Attorney-General (NSW) v Perpetual Trustee Co Ltd

[1966] HCA 33

HIGH COURT OF AUSTRALIA

Barwick C.J., Taylor and Owen JJ.

ATTORNEY-GENERAL (N.S.W.) v. PERPETUAL TRUSTEE CO. LTD.

(1966) 115 CLR 581

20 May 1966

Charities

Charities—Practicability of object—Trusts of land and moneys after intervening life interests—Form of inquiry—Whether separate trusts—Cy-pres application where execution of trusts becomes impossible.

Decision

May 20.
THE COURT delivered the following written judgment: -
By a codicil to his will, which bears date 3rd April 1895, the testator gave and devised certain lands described as the northern portion of Block 47B "say three hundred feet to Murray Street and three hundred feet to Pyrmont Street Ultimo as a site to be used in the erection and building of a District Dispensary and Receiving Hospital for the use of the Presbyterian and Protestant Poor" and, thereafter, directed "that after the deaths of my said wife and nephew and of the last succeeding nephew (that) all my real Estate and property shall be realised and sold and out of the amount that Ten thousand pounds be given and devoted towards the building of the above-mentioned Hospital and Two thousand pounds to be invested at interest so that the annual interest will go to the annual income thereof". The testator died on 21st January 1897 without having altered or revoked his will or codicil. In 1919 it was, inter alia, declared by the Supreme Court of New South Wales that the devise of the northern portion of Block 47B was subject to the prior life estates given by the will in favour of certain named nephews of the testator, the last of whom died in 1957. Thereafter, on 10th March 1961, an inquiry was directed "whether at the date of the death of the above-named George Harris deceased it was practicable to carry into execution the trust for the building and use upon the northern portion of Block 47B . . . of a district dispensary and receiving hospital for the use of the Presbyterian and Protestant poor, or whether at the said date there was any reasonable prospect that it would be practicable to do so at some future time and if so when". The inquiry duly took place before the Master but before referring to the terms of his certificate it is of some importance to notice that an order was made by the Supreme Court on 28th May 1920 under Pt IV of the Conveyancing and Law of Property Act, 1898 authorizing the sale of the subject land and, thereafter, the land was sold and the proceeds thereof were, in accordance with the order, paid into court. Subsequently these moneys were invested by the Master and at some unspecified date were paid out to the respondent, the Perpetual Trustee Company Ltd. (at p595)

2. At the conclusion of the Master's inquiry he certified that at the date of the death of the testator "it was not practicable to carry into execution the trust for the building and use upon the northern portion of Block 47B of a district dispensary and receiving hospital for the use of the Presbyterian and Protestant poor" but that at the said date "there was a reasonable prospect that it would be practicable to carry into execution the above-mentioned trust in or about the year 1957". The terms of the inquiry followed those adopted in In re White's Will Trusts; Barrow v. Gillard (1955) Ch 188 and subsequently followed in In re Tacon; Public Trustee v. Tacon (1958) Ch 447 . The first of these cases was, however, concerned with a trust which was designed by the testatrix to take effect at her death. Notwithstanding that the trust under consideration in In re Tacon (1958) Ch 447 was postponed until the termination of a life estate in the testator's daughter, the same form of inquiry was regarded as not inappropriate, provided that it was understood to mean "whether, at the date of the testator's death, there was any reasonable prospect (according to the ordinary beliefs and knowledge of mankind in 1922) that at some future date this scheme would be practicable". It seems to us that the Master did not so understand the terms of the inquiry because his reason for holding that it was not practicable at the date of the death of the testator to carry the trust in question into execution was because of the subsisting prior life interests in Block 47B and in that part of the estate the subject of the ultimate trust for conversion. This did not really provide an answer to the inquiry which, in strictness, meant whether at the date of the testator's death it could be seen that it was not practicable to carry the trust into execution in accordance with the terms of the will and it was not relevant to this question that the subsisting prior interests in the land prevented the execution of the trust immediately upon the death of the testator. (at p595)

3. The Master seems also to have considered that the terms of the will provided for a single composite trust in the sense that it first of all provided a block of land for the erection of a hospital and, thereafter, purported to provide a fund for the erection of the hospital and a further fund for its maintenance. In our view, however, it was possible for the trust with respect to the land to survive a successful attack on the validity or efficacy of the trust relating to the moneys in question: Attorney-General v. Stepney (1804) 10 Ves Jun 22 (32 ER 751) . However, the Master reached the conclusion that it was not shown that in 1897 it could be seen that it would be impracticable for the trust to be carried out at the end of the period which might elapse before the prior estates fell in. It seems to have been admitted that owing to the decline in the value of money it would have been impossible with the funds provided to erect and maintain a hospital in 1957 but the Master held that the defendant had failed to establish that as the date of the death of the testator there was "no reasonable prospect of it being practicable to carry the trust into execution in or about the year 1957" and certified accordingly. It was, of course, impracticable to carry the trust into effect in 1957 for another reason; the subject land had been sold in 1920 though the circumstances in which the order for sale was made do not appear. The records of the Equity Office relating to the application are missing and it is quite impossible to say whether the order - the subsequent sales pursuant thereto making it impossible for the trusts to be carried into effect according to their terms - was made after the beneficiaries and the next of kin had abandoned any claim to the subject land, or after the Attorney-General had abandoned any claim that, looked at as at the date of the death of the testator, it was practicable to carry the trusts into effect and that the testator had, by his codicil, manifested a general charitable intention. There is considerable difficulty in seeing how, in the absence of some such concession, the Court would have seen fit to make the order, particularly in view of the then recent decretal order of 26th September 1919 which had declared, inter alia, that the devise of the northern portion of Block 47B was a valid charitable devise without prejudice to the right of the beneficiaries or any of them under the said will to contend that the cy-pres doctrine was not applicable "if the said purposes are incapable of taking effect when the respective funds become available for the said purposes". (at p596)

4. However, upon the matter coming before the Court upon further consideration there was a challenge to the certificate of the Master and it was held that both branches of the inquiry should have been answered by the Master in the negative. In dealing with the problem Asprey J. initially stated the test which he was bound to apply and, in our opinion, he stated it correctly. Adopting the language of Lord Evershed M.R. in In re Tacon (1958) Ch 447, at pp 456, 457 he said: "the Court must, as it were, put on for all purposes 1922 spectacles; must put itself into the position of one forming a judgment of future prospects (of practicability) at the date of the testator's death". But thereafter the learned judge of first instance added that on the strength of certain authorities to which he made reference he proposed "to apply the principle of hindsight in my consideration of the present case". He added that in his view, "the application of this principle must take into account the whole of the relevant evidence which has become available since the date of death, evidence of 'any events' which are relevant to the solution of the problem". He then turned to the facts which were capable of observation "through 1897 spectacles". However, he observed that if the events subsequently to the death of the testator were to be disregarded "the facts known as at 1897 could not afford any grounds upon which it could be said that there was a reasonable prospect at some time in the future for the practicable execution of the trusts". "At that point of time", he said, "having regard to the state of facts existing at that time, the prospect of their practicable execution could be graded no higher than mere speculation because of the reasonable apprehension, which then must have been held, as to the various possibilities of the very remoteness of the relevant date which might have been almost a century ahead". His reason for this was that, even upon the assumption that the land would remain available as a site for the construction of the hospital, it would be going too far "to assert that the sum of 10,000 pounds, or what was left of it after making provision for the necessary inroads upon that fund for costs of demolition, fees of architects and other attendant expenses in relation to construction, the cost of furnishing and equipping a building to be used for the purpose defined, would be a workable fund". In addition he added that "the income from the capital sum of 2,000 pounds as the revenue to staff and operate the hospital is one which strains the imagination". This opinion, however, was expressed on the assumption that the testator had purported to construct one composite trust pursuant to which he had provided a site for a hospital and the funds to provide the cost of erecting it and maintaining it so that if the trust failed initially in part it must be held to have wholly failed. In our opinion, however, what the testator did was to devise land to be used as a site for a hospital and thereafter purported to create a trust of moneys to be applied partly "towards the building of the above-mentioned hospital" and partly as a contribution to supplement the income of such hospital. We have already observed that under the trusts it was possible for the former trust to survive even if the latter trusts were not validly created or subsequently failed and, of course, there is the decretal order to which we have already referred which declared that the trust relating to the land alone was a valid charitable trust "without prejudice" to the rights of the beneficiaries to raise certain contentions if the said purpose should ultimately be incapable of taking effect. It seems to us that this declaration precluded the beneficiaries from asserting that the trust relating to the land was not valid at its inception and there was reserved to them the right only to assert, for what it was worth, that on its subsequent failure the cy-pres doctrine was inapplicable by reason of the absence of a general charitable intention. Of course, this was a "right" which they would have had even if the order had not purported to reserve it but the express reservation does not detract from the force of the declaration that the trust was valid when the will became operative. However this may be, it is impossible to assert that at the time of the testator's death it could be seen that it would, after the prior interests had fallen in, be impracticable to carry into effect the trust created by the codicil with respect to the land devised "as a site to be used in the erection and building" of the designated hospital. The considerations adverted to by Asprey J. do not, it seems to us, touch upon this question. But there can be no doubt that in 1957 it was not practicable to carry the trust into effect because some thirty-seven years before the land had been sold pursuant to an order of the Court. However, for some twenty-three years after the death of the testator it was the subject of a trust validly created, it had during the years that had intervened between the death of the testator and the sale of the land been impressed with a charitable trust and had been irrevocably devoted to charity. On the authority of In re Slevin; Slevin v. Hepburn (1891) 2 Ch 236 and the later case of In re Tacon (1958) Ch 447 the rights of the beneficiaries and of the next of kin were for ever excluded and the proceeds of the sale of the land should now be administered cy-pres. (at p598)

5. With respect to the trusts of the amounts of 10,000 pounds and 2,000 pounds other considerations obtrude themselves. The devise of these moneys for the purposes specified is expressed in the following words: "I direct that after the deaths of my wife and nephew and of the last succeeding nephew that all my real Estate and property shall be realised and sold and out of the amount that Ten thousand pounds be given and devoted towards the building of the above-mentioned Hospital and Two thousand pounds to be invested at interest so that the annual interest will go to the annual income thereof". It is contended that these gifts infringed the rule against perpetuities and were, therefore, void. The point revolves around the meaning of the expression "the last succeeding nephew". Prima facie one might be disposed to think that the testator intended that the trust for sale should arise upon the termination of the prior interests which he had created in his residual realty and this would take place when the last of six named nephews, sons of the testator's brother John Harris, who were lives in being at the date of the testator's death, died. If this is the correct construction of the provision there was, of course, no infringement of the rule. But the point is made that the expression in the codicil is more appropriate to describe the event upon which the testator intended the trust of another portion of land, Block 70B, to take effect. This block was devised by force of the will and codicil, subject to a prior life interest in the testator's widow and, thereafter, successive estates in "my nephew John Harris son of my brother John Harris for and during his natural life and upon the decease of my said nephew to the eldest or next surviving eldest son for life of my said brother John Harris until the death of the last survivor of my said Nephews Sons of my brother John Harris, . . . to the Presbyterians the Descendants of those settled in the Colony hailing from or born in the North of Ireland to be held in trust for the purpose of establishing a College for the Education and tuition of their youth in the Standards of the Westminster Divines as taught in the Holy Scripture". This devise was declared by the Judicial Committee to be invalid (Davies v. Perpetual Trustee Company (Ltd.) (1959) AC 439 ) but, nevertheless, the argument was that the creation of the trust of the moneys envisaged by the codicil was postponed until the trust relating to Block 70B, if valid, should take effect. This view was reinforced by reference to the ultimate trust of the residue of the proceeds of conversion which was in favour of "the abovenamed College to be held on interest and this latter added to the income annually". Further it was said that the expression "the last succeeding nephew" more appropriately described a nephew who had taken a life estate in succession and not one who, as the will provided, took a life interest in the residual realty in common with his brothers and, thereafter, had by succession succeeded to a share in the interests of his brothers who had predeceased him and who ultimately, as the last survivor, had succeeded to all of his brothers' interests. To us, however, the expression "the last succeeding nephew" has a somewhat different significance. We do not think there is much substance in the latter point and it seems reasonably clear that the expression in question denotes the nephew who should last succeed to the real estate the subject of the trust for conversion. This interpretation fits the natual meaning of the words and also coincides with what may be presumed to be the intention of the testator that the residual land should be sold and the proceeds of sale applied to the declared charitable purposes upon the termination of the prior estates in the land. The fact that the residue of the proceeds of conversion are devised for the benefit of the "above-named College" does not detract from this view for it is quite possible that the testator did not perceive any difference between the ultimate devises of Block 70B and of his residual realty, or, that knowing the age and condition of his brother John thought that, as proved to be the case, he would not have any sons born after the death of the testator. In our opinion the contention that the devise of the money in question infringed the rule against perpetuities should be rejected. (at p600)

6. The devise of the sums in question were not subject to the decretal order of 26th September 1919, so that the respondents are not precluded from contending that it could be seen in 1897 that it was not practicable to carry this trust into effect. In our view, however, this contention should also be rejected. We do not think that it is permissible when looking at the problem as at 1897 to have regard to all the events which occurred subsequently between that year and 1957. To us it seems quite impossible to put on 1897 spectacles and through them to see all the events as they occurred up to 1957. Nor do we think that the so-called principle of "hindsight" is of any real value in cases such as this. Cases relating to damages for tort such as Willis v. The Commonwealth (1946) 73 CLR 105 deal with a situation of an entirely different character for as Latham J. pointed out in the nature of things it frequently happens that in assessing damages probabilities must be taken into account. But where at the time of trial "the extent and character of what would at one time be described as prospective injury depends upon the happening or non-happening of a particular event and that event has in fact happened, it is unnecessary to speculate as to whether or not this event might happen and, if so, when. In such a case prospective damage (or diminution of damage) has become actual" (1946) 73 CLR, at p 109 . Further, we do not think that there is anything in Attorney-General (S.A.) v. Bray (1964) 111 CLR 402 to justify the form of approach made by the learned judge of first instance. That was a case where the trust was designed to take effect immediately upon the death of the testatrix and, in the result, an inquiry directed to the Master was, in the circumstances, held to be premature. The case re-affirms the principle that it was proper to consider the question of practicability as at the date of the death of the testatrix but added that the question was whether at that date "it was practicable to carry 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". That and like cases are no authority for the proposition that where the execution of a trust is postponed to successive life estates the question whether the execution of the trust was practicable or impracticable at the date of the death of the testator may be left to be resolved until the termination of the prior life estates and then determined in the light of events that have occurred in the meantime. Indeed, the suggestion that this may be done is, in our view, directly opposed to the decision in In re Tacon (1958) Ch 447 . (at p601)

7. Assuming that the subject land had not been sold - an event which could not reasonably have been foreseen - we see no reason why, in 1897, it could be said that the funds the subject of these trusts would be insufficient to carry the declared purposes into effect when the time for their execution arose. The principal difficulty in the case arises from the fact that the value of money has in the intervening years declined to such an extent that the amounts given by the testator may be thought to be relatively insignificant when considered in relation to the purposes to which they had been devoted. That this would happen was not, in our view, something that in 1897 could have been reasonably foreseen. Much the same sort of problem presented itself in In re Tacon (1958) Ch 447 where it seems to have been admitted and accepted by the Court of Appeal that there was no reason to anticipate in 1922 "the . . . fall in the value of money" which occurred between 1922 and 1952. For our part we do not think that it would have been possible in 1897 to say that it would be impracticable to execute the trusts when the time for their execution arose. (at p601)

8. This means that the fate of these trusts is the same as the proceeds of the sale of Block 47B and that it is unnecessary to consider the question whether the testator had manifested a general charitable intention. (at p601)

9. In the result the last two declarations of the order appealed from should be deleted, a declaration made that the trusts should be executed cy-pres and that an inquiry should be directed for the purpose of settling a scheme. (at p601)

Orders

Appeal allowed. Decretal order of the Supreme Court of 10th December 1965 varied by deleting the order therein contained "that the said certificate of the Master in Equity dated 9th July 1964 be and is hereby varied by deleting therefrom the finding and certificate numbered 2 therein and by substituting in lieu thereof a finding and certificate that at the date of the death of the above-named George Harris deceased there was not a reasonable prospect that it would be practicable at any future date to carry into execution the trust in the codicil to the will of the said deceased contained for the building and use upon the northern portion of Block 47B 'say three hundred feet to Murray Street and three hundred feet to Pyrmont Street Ultimo' of a District Dispensary and Receiving Hospital for the use of the Presbyterian and Protestant poor" and also by deleting the last two declarations contained in the said decretal order and substituting therefor a declaration and order that upon the true construction of the said codicil and in the events which have happened the trusts relating to the amount now representing "the Northern portion of Block Forty-seven B say three hundred feet to Murray Street and three hundred feet to Pyrmont Street Ultimo" and the trusts relating to the sum of 10,000 pounds in the said codicil referred to and the sum of 2,000 pounds in the said codicil firstly referred to should be executed cy-pres and that it be referred to the Master in Equity to settle a scheme for the regulation and management of the said trusts. The costs of appeal of all parties to be paid out of the estate of the testator, those of the trustee as between solicitor and client.