Australian Executor Trustees Ltd v A-G (SA)

Case [2010] SASC 348

SUPREME COURT OF SOUTH AUSTRALIA

(Testamentary Causes Jurisdiction)

AUSTRALIAN EXECUTOR TRUSTEES LTD v ATTORNEY-GENERAL FOR THE STATE OF SOUTH AUSTRALIA & ORS

[2010] SASC 348

Judgment of The Honourable Justice Kourakis

20 December 2010

CHARITIES - CHARITABLE GIFTS AND TRUSTS - VALIDITY AND PRACTICABILITY - NON-EXISTENCE OF OBJECTS - GIFT TO CHARITABLE INSTITUTION: INSTITUTION CEASING TO EXIST - GENERALLY

Testator left gift of residue of his estate to incorporated hospital which had ceased to exist at time of death. Whether Part 9 of the Health Care Act 2008 applies. Whether gift created valid charitable trust. Whether gift failed or lapsed. Appointment of trustee.

Held: Part 9 operates retrospectively but does not apply to testator's bequest. Bequest established charitable trust for which trustee should be appointed in place of, now dissolved, trustee appointed by testator.

Health Care Act 2008 Pt 9, s 16, s 29, s 77, s 78; Trustee Act 1936 s 36, referred to.
Sir Moses Montefiore Home v Howell & Co (No 7) [1984] 2 NSWLR 406, applied.
Re Tyrie, deceased (no 1) [1972] VR 168; Australian Executor Trustees Limited v Ceduna District Health Services [2006] SASC 286; Attorney-General (NSW) v Perpetual Trustee Co Ltd (1940) 63 CLR 209; Re Ovey [1855] 29 Ch Div 560; In re Rymer [1895] 1 Ch 19; Marsh v Attorney-General [1860] 2J. and H. 61; 70 ER 971; Sobels v The Attorney-General [1942] SASR 251; Public Trustee v Cerebral Palsy Association of Western Australia Limited (2004) 28 WAR 496; In re Lucas [1948] 1 Ch 424; Royal North Shore Hospital of Sydney v Attorney-General (NSW) & Ors (1938) 60 CLR 396, discussed.
Clark v Taylor [1853] 1 Drewry 642; 61 ER 596, considered.

AUSTRALIAN EXECUTOR TRUSTEES LTD v ATTORNEY-GENERAL FOR THE STATE OF SOUTH AUSTRALIA & ORS
[2010] SASC 348

Testamentary Causes

KOURAKIS J:

Summary of findings

  1. I have no hesitation in finding that the bequest to the Central Yorke Peninsula Hospital Incorporated (CYPH) established a charitable trust.  The charitable purpose of the bequest was the provision of health and aged care services through the Maitland Hospital (the Hospital).  The testamentary disposition was not a charitable gift to CYPH, to use as it saw fit; nor was it a gift to CYPH for it, and it alone, to provide services at the Hospital.  I explain my reasons for so finding in [23] below.

  2. The nomination by Mr Flinn in his Will of the legal entity, through which services at the Hospital were at that time provided, served both as a convenient short hand form of expression of the objects of the trust, and the appointment of CYPH as the trustee of that trust.  I explain the principles which support this characterisation of the gift in [39] – [49] below.

  3. My characterisation of the bequest means that it does not fall within the scope of s 78 of the Health Care Act 2008 (HCA) because it is not a disposition made “in favour” or “for the…

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Australian Executor Trustees Ltd v A-G (SA) [2010] SASC 348
Case
[2010] SASC 348
Decision Date

CaseChat Overview and Summary

The case of Australian Executor Trustees Ltd v A-G (SA) involved a dispute over the validity of a charitable trust created by a deceased testator. The court was required to determine whether the charitable trust was valid despite the dissolution of the named charitable institution during the testator's lifetime. The case also involved the appointment of a trustee to administer the trust.

The key legal issues the court had to decide were whether the gift to the charitable institution lapsed due to its dissolution and whether a new trustee could be appointed to administer the trust. The court had to consider the principles established by the authorities on the validity and practicability of charitable gifts and trusts, including the applicability of the principles in the absence of a general charitable intention disclosed in the testamentary trusts.

The court concluded that a charitable trust was validly created by the testator's disposition, despite the dissolution of the named institution. The court held that the object of the trust was the provision of services at the hospital, which were in addition to, or supplement, or improve the health and aged care services provided by the state agencies and instrumentalities. The court exercised its jurisdiction in equity and the powers conferred by s 36 of the Trustee Act 1936 to appoint a trustee to administer the trust. The court held that the appropriate trustee was YPHAC, which had been established by the High Court of Australia to administer trusts of property used in connection with the provision of health services at the hospital.

The court's decision highlights the importance of considering the principles established by the authorities on the validity and practicability of charitable gifts and trusts when determining the validity of a charitable trust. The court's decision also underscores the importance of appointing a suitable trustee to administer the trust, even in cases where the named trustee is no longer in existence.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

In my view, the following passage from Jacobs’ Law of Trust in Australia is a useful summary of the principles established by the authorities to which I have referred. In particular, in my view, it is consistent with the approach described by Kearney J in Sir Moses:The following principles seem to be those applicable when no general charitable intention is disclosed in testamentary trusts for specified institutions where there is difficulty in effectuating the dispositions according to their tenor:(1)If the gift be construed as a gift to the named institution for its purposes, the gift lapses if the institution has ceased to exist in the testator’s lifetime. This is so even if the institution’s funds are, on its closure, devoted to charitable purposes similar to those of the named institution. However, modern authority is reluctant to construe a disposition as a gift to a particular charitable institution.(2)If the bequest be construed not as a gift to the named institution for its purposes but as a gift for the purposes themselves gift lapses if at the testator’s death the purposes of the institution cannot be carried out. This is so even if the named institution has devoted its funds to another institution with similar but different purposes which can be carried out.(3)If the bequest be construed as a gift for the purposes of the named institution, there will be no lapse simply because between the date of the will and the date of death, the institution has lawfully amended its constitution or carries on different work or changes its place of operation, provided always that at the testator’s death the particular purposes contemplated by the testator are, or can be, still carried on by it.(4)If the bequest be construed neither as a gift to the named institution for its purposes, nor as a gift for the purposes themselves, but as a gift to augment the funds of the named institution, likewise there is no lapse simply because, between the date of the will and the date of death, the institution has lawfully amended its constitution (whether including its objects or not) or carries on different work or changes its place of operation.(5)If the bequest be construed as a gift to augment the funds of a named institution, the principle set out immediately above still applies, even if the institution lawfully changes its objects so radically that it applies its funds to purposes which the testator could never have contemplated.[47][47] Jacobs’ Law of Trusts in Australia (7th ed) Heydon, Leeming at 222-3. Citations omitted.Conclusion Applying the principles discussed by Kearney J in Sir Moses, I have concluded that a charitable trust was validly created by Mr Flinn’s testamentary disposition even though the nominated trustee, CYPH, no longer exists. The object of that trust is the provision of services at the Hospital which are in addition to, or supplement, or improve, the health and aged care services which are provided at the Hospital by State agencies and instrumentalities. Accordingly, it falls to this Court in the exercise of its jurisdiction in equity and the powers conferred by s 36 of the Trustee Act 1936, to appoint a trustee. In my view the appropriate trustee is YPHAC which has been established by the HCA to, amongst other things, administer trusts of property which may be used in connection with the provision of health services at the Hospital.

Ratio Decidendi

Legal Principle Established

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