease all conflict with Ngaku in relation to the occupancy and control of New Burnt Bridge. The DAET Council rejected the proposal “unless it also included the transfer of New Burnt Bridge” to the DAET Council.

9. Mr Charles Perkins (Chairman of the ADC) chaired an “open meeting” on 18 May 1983 of Aboriginal groups in the Kempsey area to discuss housing matters of both the parties, including the dispute over New Burnt Bridge. The DAET Council declined to attend but requested to be informed of the outcome. According to a memorandum prepared by the ADC dated 15 June 1983, discussions during the meeting revealed that:

“- most of the Aboriginal people living in the Kempsey area have historical and traditional links with Burnt Bridge;

- New Burnt Bridge and Old Burnt Bridge should be regarded as one area and be accessible to all Aboriginal people living in the Kempsey area, not only Dunghutti people; and

- many Aboriginal people living in the Kempsey area would wish to live at Burnt Bridge if suitable housing were provided.”

10. The ADC informed the DAET Council and Ngaku on 20 May 1983 that:

“- there is no easy solution to the dispute;

- the ADC would like to see all Aboriginal people in the Kempsey area properly housed as soon as possible, regardless of whether they lean towards integration, or wish to live apart in segregated groups;

- all ADC funding for land and housing at Burnt Bridge and Kempsey town will be suspended until Dunghutti and Ngaku reach a satisfactory agreement on arrangements for the provision and administration of housing at Burnt Bridge.”

11. On 28 February 1984, the ADC purchased the Land from Mr Turner for $110,000, and in July that year the ADC transferred the Land to the DAET Council for $1.

12. On 7 December 1984, the ADC stated in a letter to Mr Hector Dungay who was, at the time, the Administrator of the DAET Council:

“May I also remind you that as this grant of title has been made by the ADC to further the economic and social development of people of the Aboriginal race, you are required to notify the Commission should a situation arise whereby you may seek to dispose of your interest in the land. ‘Disposal’ includes to transfer, assign, lease, sub-lease, license or mortgage and also includes to agree to dispose, and to grant consent to the disposal of the land.”

13. In a letter to Mr Hector Dungay dated 8 March 1985, the ADC advised the DAET Council of the results of a meeting of ADC’s Commissioners in February of that year, as follows:

“[The] Commissioners . . . confirmed that the grant of the title of Old Burnt Bridge be made to your Council pursuant to section 27 of the Aboriginal Development Commission Act. The Commissioners re-affirmed that the grant be made without conditions except for those obligations on your Council which arise under section 31 of the Aboriginal Development Act. This obligation requires the Dunghutti Aboriginal Elders Tribal Council to inform the Commission of any decision to dispose of the land. This policy is to ensure that the land is not sold to non-Aboriginals.

The whole intention of such grants is to enable Aboriginals, their children and their children’s children to occupy and hold title to the land.”

14. On 14 December 1994, development consent was granted by Kempsey Shire Council to a development application for the erection of an additional 27 dwelling sites, a community centre and infrastructure on the Land.

15. In 1995 to 1996, DAET Council build 15 houses on the Land pursuant to this consent funded by a grant made by ATSIC.

Establishment of the Trust

16. The establishment of the Trust arose out of the administration and liquidation of DAET Council.

17. It appears that the allocation of the 15 new houses by the DAET Council Board caused ongoing disputes between some groups and led to ATSIC’s decision to appoint an administrator

18. On 5 August 1997, Ferrier Hodgson was appointed as an administrator of DAET Council. On 22 September 1997, creditors of DAET Council approved a Deed of Company Arrangement which the DAET Council ultimately did not execute and so, on 13 October 1997, the DAET Council was subject to an automatic winding up with Ferrier Hodgson appointed as liquidator.

19. Various discussions were had regarding the best approach for dealing with the assets of DAET Council, namely the Land. Ultimately, those were resolved by AHO, ATSIC and the DAET Council entering into the Deed on 22 October 2001.

20. At the time the AHO became the registered proprietor of the Land on establishment of the Trust, there were 16 houses on the Land. There are presently 14 houses on the Land as two were demolished in 2017 because extensive termite damage made them unsafe for occupation.

The Deed

21. The Deed is entitled “Discretionary Trust Deed”. The recitals contained in the “Background” to the Deed state:

“A. The Settlor wishes to establish a trust to benefit members of the Dunghutti Aboriginal families and their descendants and to confer certain powers on the Trustee.

B. The Trustee has agreed to act as trustee of the trust and accept those powers.”

22. Clause 2 of the Deed is headed “Establishment of Trust” and includes the following:

“2.3 Declaration of Trust

The Trustee holds, and must continue to hold, the Trust Fund and income from the Trust Fund on the trusts set out in this Deed for the benefit of the Beneficiaries or such of them as the Trustee in its discretion determines.

2.4 Name of Trust

The Trust’s name is the “Dunghutti Aboriginal Elders Tribal Council Trust”.

2.5 Duration of Trust

The Trust commences on the execution of this Deed and expires on the Termination Date or at an earlier date if the Trust is terminated in accordance with Clauses 11.1 or 13.1.

2.6 Excluded Benefits

Neither the Settlor nor the legal personal representative of the Settlor may become a Beneficiary or directly or indirectly receive any benefit from the Trust, and this provision may not be revoked or varied.

2.7 No Resulting Trust

There is no resulting trust of the Trust Fund (or any of it) in favour of the Settlor.”

23. “Beneficiary” is defined in cl 1.1 as follows.

“‘Beneficiary’ means, at any time, a member of the Dunghutti Aboriginal families who was at the date of the settlement of this Trust or who becomes during the operation of the Trust either:

(i) a person who is identified as a member or past member of the Dunghutti Aboriginal Elders Tribal Council (in liquidation) in annexure 1; or

(ii) a member of the Dunghutti Aboriginal families who is known personally to two persons coming within sub-paragraph (i) and who is accepted by the Trustee as an Aboriginal member of the Dunghutti families; or

(iii) a lineal descendant of any person coming within any of sub-paragraphs (i) or (ii).”

24. Annexure 1 referred to in sub-paragraph (i) is a list of 59 people stated to be present or past members of the DAET Council as at 30 September 2001. It was not in dispute that the definition of “Beneficiary” satisfies the test for certainty as to the objects of a discretionary trust: see J D Heydon and M J Leeming, Jacobs’ Law of Trusts in Australia (8^th ed, 2016, LexisNexis Butterworths) (Jacobs’ Law of Trusts in Australia) at [5-28]-[5-29].

25. The following definitions are included in cl 1.2:

“(g) a reference to “Aborigine” or “Aboriginal person” means a person who:

(i) is a member of the Aboriginal race of Australia

(ii) identifies as an Aboriginal person; and

(iii) is accepted by the Aboriginal community as an Aboriginal person

and the expression “Aboriginal people” has a corresponding meaning;

(h) a reference to a person or entity who may be or become a beneficiary is any person or entity who from time to time till the termination date is a beneficiary even if that person or entity is not yet in existence or does not yet qualify as a beneficiary or later eschews his, her or their membership of the Dunghutti family;

(i) “the objects” means:

(1) planning and developing programs and services to assist the Beneficiaries (or any of them) in meeting their housing needs, and

(2) delivering those programs and services, and

(3) evaluating those programs and services from time to time in order to determine whether they continue to effectively meet the housing needs of the Beneficiaries (or any of them).”

26. Various clauses in the Deed refer to the “objects of the Trust” or to its “purposes and objects”, as extracted below (underlining added):

“3. USE OF THE PROPERTIES

The Trustee may use the properties consistent with the purposes and objects of this Trust Deed in such manner as the Trustee in its absolute discretion may think fit.

4. DISPOSAL OF THE PROPERTIES

The Trustee may dispose of any part or parts of the properties (with such consent, if any, as may be required by law) at such times and in such manner consistent with the purposes and objects of this Trust Deed as the Trustee in its absolute discretion may think fit.

5. TRUST OF PROCEEDS DERIVED FROM USE OF THE PROPERTIES

The Trustee shall hold any proceeds derived from the use of the properties (after payment of the expenses incidental to obtaining such proceeds) upon trust to apply them to meet liabilities incurred through implementation of the objects of the Trust or as capital or as income for the benefit of the beneficiaries consistent with the purposes and objects of this Trust Deed as the Trustee in its absolute discretion may think fit.

6. TRUST OF PROCEEDS OF SALE

The Trustee shall hold the proceeds of sale or sales of any or all of the properties (after payment of the expenses incidental to sale) upon trust to apply them to meet liabilities incurred through implementation of the objects of the Trust or as capital or as income, for the benefit of the beneficiaries consistent with the purposes and objects of this Trust Deed as the Trustee in its absolute discretion may think fit.”

27. Clauses 3 to 6 use the term “properties” which is not defined. It appears to be a reference to (or at least include) the particular houses or other buildings situated on the Land from time to time (of which there were 16 at the date of the Deed). This is indicated by clause 8 which permits the Trustee to appoint a “Tenancy Manager” in respect of some or all of the “Trust properties” with the term “Tenancy Manager” defined to mean an entity appointed to undertake “tenancy management, property maintenance and associated functions in respect of Trust properties”. That suggests that “Trust properties” is a reference to particular buildings (and surrounding land) on the Land.

28. Clauses 3 to 6 also use the expression “purposes and objects of this Deed”. While the expression “objects” is defined in cl 1.2(i) of the Deed, “purpose and objects” and “purpose” are not defined. The word “and” in the expression “purpose and objects” is used conjunctively so that both must be satisfied: Victims Compensation Fund Corporation v Brown (2003) 77 ALJR 1797; [2003] HCA 54 at [34]-[35].

29. The fact that clauses 5 and 6 refer to the “objects of the Trust” and also the “purpose and objects of this Trust Deed” suggests that the latter expression which is used in each of clauses 3, 4, 5 and 6 is intended to cover something different from the former, and in particular that the “purposes” of the Trust Deed extend to something more than the “objects” identified in clause 1.2(i). The only indication in the Deed of its “purpose” is to be found in recital A, being “to benefit members of the Dunghutti Aboriginal families and their descendants”.

30. Further discretion is vested in the Trustee by cl 14 including, with the consent of the Beneficiaries under cl 15, a power to amend the Deed as set out below.

“14. ACTS OF TRUSTEE

Subject always to any express provision to the contrary herein contained, every discretion vested in the Trustee shall be absolute and uncontrolled and every power vested in them shall be exercisable at their absolute and uncontrolled discretion and the Trustee shall have the like discretion in deciding whether or not to exercise any such power. The Trustee shall not be responsible for any loss or damage occasioned by the exercise of any discretion or power hereby or by the law conferred on the Trustee or by failure to exercise any such discretion or power or for any loss or damage occurring as a result of concurring or refusing or failing to concur in any exercise of any power or discretion.

15. ALTERATION OF TRUST

15.1 The Trustee may convene a special meeting for the purpose of gaining consent for amendments to the Trust Deed. Adult beneficiaries who are recognised by the Trustee as long-term residents of Trust property or who have been identified by the Trustee as eligible for future allocation of housing may attend and vote at the meeting. The meeting is to be held in the Kempsey area and the Trustee must give 21 days notice of the meeting in writing. The meeting shall be chaired by the Trustee or a representative nominated by it.

15.2 With the consent of a majority of the adult beneficiaries voting at a meeting held in accordance with 15.1, the Trustee may by Deed revoke, add to or vary all or any of the terms and conditions contained in this Deed, or the terms and conditions contained in any variation or alteration or addition made hereto at any time.

15.3 A failure to strictly comply with the requirements of Clause 15.1 will not invalidate any act, resolution, recommendation or decision of a majority pursuant to Clause 15.2 if that act, resolution, recommendation or decision was made in good faith.”

31. The Trust commenced on the execution of the Deed (22 October 2001) and “expires on the Termination Date or at an earlier date if the Trust is terminated in accordance with clauses 11.1 or 13.1”. “Termination Date” is defined in cl 1.1 as:

“‘Termination Date’ means the latest to occur of:

(a) the date 21 years from the death of the last survivor of the beneficiaries living at the date of this Deed;

(b) the date 80 years from the date of this Deed.”

32. Clause 13 confers on the Trustee the power to terminate the Trust early by “transferring” the assets and liabilities of the Trust to an “Identified Housing Management Organisation” (defined in cl 1.1 to mean “an organisation which has been identified by the Trustee as having the required powers and skills to hold and manage Trust properties for the benefit of the Dunghutti community”). Clause 13 provides:

13. TERMINATION OF THE TRUST AND TRANSFER OF ASSETS TO AN IDENTIFIED HOUSING MANAGEMENT ORGANISATION

13.1 The Trust may be terminated prior to the Termination Date if the Trustee elects to transfer the assets and obligations of the Trust to an Identified Housing Management Organisation, if in the opinion of the Trustee that organisation has the powers and skills required to manage the Trust assets in a manner that is broadly consistent with the Objects of the Trust.

13.2 Where the Trustee elects to terminate the Trust pursuant to Clause 13.1, after allowance has been made for meeting any outstanding expenses of the Trustee, the Trust is to be dissolved and the Trust Fund and Trust assets are to vest in the Identified Housing Management Organisation.

13.3 Where assets are to be transferred pursuant to Clause 13.2, the Trustee may require the Identified Housing Management Organisation to meet specified standards relating to its composition and the on-going management of the assets of the Trust.”

33. Contemporaneously with execution of the Deed, the Trustee entered into a “collateral agreement” with ATSIC for the provision by it of various services to assist the Dunghutti community living on the Land “to address current problems and promote the social, economic and cultural development of the community” (cl A1.4).

Legal principles

34. All express trusts can be classified as either trusts for a person or persons (the beneficiaries), or trusts for purposes. Trusts in the first category (often called private trusts) need to satisfy the “three certainties” in order to be valid, being certainty of intention to create a trust, certainty as to the property which is subject to the trust and certainty as to the person or persons who are the beneficiaries: Kauter v Hilton (1953) 90 CLR 86 at 97; [1953] HCA 95; Korda v Australian Executor Trustees (SA) Ltd (2015) 255 CLR 62; [2015] HCA 6 at [7].

35. Trusts in the second category comprise charitable trusts (often called public trusts) and a small miscellaneous group of other purpose trusts not presently relevant (which are discussed in Jacobs’ Law of Trusts in Australia at ch 11). In the case of charitable trusts, there is no person who is identified as the beneficiary of the trust and this is the key difference between a private trust and a charitable trust. As Dixon and Evatt JJ stated in Attorney-General (NSW) v Perpetual Trustee Co Ltd (1940) 63 CLR 209 at 222; [1940] HCA 12:

“A charitable trust is a trust for a purpose, not for a person. The objects of ordinary trusts are individuals, either named or answering a description, whether presently or at some future time. To dispose of property for the fulfilment of ends considered beneficial to the community is an entirely different thing from creating equitable estates and interests and limiting them to beneficiaries.”

36. In Commissioner of Taxation (Cth) v Bargwanna (2012) 244 CLR 655; [2012] HCA 11 at [8], the High Court approved the following statement of Lord Millett in Latimer v Commissioner of Inland Revenue [2004] 1 WLR 1466 (Latimer) at 1475:

“[29] … It is of the essence of a charitable trust that it is a trust for the promotion or advancement of social purposes rather than a trust for individual beneficiaries. Of course, individuals may benefit from the application of trust moneys, but they are not, as individuals, the beneficiaries of the trust and may not enforce its terms. If the purposes of the trust are charitable, they may be enforced by the Attorney-General; if they are not charitable then, with certain anomalous exceptions, they are not enforceable and the trust is not valid. Whether the purposes of the trust are charitable does not depend on the subjective intentions or motives of the settlor, but on the legal effect of the language he has used. The question is not, [w]hat was the settlor’s purpose in establishing the trust? [B]ut, [w]hat are the purposes for which trust money may be applied?”

37. As noted by Lord Millett in this passage, to say that a charitable trust is a trust for a purpose or purposes is not to deny that individuals benefit from the trust. Indeed in a number of the leading cases, the persons who benefit under a valid charitable trust are described as “beneficiaries”: e.g. Re Compton [1945] 1 Ch 123 (Re Compton) at 129. The point is that they do so as a consequence of the trustee’s effectuation of the charitable purpose or purposes of the trust: Stratton v Simpson (1970) 125 CLR 138 at 144; [1970] HCA 45. A charitable trust is not one for the benefit of individuals as beneficiaries for, if that were the case, the trust would (assuming the three certainties were satisfied) be properly classified as a private trust rather than a charitable trust.

Requirements of charitable trusts

38. Given the issue in the present case, it is necessary to identify the key elements of a charitable trust. Broadly, charitable trusts are trusts for objects expressly mentioned in the preamble to the Statute of Charitable Uses 1601 (43 Eliz I, c 4) or which by analogy are for objects within the spirit and intendment of the preamble to that statute: see Jacobs’ Law of Trusts in Australia at [10-02].

39. In Income Tax Special Purposes Commissioners v Pemsel [1891] AC 531 (Pemsel) at 583, Lord Macnaghten divided charitable trusts into four principal categories:

1. trusts for the relief of poverty;

2. trusts for the advancement of education;

3. trusts for the advancement of religion; and

4. trusts for other purposes beneficial to the community not falling under any of the preceding heads.

40. An additional requirement for a trust to be charitable is that it must be for the benefit of the community or a section of the community because the presence of a public purpose is an essential element for a charitable trust: Pemsel at 580; Verge v Somerville [1924] AC 496 at 499; Oppenheim v Tobacco Securities Trust Co Ltd [1951] AC 297 (Oppenheim) at 305-306 per Lord Simonds; Davies v Perpetual Trustee Co Ltd [1959] AC 439 at 454-455; Thompson v Federal Commissioner of Taxation (1959) 102 CLR 315 at 321-322 per Dixon CJ; [1959] HCA 66.

41. A number of English cases have established that a group of persons will not be a “section of the community” if the members of the group are numerically negligible and they are identified by a purely personal relationship to one or more persons or entities. In Re Compton, Lord Greene MR said at 129-131:

“In the case of many charitable gifts it is possible to identify the individuals who are to benefit, or who at any given moment constitute the class from which the beneficiaries are to be selected. This circumstance does not, however, deprive the gift of its public character. Thus, if there is a gift to relieve the poor inhabitants of a parish the class to benefit is readily ascertainable. But they do not enjoy the benefit, when they receive it, by virtue of their character as individuals but by virtue of their membership of the specified class. In such a case the common quality which unites the potential beneficiaries into a class is essentially an impersonal one. It is definable by reference to what each has in common with the others, and that is something into which their status as individuals does not enter. Persons claiming to belong to the class do so not because they are AB, CD and EF but because they are poor inhabitants of the parish. If, in asserting their claim, it were necessary for them to establish the fact that they were the individuals AB, CD, and EF, I cannot help thinking that on principle the gift ought not to be held to be a charitable gift, since the introduction into their qualification of a purely personal element would deprive the gift of its necessary public character. It seems to me that the same principle ought to apply when the claimants, in order to establish their status, have to assert and prove not that they themselves are AB, CD and EF, but that they stand in some specified relationship to the individuals AB, CD and EF, such as that of children or employees … . I come to the conclusion, therefore, that on principle a gift under which the beneficiaries are defined by reference to a purely personal relationship to a named propositus cannot on principle be a valid charitable gift.”

42. It will be seen from this passage that Lord Greene MR’s test for when a group of persons will be a section of the community is derived from the principle that in order to be a valid charitable trust, the persons who benefit must not do so by virtue of their character as individuals.

43. Lord Simonds in Oppenheim stated the test in similar terms at 306:

“These words “section of the community” have no special sanctity, but they conveniently indicate first, that the possible (I emphasise the word “possible”) beneficiaries must not be numerically negligible, and secondly, that the quality which distinguishes them from other members of the community, so that they form by themselves a section of it, must be a quality which does not depend on their relationship to a particular individual. It is for this reason that a trust for the education of members of a family or, as in Re Compton, of a number of families cannot be regarded as charitable. A group of persons may be numerous, but, if the nexus between them is their personal relationship to a single propositus or to several propositi, they are neither the community nor a section of the community for charitable purposes.”

44. These statements of the “Compton test” have been accepted as applicable in Australia in numerous cases: see Davies v Perpetual Trustee Co Ltd at 455; Thompson v Federal Commissioner of Taxation at 322; Re Evans (dec’d) [1957] St R Qd 345 at 350-351; Re Muir (dec’d) [1964] VR 529 at 534-535; Re Mills (1981) 27 SASR 200 at 208; Re Gillespie (dec’d) [1965] VR 402 at 404; Alice Springs Town Council v Mpweteyerre Aboriginal Corp & Ors (1997) 115 NTR 25 (Alice Springs) at 40-41; Shire of Derby-West Kimberley v Yungngora Association Inc [2007] WASCA 233; 157 LGERA 238 at [50]; Jacobs’ Law of Trusts in Australia at [10-06].

45. The Compton test may not represent the only test of when a group of persons will be a section of the community: see, for example, Re Income Tax Acts (No. 1) [1930] VLR 211; Thompson v Federal Commissioner of Taxation at 323-4. However, it is sufficient for present purposes that under the Compton test, where the group of persons who may benefit are identified by a personal relationship to a single propositus or to several propositi the public benefit requirement is not met.

46. There is an exception to the Compton test for trust for the relief of poverty where the public purpose requirement has been eroded by what are known as the “poor relations” cases. These cases stand for the proposition that in the case of trusts for the relief of poverty the distinction between a charitable trust and a private trust depends on whether as a matter of construction the gift is for the relief of poverty amongst a particular description of poor people who are identified by reference to a relationship with particular individuals (in which case it will be a charitable trust) or is merely a gift to particular poor persons, the relief of poverty among them being the motive of the gift (in which case it will not be a charitable trust): Dingle v Turner [1972] AC 601 at 617, 623; Re Scarisbrick's Will Trusts [1951] Ch 622 at 639-640 per Evershed MR and 649 and 655 per Jenkins LJ. In the latter case, Jenkins LJ summarised the position as follows:

“(i) It is a general rule that a trust or gift in order to be charitable in the legal sense must be for the benefit of the public or some section of the public: see Re Compton; Re Hobourn Aero Components Ltd's Air Raid Distress Fund; Gilmour v Coats.

(ii) An aggregate of individuals ascertained by reference to some personal tie (eg, of blood or contract) such as the relations of a particular individual, the members of a particular family, the employees of a particular firm, the members of a particular association, does not amount to the public or a section thereof for the purposes of the general rule: see Re Drummond; Re Compton; Re Hobourn Aero Components Ltd's Air Raid Distress Fund; Oppenheim v Tobacco Securities Trust Co Ltd.

(iii) It follows that according to the general rule above stated a trust or gift under which the beneficiaries or potential beneficiaries are confined to some aggregate of individuals ascertained as above is not legally charitable even though its purposes are such that it would have been legally charitable if the range of potential beneficiaries had extended to the public at large or a section thereof (eg, an educational trust confined as in Re Compton to the lawful descendants of three named persons, or, as in Oppenheim v Tobacco Securities Trust Co Ltd to the children of employees or former employees of a particular company).

(iv) There is, however, an exception to the general rule in that trusts or gifts for the relief of poverty have been held to be charitable even though they are limited in their application to some aggregate of individuals ascertained as above, and are, therefore, not trusts or gifts for the benefit of the public or a section thereof. This exception operates whether the personal tie is one of blood (as in the numerous so-called “poor relations” cases, to some of which I will presently refer) or of contract (eg, the relief of poverty amongst the members of a particular society, as in Spiller v Maude, or amongst employees of a particular company or their dependants, as in Gibson v South American Stores (Gath & Chaves) Ltd) …”

47. Later Jenkins LJ stated the nature of the “poor relations” exception referred to in paragraph (iv) above as follows:

“I think the true question in each case has really been whether the gift was for the relief of poverty among a class of persons, or rather, as Sir William Grant MR put it, a particular description of poor, or was merely a gift to individuals, albeit with relief of poverty amongst those individuals as the motive of the gift, or with a selective preference for the poor or poorest amongst those individuals”.

48. This statement of the “poor relations” exception was adopted by Lord Cross in Dingle v Turner at 617, 623.

49. The “poor relations” exception does not cut across the principle that a charitable trust is a trust for a purpose and not persons, but is rather an application of it: the relief of poverty is exercised within a class of poor persons who qualify because they are both poor and have a required relationship with an individual or individuals.

50. The “poor relations” cases are often treated as an anomalous exception to the general requirement for a public purpose, but can be explained on the basis that the relief of poverty is intrinsically altruistic in nature so that the public purpose is to be inferred: see Re Compton at 139 per Lord Greene MR and Re Scarisbrick's Will Trusts at 639 per Evershed MR.

Relief of poverty

51. In YWCA Australia v Chief Commissioner of State Revenue [2020] NSWSC 1798, Payne JA said:

“[39] “Poverty” is a relative term. It is not limited to destitution: Re Gillespie [1965] VR 402 at 406 . Poverty connotes the notion of “going short”. The reference to going short appears to derive from Lord Evershed MR’s judgment in Re Coulthurst [1951] Ch 661 at 666 where it was observed that poverty was a term:

of wide and somewhat indefinite import; it may not unfairly be paraphrased for present purposes as meaning persons who have to ‘go short’ in the ordinary acceptation of that term, due regard being had to their status in life and so forth.

[40] “Poverty” encompasses the circumstances of a person who is unable independently to achieve the status of being self-supporting: Re Central Employment Bureau for Women and Students’ Careers Association Incorporated [1942] 1 All ER 232 at 233; Re Clarke [1923] 2 Ch 407 at 411 –412. Inferential reasoning about the likely status of people using a service is permissible. In Re Niyazi [1978] 3 All ER 785, Megarry VC reasoned that a trust to establish a working men’s hostel in Cyprus was for the relief of poverty as any person who was compelled by circumstance to reside in the hostel was likely to be poor.”

52. As noted by Payne JA in the above passage, a purpose of relieving poverty need not be expressly stated and can be inferred from the terms of the trust instrument. One example is Downing v Federal Commissioner of Taxation (1971) 125 CLR 185; [1971] HCA 38 which concerned a testamentary gift for the “amelioration of the condition of the dependants of any member or ex-member of” the defence forces, where an intention to relieve poverty was inferred from the use of the word “amelioration” (at 194).

53. Another example is Re Niyazi’s Will Trusts [1978] 3 All ER 785, the last of the cases referred to by Payne JA in the above passage, where a testamentary gift “for the purposes only of the construction of or as a contribution towards the cost of construction of a working mens hostel” was held to be valid charitable trust for the relief of poverty. Megarry VC said at 787 that “a gift which in terms is not confined to the relief of poverty may by inference be thus confined” and concluded that there were a number of indications in the words used in the will to confine the gift to the relief of poverty, principally the use of the word “hostel” which indicated a building of somewhat modest accommodation for those having temporary need of it and the expression “working mens” indicated a restriction to those with a relatively low income (at 788-789).

54. Another situation where the courts are prepared in an appropriate case to infer a purpose of relieving poverty is a trust for the benefit of indigenous people who are disadvantaged and in need of financial support.

55. In Alice Springs, the respondent associations each held leases of land in Alice Springs used for town camps for Aboriginal people. The constitution of each association stated that its “central objects” were to relieve “poverty, sickness, destitution, distress, suffering, misfortune or helplessness of Aboriginal people in Central Australia” (cl 1) including by “obtaining land, housing and other community facilities for the members of the Association and other needy Aboriginal people” (cl 2(a)). Mildren J (with whom Martin CJ agreed) held that the property of each association was held on a charitable trust for the relief of poverty and other charitable purposes. In relation to the relief of poverty, Mildren J made the following comments at 39-40:

“The word ‘poverty’ is the condition of having little wealth or material possessions (Shorter Oxford English Dictionary), and is not used in any metaphorical sense [e.g., turning on whether or not the person wants material wealth]. One object of the associations is to provide relief from that condition to people who are in need of it. ‘Poverty’ in this sense, is of course, relative, but it is well established that the law does not require that the persons to be benefited should be destitute or even on the border of destitution: Re Gillespie, per Little J [1965] VR 402 at 406.

. . .

It is a notorious fact that with few, if any, exceptions, the camp residents of Alice Springs are, if not destitute, in a condition of poverty. The evidence . . . confirms what is, in any event, common knowledge; and was not challenged in cross examination.

However, if extrinsic evidence is not admissible and, to be for the relief of poverty, there must be some indication of this purpose in the trust, in this case, the objects of the constitutions include the advancement of its central objects by obtaining land, housing and other community facilities for their ‘members and other needy Aboriginal people.’ The membership provisions of the constitution do not expressly require members to be poor, but they do require the members to be adult Aboriginal persons who are residents; former residents; or frequent visitors to the town camps. Combined with the wording of clause 1 of the constitutions, and the use of the expression ‘other needy Aboriginal people’ in clause 2(a), I consider that the trusts are for the relief of poverty.”

56. As the terms of this trust were not limited to the relief of poverty, Mildren J applied the Compton test to determine if the public benefit requirement was satisfied and held that it was.

57. A case where the trust instrument identified “Beneficiaries” in a manner similar (but not identical) to the Deed in the present case is Groote Eylandt Aboriginal Trust Inc v Deloitte, Touche & Tohmatsu (No 2) (2017) 169 NTR 1; [2017] NTSC 4 (Groote). The plaintiff was trustee of a fund established to receive mining royalty payments. Under cl 2 of the trust deed the trustee was required to hold and apply the trust fund “exclusively for such charitable purposes (in the strict legal sense) as may be served by the provision of money property or other advantages for the benefit welfare and advancement of the Beneficiaries”. The term “Beneficiaries” was defined to mean “all Aboriginal people who are members of the traditional clans of and permanently reside on Groote Eylandt or Bickerton island and their successor generations”.

58. Hiley J held that the trust was established to advance a variety of charitable purposes and not merely the relief of poverty: at [263], [268]. Hence it was necessary for the Compton test to be satisfied and his Honour held that it was because the Beneficiaries were a section of the community which was thought to have traditional rights and interests in the land affected by the mining operations and could not sensibly be regarded as persons having a personal relationship to one or more persons: [226], [239]-[241]. It may be noted that cl 2 of the trust deed in that case was quite different from cl 2.3 of the Deed in that while it identified “Beneficiaries” as persons to whom benefits were to be provided, it clearly stated this was to be done in effectuation of charitable purposes. There is no such qualification in cl 2.3 of the Deed. Further, the definition of “Beneficiaries” here is, in contrast, limited to particular individuals and those having a personal relationship to them.

Other purposes beneficial to the community

59. There is no dispute that a trust for providing assistance to Aboriginal people, in particular in relation to their housing needs, is capable of being a valid charitable trust. There have been many cases where trusts established to assist Aboriginal people (in particular, by improving their economic and educational status) have been held to be charitable within the fourth Pemsel category provided that the Compton test is satisfied: eg Re Mathew (deceased) [1951] VLR 226; Dareton Aboriginal Land Council v Wentworth Council (1995) 89 LGERA 120 at 125; Aboriginal Hostels Ltd v Darwin City Council (1985) 33 NTR 1 at 14; Alice Springs at 40-41; Shire of Derby-West Kimberley v Yungngora Association Inc at [54] per Newnes AJA (with whom Buss and Miller JJA concurred); Cant v Kirby [2011] NSWSC 1193 at [46]; Groote at [104]-[107].

60. In Cant v Kirby, Gzell J said at [46] “[t]he assistance of Aboriginal persons is a charitable purpose” citing Re Mathew (deceased). In the latter case, O’Bryan J upheld a testamentary trust of property “to be used by (the trustee) in his discretion for the benefit of the Australian aborigines” as a valid charitable trust within the fourth Pemsel category, stating (at 232) that “Aboriginal Australians are notoriously in this community a class which, generally speaking, is in need of protection and assistance”.

61. Similarly, in Aboriginal Hostels Ltd v Darwin City Council, Nader J stated (at 16) that “no right thinking person could quarrel with the general proposition that Aboriginals are in need of special consideration and assistance” and said (at 17) that the provision by the appellant of hostel accommodation for Aboriginal people in the circumstances of that case was “an attempt to meet an obvious need in Aboriginal society”.

Submissions

Attorney General’s submissions

62. The first plaintiff adopted the written submissions of the second plaintiff, the Attorney General.

63. The Attorney General in written submissions contended that:

1. The ultimate question is to ascertain whether the intention of the settlor, DAET Council, as expressed in the Deed, properly construed in context was to create a charitable trust.

2. The trust is a trust for the relief of poverty and is therefore a charitable trust which is presumed to be for the public benefit.

3. Alternatively, the trust is beneficial for a section of the public. Accordingly, even if it is not for the relief of poverty, the Trust is still a charitable trust with other purposes beneficial to the community, falling within the fourth Pemsel category.

64. The Attorney General accepted that two features of the Deed were against a conclusion that the trust property is held on a charitable trust, being that the Deed, on its first page, is self-described as a “Discretionary Trust Deed” and that clause 2.3 uses the term “Beneficiaries”.

65. In relation to the first point, the Attorney General argued that this is not determinative, as trustees of a charitable trust can hold discretionary powers to determine how they will pursue a charitable purpose and the mere title “Discretionary Trust Deed” does not preclude the Trust from being a charitable trust.

66. As to the second point, the Attorney General said that the mere use of the term “Beneficiaries” was not decisive and it was necessary to determine whether the use of that term meant that the Trust was a trust for beneficiaries or rather, was an “unfortunate drafting device” (adopting Corish v Attorney-General [2006] NSWSC 1219 at [23]) to describe a section of the public as part of the description of the charitable purpose. In Corish v Attorney-General, Campbell J (as his Honour then was) said of a differently worded trust instrument at [23]:

“The term ‘beneficiaries’ in this Trust Deed does not have the same meaning that it ordinarily has in a Trust Deed. Rather, it has the meaning of a person whose activities are funded, for the purpose of advancing the objectives of the Deed.”

67. The Attorney General submitted that the definition of “Beneficiaries” in the Deed is capable of being construed as an attempt to define a section of the community rather than a group of individuals and is part of the description of the charitable purpose of the Trust.

68. The Attorney General submitted that, weighing in favour of a conclusion that the Trust is a purpose trust, and in particular a charitable trust, is the fact that the Trust has ‘objects’ set out at cl 1.2 of the Deed which are charitable in nature. Several of the clauses that are most significant for the purpose of determining the nature of the Trust (cll 3 (on use of the properties), 4 (disposal), 5 (proceeds from use) and 6 (proceeds from sale)) refer to the purposes and objects of the trust. Another clause said by the Attorney General to indicate a charitable intent is cl 2.8, which deals with the possibility that the Trust might fail in which case that property is held on trust for any of the objects contained in “Section 3 of the Aboriginal Housing Act or purposes in the said Act”, which the Attorney General submitted are readily characterised as charitable.

69. The Attorney General submitted that case law has consistently found measures for the relief of Aboriginal persons to be charitable within the fourth category and that, where trusts are for the provision of housing for Aboriginal people, they can fall within the first Pemsel category (citing Alice Springs).

70. The Attorney General also submitted that the Court leans in favour of charity so that if the text of the Deed is capable of a meaning which supports a finding of charity, that construction ordinarily should be adopted (citing Re Estate Polykarpou [2016] NSWSC 409; 16 ASTLR 400 at [64(g)]). It was also submitted that in the case of a failed charitable trust, but a general charitable intent is inferred, a cy-près scheme can be ordered (citing Attorney-General (NSW) v Perpetual Trustee Co Ltd at 225).

Defendants’ submissions

71. All the defendants (except for the tenth to fourteenth defendants) filed written submissions and were represented by counsel at the hearing. They all submitted that the Court should declare that the Trust is not a charitable trust on the basis, essentially, that on the proper construction of the Deed, the Trust is not a trust for a purpose, but rather a private discretionary trust for the benefit of identified individuals being the Beneficiaries.

Consideration

Relevant principles of construction

72. There is no dispute that the Deed created a valid express trust. The only issue is whether it is properly classified as a private trust or a charitable trust. That question turns on whether the trust property is held for the benefit of identified beneficiaries or rather on trust for a charitable purpose or purposes. That is to be determined by reference to the intention of the parties to the Deed. The search is not for the subjective intention but rather the intention revealed by the words used in the trust instrument read in context (i.e., the question is “what is the meaning of the words the parties have used in the instrument”), with the matter to be approached in the same way as for the construction of contracts: Byrnes v Kendle (2011) 243 CLR 253; [2011] HCA 26 at [17], [53]-[55], [59] and [102]-[105]. While Byrnes v Kendle was concerned with the existence of an “intention” to create a trust, the same principle applies to whether an express trust is to be classified as a private trust or a charitable trust because that question is also one of (objective) intention: Jacobs’ Law of Trusts in Australia at [3-03] and [3-06]; Scott, The Law of Trusts (3^rd ed, 1967, Little, Brown and Company) at Vol 4, §348, 2769-2770; Scott, Fratcher and Ascher, Scott and Ascher on Trusts (5^th ed, 2006, Aspen Publishers) at Vol 5, §37.2.2, 2378-2379.

73. The determination of the objective intention of the parties to a contract turns on the text construed in light of its context and purpose: S&C Nicola Pty Ltd v Peter Holmes Investment Pty Ltd [2022] NSWCA 72 at [29] per Leeming JA. The relevant principles were summarised by French CJ, Nettle and Gordon JJ in Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104; [2015] HCA 37 at 116-117 as follows (footnotes omitted):

“[46] The rights and liabilities of parties under a provision of a contract are determined objectively, by reference to its text, context (the entire text of the contract as well as any contract, document or statutory provision referred to in the text of the contract) and purpose.

[47] In determining the meaning of the terms of a commercial contract, it is necessary to ask what a reasonable businessperson would have understood those terms to mean. That enquiry will require consideration of the language used by the parties in the contract, the circumstances addressed by the contract and the commercial purpose or objects to be secured by the contract.

[48] Ordinarily, this process of construction is possible by reference to the contract alone. Indeed, if an expression in a contract is unambiguous or susceptible of only one meaning, evidence of surrounding circumstances (events, circumstances and things external to the contract) cannot be adduced to contradict its plain meaning.

[49] However, sometimes, recourse to events, circumstances and things external to the contract is necessary. It may be necessary in identifying the commercial purpose or objects of the contract where that task is facilitated by an understanding “of the genesis of the transaction, the background, the context [and] the market in which the parties are operating”. It may be necessary in determining the proper construction where there is a constructional choice. The question whether events, circumstances and things external to the contract may be resorted to, in order to identify the existence of a constructional choice, does not arise in these appeals.

[50] Each of the events, circumstances and things external to the contract to which recourse may be had is objective. What may be referred to are events, circumstances and things external to the contract which are known to the parties or which assist in identifying the purpose or object of the transaction, which may include its history, background and context and the market in which the parties were operating. What is inadmissible is evidence of the parties’ statements and actions reflecting their actual intentions and expectations.

[51] Other principles are relevant in the construction of commercial contracts. Unless a contrary intention is indicated in the contract, a court is entitled to approach the task of giving a commercial contract an interpretation on the assumption “that the parties … intended to produce a commercial result”. Put another way, a commercial contract should be construed so as to avoid it “making commercial nonsense or working commercial inconvenience”.

[52] These observations are not intended to state any departure from the law as set out in Codelfa Construction Pty Ltd v State Rail Authority and Electricity Generation Corporation v Woodside Energy Ltd. …”

74. I have taken these principles into account in construing the Deed. The question of construction can be resolved by reference to the text of the Deed, and it was not suggested by any of the parties that it was necessary to have regard to circumstances external to the Deed. However, I note that there is nothing in the background to the execution of the Deed referred to above which contradicts the conclusions I have reached based on its text.

Trust not a charitable trust

75. For the following reasons, on the proper construction of the Deed, the Trust is not a charitable trust.

76. The key provision of the Deed is the declaration of trust in cl 2.3 which states that the trust property is to be held “for the benefit of the Beneficiaries or such of them as the Trustee in its discretion determines”. There are a number of points to note about this provision.

1. The “Beneficiaries” comprise the members of the Dunghutti Aboriginal families who (either at the date of the Deed or during the terms of the Trust) satisfy one of sub-paragraphs (i) to (iii) of the definition of “Beneficiary” in cl 1.1. Essentially, they must be either named on the list in annexure 1 to the Deed (sub-paragraph (i)) or a member of the Dunghutti Aboriginal families personally known to such a person (sub-paragraph (ii)) or a descendant of either category (sub-paragraph (iii)). The Beneficiaries are therefore an identified but fluctuating group of individuals which is defined by their personal relationship with the persons listed in annexure 1.

2. While the trustee has a discretion under cl 2.3 as to which of the Beneficiaries will benefit and to what extent, any of the Beneficiaries could bring an action against the trustee to enforce the terms of the Trust, for example if the trustee purported to deal with the properties or proceeds from the use or sale of the properties inconsistently with cl 3 to 6 above, because a beneficiary under a discretionary trust has a right to have his or her interest protected by a court of equity: Gartside v Inland Revenue Commissioners [1968] AC 553 at 617; Jacobs’ Law of Trusts in Australia at [23-03].

3. The use of the words “for the benefit of the Beneficiaries” in cl 2.3 indicates that the settlor’s intention was to benefit particular persons (the Beneficiaries) by virtue of their character as individuals rather than to benefit a class of persons identified and defined by reference to their need for charitable relief. That is a clear indication of an intention to create a non-charitable trust: see [36]-[37] above and Latimer at [29]; Re Scarisbrick's Will Trusts at 655; Re Compton at 129.

4. This is not a case where the term “beneficiaries” is used as part of the description of the charitable purpose; rather it is used to indicate that particular individuals are to benefit by virtue of their character as individuals, and hence cannot be regarded as a mere “unfortunate drafting device” for describing a charitable purpose (see [66] above).

5. Further, by stating that the property as being held for beneficiaries who are an identified group of persons, cl 2.3 uses the classic language indicating a private (discretionary) trust for persons rather than a trust for charitable purposes.

77. That construction is confirmed by other provisions of the Deed. First, recital A indicates that the purpose of the Trust is to benefit particular persons (the Beneficiaries) rather than to advance a charitable object. While a recital to a deed is not part of the operative provisions, it may be used as an aid to construction, in particular where it provides a statement of the parties’ intention or object in entering into the transaction embodied in the deed: Lachlan v HP Mercantile Pty Ltd (2015) 89 NSWLR 198; [2015] NSWCA 130 at [52]-[53]. This is both because the recitals provide part of the context in which the operative provisions are to be construed and because the commercial purpose to be secured by the contract is relevant to its construction. As Allsop P (as his Honour then was) stated in Onesteel Manufacturing Pty Ltd v Bluescape Steel (AIS) Pty Ltd (2013) 85 NSWLR 1; [2013] NSWCA 27 at [63]:

“The recitals to the agreement set out those aspects of the background that give explanation to the transaction. There may be other background facts, but the recitals reveal the background chosen by the parties by way of the identification of relevant context. The recitals can assist in interpretation of operative provisions, though they do not control the latter’s operation when clear and unambiguous …” (emphasis in original)

78. Second, cl 5 and cl 6 state that the trustee is to hold proceeds from the use (cl 5) or sale (cl 6) of the properties “upon trust … for the benefit of the beneficiaries consistent with the purposes and objects of this Trust Deed as the Trustee in its absolute discretion thinks fit”. (While the word “beneficiaries” is not capitalised, this appears to be a typographical error and I read this as an intended reference to the defined term “Beneficiaries”.) What is significant about cl 5 and cl 6 is that the trustee must hold the relevant proceeds on trust for the benefit of the Beneficiaries consistent with the purposes and objects of the Trust rather than for the purposes and objects of the Trust. The discretion conferred on the trustee as to how the beneficiaries are to be benefited is required to be guided by the “purposes and objects of the Trust”, but the clauses have been drafted with the evident intention of requiring the trustee to hold the proceeds for persons rather than for a purpose (i.e. “the purposes and objects of the Trust”). This confirms that a conscious choice has been made to establish a trust to benefit particular persons rather than a trust for a purpose.

78. Largely as a consequence of the conclusions above, the Attorney-General’s submission that the Trust should be regarded as a charitable trust either as one for the relief of poverty or within the fourth Pemsel head cannot be accepted.

79. It is clear from the terms of the Deed that the trust property is not to be held solely for the relief of poverty which is sufficient to preclude the Trust from being charitable within the first Pemsel head. Clauses 3, 4, 5 and 6 of the Deed require the Trustee to use the “properties”, dispose of the “properties” and hold the proceeds of use or sale of the “properties” in a manner consistent with the “purposes and objects” of the Trust deed. The manner in which those persons are to be benefited and to what extent and by what means is left entirely to the discretion of the Trustee and is not restricted or defined by whether they are in poverty. So for example, benefits could be conferred on one or more Beneficiaries by the construction of community facilities on the properties which would improve the quality of their lives but not relieve their poverty in any way. No words are found in the Deed which either expressly or inferentially limit the benefits in the relevant way to the relief of poverty. Nor is poverty of a Beneficiary a criterion for relief.

80. Consequently, even if it be assumed that the meeting of the housing needs of the “Beneficiaries” is a purpose of relieving poverty, the Trust is not directed solely to relieving that poverty. Rather, it is directed to benefiting particular individuals selected by the trustee within the class of the “Beneficiaries” and it can be said that the relief of poverty is no more than a motive for establishing the Trust.

81. Insofar as the fourth Pemsel head of charity is relied upon, the “Beneficiaries” do not comprise a section of the community within the Compton test. This is because they are defined by reference to a personal relationship to an individual or individuals (being the persons identified in annexure 1 to the Deed). The Deed is analogous in that regard to Davies v Perpetual Trustee Co Ltd at 456 and Re Mills at 208, and the definition of “Beneficiaries” in the Deed is distinguishable from the definition of “Beneficiaries” in Groote: see [57]-[58] above.

82. Finally, in relation to the Attorney-General’s submission that the court “leans in favour of charity”, in Re Estate Polykarpou Lindsay J said at [64(g)] that:

The Court leans in favour of charity; if the text of a will is capable of a meaning which supports a finding of charity, that construction ordinarily should be adopted: Taylor v Taylor (1911) 10 CLR 218 at 225; Hadaway v Hadaway [1955] 1 WLR 16 at 19.

84. Both of the authorities cited by Lindsay J are properly seen as applications of the principle ut res magis valeat quam pereat (“it is better for a thing to have effect than be made void”) applicable both to trusts created by a will or by a deed inter vivos: Inland Revenue Commissioners v McMullen [1981] AC 1 at 14; G E Dal Pont, Law of Charity (3^rd ed, 2021, LexisNexis) at [6.1]. So, for example, where there is a gift (by will or deed) which is capable of two constructions one of which would make it void and the other effectual as a charitable trust, the latter will be preferred if possible. In the present case, it is not necessary or appropriate to apply this principle as the meaning of the words in the Deed is clear and the trust is a valid non-charitable trust. Nor, for the same reason, is it necessary to consider the principles concerning cy-près schemes.

Conclusion

85. For the above reasons, the Trust established by the Deed is not a charitable trust. The parties are in agreement that whatever the outcome of the proceeding, there should be no order as to costs. Accordingly I make the following orders:

1. The Court declares that the trust known as the “Dunghutti Aboriginal Elders Tribal Council Trust” the terms of which are contained in a trust deed dated 22 October 2001 as between the Dunghutti Aboriginal Elders Tribal Council (in liquidation) as settlor, the Aboriginal Housing Office as trustee and the then Aboriginal and Torres Strait Islander Commission (now succeeded by the Commonwealth of Australia) is not a charitable trust.

2. No order as to costs.

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Amendments

07 July 2023 - Title amended to remove given names of the first defendant.

Decision last updated: 07 July 2023