Attorney General for New South Wales v Fulham - [2002] NSWSC 629

No judgment structure available for this case.

CITATION: ATTORNEY GENERAL FOR NEW SOUTH WALES v FRED FULHAM & ORS [2002] NSWSC 629

CURRENT JURISDICTION: Equity

FILE NUMBER(S): SC 1710/2002

HEARING DATE(S): 26-28/06/2002

JUDGMENT DATE: 19 July 2002

PARTIES :

Attorney General for New South Wales - Plaintiff
Fred Fulham - First Defendant
Charles Kelly - Second Defendant
Evan Lyall Jones - Third Defendant
Peter Flaherty - Fourth Defendant
Godfrey Eugene Priest, Bruce Vanzela and John Thomas Walter Sheehan (As Trustees of the RSL Welfare and Benevolent Institution) - Fifth Defendant
Leukaemia Foundation of New South Wales Incorporated - Sixth Defendant
Sidney Philip Lindeman - Seventh Defendant
Richard James Maher - Eighth Defedant
Kevin Bryan Vance - Ninth Defendant
The Trustees of the Society of St Vincent De Paul (NSW) Incorporated - Tenth Defendant
The Australian Cancer Research Foundation - Eleventh Defendant
Remy Lam Son Bui - Twelfth Defendant

JUDGMENT OF: Bryson J at 1

COUNSEL : Ms K.L. Eastman - Pltf
Mr Tudehope (s) - 1D; submitting
Ms A. Williams (s) - 2D - submitting
Mr J.C. Thompson - 3D, 7D, 8D and 9D
Peter Flaherty in Person - 4D
Mr B. Ellicott QC & Mr N. Gye - 5D
Mr R.D. Wilson - 6D
Mr G.M. McGrath - 10D
Mr R. Darke SC - 11D
Mr R.J. d'Apice (s) - 12D
Mr J. Basten QC - Centenary Institute
Ms L. Doust (s) - Vietnam Veterans Association

SOLICITORS: I V Knight Crown Solicitor - Pltf
O'Hara & Company - 1D
Leslie Caplan & Grunstein - 2D
Connah, Steed & Co - 3, 7, 8 & 9Ds
Peter Flaherty in Person - 4D
Pricewaterhouse Coopers Legal - 5D
Tress Cocks & Maddox - 6D
Murphy & Moloney - 10D
Allens Arthur Robinson - 11D
Makinson & d'Apice - 12D
R.L. Whyburn & Associates - Vietnam Veterans Association.

CATCHWORDS: CHARITIES - cy pres scheme - supervening impossibility - power under Charitable Trusts Act 1993 s.10 - Leichhardt - Lilyfield Returned Sailors, Soldiers and Airmen's Memorial Hall Building Trust - AGNSW applied for cy pres scheme where charity owned site of Leichhardt RSL Club - after litigation Club in liquidation and some of Hall Trust Trustees sold land and distributed most of funds to other charities without authority of members and without proceeding to Dissolution in accordance with Constitution - on the facts, cy pres scheme was appropriate because of supervening impossibility and also under s.10 - consideration of practicalities affecting pursuing Recipients for repayment and then distributing according to a scheme devised by the Court - consideration of positions of trustees and other persons related to the Hall Trust - consideration of merits and claims of Recipients and of other charities which intervened - notwithstanding many considerations against doing so, the practicalities favoured adopting a cy pres scheme which in effect ratified the unauthorised distributions which had been made.

LEGISLATION CITED: Charitable Trusts Act 1993
Charitable Collections Act 1934
Charitable Fundraising Act 1991
Trustee Act 1925

CASES CITED: Attorney-General v Sherborne Grammar School (1854) 18 Beavan 256
Attorney-General for New South Wales v Adams (1908) 7 CLR 100
Re Taylor; Martin v Freeman 58 LT 538
Attorney-General (NSW) v Perpetual Trustee Co (Ltd) (1940) 63 CLR 209
Phillips v Roberts [1975] 2 NSWLR 207
Hixon v Campbell (1924) 24 SR (NSW) 436
Williams v Attorney-General (1948) 48 SR (NSW) 505
Beggs v Kirkpatrick [1961] VR 764 at 767
Attorney-General (SA) v Bray (1964) 111 CLR 402
Harris v Skevington [1978] 1 NSWLR 176
Gertsch v Atsas [1999] NSWSC 898
Income Tax Special Purposes Commissioners v Pemsel [1891] AC 531
Murray v Thomas [1937] 4 All ER 545
In Re Spence; Barclays Bank Ltd v Stockton-on-Tees Corporation [1938] Ch 96
Monds v Stackhouse (1948) 77 CLR 232.
Verge v Somerville [1924] AC 496
Barby v Perpetual Trustee Co Ltd (1937) 58 CLR 316
Somerville v Attorney-General for the Commonwealth of Australia (1921) 21 SR (NSW) 450
Williams v Attorney-General (1948) 48 SR (NSW) 505
Free Church of Scotland v Overtoun; Macalister v Young [1904] AC 515
Attorney General (NSW); Ex rel MacLeod v Grant (1976) 135 CLR 587
Murray v Thomas [1937] 4 All ER 545
In Re Slevin; Slevin v Hepburn [1891] 2 Ch 236
In Re Diplock; Diplock v Wintle [1948] 1 Ch 465
Retravision (NSW) Ltd v Copeland (Young J 8 October 1997 Unreported)

DECISION: Cy pres scheme proposed by AG was adopted - see [90]

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

BRYSON J

Friday 19 July 2002

1710 of 2002 - ATTORNEY GENERAL FOR NEW SOUTH WALES v FRED FULHAM & ORS

JUDGMENT

1 HIS HONOUR: The Attorney General has applied to the Court for administration of the property of a charity under a cy pres scheme. The Charity was formed in 1941 with the name “Leichhardt-Lilyfield Returned Sailors, Soldiers and Airmen’s Memorial Hall Building Trust” and conducted by a voluntary association under that name. In 1989 the voluntary association adopted the name “Leichhardt-Lilyfield Ex-Service Memorial Trust “ for itself and the Charity. I will refer to the voluntary association as “the Hall Trust”. In 2000 the principal trust property was land in Short Street Leichhardt, which had been acquired in three different purchases. The Charity also owned considerable accumulated funds. The land was sold for $2,975,000 at auction on 16 March 2000 by Mr Charles Kelly, Mr Frederick Mervyn Fulham and Mr Ronald Hugh Wells who then acted as the trustees. I will deal later with whether the trustees were authorised to sell the land. The sale was later settled and they collected the proceeds into the Hall Trust’s bank account. Most of the funds including the sale price were later distributed by Mr Fulham and Mr Kelly to other charities, leaving a small balance. In making these distributions Mr Fulham and Mr Kelly acted on their own, without obtaining a decision to make the distribution from the members of the Hall Trust, or from other persons whom the Hall Trust had voted in as trustees. Although the validity of the appointment of the other trustees is doubtful, there was no basis on which to suppose that Messrs Fulham and Kelly were authorised to decide that the Charity’s moneys should be distributed to other charities and decide on the amounts.

2 The proceedings were commenced by the Attorney General on 28 February 2002 by a Summons to which the defendants were Messrs Fulham and Kelly, and also Messrs Jones and Flaherty who had been voted in as trustees in December 1998. The first and second defendants Mr Fulham and Mr Kelly filed submitting appearances and did not take an active part in the proceedings or make any submissions at the hearing. The third defendant Mr Jones has been a member of the Hall Trust since July 1988 and became its Secretary. Although the Hall Trust resolved to appoint him a trustee, his appointment was not perfected and he did not take part in the sale of the land or the distribution of the funds. He gave evidence on affidavit of events in the history of the Hall Trust, and was represented by counsel at the hearing and opposed the plaintiff’s claim. Mr Jones’ position was shortly that the Hall Trust should be left to conduct the Charity and should have the assistance of the Court in recovering its funds. The fourth defendant Mr Flaherty, like Mr Jones, was appointed a trustee by the members but did not take part in the sale of the land and distribution of funds. It was established by directions before the hearing that no person contended that Mr Flaherty had incurred any personal liability. He conducted his case in person, made a written submission and at the hearing made an oral submission in which his position was, generally, to the effect that the scheme proposed by the plaintiff or some similar scheme should be adopted. Eight other defendants were added by interlocutory orders.

3 The fifth defendant is The Trustees of the RSL Welfare and Benevolent Institution, which it seems is an unincorporated body. RSL Welfare is a charitable institution which has existed in association with RSL since 1964, and adopted its present name in 2002. Its affairs are conducted by trustees one of whom is Mr J T W Sheehan, the State Secretary of RSL. The objects set out in its rules are to the effect that it is to provide assistance to ex-service personnel, defence personnel and their dependants. The assistance to be provided is defined extensively in terms which show that its objects are charitable. In practical terms RSL Welfare is completely controlled by RSL and is an organ of the RSL. The cy pres scheme proposed by the plaintiff provides for distribution of the balance of funds available to RSL Welfare. Assumptions underlying the plaintiff’s case and the case presented by RSL Welfare are to the effect that any merits or claims of organizations associated with RSL should be recognized in the cy pres scheme by benefits conferred on RSL Welfare. I regard this assumption as correct, as RSL Welfare is the charity arm of all RSL bodies and its objects make it an appropriate recipient.

4 Several bodies associated with Returned & Services League of Australia (NSW Branch) are significant for this case. Returned & Services League of Australia (NSW Branch) is an incorporated body and a branch of the League which has branches throughout Australia. The League was formed in 1916 and the NSW Branch was created in 1917. I refer to the NSW Branch as the RSL. The League has had several changes of name; in November 1940 and until 1965 its name was Returned Sailors’ Soldiers’ and Airmen’s Imperial League of Australia. After several more changes its name became, in 1990, Returned & Services League of Australia. The State Council of the RSL approved the formation of the Leichhardt-Lilyfield Sub-Branch in 1928 and the existence of the Sub-Branch appears to have been continuous since then. In the letter of 28 December 1940 which contains the first reference to a Memorial Hall Building Trust it was said that the Hall Trust had been formed by the Sub-Branch.

5 Leichhardt-Lilyfield Sailor & Soldiers Airmens Club Limited was incorporated in 1971, became a registered club, apparently continuing an earlier club which was a voluntary association, and conducted the Club at the Short Street premises until 1999. The Club changed its name twice and became The Leichhardt Community and Services Club Limited on 7 May 1998. An administrator of the Club was appointed on 11 June, 1999. Liquidators were appointed on 8 July 1999. I refer to it as the Club.

6 The sixth defendant is Leukaemia Foundation of New South Wales Inc., one of the recipients of distributions made by Messrs Fulham and Kelly.

7 The seventh, eighth and ninth defendants Messrs Lindeman, Maher and Vance are the new trustees of the Hall Trust appointed by its members on 27 April 2002. They opposed the scheme, had common representation with Mr Jones, and took the same position as he did.

8 The tenth defendant is the Trustees of the Society of St Vincent De Paul (NSW) an incorporated charitable body which conducts three of the institutions which were Recipients of gifts. The eleventh defendant is Australian Cancer Research Foundation, also a Recipient. The twelfth defendant Father Remy Lam Son Bui is the trustee of The North Leichhardt Parish School Building and Catholic Charities Trust, also a Recipient. I permitted The Institute of Cancer Medicine and Cell Biology, also a Recipient, to appear at the hearing and make submissions by counsel, although it was not a party. I also permitted Vietnam Veterans’ Association of Australia, NSW Branch Incorporated, which was not a Recipient but claimed consideration for distribution under the scheme, to appear at the hearing by its solicitor and make submissions. Several other charitable bodies sought consideration but did not become defendants or appear at the hearing.

9 The Recipients furnished information about their affairs which was put in evidence by the plaintiff, and in some cases provided affidavits dealing with their affairs and circumstances, including circumstances of receipt and application of donations, which were read by the plaintiff. The Recipients were as follows:

The Heart Research Institute received $200,000, declined to give to the Crown Solicitor an undertaking to hold the funds received pending litigation, and through an officer gave evidence to the effect that the funds have been expended and were not available to be repaid.

The Victor Chang Cardiac Research Institute received a donation of $200,000, declined to give an undertaking and gave evidence to the effect that the funds were expended and were not available.

Fred Hollows Foundation received two donations totalling $265,221.05, declined to give an undertaking and gave evidence to the effect that the funds were not available.

Multiple Sclerosis Society of NSW received a donation of $50,000, declined to give an undertaking and gave evidence to the effect that the money had been expended and was not available.

The Royal Blind Society received a donation of $100,000, gave an undertaking to abide by the decision of the Court, and gave evidence that the funds had been expended and were not available.

The Children’s Cancer Institute received a donation of $200,000, declined to give an undertaking and gave evidence to the effect that the funds had been expended and were not available.

Barnardos Australia received a donation of $200,000, declined to give an undertaking and gave evidence to the effect that the funds had been expended and were not available.

Centenary Institute of Cancer Medicine and Cell Biology received a donation of $200,000, declined to give an undertaking and gave evidence from which it appears that the funds may have been expended, that they are not available for refund, and that the Institute is not prepared to refund them. Any claim for refund can be expected to be contentious.

Vincentia Village is an institution conducted by the Trustees of the Society of St Vincent De Paul, the tenth defendant. Vincentia Village received a donation of $200,000.

Claffy House, also conducted by St Vincent De Paul received a donation of $200,000.

Matthew Talbot Hostel also conducted by St Vincent De Paul received a donation of $200,000. While the tenth defendant indicated readiness to comply with obligations, it also produced evidence which suggested that all or most of the moneys donated had been expended before undertakings were called for. The effect of the written and oral submissions on behalf of the tenth defendant as I understood it was that there would be real difficulties for the tenth defendant in refunding the three donations or any part of them, and that if a claim were made it would have to consider carefully its position including its ability to comply.

Diabetes Australia received a donation of $200,000, gave an undertaking to abide by the Court’s decision but also produced evidence which appears to indicate that the money has been or may have been expended.

The National Heart Foundation received a donation of $200,000, gave the Crown Solicitor an undertaking not to distribute pending litigation, and has not expended the donation but has the funds available.

The Leukaemia Foundation, the sixth defendant, received a donation of $200,000, gave the Crown Solicitor an undertaking, and has not expended the funds.

Australian Cancer Research Foundation, the eleventh defendant received a donation of $200,000, and its counsel gave me an undertaking during the hearing that the funds will not be utilized pending the outcome of this case, and has not expended the funds.

NSW Breast Cancer Institute received a donation of $200,000, gave the Crown Solicitor an undertaking and has not expended the funds.

Australian Red Cross Society received a donation of $100,000, gave the Crown Solicitor an undertaking and has not expended the funds.

Sydney Legacy Appeals Fund received a donation of $200,000, gave the Crown Solicitor an undertaking, and has not expended the funds.

10 The payments total $3,515,221.05 and $2,200,000 is subject to undertakings of various kinds, some heavily qualified. Practically all the Recipients, whether or not they had refused undertakings or expended the funds, made submissions and in one form or another resisted any requirement to make a refund and supported the proposed scheme. While none of the Recipients exhibited a recalcitrant or otherwise unsuitable attitude, it is plain enough that any requirement to refund part or all of the funds would be a severe disappointment to reasonable expectations of all of them, and that for most of them it would in practicality be difficult or in some cases impossible to comply. The possibility can clearly be foreseen that Recipients would consider their positions carefully and examine their legal responsibilities if they were called upon to make refunds, and the possibility of disputes and litigation can be seen. Of the Recipients only Sydney Legacy Appeals Fund has an exclusive association with ex-service persons and their dependants, the activities of Australian Red Cross Society give it a significant association with ex-service persons and their dependants, while the others benefit the community generally and are not specifically directed to the welfare of ex-service persons and their dependants, although they actually function for their welfare in varying degrees. The North Leichhardt Parish School Trust represented by the twelfth defendant is the only Recipient which has any strong association with the Leichhardt District.

11 Several other associations made claims for consideration in relation to the cy pres scheme. Some had significant local associations and one, Vietnam Veterans’ Association of Australia, NSW Branch Incorporated, has a strong claim for consideration in selecting beneficiaries of a scheme in a charity related to the welfare of ex-service personnel and their dependants.

12 The power which the Court has under the general law to order a cy pres scheme appears from a passage in the judgment of Romilly M R in Attorney-General v Sherborne Grammar School (1854) 18 Beavan 256, 52 ER 101. At 280 – 281 110-111 his Lordship said:

“….what is the power which this Court possesses, in this state of circumstances, with reference to this charity? The duties and authority of this Court in dealing with matters of charity, is not, I think, on this point, open to much doubt or question. This Court has authority to redress a breach of trust, where the objects of a founder have been prevented or neglected. It also has authority to direct a scheme, in order to enforce the more complete attainment of those objects. This Court has a further power and authority when the objects contemplated by the founder cannot be carried into effect, to direct the application of the revenues of the charity to promote objects in accordance with the spirit of the original foundation, the actual compliance with which has become impossible. But it has no authority to vary the original foundation, and to apply the charity estates in a manner which it conceives to be more beneficial to the public, or even such as the Court may surmise that the founder would himself have contemplated, could he have foreseen the changes which had taken place by the lapse of time.”

13 In Attorney-General for New South Wales v Adams (1908) 7 CLR 100 Isaacs J 124 – 125 cited with approval a passage from the judgment of Kay J in Re Taylor; Martin v Freeman 58 LT 538 at 543 which included the following expressions explaining execution of a charitable trust cy pres:

“ ‘…that is, carry out the general paramount intention in some way as nearly as possible the same as that which the testator has particularly indicated without which his intention itself cannot be effectuated.’ “

14 In Attorney General (NSW) v Perpetual Trustee Co (Ltd) (1940) 63 CLR 209 at 225 Dixon and Evatt JJ gave the following account of the act of the Court when ordering a cy pres scheme:

“…the court will execute the trust by decreeing some other application of the trust property to the furtherance of the substantial purpose, some application which departs from the original plan in particulars held not essential and, otherwise, keeps as near thereto as may be.”

15 Hutley JA said, in Phillips v Roberts [1975] 2 NSWLR 207 at 211 to 212:

Re Weir Hospital

16 However s 9 of the Charitable Trusts Act 1993 has widened the grounds on which the Court may act, in that it is no longer necessary that actual compliance with the original terms should be impossible. It is now enough that they have ceased to provide a suitable and effective method of using the trust property. Subsection 9 (1) is in these terms:

“The circumstances in which the original purposes of a charitable trust can be altered to allow the trust property or any part of it to be applied cy pres include circumstances in which the original purposes, wholly or in part, have since they were laid down ceased to provide a suitable and effective method of using the trust property, having regard to the spirit of the trust.”

17 The Court may alter the purposes of a charitable trust where the original purposes have ceased to provide a suitable and effective method of using the trust property; this is well short of a test requiring impossibility. Subsection 9 (1) greatly widens the circumstances in which the Court may act and the influence which it may allow considerations of practicality to have.

18 The special position in which the Court acts when dealing with cy pres schemes was referred to in Phillips v Roberts in the judgment of Hutley JA at 211, where his Honour stated reasons why:

“…it has been recognized by distinguished lawyers that the administrative task of re-organizing charitable trusts requires freedom from restrictions associated with the judicial process…”

Phillips v Roberts

19 It is also necessary to notice s 10:

20 The question whether the terms of the trust instrument show a general charitable intention is prominent in cases where it is initially impossible to implement the terms of the trust and a cy pres scheme is applied for; in a case like that, unless there is a general charitable intention no charitable trust has come into existence. Where, as in this case, the charity when created was valid and implementation has become impossible or ceased to be suitable and effective through supervening circumstances, there is in my opinion no need to show a general charitable intention. However it is necessary to act in accordance with the spirit of the trust, to do which it is necessary to have regard to any general indications in the trust instrument.

21 In my opinion where property has become vested in a trustee for charitable purposes, and it later becomes impossible to apply the property for the charitable purposes, the Court is not concerned to inquire into the existence of a general charitable intention when asked to apply the property cy pres. Even if the charitable purpose was highly specific and there was no general charitable intention, when the attainment of the specific purpose becomes impossible the property can be dealt with only for some charitable purpose. Different considerations apply where attaining the charitable purpose is impossible in the circumstances which exist when the trust is purportedly created; then the existence of a general charitable intention is necessary if there is to be a valid charitable trust at all. In my understanding the view that I have expressed appears from the judgment of the Court of Appeal in In Re Slevin; Slevin v Heburn [1891] 2 Ch 236, although in that case the position was complicated as the gift was made to a named institution which existed when the gift took effect but ceased to exist before the gift was paid over. The Court of Appeal appears to have regarded the legacy in that case as passing to the Crown as bona vacantia and to have regarded the choice of an analogous purpose of charity as a choice to be made by the Crown and not by the Court.

22 In this Court Maughan AJ stated the law in a similar way in Hixon v Campbell (1924) 24 SR (NSW) 436 at 441-442. Sugerman J took a similar view in Williams v Attorney General (1948) 48 SR (NSW) 505 at 508, surprisingly without referring to Hixon v Campbell. See too Beggs v Kirkpatrick [1961] VR 764 at 767 where Adam J cited further authorities. If a general intention of charity were necessary I would be inclined to think that it is shown by the contemplated distribution on dissolution in the 1941 Constitution, notwithstanding that there has not been a dissolution. Even when a general intention of charity is required it is an undemanding requirement: see Attorney-General (NSW) v The Perpetual Trustee Company (Ltd) (1940) 63 CLR 209 at 225 (Dixon and Evatt JJ) and is supported by the presumption in s 10 (2) of the Charitable Trusts Act 1993.

23 Counsel for RSL Welfare referred me, in relation to whether or not a charitable trust is impractical to administer so that a scheme should be ordered, to the judgment of Kitto J in Attorney-General (SA) v Bray (1964) 111 CLR 402 at 418 and to his Honour’s adoption of the formula:

“whether at the date of the death of the testatrix it was practicable to carry out the intentions of the testatrix into effect or whether at the said date there was any reasonable prospect that it would be practicable to do so at some future time.”

Harris v Skevington

24 The scheme put forward by the Attorney General contains provisions which in effect will ratify the distributions made by Messrs Fulham and Kelly notwithstanding that they were not authorized to make them. In addressing the application and the positions put forward by other parties it is necessary to keep in view that as things now stand it is necessary to claim back from Messrs Fulham and Kelly the amounts of distributions which they have made, and also to claim back from charities the amounts distributed to them or any deficiency after the recoveries from Messrs Fulham and Kelly. It is not in my opinion clear or a forgone conclusion that the Hall Trust is entitled to the repayment by charities of the amounts distributed. Although as a matter of first impression the trustees or new trustees of the charitable trust appear to have a fairly clear right to recover moneys paid as donations, without consideration and in breach of trust, it would, I think, be open to charities to resist such claims, in a field where the law is unsettled and is still developing, on grounds relating to alterations of position which they have made on the readily understandable assumption that Messrs Fulham and Kelly had actual authority to make the distributions.

25 Some of the Recipients have contended that they have disposed of all or much of the amounts given to them, and some have given undertakings to retain the amounts given to them until the final determination of these proceedings, but may on consideration of their positions wish to maintain some defence in the nature of alteration of position, which could conceivably be based on plans or commitments of funds or other changes of position even though funds have not actually been expended. On the developing law of change of position see Gertsch v Atsas [1999] NSWSC 898 and note by J. Molomby at (2000) 74 ALJ 224. Claims for repayment could be complex. The payments were, it seems to me, clearly made in breach of trust, and also in breach of fiduciary duty as bank signatories. The payments were received without consideration, but also without any indication that there had been breaches of trust or of fiduciary duty: the circumstances were not such as to prompt inquiry, and Messrs Fulham and Kelly actually were trustees of an association which, depending on its own internal workings, could well be distributing funds. If charities spent the money straight away, or paid it off debts in transactions which could not be reversed, that was within what they were entitled to do, according to every indication to them. There is nothing in the conduct of Recipients which could be impeached; on the other hand, they received the payments without consideration. Either on a claim for repayment or a claim against assets there could well be much to debate.

26 While I cannot see fully what would be involved, it is my view that attempts to recover the amounts distributed, although they may be simple and successful in the cases of some of the charities, may also involve fairly elaborate disputes, and in some cases litigation, to establish entitlement to recovery. It cannot be clearly or confidently predicted that recovery will be simple, or will be effective in every case; the outcomes may well be various, and some Recipients may not be able to comply with any court order. Where moneys donated have been set aside in some specific fund and can be identified there is also room for claims based on equitable ownership or equitable charges over the fund, irrespective of the personal liability of the donee. The judgment of the Court of Appeal in In Re Diplock; Diplock v Wintle [1948] 1 Ch 465 illustrates how complex arguments of that kind can become, and also their susceptibility to various outcomes depending on the circumstances of each donee. The development of the law relating to unjust enrichment since Re Diplock was decided can be expected to add to the complexities of such disputes.

27 I do not regard it as part of the function of the Court in considering the application for a cy pres scheme to decide whether any particular donee is obliged to make any payment or holds property subject to any equitable interest, or to make any order giving effect to any such right. If claims of that kind are to be made they will be made by the trustees or new trustees of the Charity, and dealt with case by case according to the responses and defences raised. I cannot perceive what the outcomes would be; in some cases recovery would be effected fairly readily, but there could well be complex disputes and even litigation.

28 When the Trust was formed in 1940 the Charitable Collections Act 1934 was in force. The effect of its provisions was that it was unlawful to make an appeal for support of a charity, which included taking any collection and inviting donations of money, except on some conditions which included that the charity was registered under that Act or exempted from registration. The Chief Secretary (who administered that Act) exercised control over the objects and rules of registered charities, including control over amendments to their rules. This continued until the Charitable Collections Act was repealed and replaced by the Charitable Fundraising Act 1991, which commenced on 1 September 1993 and did not put the Chief Secretary in the same position of control over the rules of charities.

29 The cardinal provision of the Charitable Collections Act 1934 was the provision in s 3 to the effect that “It shall not be lawful for any person to make any appeal for support of any charity unless…” (and stated conditions including registration which were to be fulfilled). Subsection 5(1)(g), which commenced on 25 November 1941, required a proposed alteration of the constitution of a charity to be notified to the Chief Secretary, whose approval was, by s.5B(2), essential if the alteration was to be effective. Section 5(1)(g) and s.5B did not confer power to alter the constitution of a charity, and did not confer validity on an alteration when the Minister signified his approval unless the alteration was otherwise valid. When the Hall Trust was formed in 1941 it was essential to comply with s 3 and obtain registration, as the object was stated to be raising funds, which would have been unlawful without registration. Registration or absence of registration had no other effect on whether the objects were charitable; registration by the Chief Secretary could not confer validity on an otherwise invalid or doubtful purported charitable trust. The same should be said of later amendments. The Chief Secretary’s attention is unlikely to have gone to the effect of changes in the rules on the trusts on which property was already held; the focus of the Chief Secretary’s attention was or should have been whether, with the rules in the proposed amended state, the Hall Trust would be a suitable body to be registered and hence should in the public interest be permitted to collect funds.

30 The first event in the history of the Charity of which evidence speaks is that a letter was written, on printed letterhead bearing the name of the Hall Trust, by its Honorary Secretary Mr P G Knill to The Chief Secretary’s Department on 28 December 1940. The letter said among other things:

“the Leichhardt-Lilyfield Sub-Branch of the Returned Soldiers has formed a Memorial Hall Building Trust”

and

“it is their wish that they be registered…for the purpose of raising funds…so that they can erect a Memorial Hall on the land they are purchasing in Short Street, Leichhardt.”

Charitable Collections Act

31 The rules proposed in December 1940 but not approved by the Chief Secretary stated the objects of the Hall Trust to the following effect:

“To raise funds to purchase land and erect a building or buildings thereon, in Short Street, Leichhardt, to be known as…Memorial Hall, and to administer the affairs of the said premises and trust generally…”

32 The name of the Hall Trust was Leichhardt-Lilyfield Returned Sailors, Soldiers and Airmen’s Memorial Hall Building Trust. This name tells much about its objects, and everything in the 1941 Constitution should be understood in the context of the name. The 1941 Constitution opened by stating that the rules were adopted at a meeting of the Trust:

“…held in the rooms of the Trust in Short Street, Leichhardt, on Saturday, the 1st day of March, 1941….”

OBJECTS

(2) The objects of the Charity shall be for the purpose of raising Funds to be used in the erection of a Memorial Hall on the property situated in Short Street, Leichhardt.”

33 Rule 3 provided for membership:

MEMBERSHIP

(3) All Returned Sailors, Soldiers and Airmen and residents in the locality who are interested in the furtherance of the purpose of the charity shall be eligible for membership.”

34 In the 1941 Constitution there are several internal references to the Hall Trust as “the Charity”. The final clause 13 was as follows:

DISSOLUTION

13 The Charity shall be dissolved in the event of the membership being less than three persons or upon the vote of a three-fourths majority of the members present at a Special Meeting convened to consider such question. Upon dissolution assets and funds on hand may, after payment of all expenses and liabilities, be handed over to such registered or exempted Charity or Charities as a majority of the Members present at a General Meeting may decide.”

35 While the 1941 Constitution was in effect a parcel of land in Short Street, referred to as Trust Land 2, was transferred from T A Field Pty Limited to Mr Dabinett and eight other persons who must be taken to have been trustees of the Hall Trust, by Transfer registered on 16 September 1942. This is not the land which was available to the Trust in 1940 but a contiguous parcel purchased from T A Field Pty Limited; there may have been some element of donation in the price although this is not clear.

36 In 1940 the registered proprietor of Trust Land 1 was Edward Henry Bartley, who had been its registered proprietor since 1927. Mr Bartley remained the registered proprietor until Trust Land 1 was transferred by Mr Bartley to Mr Cummings and nine other persons, who must have been trustees of the Hall Trust, by Transfer dated 6 May 1949 and registered on 31 August 1949. No circumstances in evidence explain the interval between purchase in 1940 and transfer in 1949; perhaps the land was purchased on terms which required payment of the price by instalments or perhaps there were delays for other reasons; the circumstances are not known. Trust Land 1 was spoken of as purchased and was available to the Trust from 1940 onwards, and the date of the Transfer should not be regarded as the date of its acquisition.

37 The Hall Trust adopted another constitution at a General Meeting on 26 June 1944, held at 38 Short Street. This constitution was approved by the Chief Secretary’s Department. The June 1944 Constitution contains this objects clause:

38 The June 1944 Constitution provided for twelve members to act as trustees and for executive officers of the Leichhardt-Lilyfield Sub-Branch (that is to say, of the RSL) to be officers of the Hall Trust. The rules also provided:

“Upon ‘The Trust’ becoming defunct through effluxion of time, the buildings, land and all assets to become the property of the St. John Ambulance, Leichhardt Branch.”

39 The June 1944 Constitution had objects which were different to those of 1941 Constitution. The significant differences were the specific reference to acquiring land and/or properties, indicating that more land might be acquired, and the fuller specification of the use of the building. I do not regard this as a significant limitation of the use to which the previous objects contemplated that the hall would be put; use of the memorial hall for returned service men was on a fair reading a use contemplated by the 1941 Constitution, having regard to the name of the Trust and its membership. The June 1944 Constitution did not contain any provision relating to disposing of land by sale lease or otherwise, and did not contain any provision authorising its own amendment. It was amended in September 1944 in ways which included adding a rule which empowered amendments by a General Meeting or Special Meeting convened for that purpose, and there were other amendments, either in 1944 or possibly in 1947, including one which included leasing the building or buildings when acquired or erected among the objects. These amendments also appear to have been approved by the Chief Secretary.

40 There was a further amendment in 1955 when a document headed “Constitution or Rule” was adopted and approved by the Chief Secretary’s Department. In this document the objects were:

OBJECTS

DISSOLUTION

41 In 1962 another constitution adopted in 1961 was approved by the Chief Secretary. The objects clause was the same as in the 1955 Constitution. The significant change related to membership:

MEMBERSHIP

Trustee Act 1925

42 The objects in the 1955 and 1962 Constitutions were different in the letter from the objects in the 1941 Constitution, largely because the 1955 and 1962 objects spelt out in detail matters which should reasonably be implied as objects of the Hall Trust on a whole view of the 1941 Constitution, which spoke of objects in terms of raising money but plainly contemplated long-term continuing use of a building which was to be erected, in a context which showed that the building was to be used by returned men.

43 While affairs were being conducted under the 1962 Constitution the Hall Trust acquired more land in Short Street, referred to as Trust Land 3, by transfer from Mr G K Culmane and Mr G R Rex who appear to have been executors of the previous registered proprietor. On the probabilities, this land was purchased by the Hall Trust.

44 Mr E L Jones, who is the fourth defendant, became secretary of the Hall Trust in or by January 1989. The rules were amended on 28 January 1989 to change eligibility for membership. New Rule 3 was:

“Any returned ex-service person member of the Leichhardt Lilyfield, RSS & AILA sub Branch, shall be eligible for membership of ‘The Trust’”

45 The rules were again amended on 17 August 1991 when the word “primarily” was deleted from the objects. This amendment was approved by the Chief Secretary’s Department.

46 With the repeal of the Charitable Collections Act 1934 on 1 September 1993 there was no longer any need to obtain the approval of the Chief Secretary for amendments. Over the following years there were several occasions when possible amendment was considered. In 1994 further amendment of the constitution was discussed at meetings of the Trust; the subject seems to have come before five meetings or Special Meetings of the Trust in 1994 and an extraordinary meeting of members in August 1995, but although it is said in evidence that on 23 November 1994 a Special Meeting resolved to approve amendments to the constitution, there is no sign that affairs were conducted on the basis that there was then an amendment. A new constitution was adopted by a Special Meeting of members on 21 May 1998. By the May 1998 Constitution the name of the Trust was changed to “The Leichhardt-Lilyfield Ex-Service Memorial Trust.” The objects were:

“2. To serve primarily to assist ex-service persons in need and to make donations to reputable charities and such appeals made nationally in regard to national disasters in accordance with charitable collection.”

“3. Any ex-service person shall be eligible for membership of the ‘Trust’. Trustees shall have the power to appoint members who qualify as, as members of the ‘Trust’ on the direction of the committee.”

47 By clause 4 there were to be three trustees, and provision was made for new trustees on death, resignation or removal to be nominated by the committee and appointed by the president under s 6 of the Trustee Act 1925. Provision for dissolution was as follows:

“14. The ‘Trust’ shall be dissolved in the event upon the vote of a two thirds (2/3) majority of the members present at a Special Meeting convened to consider such a question. Upon dissolution of the ‘Trust’, assets and funds of the ‘Trust’, after payment of all expenses and liabilities, then the remaining assets and funds of the Leichhardt-Lilyfield Ex-Service Memorial Trust shall be handed over to some registered or exempted charity or charities as a majority of the members present shall decide.”

48 There was a further and to date last amendment on 16 December 1998 which modified the objects clause so as to provide for donations to appeals made in New South Wales and not nationally. The amendment provided for four trustees and not three as previously.

49 It is necessary that the Court be satisfied that the trust for which it is to order a cy pres scheme was validly constituted as a charitable trust. None of the many parties to the proceedings contended that the Charity is not a valid charitable trust, and it would not be possible to identify the persons or classes or persons who would have any interest in the property if it were established that it is not, because the property was acquired through transactions, probably largely donations of money, which occurred many decades ago and are no longer recorded. The identities and amounts of gifts and the circumstances in which they were made are now beyond all practical ascertainment. At all times the rules of the Hall Trust have provided for the property to go to some other charities or persons on dissolution, so that persons who made gifts should be understood as having intended to part with their gifts out and out, without reversion to donors in the case of failure. The only potential claimant whom I can see is the Crown, which would be entitled if the property became bona vacantia, and the Crown makes no such claim but seeks a remedy in which the validity of the charitable trust is assumed. It is still necessary for me to state reasons for treating the Charity as valid.

50 The question whether the objects in the 1941 Constitution were charitable depends upon the general law relating to charities, and judicial decisions establish that a trust for a memorial hall or public hall is a charitable trust within the fourth class of charities in Income Tax Special Purposes Commissioners v Pemsel [1891] AC 531 at 583, being a trust for an object for the advantage of the public. In Murray v Thomas [1937] 4 All ER 545 Clauson J accepted that the object of providing a memorial hall for use in two villages was charitable. See too In Re Spence; Barclays Bank Ltd v Stockton-on-Tees Corporation [1938] Ch 96 at 100-105. The High Court of Australia accepted that a hall or theatre to provide concerts for citizens of Launceston was a charitable object in Monds v Stackhouse (1948) 77 CLR 232. Although it should be taken that the hall was to be available for members of the Hall Trust the qualifications for membership in the 1941 Constitution are sufficiently wide to be a section of the public or an appreciably important class of the community, and should not be classed as a fluctuating body of private individuals. “All returned sailors, soldiers and airmen” points to a class closely similar to that which was held to be a class of the community in Verge v Somerville [1924] AC 496 at 506 (PC) and if there were otherwise room for doubt their cumulation with “residents in the locality who are interested in the purpose of the [furtherance] of the charity” would put the matter beyond doubt. On returned soldiers and their dependants as a section of the public see too Barby v Perpetual Trustee Co Ltd (1937) 58 CLR 316.

51 Trusts which provide benefits for members of armed services, or former members of armed services, or their dependants, are also upheld, irrespective of whether they act to relieve poverty, sickness or age, apparently because they encourage participation in armed service with consequent benefit to the community. A repatriation fund was treated as a valid charitable gift by the Privy Council in Verge v Somerville at 506, evidently on this principle; and the principle was stated more fully in the judgment of P W Street CJ in Eq at first instance; Somerville v Attorney General for the Commonwealth of Australia (1921) 21 SR (NSW) 450 at 461- 462. In Williams v Attorney-General (1948) 48 SR (NSW) 505 Sugerman J accepted (and it was not contested) that the purpose of providing comforts for members of the Australian Imperial Forces was a charitable purpose. A memorial hall for use by returned service persons should in my opinion be also be regarded as charitable. The objects adopted in 1944 of providing recreation and meeting rooms for returned men, and the similar objects with relatively small variations through several later amendments until and including 1991 are also clearly charitable and depart very little from the original objects, while the two forms of objects adopted in 1991 are both plainly charitable.

52 There is a profusion of available possible objects in these many constitutions, and although they do not vary greatly, it is necessary to decide which objects have effect in order to address in a clear way the question whether the objects have become impossible to attain or have ceased to be suitable and effective and to discern the spirit of the Charity which should be given effect in any scheme. The 1941 Constitution was in effect when Trust Land 1 and Trust Land 2 were acquired; or in the case of Trust Land 1, which appears to have been acquired earlier, that constitution is the best evidence available of the intentions of those who acquired it about the terms of the Trust to which it was to be subject. The objects clause speaks in terms of raising funds, but the land originally purchased and other land purchased with funds so raised must be understood to be impressed with the same trust as the funds.

53 The Hall Trust was and is a voluntary association and the members may end their association whenever they decide to do so, and they may continue their association in whatever form they agree. In particular they may amend the rules of their association, if all or all who continue in association agree to the amendment; and this is so whether or not there is a power of amendment in their rules. However it is not open to them to alter the terms of any charitable trust to which trust property has become subject if the document which records the objects does not contain a power of amendment; and if there is a power of amendment, it must extend to amending the objects of the charitable trust. The decision in Free Church of Scotland v Overtoun; Macalister v Young [1904] AC 515 is a powerful illustration of the inability of a majority, short of unanimity, to alter the trusts upon which the property of a voluntary association is held, unless there is power which extends to altering the trusts: see Attorney General (NSW); Ex rel MacLeod v Grant (1976) 135 CLR 587 at 603 and 605 (Gibbs J.). After Trust Land 1 and Trust Land 2 had been impressed with the charitable trusts expressed in the 1941 Constitution it was not possible for the members, even unanimously, to alter those trusts by agreement among themselves, as those rules did not provide for amendment of the charitable objects, or for any other amendment. Land was held on trust for the objects stated in the rules which existed when it was acquired; it was not held on trust for the objects stated in the rules of the Hall Trust whatever they may become. In my opinion then Trust Land 1 and Trust Land 2 always remained subject to a charitable trust for the objects which appear from the 1941 Constitution, and those objects were not altered when the constitution of the Hall Trust was altered from time to time.

54 The instrument creating a charitable trust may, in concept, confer power on some person to alter the charitable trust. It would not be enough that the rules of a voluntary association which conducted a charitable trust contained a power to amend the rules; the power must extend to alteration of the charitable trust, and it would be a question of construction of the rules to ascertain whether the power extended so far. It would also be for consideration whether some purported alteration fell within the power; there may be limits relating to the purposes for which the power may be exercised, or limits to the nature of the amendment authorised, arising from the limits, wide as they are, to the concept of an amendment or in some other way from limits in the terms in which the power was created. It was contended by senior counsel for RSL Welfare that the amendment adopting the objects in the 1998 Constitution was ineffective because it went beyond the concept of amendment authorised by rule 7 of the 1962 Constitution, which had not been affected by intervening amendments. The submission was that the 1998 amendment went beyond amending the rules, to the extent of being an abandonment of the previous objects and a re-foundation of the Charitable Trust. The force of this submission is that the change in the objects was radical, departed from the elements of building a hall, holding land, conducting activities in Short Street Leichhardt and providing a memorial which until then had been central. This submission would only affect Trust Land 3, as Trust Land 1 and 2 were acquired under the 1941 Constitution which did not contain any power of amendment. While I find this submission attractive I will not come to a conclusion on it because of the impossibility in the circumstances of attaining the objects whichever version of the objects actually has effect for Trust Land 3.

55 The charitable trust created in 1941 did not confer power to sell the property on the Hall Trust; the only object in contemplation related to use of land in Short Street as a memorial hall. There were no trustees and no powers of trustees under the 1941 Constitution. Apart from an implied power to expend money for purposes incidental to the charitable objects, that constitution did not authorize distribution of funds by making donations to other charities, whether the funds were raised by sale of property or in any other way. It authorized distribution of funds to other charities in the case of dissolution of the Hall Trust, which was to happen on the membership falling below three persons or on the vote of a three-fourths majority of members at a Special Meeting; but there has never been any dissolution in accordance with rule 13 or in any other way, and accordingly nobody, whether Messrs Fulham and Kelly or anyone else, has ever had lawful authority to sell land, convert land into funds, or to distribute funds.

56 Trust Land 3 was acquired in 1969 when Hall Trust affairs were being conducted under the 1962 Constitution with the objects in that constitution. Those objects did not differ much in principle from the objects of 1941 except that they referred specifically to acquiring land and properties, rather than leaving that to implication, and they contained a specific object which included dealing with property including transferring buildings and dealing generally with land. There was a different dissolution clause, but as there has never been a dissolution this is not of importance. If the 1962 Constitution established the terms of the trusts of Trust Land 3, it certainly did not authorize Messrs Fulham and Kelly, or three trustees, to sell property without the authority of the members, and did not authorize Messrs Fulham and Kelly to distribute funds. It was argued before me that Trust Land 3 should be taken to be an accretion to the land already held on the trusts of the 1941 Constitution, and that I should infer that it was intended that it should be held on the same trusts. While this argument has considerable force I am inclined to think that the better view is that the persons controlling affairs in 1969 probably intended that land which they then acquired would be held on trusts established by the then current constitution, which had been in effect for seven years and under which any available funds had probably been raised. That is to say, for Trust Land 3, the objects of charitable trust upon which it was acquired and the spirit of the trust are to be ascertained from the 1962 Constitution. Notwithstanding that Trust Land 3 was contiguous with Trust Land 1 and 2, and that the three were later developed by building one club building on them, I do not think that it is correct to regard Trust Land 3 as an accretion to the land earlier held, and I do not regard authorities which incidentally refer to trusts to carry out improvements to existing buildings which were already the subject of other charitable trusts of any assistance.

57 The evidence does not give an account of the buildings (whatever they were) which were on the three parcels of land when acquired, or of any hall or other structure later erected on those parcels of land before 1986. Leasing the land to the Club was a practical means of realizing the objects, as premises which were simply a meeting hall and no more could not be expected to be used with much intensity, whereas a club with its facilities, refreshments and amusements could be expected to be effective as a place of resort. It was asserted in correspondence in 1989 that the Club had erected very substantial club buildings over a period of about 40 years, that is from about 1949 on. Matter of detail relating to the land and improvements on it begins to be discernible in 1971 when the Club was incorporated. The Club probably existed and used the Hall Trust land as an unincorporated body for many years before 1971, and when incorporated continued to do so on some basis which is not clearly established in which rent was paid to the Hall Trust for the land and a meeting room was made available for the Hall Trust. Construction of a new clubhouse commenced in 1986 and was completed by 1990. It is said to have cost approximately $1,841,000. The affairs of the Hall Trust and the Club were conducted on the basis that the Club held a tenancy of the premises from the Hall Trust and paid rent. For a long time the rent was only at a very modest rate, and no written lease was granted until February 1996. As well as paying a very modest rent, the Club provided services and assistance to ex-servicemen, including some services on occasions when membership of the Club was not treated as necessary for attendance, and the Club made some donations of money to the Sub-Branch, and provided a room free of charge for use by the Hall Trust for its meetings and also for the Sub-Branch.

58 Mr Kelly, Mr Fulham (the first and second defendants) and Mr Ronald Hugh Wells were appointed trustees by a deed dated 19 November 1988 which was registered in the General Register of Deeds and took effect according to s 6 of the Trustee Act 1925. Their appointment appears to have taken place in accordance with the then current constitution of the Trust. In May 1989 Messrs Fulham Kelly and Wells became the registered proprietors of the land.

59 The May 1998 Constitution provided for three trustees. When it was adopted there were three trustees namely Mr Fulham, Mr Kelly and Mr Wells. At a meeting on 25 September 1998 Mr Wells’ resignation was accepted and Mr Jones and Mr Flaherty were elected additional trustees; so the members appeared to have given their authority for there to be four trustees, and this apparent authority was acted on by a Deed of Appointment of new trustees on 11 December 1998. However it was not until 16 December 1998 that the constitution which allowed for four trustees was adopted. The deed has not been registered as the terms of s 6 of the Trustee Act 1925 require and hence the appointment is not effective: Retravision (NSW) Ltd v Copeland (Young J 8 October 1997 unreported). So far as appears the Deed was not registered by 27 April 2002 when the membership appointed another three persons as trustees. Even if the deed had been registered its effectiveness would be doubtful as it purported to give effect to an appointment of four trustees by the members at a time when the constitution only provided for three. In fact Mr Fulham and Mr Kelly continued to act as if they were the only continuing trustees; they did not explain their reasons but it seems that they may well have been right. If indeed they were the only trustees, that fact did not confer on them authority to do what they did.

60 Meetings of the members considered the sale of the land. On 23 December 1999 there was a unanimous decision of the members to sell the premises to the Balmain Leagues Club. However this sale did not take place and the Leagues Club withdrew from negotiations in January 2000. Otherwise there was never any decision by the members to sell the premises, and the auction sale which was in fact conducted on 16 March 2000 took place without members’ agreement. Later a meeting of members ratified the sale. Part of the land was transferred to the purchaser Idameneo (No 123) Pty Ltd in April 2000 and the remaining part was transferred on 3 November 2000.

61 An Extraordinary General Meeting of the Trust, convened by Mr Kelly, was held on 29 July 2000 and a motion proposed by Mr Kelly for the dissolution of the society and distribution of its assets was defeated. At this time it appears that there were eight members. Attempts were made to convene meetings for various dates in August 2000, but no meeting took place. Then on 27 March 2001 Messrs Fulham and Kelly sent letters to members circulating a list headed “The Wish List”, which set out names of charities to which they intended to distribute the funds of the Hall Trust. There are considerably more names on the list than there later were actual Recipients of funds. The amounts intended to be distributed to particular charities were not stated. Their letter said they proposed to proceed to distribution on 29 March 2001 in the absence of a Court order to the contrary.

62 By circulating these letters and forming the intention to distribute funds, not in accordance with any decision of members, and not after any dissolution, but in accordance with their own wishes, Messrs Fulham and Kelly departed from any kind of regularity in the conduct of affairs and in dealing with the assets. Under none of the many constitutions could assets be distributed to other charities without there first having been a dissolution; and there had not been one; and on no possible view of the powers of trustees were they in a position to effect a distribution without acting in accordance with a decision of members. Messrs Kelly and Fulham acted as if they were authorized to conduct all Hall Trust affairs; whereas they plainly were not, and they had not been able to obtain the approval of members for various projects, and they had not acted in accordance with a clear decision for the appointment of two other persons as trustees with them.

63 When Mr Jones received his copy of the letter of 27 March 2001 he spoke to Mr Cantrill of the Crown Solicitor’s Office, to whom he had earlier given some information about Hall Trust affairs. Mr Cantrill contacted Mr Fulham who in a conversation gave Mr Cantrill an undertaking that moneys would not be dispersed. Mr Tudehope, solicitor, also on 30 March gave Mr Cantrill an assurance that Mr Tudehope would ask Mr Fulham not to pay out any money, and Mr Tudehope by letter of 12 April 2001 told Mr Cantrill that Mr Fulham and Mr Kelly, in accordance with an undertaking, had not made any distribution pending further discussions with the Crown Solicitor’s Office. Notwithstanding these events Messrs Fulham and Kelly directed the bank to draw cheques in favour of a number of payees specified by them; the cheques were drawn various dates, 4, 15 and 25 May 2001 and distributed by them to the various Recipients. This happened in disregard of Mr Fulham’s assurance to Mr Cantrill and of the undertaking confirmed by Mr Tudehope, without giving any information to Mr Jones, and at a time when it must have been fully known that authority to act in this way was under challenge and investigation.

64 On 7 June 2001 Mr Tudehope informed the Crown Solicitor’s Office that he no longer held instructions and that the Crown Solicitor should deal with Mr Fulham; when the Crown Solicitor’s officer Ms Barbaro telephoned Mr Fulham the following day he told her that the money had all been given away. Mr Jones was a signatory on the bank account, although it appears that two signatures were enough and that Mr Fulham and Mr Kelly could act without him. He attended the bank and attempted to stop the cheques, but as they were bank cheques, and had already been issued in accordance with signature instructions held by the bank, he was unable to stop them. It is said however that $63,513.20 is now held in an account for the Hall Trust, in a different bank.

65 Behind these events is a history of involvement of the Hall Trust in disputes and conflict extending back for about ten years before the sale. The Hall Trust resolved in a decision minuted on 21 October 1989 to take action to recover possession from the Club and then in 1990 commenced proceedings for ejectment against the Club. The proceedings were slow to progress and the responses to it appear to have included adverse action within the Sub-Branch against RSL membership of the Hall trustees. The litigation produced an agreement which was the outcome of a mediation conducted on 27 October 1992; but there was no real resolution of conflict. Difficulties developed in the use of the meeting room in the Club premises and Mr Fulham adopted the practice of holding meetings in his own home because (as he said) the room in the Club premises was bugged. In 1993 Mr Fulham maintained that the trustees were entitled to sell the premises and that they would set events in motion for the sale of the premises. The trustees in fact retained selling agents in June 1993, and soon afterwards the members of the Hall Trust decided to refuse to negotiate with the Club, and to give Notice to Quit.

66 Later in 1993 the Club commenced proceedings in the Equity Division claiming, in various forms, an equitable interest or entitlement to be granted some interest, leasehold or freehold, in the land or charge over it. There were various events of conflict and skirmish over occupation of the meeting room in the premises, including challenge to its being used by the Sub-Branch, a tussle over changing the lock to the room and a challenge, in a letter written by solicitors on behalf of the Hall Trust, to the Club’s allowing the Sub-Branch to use the room which met a response in which the Sub-Branch challenged Mr Fulham’s membership on the ground of conduct unbecoming a gentleman or a member. The Equity proceedings were heard before Mr Justice Young on 14 August 1995 and his Honour’s judgment of 23 August 1995 had the effect of establishing that the only entitlement of the Club to the land was an entitlement to a further lease of 2 years to commence on 1 January 1996 at a commercial rent determined at $199,750 per annum. A lease was accordingly granted to the Club on 10 February 1996, but its effect was that at the end of 1997 the Club lost all entitlement to occupation of the Club premises and had no asset to represent its expenditure on the improvements. However occupation by the Club continued for some time, under arrangements which appear to have been made by the then trustees, until the Club passed into administration, then into liquidation and its liquidators gave up possession.

67 An illustration of the state of internal conflict in the Hall Trust is that at a meeting on 4 December 1999 Mr Fulham, seconded by Mr Flaherty moved to dismiss Mr Jones as a trustee: this motion failed. A tape recording was made of proceedings at this meeting, but the tape and what it recorded were not available to members. Mr Jones in a stream of correspondence sought to obtain information about the tape recording, and about the terms of the auction sale including the price, observed that the sale was not in accordance with the members’ decision of 23 December 1999 and generally tried to exert his position as a person who had been appointed by the members as one of the trustees, without obtaining any significant response or recognition from Messrs Fulham and Kelly. After the auction the Hall Trust at a meeting of members called on or about one day’s notice passed a motion ratifying the sale. Mr Jones attempted to move for rescission but was unable to obtain co-operation in holding a meeting. A proposed dissolution was defeated at the Extraordinary General Meeting of 29 July 2000, and no resolved position for the conduct of Hall Trust affairs emerged. Various attempts to conduct the Annual General Meeting did not proceed and finally, on 19 August 2000, lapsed due to lack of a quorum. About August or September 2000 various members of the Trust sought to obtain the intervention of public authorities, including the Crown Solicitor and the Office of Charities of the Department of Gaming and Racing, which is the successor of the former Chief Secretary’s Department.

68 With these events it appears to me that there was a complete and unresolvable breakdown in the affairs of the Hall Trust. Its affairs have not been conducted in accordance with its constitution, there has been no co-operation among its trustees, and attempts to obtain decisions of members on significant matters, or to hold an Annual General Meeting were unsuccessful. The unauthorized distributions by Messrs Fulham and Kelly are the most drastic of a long series of events which taken together show clearly that the Hall Trust has ceased to be means by which the affairs of the Charity could be conducted. This is not an organization in the hands of which trust property could safely be left. The original project of building a memorial hall and, by inference, using it for the benefit of ex-service persons has run its course over the decades and has been completely exhausted, and the means available for using the premises, namely the conduct of an RSL Club in them, have become ineffective with the failure and liquidation of the Club. Then two of the trustees have without authority sold the land, banked the proceeds and put an end permanently and irretrievably to attaining the objects for which the Hall Trust was first formed, which were specifically related to land in Short Street and to use of the land as a memorial hall by ex-service persons. The trust has not even been able to achieve its own dissolution. After the Hall Trust has had such a great fall it cannot be put together again. No use is available to which the funds of the Trust could be applied to attain its objects. In these circumstances there is in my judgment a complete proof that the attainment of the objects of the Hall Trust had become impossible; and there is a complete demonstration that the Court should not allow money subject to a charitable trust to remain under the control of the Hall Trust.

69 In the presentation of the case on behalf of the third, seventh, eighth and ninth defendants, who are related to the continuing Hall Trust, it was contended that the Attorney General had failed to take action necessary to thwart Messrs Fulham and Kelly when it was known that there was a risk that they would act in the way they did, and that it was not appropriate for the Attorney General to attempt to impose on the Hall Trust a scheme which would have the effect of endorsing breaches of trust and depriving the Hall Trust of its opportunity to determine its own future, including whether there should be a dissolution and if so what the distribution should be. Their position can be fairly summarised as being that the Hall Trust with its present membership and the trustees who were appointed on 27 April 2002 should, with the assistance of the Court, be put back in control of the funds or so much as can be recovered, and left to pursue their course in accordance with the constitution of the Hall Trust. Counsel for these defendants told me that he was instructed that they did not intend to contest resistance to refunding donations by Recipients which maintained that they had immediately spent money on buying capital equipment, or where the new trustees form the view that there has been a genuine change of position.

70 I do not accept criticism made in these submissions of the conduct of affairs on behalf of the Attorney General by officers of the Crown Solicitor. When late in March 2001 Mr Jones made the terms of Messrs Fulham and Kelly’s letter to members with the enclosed “Wish List” known to Mr Cantrill, Mr Cantrill acted promptly, and obtained an assurance from Mr Fulham, reinforced soon thereafter by correspondence from a solicitor, which constituted reasonable grounds for acting on the basis that the distribution was no longer threatened or likely. Once it was known that it had been pointed out to Messrs Fulham and Kelly that what they were proposing to do was under challenge and assurances had been given by Mr Fulham and by a solicitor on their behalf, so that it was known that they had access to legal advice, the Attorney General and his officers cannot be reasonably be criticized for not taking some further steps such as urgently commencing litigation and seeking an injunction or the appointment of a receiver. In the face of undertakings not to make the distribution, it is unlikely that an immediate injunction would have been obtained. When it became known that the distribution had actually taken place the Crown Solicitor’s officer acted rapidly, sought undertakings from the Recipients, and obtained them in a majority of cases. The miscarriage of Hall Trust affairs and the distribution of its money cannot on any reasonable basis be laid at the door of the Attorney General. Intervention by the Crown as protector of charities is not the first resort; members of the Hall Trust, particularly those whom the members had appointed as trustees, were the persons with the first and best opportunity to foresee and prevent wrong dealings with its property, and the ordinary workings of the Hall Trust in accordance with its constitution had broken down many months earlier; while the possibility that two trustees who were authorised bank signatories and who were estranged from other members might act on their own should have been clear enough to other members.

71 Messrs Fulham and Kelly filed submitting appearances and did not defend the proceedings or explain their conduct. The primary liability for misapplying the funds falls on them, and one result of adopting the scheme proposed by the Attorney General will be that they will escape claims for restitution, a protection which they in no way deserve. They have not attempted to defend their conduct, and it is obvious that they acted in breach of trust and did not have regard to their responsibilities as trustees of charity money. It is very unlikely that they are in a financial position to make good the large sums of money which they have lost. They have made a complete wreckage of the Hall Trust and its affairs and it would be very unfortunate if they were ever given similar responsibilities again.

72 A significant shortcoming of the proposed scheme is that it confers success on their unauthorized conduct and could be interpreted as approving of it, although that would on any reasonable view be a misinterpretation. Counsel for Mr Jones described the scheme as sweeping the problem under the carpet. He contended that it would offer a very bad example and an encouragement to delinquent trustees if what they did was in fact ratified. To me it seems that there may be some tendency of this kind, although trustees who saw any encouragement in the circumstances would be very few and very foolish, particularly if they knew anything of the complexity of the controversy and litigation which followed. Only very rarely would this factor outweigh the aversion which trustees should have to incurring large financial obligations if they do not comply with their duties. Very few trustees would find any encouragement in the decision I am asked to make, or would feel that they could rely on being retrieved from ruin by a cy pres scheme. The focus of the Court’s attention is on the trust property and how it should be applied, and the impact on actual and potential defaulting trustees of any decision is an incidental matter. The evil example is unlikely to contribute to any further delinquent behaviour. If there had been any element of dishonest application of trust moneys I would not act so as to confer this incidental benefit on them; but there has not.

73 I see a number of significant disadvantages in the proposed cy pres scheme. There will be an entire defeat of the due workings of the affairs of the Hall Trust and the reasonable expectations of the persons involved that the Hall Trust would be administered according to its constitution and that members would have their due place in its affairs, with a proper opportunity to contribute to decisions relating to dissolution and distribution of its assets, and with due respect for their opinions and views and, it may be, recognition in society of their contribution. The cy pres scheme does not give the recognition which, in better circumstances, I would wish to give to the rights and expectations of other members of the Hall Trust. I do not disregard them, but their vindication is not the main focus of my attention.

74 One result which was achieved by the Charity was the presence in Short Street Leichhardt, visible for the community to see, of a building which kept up memory of the service and sacrifice overseas of members of the armed services, reinforced by activities conducted in the building. The distribution of funds in accordance with the cy pres scheme will not continue, with any of the same force, the function of the Hall Trust and its premises as a memorial. I was assured in the course of submissions by several Recipients of their intention to display plaques or otherwise memorialise the source of the benefaction; I welcome these assurances, but what they propose to do will not have the same force.

75 The distribution which the scheme would ratify will also have less effect than the pursuit of the objects formerly had to serve the interest and welfare of ex-service persons. The activities of one Recipient, Sydney Legacy, are well related to the interests and welfare of dependants of ex-service persons, others serve the interests and welfare of ex-service persons less directly, while all make contributions to the community which will benefit ex-service persons in the same way as the community generally. While the number of ex-service persons who served in world wars is now falling rapidly and those who remain are of advanced years, they still have needs and interests, and the balance of advantage towards their needs and interests is not as I would have chosen in better circumstances. Ex-Service persons who have served overseas in later conflicts continue to be numerous in the community. The balance is not redressed by the proposal to make the relatively small funds remaining a donation to the RSL Welfare Fund.

76 Another respect in which I find the proposed scheme less than satisfactory is that there is relatively little association between the charities to be benefited and the Leichhardt-Lilyfield District. Only St Columbas’ School represented by the twelfth defendant Father Bui has a strong local association.

77 The position of the fifth defendants, who are the trustees of the RSL Welfare and Benevolent Institution, was to the effect that there should be a cy pres scheme in a different form in which the Recipients who have given undertakings and are in a position to return moneys donated are required to return the funds and the funds available should be distributed to RSL Welfare. Counsel for RSL Welfare did not ask the Court to make any scheme or orders under which there would be attempts to pursue Recipients who have spent the funds available.

78 Essentially the position taken by RSL Welfare was that its claim as an ex-service welfare organization related to the RSL has overwhelming primacy for consideration in a cy pres scheme for the Hall Trust, and that this should be recognized as far as is practicable, but accepting the limit that there should not be compulsion against charities which had expended funds before they were informed that the funds had been misapplied. Counsel for RSL Welfare submitted that if there were disputes I should require them to be mediated. I was referred extensively to the connections between the Hall Trust and various organizations connected with the RSL, of which there are many throughout the history of the Hall Trust, and to indications, both in purpose and in application, of the relation between the Hall Trust and benefits to ex-service persons. At times these submissions were expressed in terms of a claim of right, as if the claim of RSL Welfare was so overwhelming that the Hall Trust property should be regarded as belonging to RSL Welfare. This was an excessive position.

79 There is no reference in the 1941 Constitution to the RSL or to any welfare fund associated with it as a possible recipient, on dissolution or in any other circumstances. There was a very strong association from the beginning between the Hall Trust and the RSL, its Sub-Branch and related bodies. The opening correspondence in evidence shows that forming the Hall Trust and acquiring Trust Land 1 were initiatives taken by the Sub-Branch. In some later versions of the constitution the RSL or related bodies had prominent places, including provisions which at one time made officers of the Sub-Branch officers of the Hall Trust, and provisions which restricted membership by reference to the membership of or approval by bodies related to the RSL. There was also strong association in the prominent place which the RSL has had, throughout the life of the Hall Trust and before, in advancing the interests of ex-service persons. The association with the Club was particularly strong. The Club occupied the Hall Trust land for many years, paid rent which for many years was nominal, and provided the Hall Trust with meeting rooms; and when the Hall Trust had significant disputes and litigation the Club was its opponent. All these things give RSL Welfare a strong claim for consideration but they do no more than that and do not establish that giving the property to RSL Welfare will carry out the objects of the charitable trust as nearly as possible in the same way as was originally provided for.

80 The Hall Trust had strong associations with the Leichhardt-Lilyfield District, and of benefits to ex-service persons and other inhabitants of that District, which would not be continued if the available property were given to RSL Welfare, and the element of a memorial of overseas service would only be faintly echoed. In the 1941 Constitution provision for distribution on dissolution did not include any RSL charity and was not particularly directed to ex-service charities. While I do not think that a cy pres scheme ought to be modelled on any version of the dissolution clause, the cy pres scheme proposed by the plaintiff does not appear to me to depart from the spirit of the trust in so far as the 1941 dissolution clause is an expression of it. It was submitted that if the funds were properly administered on dissolution they would all be paid to the RSL under clause 14 of the 1962 Constitution. In my view the amendment which adopted clause 14 is of doubtful validity because it went beyond the alteration of an earlier clause relating to disposition of property to charities and operated instead to bar disposition on dissolution to any charity. In any event there has been no dissolution and no rights have arisen under clause 14.

81 In my view RSL Welfare has a strong claim for consideration when deciding what scheme should be adopted, but not an exclusive claim, and not a claim of such strength as to exclude considerations of practicality. Counsel for RSL Welfare submitted that it would not be proper to visit the consequences of yielding to the practicalities on RSL Welfare. This submission was formed on a basis of assumed entitlement which was not justified. Any entitlement of RSL Welfare would begin when favourable consideration by the Court brought RSL Welfare within the dispositions under a scheme, and there is no correct view in which any property which passes to another charity is lost to RSL Welfare.

82 One effect of what RSL Welfare proposes would be to produce an apparent inequity or unfairness among the Recipients; some would be called on, by calls which they may have grounds to resist, to refund moneys which they have kept available while others will not be called on or can be expected to have much stronger grounds for resistance merely because of the time at which they disposed of the money donated. The unfairness would, in my opinion, be more apparent than real, as all benefited from donations and none had a claim of right, the principle of selection by Mr Fulham and Mr Kelly was unauthorised and all but random, being rather fewer than the “Wish List” which they had composed, and the property when recovered from the Recipients would again be applied for charitable purposes. I do not regard apparent unfairness or inequity among Recipients as a significant matter.

83 In deciding what cy pres scheme to adopt I feel that I must yield to claims of practicability and expediency. I should avoid any decision which would produce or might tend to produce disputation over the recovery of donations, and avoid the attendant close examination of entitlements against Mr Fulham, Mr Kelly and (to the extent that they are insufficient) against Recipients, and I should in practicality avoid examination of the circumstances of particular Recipients to ascertain their obligation to make a repayment and their capacity to do so. If I set processes like those going I would be fairly certain to generate expense, delay, bad feeling and litigation, with diversion of energy and diminution of resources away from attainment of charitable objects; whereas under the plaintiff’s scheme the funds pass immediately to worthy charitable objects. If the funds were left under the control of the Hall Trust, disputes and litigation would in my view be a fair certainty, and would continue the Hall Trust’s long history of engagement in such troubles. Claims of practicality appear to me to require a course which will bring the unhappy history of the Hall Trust to a relatively early close with its funds in the hands of worthy charities.

84 Although there are a number of factors against my adopting the scheme in the terms put forward, and against my appearing to approve or ratify the misconduct of Messrs Fulham and Kelly, the strong claims of practicality induce me to adopt the Attorney General’s proposed scheme. I am in a conflict between purity and practicality. It would not be open to me to adopt the course of simply gathering together those of the gifts which can readily be recovered; if I am to opt for purity, its pursuit ought to be complete. When I consider whether I should embark the trust property on a course in which it is collected together, Messrs Fulham and Kelly’s resources are exhausted to compensate for their breaches of trust and the Recipients are pursued for whatever they may be obliged to repay of the balance, I find the sheer complexity and difficulty of that course very striking. If I adopted that course I would embark the trustees (whoever they are to be) responsible for the giving effect to it into a large and complex course of disputes, claims and probably of litigation, with the probability of complexity, delay and large expense.

85 Close analogy is of no assistance in formulating a cy pres scheme. It is not feasible to require the trust moneys to be applied to building another meeting hall for returned men, in Leichhardt or anywhere else; the passage of time and other social changes have ended the epoch when a project of that kind could have any vitality. No party has suggested that any such thing should be attempted. Attempts to follow the spirit of the Hall Trust in formulating a scheme must produce some scheme with objects which do not resemble the original purpose.

86 Once the charitable objects in the 1941 Constitution became impossible with the passing of the need for the hall and the disposition of the land, the indications available in the terms of the 1941 rules for the spirit of the charitable trust are very general; apart from the provision of a hall which had become impracticable, the dissolution clause shows contemplation that any registered or exempted charity selected by a majority of members is within the spirit of the Trust; the legislation to which the words “registered or exempted” alluded has been repealed, and the spirit of the Trust extends to any charity to which the public might donate funds.

87 I have given some consideration to whether I should direct that some part of the funds should be set aside and used for the maintenance of War Memorials, and I take notice that there are a significant number of War Memorials in the Leichhardt District, in public places and also in public buildings and schools, and there is a need to make funds available for expenditure from time to time on refurbishment and maintenance of these memorials. I have not however been able to find and I have not been referred to any authority in Australian law or in English law for treating a trust for the provision of a War Memorial, or any other memorial as a charitable trust. Judicial opinion positively supporting trusts for memorials relates to memorials which are otherwise of public utility such as public halls, or are aids to worship in churches. A dictum of Clauson J in Murray v Thomas [1937] 4 All ER 545 at 550B-D faintly supports the erection of a memorial in the nature of a cross as of itself a charitable purpose, but his Lordship did not cite authority or express a concluded view, and spoke in England where the establishment of religion may affect the concept of the public utility of erection of a cross. Cases referred to in Scott and Fratcher “The Law of Trusts” 4th Edition Volume IVA para 374.9 note 9 show that some courts in American States have gone further. Counsel for the plaintiff submitted that it was open to me to take the view that the provision of a War Memorial is a work of public utility and falls within the fourth class in Pemsel’s case; I do not think that that is at all clear, provision of a memorial may well fall outside the relevant concept of public benefit, and it would not be appropriate for me to include a provision the lawfulness of which was doubtful in a scheme ordered by the Court. I express the hope that the Recipients will find some means of commemorating the gift and its relation to the trust for a memorial hall, but I do not intend to impose any controls on what they do.

88 By acting in this way I will produce some effects which I regret and would prefer to avoid. One is that the memorial element of the Hall Trust will all but disappear. Another is that less of the Charity’s assets than I would wish to see will be applied to charities with objects specifically related to ex-service persons and their dependants. Another is that I would wish to see a greater relationship between the charitable purposes to which the funds are applied and the Leichhardt-Lilyfield District. Another disadvantage, which I recognize although it weighs less heavily with me, is that the members of the Hall Trust will be disappointed of the recognition and dignity associated with administration of the Hall Trust and power of decision over application of its funds. Another disadvantage is that Messrs Fulham and Kelly will escape from obligations from which they do not deserve to escape. I see these disadvantages, but in my judgment they are outweighed by claims of practicality and the need to resolve conflict, avoid more conflict, and apply the property to charitable purposes within the spirit of the original gift. Although the selection of the Recipients was more or less random and made by persons with no authority to make it, I am of the opinion that I should not embark the Court on an attempt to improve on the selection.

89 For these reasons I propose to make the orders sought. In my view this is not a case in which any person should recover an order for costs. The third, seventh, eighth and ninth defendants, who are now in control of the Hall Trust should in my view be entitled to be indemnified for their costs of the litigation out of the relatively small part of the funds which remain, and this will go in diminution of the funds available to RSL Welfare. If it is necessary to deal with this subject by an order as to costs I am prepared to do so.

90 ORDERS:

(1) Order that John Thomas Walter Sheehan be appointed to represent for the purposes of these proceedings the trustees of and all persons interested in the charity known as The Trustees of the RSL Welfare and Benevolent Institution, the fifth defendant.

(2) Declare that it is impracticable to carry out the charitable trusts over the assets of the charity known as Leichhardt-Lilyfield Returned Sailors, Soldiers and Airmen’s Memorial Hall Building Trust also known as Leichhardt-Lilyfield Ex-Service Memorial Trust.

(3) Order that the assets of the charity be applied and dealt with in accordance with the Scheme set out in the Schedule to the Summons filed herein on 28 February 2002.

(4) Reserve liberty to the third, seventh, eighth and ninth defendants to apply for an order relating to an indemnity for their costs of the proceedings out of the assets of the charity,

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Last Modified: 07/22/2002

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Citations

Attorney General for New South Wales v Fulham [2002] NSWSC 629

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CITATION:	ATTORNEY GENERAL FOR NEW SOUTH WALES v FRED FULHAM & ORS [2002] NSWSC 629
CURRENT JURISDICTION:	Equity
FILE NUMBER(S):	SC 1710/2002
HEARING DATE(S):	26-28/06/2002
JUDGMENT DATE:	19 July 2002
PARTIES :	Attorney General for New South Wales - Plaintiff Fred Fulham - First Defendant Charles Kelly - Second Defendant Evan Lyall Jones - Third Defendant Peter Flaherty - Fourth Defendant Godfrey Eugene Priest, Bruce Vanzela and John Thomas Walter Sheehan (As Trustees of the RSL Welfare and Benevolent Institution) - Fifth Defendant Leukaemia Foundation of New South Wales Incorporated - Sixth Defendant Sidney Philip Lindeman - Seventh Defendant Richard James Maher - Eighth Defedant Kevin Bryan Vance - Ninth Defendant The Trustees of the Society of St Vincent De Paul (NSW) Incorporated - Tenth Defendant The Australian Cancer Research Foundation - Eleventh Defendant Remy Lam Son Bui - Twelfth Defendant
JUDGMENT OF:	Bryson J at 1

COUNSEL :	Ms K.L. Eastman - Pltf Mr Tudehope (s) - 1D; submitting Ms A. Williams (s) - 2D - submitting Mr J.C. Thompson - 3D, 7D, 8D and 9D Peter Flaherty in Person - 4D Mr B. Ellicott QC & Mr N. Gye - 5D Mr R.D. Wilson - 6D Mr G.M. McGrath - 10D Mr R. Darke SC - 11D Mr R.J. d'Apice (s) - 12D Mr J. Basten QC - Centenary Institute Ms L. Doust (s) - Vietnam Veterans Association
SOLICITORS:	I V Knight Crown Solicitor - Pltf O'Hara & Company - 1D Leslie Caplan & Grunstein - 2D Connah, Steed & Co - 3, 7, 8 & 9Ds Peter Flaherty in Person - 4D Pricewaterhouse Coopers Legal - 5D Tress Cocks & Maddox - 6D Murphy & Moloney - 10D Allens Arthur Robinson - 11D Makinson & d'Apice - 12D R.L. Whyburn & Associates - Vietnam Veterans Association.
CATCHWORDS:	CHARITIES - cy pres scheme - supervening impossibility - power under Charitable Trusts Act 1993 s.10 - Leichhardt - Lilyfield Returned Sailors, Soldiers and Airmen's Memorial Hall Building Trust - AGNSW applied for cy pres scheme where charity owned site of Leichhardt RSL Club - after litigation Club in liquidation and some of Hall Trust Trustees sold land and distributed most of funds to other charities without authority of members and without proceeding to Dissolution in accordance with Constitution - on the facts, cy pres scheme was appropriate because of supervening impossibility and also under s.10 - consideration of practicalities affecting pursuing Recipients for repayment and then distributing according to a scheme devised by the Court - consideration of positions of trustees and other persons related to the Hall Trust - consideration of merits and claims of Recipients and of other charities which intervened - notwithstanding many considerations against doing so, the practicalities favoured adopting a cy pres scheme which in effect ratified the unauthorised distributions which had been made.
LEGISLATION CITED:	Charitable Trusts Act 1993 Charitable Collections Act 1934 Charitable Fundraising Act 1991 Trustee Act 1925
CASES CITED:	Attorney-General v Sherborne Grammar School (1854) 18 Beavan 256 Attorney-General for New South Wales v Adams (1908) 7 CLR 100 Re Taylor; Martin v Freeman 58 LT 538 Attorney-General (NSW) v Perpetual Trustee Co (Ltd) (1940) 63 CLR 209 Phillips v Roberts [1975] 2 NSWLR 207 Hixon v Campbell (1924) 24 SR (NSW) 436 Williams v Attorney-General (1948) 48 SR (NSW) 505 Beggs v Kirkpatrick [1961] VR 764 at 767 Attorney-General (SA) v Bray (1964) 111 CLR 402 Harris v Skevington [1978] 1 NSWLR 176 Gertsch v Atsas [1999] NSWSC 898 Income Tax Special Purposes Commissioners v Pemsel [1891] AC 531 Murray v Thomas [1937] 4 All ER 545 In Re Spence; Barclays Bank Ltd v Stockton-on-Tees Corporation [1938] Ch 96 Monds v Stackhouse (1948) 77 CLR 232. Verge v Somerville [1924] AC 496 Barby v Perpetual Trustee Co Ltd (1937) 58 CLR 316 Somerville v Attorney-General for the Commonwealth of Australia (1921) 21 SR (NSW) 450 Williams v Attorney-General (1948) 48 SR (NSW) 505 Free Church of Scotland v Overtoun; Macalister v Young [1904] AC 515 Attorney General (NSW); Ex rel MacLeod v Grant (1976) 135 CLR 587 Murray v Thomas [1937] 4 All ER 545 In Re Slevin; Slevin v Hepburn [1891] 2 Ch 236 In Re Diplock; Diplock v Wintle [1948] 1 Ch 465 Retravision (NSW) Ltd v Copeland (Young J 8 October 1997 Unreported)
DECISION:	Cy pres scheme proposed by AG was adopted - see [90]