Elizabeth Joan Paulsen as executor of the estate of the late Miriam Lesley Jean Douglass v Northern Sydney Local Health District

Case •

[2018] NSWSC 1473

•

03 October 2018

No judgment structure available for this case.

Supreme Court


New South Wales

  • Summary available
Medium Neutral Citation: Elizabeth Joan Paulsen as executor of the estate of the late Miriam Lesley Jean Douglass v Northern Sydney Local Health District [2018] NSWSC 1473
Hearing dates: 9 July 2018
Date of orders: 03 October 2018
Decision date: 03 October 2018
Jurisdiction:Equity
Before: Ward CJ in Eq
Decision:

(1)   Declare that The Norman Anderson and Norman Memorial Trust (referred to in these proceedings as the First Trust) had “ceased to exist” (within the meaning of that expression as used in the deceased’s will dated 29 September 1999 – the deceased’s Will) at the time of the death of the late Miriam Lesley Jean Douglass (the deceased) on 18 May 2016.
(2) Order that the questions posed for judicial advice pursuant to s 63 of the Trustee Act 1925 (NSW) or in the Court’s inherent jurisdiction should be answered as follows:
(a)   On the true construction of the deceased’s Will and in the events that have happened, the executor’s discretion to choose a charitable organisation in New South Wales with the same or similar purposes as the First Trust has been enlivened;
(b)   The executor is justified in applying the estate’s residue to The Garvan Institute of Medical Research (ABN 62 330 391 937) (The Garvan Institute) for the purpose of funding research into breast and prostate cancer only in the terms contemplated in the letter dated 13 December 2017 from The Garvan Institute to the executor; and
(c)   This question does not arise in light of the answers to (a) and (b) above.
(3)   Order that the receipt of the proper officer for the time being of The Garvan Institute will operate as a full and final release in favour of the executor in respect of the residuary gift contained in paragraph (f) of the deceased’s Will, probate of which was granted to the executor on 21 October 2016.
(4)   Order that the executor’s costs of this application be paid out of the estate of the deceased on an indemnity basis.
(5)   Otherwise make no order as to costs with the intent that the defendant pay its own costs.

Catchwords: SUCCESSION – Wills, probate and administration – Construction and effect of testamentary dispositions – Where testator devised whole real property and residue of personal property to a named trust – Where the named trust was the subject of court orders in 2008 for administration cy-près – Held the named trust had “ceased to exist” within the meaning of the Will and the executor was entitled to select another charitable organisation as the residuary beneficiary
Legislation Cited: Charitable Trusts Act 1993 (NSW), s 9
Garvan Institute of Medical Research Act 1984 (NSW), ss 5, 6
Health Services Amendment (Local Health Districts and Boards) Act 2011 (NSW), Sch 1
Health Services Amendment (Local Health Networks) Act 2010 (NSW), Sch 1
Trustee Act 1925 (NSW), s 63
Cases Cited: AG (NSW) v Perpetual Trustee Company Ltd (1940) 63 CLR 209; [1940] HCA 12
Korda v Australian Executor Trustees (SA) Ltd (2015) 255 CLR 62; [2015] HCA 6
Morlea Professional Services Pty Ltd v Richard Walter Pty Ltd (in liq) (1999) 96 FCR 217; [1999] FCA 1820; 169 ALR 419
Perpetual Trustees (WA) Ltd v Naso (1999) 21 WAR 191; [1999] WASCA 80
Re Estate Late Chow Cho-Poon [2013] NSWSC 844
Re Tyrie (No 1) [1972] VR 168
Saunders v Vautier (1841) 4 Beav 115; 49 ER 282
Texts Cited: J D Heydon and M J Leeming, Jacobs’ Law of Trusts in Australia (8th ed, 2016, LexisNexis)
Category:Principal judgment
Parties: Elizabeth Joan Paulsen (Plaintiff as executor of the estate of the late Miriam Lesley Jean Douglass)
Northern Sydney Local Health District (Defendant)
Representation:

Counsel:
N Kirby (Plaintiff)
MB Evans (Defendant)

  Solicitors:
McIntyre Legal (Plaintiff)
Hicksons (Defendant)
File Number(s): 2016/00258542
Publication restriction: Nil

Judgment

  1. HER HONOUR: In this matter, by summons filed 23 February 2018, the plaintiff, as the sole executor of the estate of the late Miriam Lesley Jean Douglass (the deceased), seeks judicial advice pursuant to s 63 of the Trustee Act 1925 (NSW) or in the Court’s inherent jurisdiction in relation to certain questions arising in the administration of the deceased’s estate (which I set out below at [43]), and consequential orders on the giving of that advice.

  2. The defendant, which was joined to the proceedings without opposition by the plaintiff by leave granted at the commencement of the hearing of the judicial advice application, is the Northern Sydney Local Health District, which entity is responsible for the administration of the Royal North Shore Hospital. Although at one stage there appeared to be a challenge as to the legal status of the defendant as trustee of what I will refer to in due course as the Fourth Trust, ultimately it was not contested that the defendant is the successor to the Northern Sydney and Central Coast Area Health Service (to which I will refer as the NSCCAHS). (For completeness, I note that on 1 January 2011 the NSCCAHS was replaced by the “Northern Sydney Local Health Network” by Schedule 1 of the Health Services Amendment (Local Health Networks) Act2010 (NSW) and then, on 1 July 2011, by Schedule 1 of the Health Services Amendment (Local Health Districts and Boards) Act 2011 (NSW) the Local Health “Networks” were replaced with Local Health “Districts”.)

Background

  1. The deceased died on 18 May 2016. Under the deceased’s last will dated 29 September 1999 (the Will), the plaintiff and another person were appointed as executors and trustees. The other person renounced probate (see the Statement of Facts at [3]), leaving the plaintiff as sole executor and trustee. Probate of the Will was granted by this Court to the plaintiff on 21 October 2016. As at 20 February 2018, the assets of the estate had largely been realised and the residue of the estate comprised an amount of $1,592,741.37, which was held in an estate bank account (Statement of Facts at [6]).

  2. After various specific bequests of personal property, the Will provided for the residue of the deceased’s estate to be held upon trust for “The Norman Anderson and Norman Memorial Trust” care of “The Royal North Shore Hospitals [sic], St Leonards”, “for its research into prostate cancer and breast cancer only” (cl (f) of the Will).

  3. The Will further provided as follows:

I DECLARE that if at the time of my death that Trust has ceased to exist my Trustees shall in their absolute and unfettered discretion choose a charitable organisation in New South Wales whose purposes are the same as or similar to those [of] the Trust AND upon my Trustees declaring the identity of such charitable organisation my Trustees shall be at liberty to pay such moneys or transfer such securities to the said organisation as though it had been named in my will in lieu of the Trust.

  1. The position as to the administration of the Will is not uncomplicated, by reason of the fact that it appears that the settlor of The Norman Anderson and Norman Memorial Trust had a propensity to establish trusts for the purpose of, or related to, cancer research. I summarise those as follows.

1983 Deed of Trust

  1. By Deed of Trust executed on 31 May 1983 (Annexure C to the Statement of Facts), Raymond Simpson Norman (Mr Norman), as “Founder”, established the “NORMAN, ANDERSON AND NORMAN MEMORIAL TRUST”, appointing four persons and himself as the trustees (the four other persons being two medical practitioners – John Anthony Levi and Ian Roger Vanderfield; a solicitor, David John Crapp; and a bank officer, Robert Randolf Sorrell. Mr Crapp, who gave evidence in the judicial advice proceedings before me, was the solicitor who had drafted the said Deed of Trust (and who in due course drafted the Will)). I will refer to this Deed of Trust as the 1983 Deed of Trust, and to the trust established by it, as did the parties in submissions, as the First Trust.

  2. Under the 1983 Deed of Trust, Mr Norman settled a sum of $100 on the named trustees. This Deed of Trust provided that that sum, together with “all and any other moneys, assets, choses in action, rights or property of any description whatsoever which are from time to time accepted by the Trustees as additions to the trust fund” (together called “the Trust Capital”) was to be invested by the trustees in their names or the names of any two of them in any one or more of certain specified forms of investment (cl 1).

  3. The stated object of the trust so established (cl 3) was that the trustees “shall hold the trust capital upon trust to apply the income of the trust capital for the establishment and maintenance of a scholarship to be called the Norman, Anderson and Norman Memorial Scholarship for the purposes of the advancement of medical research into cancer and the field of oncology generally”. Clause 3 further provided that no part of the capital or income therefrom was (subject to cll 9, 13 and 15) to be devoted “to any purpose other than the charitable purposes set forth” and no part thereof was to revert to the Founder (Mr Norman) or his executors, administrators or assigns.

  4. Clause 4 of the 1983 Deed of Trust provided for there to be one public hospital (the “host hospital”) appointed for the purpose of the operation of the trust; the first such “host hospital” being “The Royal North Shore Hospital at Sydney in the State of New South Wales”. The clause further provided that the trustees “may from time to time in their absolute discretion adopt and appoint” any other public hospital in Australia as the host hospital in place of The Royal North Shore Hospital.

  5. Clause 6 of the 1983 Deed of Trust authorised and empowered the trustees to delegate the management of the whole or any part or parts of the trust capital to Westpac Banking Corporation (or any successor thereto or any bank with which it should merge or any principal bank arising out of reconstruction or partial reconstruction of that bank).

  6. Clause 8 of the 1983 Deed of Trust, headed “SCOPE OF SCHOLARSHIP”, provided that the scholarship was to be in such sum or sums as the trustees should determine; and was to be awarded annually or at such other intervals as the trustees should determine to a person with a medical degree from an Australian or British university (or from any other university which was recognised by the trustees as having equivalent status to an Australian university), for the purpose of study overseas in one or more of the following fields:

(a)   medical research and development in the field of medical oncology;

(b)   the research, experimentation and development into and of any drug for use in the treatment of or further research into Cancer in any of its forms;

(c)   research, experimentation and development into and of any equipment or structure for use in the treatment of or further research into Cancer in any of its forms;

(d)   any other field touching the research into oncology which the Trustees shall consider meritorious, but not within bounds liable to disqualify the Trust as a charitable Trust.

  1. Clause 8 further provided that all such research was to be performed at the direction of the trustees; and that nothing in the deed was to be deemed to prevent the trustees from granting concurrent scholarships.

  2. Clause 19 of the 1983 Deed of Trust provided that the number of trustees (except pending appointment of a new trustee or new trustees) was not to be less than five and that two of the trustees were to be nominees of the host hospital from time to time but that otherwise the statutory power of appointing a new trustee or new trustees was to apply to the deed and was to be exercisable by Mr Norman as the Founder under the deed during his lifetime.

  3. Clause 20 of the 1983 Deed of Trust, headed “SATISFACTION OF THE OBJECTS OF THE TRUST”, provided that “[a]s often as in the opinion of the Trustees further application of moneys for the purpose for the time being of the Trust is unwarranted the Trustees shall apply to the Court for determination of a cy-pres scheme, and shall thereafter (subject to any contrary order or direction of the Court) carry out, conduct and pursue the business of the Trust for the purpose of such cy-pres scheme exclusively”.

  4. Clause 21 of the 1983 Deed of Trust, headed “DISSOLUTION”, dealt with the event that the trust should “be wound up or dissolved” in circumstances where there remained, after the satisfaction of all its debts and liabilities, “any property whatsoever”. In that event the clause provided that such property “be given or transferred to some other institution society or body [determined by the trustees at or before the time of dissolution] having objects similar to the objects of the Trust and which shall prohibit the distribution of its income and property among its members” and “if and so far as effect cannot be given to the aforesaid provision then for some recognised charitable institution”.

  5. Pausing here, it can be seen from the above that there was a clear intent on the part of Mr Norman when creating the First Trust that the trust fund be applied for what he regarded as charitable purposes. It is also obvious that the trust fund of $100 (even at its value in 1983), unless supplemented, was hardly likely to be of much assistance for the purposes of funding study overseas.

1988 Deed of Trust

  1. On 20 January 1988, Mr Norman, as Founder, executed another Deed of Trust, again appointing himself and the same four individuals as trustees. He again settled the sum of $100 on the trustees. The trust thereby established was named the “NORMAN ANDERSON AND NORMAN SECOND MEMORIAL TRUST” (cl 2). I will refer to this Deed of Trust as the 1988 Deed of Trust and to the trust established by it as the “Second Trust”.

  2. The terms of the 1988 Deed of Trust (which was again drafted by Mr Crapp) were to a large extent the same as those of the 1983 Deed of Trust, though the scholarship (the establishment and maintenance of which was the object of this second trust) was (not surprisingly) to be known as the “Norman, Anderson and Norman Second Memorial Scholarship” (see cl 3). It was also to be for the purposes of “the advancement of medical research into cancer and the field of oncology generally”.

  3. The Royal North Shore Hospital was again nominated as the first “host hospital” under this Deed of Trust (cl 4). One change (an indicator perhaps of the reason for the establishment of the Second Trust – there being evidence that Mr Norman, a retired bank manager, was dissatisfied for some reason at that time with Westpac) was that cl 6 authorised and empowered the trustees to delegate the management of the trust capital “to any Trading Bank, Manager, Corporate Trustee or Consultancy now or hereafter empowered to carry on business in Australia or any one or more of them”.

  4. Again, the sum settled on trust seems unlikely, of itself, to have been of much assistance in furthering the objects of the trust.

  5. It is noted for the defendant that evidence given in other proceedings in 2007 (to which I will refer shortly) by Messrs Sorrell, Levi and Full (Mr Full having replaced Mr Vanderfield as trustee by then) indicated that there had never been a meeting of the trustees of the First Trust or the Second Trust; nor had there been any communication between the five trustees, at least in that capacity.

Establishment of third trust in 2001

  1. In 2001, as evidenced by a letter dated 10 January 2001, Mr Norman established a third trust known as the Norman Anderson and Norman Memorial Cancer Research Trust (“the Third Trust”). The 10 January 2001 letter was sent by Ms JoAnne Fisher, Acting Executive Director of Royal North Shore Hospital, to Mr Norman (see Annexure B to the affidavit of John Russell Kell affirmed 18 April 2008 in proceedings 2007/5430, which is exhibited to the affidavit of John Russell Kell sworn 28 June 2018 in the present proceedings). In the second amended cross-claim filed in 2008 by NSCCAHS in those other 2007 proceedings, to which I refer below, it was alleged that this third trust was a “new special purpose trust” (see at [5]).

  2. By this stage, Mr Vanderfield had retired as a trustee of both the First Trust and the Second Trust (see deed dated 14 May 1993 of Mr Vanderfield) and Norman Roy Full had been appointed as trustee of both trusts in Mr Vanderfield’s place.

  3. The Third Trust appears to have been known as the Norman, Anderson and Norman Memorial Cancer Research Trust. By his will dated 15 February 2001, Mr Norman left a gift of $1,000,000 to that named trust (cl 3(2)) (Annexure C to the affidavit of John Russell Kell affirmed 18 April 2008 in proceedings 2007/5430, a copy of which is exhibited to the affidavit of John Russell Kell sworn 28 June 2018 in these proceedings).

  4. Mr Norman died in March 2006.

  5. As adverted to above, cl 3(2) of Mr Norman’s will was expressed as a gift on trust for the Norman Anderson and Norman Memorial Cancer Research Trust established by The Royal North Shore Hospital of up to $1,000,000 from his estate being:

(a)   In the first instance, the proceeds of my accounts at Westpac Banking Corporation in the name “Norman Anderson and Norman Memorial Trust” or “Norman Anderson and Norman Memorial Cancer Research Trust” up to $1,000,000.

  1. The will went on to provide for further funds to be gifted to the said trust from the sales of certain properties if the funds in the bank accounts were less than $1,000,000. (Pausing there, since the bank accounts in question were accounts apparently held in the names of the first two trusts, it is difficult to see how Mr Norman was in a position to treat these as his own assets capable of bequest under his will but nothing turns on this.)

  2. In the present proceedings, the defendant submits that the above provision in Mr Norman’s will suggests that he viewed the three funds as all part of the one trust and, by that provision in his will, dealt with them accordingly. I beg to differ. Clause 3(2) of Mr Norman’s will in terms appears to recognise that there were two existing trust accounts and to provide for the creation of a new (third) trust, to which the funds held subject to the first two trusts were somehow to be applied by way of his testamentary direction.

2007 proceedings

  1. I have referred above to other Court proceedings in 2007. Those arose in the context where another testator (Ms Marie Vivienne Dalton) had left a will leaving the residue of her estate to the “Trustees of the Norman Anderson and Norman Second Memorial Trust” for its general purposes. Ms Dalton died in 2006. Probate of her will was granted to Ms Kay Leneve Gibb, as her executor, on 1 May 2007. Prior to the grant of probate, Mr Crapp, who acted as solicitor for Ms Gibb, raised an issue as to whether the Second Trust (i.e., The Norman Anderson and Norman Second Memorial Trust) had “ceased to exist”.

  2. The solicitor acting for what was then the NSCCAHS (Mr John Kell) responded to an inquiry from Mr Crapp as to whether the Second Trust was still in existence by advising Mr Crapp, by letter dated 20 October 2006, that the Second Trust “continues to be operational and hold assets” and held funds although they were in a bank account entitled the “Norman Anderson and Norman Memorial Trust” (see affidavit sworn 7 November 2007 of David John Crapp at [35(i)], a copy of which is exhibited to the affidavit of John Russell Kell sworn 28 June 2018 in these proceedings).

  3. On 7 November 2007, Ms Gibb filed a summons in this Court (proceedings 2007/5430) seeking a declaration that The Norman Anderson and Norman Second Memorial Trust had, as at 2 May 2006, ceased to exist. Mr Crapp swore an affidavit dated 7 November 2007 in support of that summons.

  4. An amended summons, naming the NSCCAHS as defendant was filed on 18 February 2008; and a further amended summons joining the Attorney-General for the State of New South Wales as second defendant was filed on 21 April 2008.

  5. On 21 April 2008, NSCCAHS filed a cross-claim seeking, relevantly, declarations that the respective trusts referred to above (i.e., the trusts established by the 1983 and 1988 Deeds of Trust and the Third Trust, the subject of the gift in Mr Norman’s will) had ceased to provide a suitable and effective means of applying the property of the trust in each case and orders that the funds held in those trusts be applied cy-près by way of an order under s 9 of the Charitable Trusts Act 1993 (NSW) that the funds held in those three trusts be paid to NSCCAHS to be held under a trust (to be) known as the “Norman Anderson and Norman Cancer Prevention Trust” (to which I will refer as the Fourth Trust) for the purposes of “prevention and cure of cancer and anything incidental or conducive to those purposes”. Ancillary orders for the payment of the funds available from Ms Dalton’s deceased estate (to the Fourth Trust directly or to the Second Trust) were sought.

  1. The trustees of the First and Second Trusts were joined to the 2007 proceedings as the third to sixth cross-defendants and at least the third to fifth cross-defendants (Mr Crapp, Dr Full and Mr Sorrell) filed submitting appearances. (The defendant says that Dr Levi also filed a submitting appearance but that it does not appear to be on the court file.)

  2. Relevantly, for the purposes of these proceedings, on 30 September 2008 White J (as his Honour then was) made orders (by consent) in terms of the orders that had been sought by NSCCAHS in its second amended cross-claim. Those orders included declarations that, in each case, the original purposes of the First Trust, the Second Trust and the Third Trust had ceased to provide a suitable and effective means of applying the property of the trust; and orders that each of the First Trust, the Second Trust and the Third Trust be determined and that the funds of the trust be applied by way of a cy-près scheme pursuant to s 9 of the Charitable Trusts Act and were to be paid to NSCCAHS to be held on trust in accordance with the terms of the trust deed establishing the Fourth Trust.

  3. His Honour relevantly made orders in the following terms (see Annexure E to the Statement of Facts):

4. An order that Norman Anderson and Norman Memorial Trust be determined and the funds held on that Trust be applied by way of Cy-Près Scheme pursuant to section 9 of the Charitable Trusts Act 1993 (NSW) in accordance with Order 7;

5. An order that the Norman Anderson and Norman Second Memorial Trust be determined and the funds held on that Trust be applied by way Cy-Près Scheme pursuant to section 9 of the Charitable Trusts Act 1993 (NSW) in accordance with Order 7;

…

7.   An Order that the funds held in:

a) The Norman Anderson and Norman Memorial Trust;

b) The Norman Anderson and Norman Second Memorial Trust; and

c) The Special Purpose Trust established by donation by Raymond Norman on or about 10/1/01,

be paid to the Cross Claimant [NSCCAHS] to be held on trust under a Trust to be known as the “Norman Anderson and Norman Memorial Cancer Prevention Trust” as a Trust for the purposes of “prevention and cure of cancer and anything incidental or conducive to those purposes”.

The Fourth Trust

  1. On 8 October 2008, the Fourth Trust (named the Norman Anderson and Norman Memorial Cancer Prevention Trust) was established. (An unexecuted and undated copy of the Trust Deed was Exhibit 1 in the 2007 proceedings before White J; the trust deed was subsequently executed in that form – see Annexure F to the Statement of Facts filed in the present proceedings.) The purposes of that trust, as set out in cl 3, are the prevention and cure of cancer:

3.   Purpose of the Trust

3.1   Prevention and cure of cancer

The Trustee must hold the Trust Fund upon trust exclusively for the purposes of prevention and cure of cancer and anything incidental or conducive to those purposes.

  1. The settlor, Mr Kell, settled the sum of $100 on the terms of the Trust Deed to establish the Fourth Trust. The trustee under that Trust Deed is the NSCCAHS (defined in that deed as “NSCCH or any other trustee or trustees of the Trust Fund”). NSCCAHS is named as a party to the deed. The recitals to the deed (after referring to the First and Second Trusts as charitable trusts and the Third Trust as a “special purpose and [sic] trust fund established at Royal North Shore Hospital in 2001”) include the following:

D.   In recognition of the advantages in aggregating the capital of the First Trust, the Second Trust and the Third Trust to maximise the income generated by those funds, NSCCH wishes to establish a new trust to be known as “Norman Anderson and Norman Memorial Cancer Prevention Trust” into which the capital of the First Trust, the Second Trust and the Third Trust will be paid.

E.   The parties anticipate that the funds held in the First Trust, the Second Trust and the Third Trust will be transferred to NSCCH as trustee of the Trust by way of an application of the funds held in the said trusts cy-près by an Order of the Supreme Court of New South Wales.

  1. Pausing here, I note that the defendant has submitted that, in view of the fact that there is no known antidote or vaccination for cancer and no known “cure” for cancer (although there are treatments for various cancers, including surgical intervention in some cases), it is self-evident that the Fourth Trust is a trust for cancer research.

The present proceedings

  1. In the present case, the questions that have arisen in the administration of the deceased’s estate are as to: whether the trust named in the Will has relevantly ceased to exist; and, if so, whether the executor would be justified, in the exercise of her discretion, in nominating The Garvan Institute “in lieu of the Trust” as the recipient of the residue of the estate.

  2. The Attorney-General has authorised the commencement of these proceedings but not the filing of a cross-claim in the proceedings by the defendant (though the Attorney-General did not oppose its joinder as a defendant).

Questions for Judicial Advice

  1. The executor seeks a declaration that The Norman Anderson and Norman Memorial Trust had “ceased to exist” at the time of the death of the deceased; and judicial advice as to the following questions (set out at [42] of the Statement of Facts):

(a)   on the true construction of the last will of the Deceased and in the events that have happened, is the Plaintiff’s discretion in paragraph (f) of the Will to choose a charitable organisation in New South Wales with the same or similar purposes as the First and Second Memorial Trusts enlivened; and

(b)   if the answer to the question in (a) is “yes”, is the Plaintiff justified in applying the residue of the Deceased’s estate to the Garvan Institute of Medical Research (“Garvan Institute”) to be used for breast cancer and prostate cancer research only in the terms contemplated in the letter from the Garvan Institute to the Plaintiff dated 13 December 2017; or

(c)   if the answer to the question in (a) is “no”, what steps would the Plaintiff be justified in taking to effect the wishes of the Deceased?

Advice to the executor

  1. In accordance with the practice in judicial advice applications (see, for example, Re Estate Late Chow Cho-Poon [2013] NSWSC 844 at [48]-[49] per Lindsay J), annexed to the Statement of Facts filed with the summons seeking judicial advice was a copy of Counsel’s memorandum of advice dated 22 February 2018. In that advice, Mr Kirby of Counsel concluded that the Trust (though there referring to the Second Trust) had relevantly ceased to exist and that the executor would be justified in exercising her discretion to apply the residue of the estate to The Garvan Institute with the limitation that the funds be applied only to funding breast and prostate cancer research.

  2. In submissions filed for the executor on the hearing of the judicial advice application, reference was made to new evidence that had emerged since the provision of that advice – in particular, evidence to suggest that Counsel’s conclusion that the reference in the Will to the relevant trust was to be construed as a reference to the Second Trust was incorrect and that the reference in the Will was intended to be (as it appears in the Will) a reference to the First Trust. Otherwise, the conclusions reached in Counsel’s memorandum of advice were affirmed by him at the hearing of the judicial advice application.

Evidence of Mr Crapp

  1. By affidavit sworn 20 December 2017, Mr Crapp, the solicitor who drew the Will and who is now retired, deposed to having assisted the deceased with the preparation of three wills; to having provided advice to the deceased in relation to other matters ([5]); and to having assisted Mr Norman with the drafting of the 1983 and 1988 Deeds of Trust (see generally from [7]-[30] of Mr Crapp’s affidavit).

  2. Relevantly, Mr Crapp’s initial recollection was that the reference to the “Norman Anderson and Norman Memorial Trust” in the Will (which was the third will he had drafted for the deceased: see [37]) contained a typographical error and that the Will should have referred to the “Norman Anderson and Norman Second Memorial Trust” (as had the first two of the deceased’s wills that he had drafted) (see [44]-[52] of his affidavit). Mr Crapp deposed to a belief at the time of drafting each of the deceased’s three wills (based on conversations which he had had with Mr Norman) that the First Trust had been wound up following the establishment of the Second Trust on 20 January 1988 and that the funds held in the First Trust had been transferred into the Second Trust ([52]).

  3. However, the evidence that was before the Court in the 2007 proceedings (annexure A to the affidavit of Mr Sorrell sworn 16 May 2006, exhibited to the affidavit of Mr Kell sworn 28 June 2018 in these proceedings) included a copy of a letter dated 6 September 1999 from Mr Crapp to Mr Norman referring to a female client who had made a will a few years before, leaving her house and some money to the Second Memorial Trust for research into 2 fields of oncology, and saying:

She is about to bring it up to date in some respects, and I have an idea in the back of my mind that you mentioned to me that the Second Memorial Trust would probably not go very far.

Should I leave the gift to the Second Memorial Trust in place, or would it be better if I left it to the original Memorial Trust?

  1. On that copy letter there is a handwritten annotation “Replied 20/9/99 1st Trust is the one. Will contact you when we arrive back home” (underlining in original).

  2. Mr Crapp subsequently received a letter from Mr Norman on about 24 September 1999 in which Mr Norman wrote:

Many thanks for recommending the Trust to your client. The 1st Trust would be best.

  1. The Will was executed, as noted earlier, on 29 September 1999 (some 9 days after the date of the above handwritten annotation and only 5 days after receipt by Mr Crapp of the abovementioned letter from Mr Norman).

  2. On the basis of the above, Counsel for the executor submitted (and I accept) that it is clear that there was no typographical error in the Will (as had been postulated in his memorandum of advice) and that it was intended that under the Will the residue was to be held on trust for the First Trust. (Nothing ultimately turns on this, since White J’s orders were for the determination of all three of the trusts in question – the only question being as to whether the making of those orders had the effect that, by the time of the deceased’s death, the relevant trust had ceased to exist.)

Executor’s submissions

  1. For the executor, it is submitted that the orders made by White J on 30 September 2008 had the effect of determining the First Trust and hence, by reason of its determination, the First Trust then ceased to exist. (Reference is also made in this context to a letter written by Mr Kell, the settlor of the Fourth Trust, to the NSCCAHS on 8 October 2008 stating that the First Trust had been “wound up” by the Court, a copy of which was forwarded to the executor’s solicitors in these proceedings by letter dated 3 July 2017 – see [50] of the executor’s affidavit sworn 21 February 2018).

  2. It is submitted that, according to the plain words of the Will, that fact - the cessation of the First Trust – means that the executor’s discretion to choose a substitute beneficiary has been enlivened; and it is submitted that The Garvan Institute is a suitable substitute beneficiary.

  3. In that regard, it is noted that The Garvan Institute is a registered charity with the Australian Charities and Not-for-Profits Commission with a head office in New South Wales; that it is governed by the Garvan Institute of Medical Research Act 1984 (NSW), under which its objects include (s 5(1)), as the principal object, “to further knowledge in the field of human medicine by promoting the conduct of research in that field, being research which is consistent with the tenets of the Sisters of Charity”; and that The Garvan Institute is (by s 6(3)) able to agree to any condition that is not inconsistent with its objects being imposed on its acquisition of any property.

  4. The Garvan Institute has indicated its willingness to hold the deceased’s funds in an endowment fund named in honour of the deceased and to ensure that all proceeds are used to fund research into prostate cancer and breast cancer only (see its letter dated 13 December 2017, annexure M to the executor’s affidavit sworn 21 February 2018 in these proceedings).

  5. In written submissions, Counsel for the executor considered the potential operation of the rules that have been developed for the prevention of the lapse of charitable gifts (referring to Re Tyrie (No 1) [1972] VR 168 per Newton J as the starting point in that regard) and argued that in the present case none of the so-called exceptions to the general rule (that where a named beneficiary no longer exists the gift will lapse) applies. However, in my opinion it is not necessary to dwell on that aspect of the submissions because in the present case the Will itself contemplated the possibility that the named Trust would have ceased to exist at the time of death and made provision for what was to happen in that event. Hence there would be no question of the gift of the residue lapsing if the correct conclusion is that the First Trust has ceased to exist.

  6. The executor submits that the effect of White J’s orders is that the relevant trust (the First Trust) has ceased to exist (arguing that the Fourth Trust is a new trust with different - and much broader – objects).

Defendant’s submissions

  1. The defendant accepts that the critical question which flows from the request for judicial advice is whether the orders made by White J on 30 September 2008 had the effect of causing the trust referred to in the Will as the NORMAN ANDERSON AND NORMAN MEMORIAL TRUST to be one that has “ceased to exist” in the terms in which that expression is used in paragraph (f) of that Will.

  2. The defendant accepts (and it can hardly be suggested to the contrary) that the orders made in the 2007 proceedings on 30 September 2008 clearly provide that each of the First and Second Trusts “be determined”. However, it is submitted (seemingly counter-intuitively) that that does not necessarily mean that those trusts “ceased to exist” as at that date.

  3. It is submitted that it is clear that, as at 30 September 2008, there were funds held in both trusts. The defendant argues that those funds were subject to the trusts of the 1983 and 1988 Deeds of Trust in each case as at that time.

  4. The defendant argues that the order (order 7) that those funds be paid to the NSCCAHS (to be held on trusts pursuant to a deed established for the purpose to enable those funds to be applied cy-près for the purposes of “prevention and cure of cancer and anything incidental or conducive to those purposes”) did not have the effect that the First and Second Trusts then ceased to exist. Rather, the proposition put for the defendant seems to be that, as a matter of substance, the Fourth Trust is simply some form of reincarnation of the earlier trusts.

  5. The defendant submits that the funds, at the time White J made the 30 September 2008 orders were still “as it were, covered by or infected by, held by, the trust for the original substantive purpose of cancer research flowing from the original Norman gift” and that the application of those funds cy-près “simply operated to apply them by way of a trust of different terms”. Thus it was submitted at the hearing that (T 45.38):

… this is a form and substance argument. While the orders to give effect to that need and, in my submission, there was clearly a need that the money held in these various trusts be applied cy‑pres, the substance of what was being done was the preservation of the original Norman trusts, all three of them, for their intended purpose of research into cancer, but by means of a different form, but the underlying substance of the trusts remained the same. So that even though words such as the original trusts are determined and the funds are transferred to another trust by name for cy‑pres purpose the substance of what happened was that the first two Norman Memorial Trusts and the Norman Research Trust were preserved but rendered more effective.

  1. It was accepted that White J’s orders had the effect of determining the earlier trusts but it was said that (T 46.8-46.31):

We have one trust, it’s new in form, but in substance is the trust that started in 1983. That, in my submission, is taken into account in by the parliamentary draftsman in s 9, particularly when one looks at 9(2) where a reference to the original purposes of charitable trust are to be construed, if the application of the trust property or any part has been altered or regulated by a scheme or otherwise as references to the purposes for which the trust property are for the time being applicable.

In this case, we have a trust which [sic] where the trust property or the application of the trust property has been altered or regulated by a scheme so that there is now one trust, where previously there were three named trusts. The relevant purposes, if one were to approach this again for the purpose of arguing that the money held by the trust ought be applied cy-pres, it would be the purposes set out in the fourth trust that would be the relevant ones. But the origin of that trust lies in the first three and in particular the first two.

It’s not as though there was some moment in time when the funds held in the first three Norman trusts ceased to be subject to a trust for charitable purposes or a trust for the charitable purpose of cancer research and then suddenly were, as it were, settled on a new trust, as fresh funds. Again, in saying that, I hark back to the Attorney-General v Perpetual Trustee case, sometimes referred to I think as Milly Milly or McDonell’s case, where again the Court said that applying the questions of construction in the context, when applied to charitable trusts are applied differently from private trusts.

  1. Counsel for the defendant further submitted (T 47.9-24):

The Court, in my submission, shouldn’t focus on the mechanics of the scheme whereby the purposes of that trust were altered to make the trust and others a more effective and efficient means of applying the fund, the Court should focus on the substance of the trust which was, that was a trust for charitable research established by Mr Norman and the fourth trust is a trust, but as to its origin, was a trust for charitable purposes originally created by Mr Norman, but subsequently altered by court order. If one were to ask, rhetorically perhaps, the question, when did the fourth trust start?

The answer may be 30 September 2008, when White J made his orders, but really the correct answer to that would be it really started in 1983 when Mr Norman settled moneys on this particular trust, as drawn by Mr Crapp. As I’ve said, in my researches, I haven’t found any case in which a charitable trust that’s been the subject of a cy-pres order, has been found to have ceased to exist in the process of that order being made. It may be the question has never been asked--

  1. The proposition thus was that what the order determining the trust did was to bring about the end of the form of the trust but not its substance.

  2. In the defendant’s written submissions it was said that it is a commonplace of the law of trusts that the trust fixes to the property of the trust such that if the trust property passes to the hands of a third party then, subject to questions of bona fide purchase without notice, the trust obligations will travel with that property. It was submitted that the proper approach to the construction of a charitable trust is different from the approach to the construction of private trusts, by reference to AG (NSW) v Perpetual Trustee Company Ltd (1940) 63 CLR 209; [1940] HCA 12 (McDonell’s Case) where Dixon and Evatt JJ said (at 222-223):

A charitable trust is a trust for a purpose, not for a person. The objects of ordinary trusts are individuals, either named or answering a description, whether presently or at some future time. To dispose of property for the fulfilment of ends considered beneficial to the community is an entirely different thing from creating equitable estates and interests and limiting them to beneficiaries. In this fundamental distinction sufficient reason may be found for many of the differences in treatment of charitable and ordinary trusts. As a matter of reason, if not of history, it explains the differences between the interpretation placed on declarations or statements of charitable purposes and the construction and effect given to limitations of estates and interests. Estates and interests are limited with a view to creating precise and definite proprietary rights, to the intent that property shall devolve according to the form of the gift and not otherwise. Whatever conditions are expressed or implied in such limitations are therefore as a rule construed as essential to the creation or vesting of the estate or interest unless an intention to the contrary appears. But to interpret charitable trusts in the same manner would be to ignore the conceptions upon which such trusts depend.

  1. The defendant argues that the question, in the context of this case, is whether the gift to the “Norman Anderson and Norman Memorial Trust” is a gift to that trust as constituted at the time of the will (in 1999) or a gift to that trust as it might be constituted at the time of the testator’s death; and that the answer to that question should be that it is the latter.

  2. Reference is also made to the observation in AG (NSW) v Perpetual Trustee Company Ltd by Dixon and Evatt JJ (at 225) that:

If there are insuperable objections, either of fact or of law, to a literal execution of a charitable trust it at once becomes a question whether the desires or directions of the author of the trust, with which it is found impracticable to comply, are essential to this purpose. If a wider purpose forms his substantial object and the directions or desires which cannot be fulfilled are but a means chosen by him for the attainment of that object, 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.

though it is submitted it was not necessary to invoke that principle in this case.

  1. It is instead argued that this case raises the question as to how a charitable trust might “cease to exist” (using the words of the Will). The defendant’s submission is that:

One may think that an order of the court that a trust be determined might have that effect but that order has to be seen in the context in which it is made. The order, in each case, was not simply that the trust be determined but that it be determined and, “the funds held on that trust be applied by way of cy près scheme pursuant to s 9 of the Charitable Trusts Act 1993 (NSW) in accordance with Order 7”[.]

  1. It is submitted that s 9 of the Charitable Trusts Act, which is set out below, is concerned with the purposes of “a charitable trust”, i.e., the one trust, being “altered” to allow the trust property to be applied cy-près, where the original purposes have ceased, inter alia, to provide a suitable and effective method of using the trust property, “having regard to the spirit of the trust”; and that it is referring to a trust which has its “original purposes” altered to allow the trust property to be applied to a more suitable and effective purpose. Section 9 is in the following terms:

9 Extension of the occasions for applying trust property cy pres

(1)   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.

(2)   References in this section to the original purposes of a charitable trust are to be construed, if the application of the trust property or any part of it has been altered or regulated by a scheme or otherwise, as references to the purposes for which the trust property are for the time being applicable.

  1. It is noted that sub-s (2) specifically deals with the case of a trust which has been the subject of a cy-près order and provides that the “original purposes” of that trust, post-cy-près as it were, must be the purposes as altered by the court and not the prior “original” purposes.

  2. Thus it is submitted that the trust described in the Will as “the NORMAN ANDERSON AND NORMAN (SECOND) MEMORIAL TRUST c/- The Royal North Shore Hospitals [sic], St Leonards” must now be seen as the “Norman Anderson and Norman Cancer Prevention Trust” (the Fourth Trust) as provided for in the orders of the Court of 30 September 2008.

  3. In essence, the defendant’s submission is that:

The short point is that the Norman Anderson and Norman Second [M]emorial Trust has not “ceased to exist”, it has simply been altered by orders made by the Court under s 9 of the Charitable Trusts Act 1993 and now operates under the name of and in accordance with the provisions of the Norman Anderson and Norman Cancer Prevention Trust.

  1. In those circumstances, it is submitted that the proviso set out in the Will is not triggered; and (which was not ultimately disputed) that the Royal North Shore Hospital can accommodate and comply with the restriction that the gift be “for its research into prostate cancer and breast cancer only”.

Determination

  1. In substance, the defendant’s argument turns on how the words “ceased to exist” in cl (f) of the Will are to be construed, particularly having regard to the fact that the residuary gift under the Will was left to the deceased’s trustees to be held on trust for a named trust for specified purposes (research into prostate and breast cancer only). It seems to have been assumed, both by the deceased – by reference to the terms of the Will – and the parties generally, that the named trust was a trust for charitable purposes (though the objects of the First Trust arguably extend to purposes that might not strictly be regarded as charitable – see, for example, reference to the development of equipment for use in the treatment of cancer). It was not suggested, for example, that the Will conferred no more than a discretionary power to be exercised for the stated charitable purpose.

  2. In submissions for the defendant, as noted above, emphasis was placed on the well-recognised proposition that a charitable trust is a trust for a purpose, not a person. The proposition was put, in effect, that a charitable trust does not cease to exist when the funds held on such a trust are applied for a different purpose. Counsel for the defendant noted that the various editions of Jacobs’ Law of Trusts (a reference to J D Heydon and M J Leeming, Jacobs’ Law of Trusts in Australia (see most recently, 8th ed, 2016, LexisNexis)) he had consulted were silent on the question as to how a charitable trust might “cease to exist”, although seemingly accepting that this might be the case if the trust funds were simply exhausted.

  3. Although I accept that the various academic texts on the law of trusts, charitable trusts, equity and succession do not appear to address in terms the meaning of a determination of a (charitable) trust or its consequences, it does appear implicitly to be accepted (albeit in a small number of cases) that to determine a trust is akin to terminating it.

  4. For example, in Hack v Kettering Pty Ltd [2009] QSC 27, Applegarth J considered whether a trust deed should be interpreted as only allowing the distribution of trust property upon the determination of the trust. His Honour clearly accepted that the reference to the determination of the trust was a reference to the trust being brought to an end, noting (at [20]):

… If the plaintiffs’ interpretation was correct the cash (and the remaining asset) could only be distributed upon the determination of the trust. A more sensible result, and one more likely to accord with the intentions of the parties to the Deed, is that capital capable of being distributed pursuant to cl 9(e) be available for distribution during the life of the trust.

  1. Similarly, in Morlea Professional Services Pty Ltd v Richard Walter Pty Ltd (in liq) (1999) 96 FCR 217; [1999] FCA 1820; 169 ALR 419, Hill, Sackville and Finn JJ appeared to accept that the determination of a trust was akin to its being wound up. In that case, their Honours noted that the directors of Morlea, as trustee of the Aurelius Unit Trust, had “resolved to wind up the trust and to distribute the assets of the trust in specie to the unit holders according to their entitlements” (at [19]). Their Honours then said that “[t]he provision of the trust deed under which Morlea acted was in the following terms”, before quoting cl 16.1 of the deed, which relevantly provided that “[t]he trustee may at any time for any reason whatsoever and without any obligation to disclose the reason to unit holders and shall in any event prior to the vesting day determine the trust hereby created” (at [20]).

  2. Finally, in Newton v Public Trustee [1999] WASC 179, McKechnie J considered an action for a declaration that the beneficiary of a court-ordered trust had validly determined the trust. In considering the question, his Honour discussed the ratio of the decision in Saunders v Vautier (1841) 4 Beav 115; 49 ER 282, and considered the decision of Parker J in Perpetual Trustees (WA) Ltd v Naso (1999) 21 WAR 191; [1999] WASCA 80, where his Honour concluded that “there does not appear to be any basis on which the rule, even if so understood, can be extended to allow a beneficiary of a trust such as the present to terminate the trust by calling for the fund from the trustee notwithstanding the order of the court” (at [8]-[10], [19], quoting Perpetual Trustees (WA) Ltd v Naso at [25] per Parker J (White J agreeing)) (emphasis added). It appears from the context of the quotation that McKechnie J considered that to determine a trust was to terminate it.

  3. It appears counter-intuitive that a Court order expressly determining a trust (here, it may be assumed – since that is the basis on which the parties have proceeded – a charitable trust or, more precisely, a trust for a charitable purpose) would not have the effect of bringing that trust to an end; particularly where the order was accompanied by an order for the transfer of the funds held for the (thenceforth determined) trust to trustees appointed for the purposes of a new trust. However, at the very least, the determination of such a trust in those circumstances must lead to all of the property that was hitherto held for the purposes of the (now determined) trust being applied for the purposes of the new trust. A trust cannot survive the transfer of all of the trust property from the trustee. A trust without trust property fails for lack of certainty of its subject matter (see, for example, Korda v Australian Executor Trustees (SA) Ltd (2015) 255 CLR 62; [2015] HCA 6 at [7] per French CJ)

  4. It is trite to note that a trust is not a separate legal entity that continues to exist without trust property, in a manner analogous to a shell corporation. Indeed part of the difficulty to which the defendant’s argument gives rise is that it would appear that the Will is drafted on the premise that there was some form of institution known as “The Norman, Anderson and Norman Memorial Trust” that might at some future point cease to exist whereas, on the defendant’s argument, such a trust would continue in perpetuity so long as its funds continued to be applied cy-près for charitable purposes.

  5. In my opinion, the sensible construction of the Will is that the deceased intended that the residuary gift be held by the trustees of the First Trust on trust for the expressed purposes (prostate and breast cancer research); and that if the First Trust (as constituted by the 1983 Deed of Trust) ceased to be the operative vehicle for such purposes (i.e., “ceased to exist”) then the executor’s discretion to choose a charitable organisation whose purposes are the same as or similar to the First Trust would be enlivened. Indeed, the very declaration (or, perhaps more precisely, direction) as to what was to happen if “that Trust” has ceased to exist makes clear to my mind that the deceased understood the First Trust in effect to be a charitable organisation with a potentially finite existence.

  6. The argument developed for the defendant in effect treats the “declaration” appearing at the end of paragraph (f) of the Will as if it read “if at the time of my death the purposes of that Trust have ceased to exist…” (italics to indicate the re-wording). That does not commend itself to me as the natural meaning of the clause.

  7. It is perhaps ironic that the very Court orders that lead me to conclude that the executor’s discretion to choose a charitable organisation with similar purposes as those of the First Trust has now been enlivened are the orders which the defendant (in its previous iteration) sought be made in the 2007 proceeding. So be it. There is also an irony (though nothing turns on this) in that, according to a communication dated 26 April 2017 to the executor’s solicitor (annexure H to the executor’s affidavit sworn 21 February 2018 in these proceedings), the defendant, in its capacity as trustee of the Fourth Trust, had indicated that it was “concerned that they will not be able to ensure that they meet the intended purpose of the Douglass bequest within [the Fourth] Trust” and said that it was “reviewing this Trust as a whole to determine if we can wind it down as it is so complex and very limiting”.

  8. Furthermore, while I do not consider that the discussion of the Re Tyrie “exceptions” is apposite to the principal issue for determination in this case, it does perhaps illustrate that the testator, by empowering her executor to choose an institution in the event that the First Trust had “ceased to exist”, appears to have intended that the process of determining an alternative destination for the residuary estate would be undertaken by the executor of her choice, not by the Court. Whether or not that be the case, I have concluded that the effect of the orders made by White J in 2008 was that the First Trust did then cease to exist such that, when the deceased died in 2016, that Trust had long since “ceased to exist” and the executor’s discretion was enlivened.

  9. There is no sensible basis on which to conclude (nor was it suggested otherwise) that The Garvan Institute does not satisfy the description of a charitable organisation in New South Wales. It is prepared to hold the residuary bequest and apply the income solely for the purposes specified in the Will. Accordingly, there is no reason not to endorse the decision made by the executor, in the exercise of her absolute and unfettered discretion as conferred by the terms of the Will, to choose that organisation as the recipient of the residuary bequest.

Orders

  1. Accordingly, I make the following orders:

  1. Declare that The Norman Anderson and Norman Memorial Trust (referred to in these proceedings as the First Trust) had “ceased to exist” (within the meaning of that expression as used in the deceased’s will dated 29 September 1999 – the deceased’s Will) at the time of the death of the late Miriam Lesley Jean Douglass (the deceased) on 18 May 2016.

  2. Order that the questions posed for judicial advice pursuant to s 63 of the Trustee Act 1925 (NSW) or in the Court’s inherent jurisdiction should be answered as follows:

  1. On the true construction of the deceased’s Will and in the events that have happened, the executor’s discretion to choose a charitable organisation in New South Wales with the same or similar purposes as the First Trust has been enlivened;

  2. The executor is justified in applying the estate’s residue to The Garvan Institute of Medical Research (ABN 62 330 391 937) (The Garvan Institute) for the purpose of funding research into breast and prostate cancer only in the terms contemplated in the letter dated 13 December 2017 from The Garvan Institute to the executor; and

  3. This question does not arise in light of the answers to (a) and (b) above.

  1. Order that the receipt of the proper officer for the time being of The Garvan Institute will operate as a full and final release in favour of the executor in respect of the residuary gift contained in paragraph (f) of the deceased’s Will, probate of which was granted to the executor on 21 October 2016.

  2. Order that the executor’s costs of this application be paid out of the estate of the deceased on an indemnity basis.

  3. Otherwise make no order as to costs with the intent that the defendant pay its own costs.

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Decision last updated: 03 October 2018

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Re Estate Late Chow Cho-Poon; Application for judicial advice [2013] NSWSC 844
Attorney-General (NSW) v Perpetual Trustee Co (Ltd) [1940] HCA 12
Attorney-General (NSW) v Perpetual Trustee Co (Ltd) [1940] HCA 12