Estate Polykarpou; re a Charity

[2016] NSWSC 409

Supreme Court

New South Wales

Medium Neutral Citation:

Estate Polykarpou; Re a charity [2016] NSWSC 409

Hearing dates:

14 March 2016

Date of orders:

22 July 2016

Decision date:

22 July 2016

Jurisdiction:

Equity - Probate List

Before:

Lindsay J

Decision:

(1)   DECLARE that, on the true construction of the will of Euphemia (“Mia”) Polykarpou dated 22 March 2014, and in the events which have happened, the gift of property in clause 4.2 of the will constitutes a valid charitable trust.

 

(2)   DECLARE that, notwithstanding dissolution of the corporation identified in clause 4.2 as the recipient of trust property, the property the subject of the trust is dedicated to charity.

 

(3)   ORDER that the trust property be applied cy pres, and that a scheme be settled for that purpose.

 

(4) ORDER (pursuant to the Charitable Trusts Act, section 13(2)) that the trust be referred to the Attorney General for the Attorney to establish such a scheme.

 (5)   RESERVE to the Attorney General, the trustee of the charitable trust and such (if any) other persons who may be interested in due administration of the trust, liberty, at their own risk as to costs, to apply for directions in settlement of a cy pres scheme.

Catchwords:

CHARITIES – Charitable gifts and trusts – When applied cy-pres – Where general charitable intention – Gift to specifically named charity which ceased to exist before death of testatrix – Analysis of Court’s jurisdiction over charitable trusts and gifts - Charitable Trusts Act as legislative framework for administrative arrangements, not displace Court’s general jurisdiction
SUCCESSION - Construction and effect of testamentary dispositions - Construction of gift to dissolved corporation

Legislation Cited:

Australian Constitution Act 1842 (Imp)
Australian Courts Act 1828 (Imp)
Charities Procedure Act 1812 (Eng)
Charitable Trusts Act 1993 NSW
Civil Procedure Act 2005 NSW
Civil Procedure Rules, 2005 NSW
Imperial Acts Application Act 1969 NSW
Interpretation Act 1987 NSW
New South Wales Act, 1823 (Imp)
Short Titles Act 1896 (Imp)
Sir Samuel Romilly’s Act 1812 (Eng)
Supreme Court Act 1970 NSW)
Succession Act 2006 NSW
Uniform Civil Procedure Act 2005 NSW

Cases Cited:

Allgood v Blake (1873) LR 8 Exch 160
Attorney General (NSW) v Fred Fulham [2002] NSWSC 629
Attorney General (NSW) v Perpetual Trustee Co Limited (1940) 63 CLR 209
Berry v International Committee of the Red Cross (WA Supreme Court, 24 November 1986) BC 8691001
Boyes v Cook (1880) 14 ChD 53
Commissioner of Stamp Duties (QLD) v Livingston [1965]AC 694
Commissioners for Special Purposes of the Income Tax v Pemsel [1891] AC 531
Cooper v Stuart (1889) 14 App Cas 286
Coorey v Coorey (NSW Supreme Court 22 February 1986, unreported)
Cram Foundation v Corbett-Jones and Anor [2006] NSWSC 495
Damberg v Damberg (2001) 52 NSWLR 492
Dobrijevic v Free Serbian Orthodox Church, Diocese for Australia and New Zealand Property Trust [2015] NSWSC 637
Fell v Fell (1922) 31 CLR 268
Goldwyn v Mazal [2003] NSWSC 427
Hadaway v Hadaway [1955] 1 WLR 16
Hatzantonis v Lawrence Cox [2003] in NSWSC 914
Hunter Region SLSA Helicopter Rescue Services Limited v Attorney General for NSW (2000) NSWSC 456
In re Bennett, deceased; Sucker v Attorney General [1960] 1 Ch 18
In re WM (a person alleged to be of unsound mind) (1903) 3 SR (NSW) 552; 20 WN (NSW) 124
In re-Wright; Blizard v Lockhart [1954] Ch 347
In re-Wright; In re-Slevin; Slevin v Hepburn [1891] 2 Ch 237
Independent Commission Against Corruption (NSW) v Cunneen [2015] HCA 14; 89 ALJR 475
IR v AR [2015] NSWSC 1187
Kytherian Association of Queensland v Sklavos (1958) 101 CLR 56
Livingston v Commissioner of Stamp Duties (QLD) (1960) 107 CLR 411
Lockrey v Ferris [2011] NSWSC 179; 8 ASTLR 529 Lovett v Permanent Trustee Co Limited (unreported, the NSW Court of Appeal, 24 March 1987)
McCormack v Stevens [1978] 2 NSWLR 517
McLean v Attorney General (NSW) [2002] NSWSC 371
McLean v Burns Philip Trustee Co Pty Ltd (1985) 2 NSWLR 623
Moggridge v Thackwell (1803) 7 Ves 36 32 ER 15
National Antivivisection Society v Inland Revenue Commissioners [1948] AC at P 74
Paice v Archbishop of Canterbury (1807) 14 Ves 364; 33 ER 560
Parry v Haisma [2012) NSWSC 290]
Perpetual Trustee Co Limited v Wright (1987) 9 NSWLR 18
Perpetual Trustee Co v MacKenzie (1917) 17 SR (NSW) 660
Phillips v Roberts 1975] 2 NSWLR 207
Public Trustee v Attorney General (NSW) (1997) 42 NSWLR 600
Re AAA; Report on a Protected Person’s Attainment of the Age of Majority [2016] NSWSC 805
Re Conroy (1973) 35 DLR (3d) 752
Re Estate Morgan [2015] NSWSC 184
Re Eve [1986] 2 SCR 388 at 407-411; (1986) 31 DLR (4th) 1
Re Frieda and Geoffrey [2009] NSWSC 133; 40 Fan LR 608
Re Tyrie, deceased (No. 1) [1972] VR 168
Re-Victoria [2002] NSWSC 647; 29 Fan LR 157 Smith v West Australian Trustee and Executor & Agency Co Limited (1950) 81 CLR 320
Secretary, Department of Health and Community Services v JWB and SMB (Marion’s Case) (1992) 175 CLR 218
Stratton v Simpson (1970) 125 CLR 138
Taylor v Taylor (1911) 10 CLR 218
The Sydney Homoeopathic Hospital v Turner (1959) 102 CLR 188
Uniting Church in Australia Property Trust (NSW) v Monsen [1978] 1 NSWLR 575 at 591

Texts Cited:

Blackstone’s Commentories on the Laws of England (1st ed, 1765-1769; 9th “received” ed, 1783), Volume 3, chapter 27, pages 427-428
Chantal Stebbings, “Re Earl of Sefton (1898)”, chapter 15 in C&P Mitchell (eds), Landmark Cases in Equity (Hart Publishing, Oxford, 2012) pages 460 and 468 n 82
Chitty, A Treatise on the Law of the Prerogatives of the Crown (1820), Chapter 9, Section 2, pages 161-162
Dal Pont, Law of Charity (Lexis Nexis Butterworths, Australia, 2010), pages 75-78; [3.55]
Daniell’s Chancery Practice (8th ed, 1914), Volume 1, pages 34-35 and 48
D.M. Kerly, An Historical Sketch of the Equitable Jurisdiction of the Court of Chancery (Cambridge University Press, 1890), pages 26 and 49-57
Fonblanque, A Treatise of Equity (1st ed, 1792-1793), Volume 2, Part 2, Chapter 1, pages 205-208
Gino Dal Pont, Charity Law in Australia and New Zealand (Oxford UP, Melbourne, 2000), pages 26-29; 259-260
H. Picarda, The Law and Practice Relating to Charities (Bloomsbury Professional, England, 4th ed, 2010), pages 728-729, 479
Hansard (Parliamentary Debate) in the Legislative Council of NSW on 11 March 1993
HWR Wade and HL Cryer, Annual Survey of Commonwealth Law, 1974 (Butterworths, London, 1975), page 514
JD Heydon and ML Leeming (eds) Jacobs’ Law of Trusts in Australia (Lexis Nexis Butterworths, Sydney, 7th ed, 2006), paragraphs [1006]-[1016].
Jordan, Administration of the Estates of the Deceased Persons (3rd ed, 1948, Sydney Law School) pages 42-44
J.T. Bigge, Report of the Commissioner of Inquiry on the Judicial Establishments of New South Wales and Van Diemen’s Land (ordered by the House of Commons to be printed, 21 February 1823)
LA Sheridan and VTH Delany, The Cy-pres Doctrine (London, 1959), pages 17 and 140
Lives of the Lord Chancellors (1845), at page 13 of volume 1
ML Smith, The Early Years of Equity in the Supreme Court of NSW (1998) 72A LJ 799, 804.
Meagher, Gummow and Lehane, Equity: Doctrines and Remedies (Lexis Nexis Butterworths, Australia, 5th ed, 2015), paragraph [1-115], [1.120]–[1.140]
Nygh’s Conflict of Laws in Australia (9th ed, Lexis Nexis, Australia, 2014), chapter 17
PW Young, C Croft and ML Smith, On Equity (Law Book Co, Sydney, 2009), paragraph [6.360]
Sir Frederick Jordan, Select Legal Papers (Legal Books, Sydney 1983)
Spence, The Equitable Jurisdiction of the Court of Chancery (1846-1849), Volume 1, Chapter II, pages 588-589; Volume 2, chapter 6, pages 246-247
Storey, Commentaries on Equity Jurisprudence (1st English ed, 1884), paragraph1186, 1190
Story, Commentaries on Equity Jurisprudence (1st Eng ed, 1884), Chapter 32, paragraphs 1187-1191
Tudor on Charities (10th ed, 2015), paragraph [13-008]
Young, Croft and Smith, On Equity (2009), paragraph [6.500] note 297

Category:

Principal judgment

Parties:

Plaintiff: Paul Michael Russell (Executor)
First Defendant: Attorney General of NSW
Second Defendant: Theocharis (“Theo”) Polykarpou (father of deceased)
Third Defendant: Efpraxia (“Effie”) Polykarpou (mother of deceased)

Representation:

Counsel:
Plaintiff: G McNally SC
First Defendant: H El Hage
Second and Third Defendants: CJ Bevan

  Solicitors:
Plaintiff: Watkins Tapsell
First Defendant: NSW Crown Solicitor
Second and Third Defendants: Doyle & Associates

File Number(s):

2015/00366671

Judgment

INTRODUCTION

1. The principal questions for determination in this judgment are:

1. formally, whether, upon the proper construction of a will, a testamentary gift (to a specifically named corporation which was dissolved before the will took effect on the death of the testatrix) was a gift for charitable purposes; and

2. critically, if so, whether upon its proper construction, the will manifests a general charitable intention so as to warrant, and require, the gift to be administered cy pres.

2. If either of these questions is answered in the negative, the gift must be held to have failed in its entirety and the property the subject of the gift (with an estimated value, for probate purposes, of approximately $700,000) must be taken to be held by the executor of the deceased estate on trust for the deceased’s parents (pursuant to the Succession Act 2006 NSW, section 128) on a partial intestacy.

3. The first question (whether the will manifests a charitable intention) is, in substance, uncontroversial, but it is a necessary step towards the second question (whether the will manifests a general charitable intention). The second question is the critical one. Accepting that the gift was for charitable purposes, and that it failed (at least as to its mode of performance) because of the donee’s dissolution before the death of the donor, does the will manifest a general charitable intention that allows it to be administered cy pres, in a different mode of performance, via a scheme settled for that purpose?

4. Expressed in more summary terms, the question might be framed as: Whether, upon the proper construction her will, the deceased “dedicated” the property the subject of controversy to charity. The necessity for finding a general charitable intention, rather than merely a particular one, arises from the circumstance that a particular charitable gift has become impossible, or impracticable, of performance before taking effect. Once property is effectively dedicated to charity, whether in pursuance of a general or particular charitable intent, it remains so dedicated, to the exclusion of private interests otherwise entitled: Cram Foundation v Corbett-Jones and Anor [2006] NSWSC 495 at [49]-[50], citing, inter alia, In re Slevin; Slevin v Hepburn [1891] 2 Ch 237 and In re Wright; Blizard v Lockhart [1954] Ch 347 at 362-363.

5. Within this conceptual framework, a central question in dispute between the parties in these proceedings is whether the statutory presumption of a general charitable intention, for which section 10 of the Charitable Trusts Act 1993 NSW provides, applies to a testamentary gift to a defunct (charitable) institution without either: (a) an express statement of the purpose of the gift; or (b) an express “interposition” of a trust, between the deceased donor and the defunct donee, by an express imposition of the obligations of a trustee on an executor.

6. A determination of this question requires consideration of the proper construction of section 10, which, in turn, requires an appreciation of the purpose, nature and effect of: (a) the Charitable Trusts Act 1993; and (b) this Court’s underlying, general jurisdiction over charitable trusts and charitable gifts generally.

THE ESTATE THE SUBJECT OF LITIGATION

7. The deceased, Euphemia (“Mia”) Polykarpou, died on 2 March 2015, leaving an estate with an estimated value of about $1.4 million and a will dated 22 March 2004, probate of which was granted to the plaintiff on 20 October 2015.

PROCEDURAL CONTEXT

8. By a summons filed on 14 December 2015, the plaintiff applied (pursuant to the Trustee Act 1925 NSW, section 63) for judicial advice on the question whether he would be justified in making an application for a cy pres scheme in relation to the gift in question (a gift in favour of a not-for-profit corporation, Oprah Angel Network (“OAN”), incorporated in the State of Illinois in the United States of America) for which clause 4.2 of the will provides.

9. OAN was incorporated in 1998 and dissolved in 2010. It was an entity associated with the American media personality Oprah Winfrey. It was promoted on the Oprah Winfrey Show, televised in Sydney, where the deceased lived.

10. An affidavit sworn by one of her sisters describes the deceased as a regular viewer of the show. She, the deceased, is said to have “appeared to be very inspired by what Oprah talked about on her show and the show subject matter, particularly stories about people rising above adversity.”

11. On 9 February 2016 I made orders, the effect of which was:

1. to join as defendants in the proceedings the Attorney General of NSW, as the State’s protector of charities (the first defendant),and, as the persons entitled to the property in question in the event that the gift for which clause 4.2 provides has failed, the deceased’s parents (the second and third defendants); and

2. to authorise an amendment of the summons to include prayers for relief as to the proper construction of the will and (under the provisions of Part 54 of the Uniform Civil Procedure Act 2005 NSW governing applications for partial administration orders) directions for administration of the estate.

12. On 11 February 2016 an amended summons seeking such relief was duly filed.

13. At a directions hearing held before me on 25 February 2016, counsel for the Attorney General informed the Court that, pursuant to sections 6(1)(a) and 6(2A) of the Charitable Trusts Act 1993, the Attorney had granted her authority for the bringing, and continuation, of the proceedings.

14. That grant of authority is a substitute for the Attorney’s fiat, required under earlier legislation dating back to the Charities Procedure Act 1812 (UK) - Sir Samuel Romilly’s Act - for a private person to institute or maintain proceedings relating to the administration of a charitable trust. It relieves the Court of having to consider whether, pursuant to sections 6(1)(b) and 6(2A) of the Charitable Trusts Act, to grant leave for the proceedings to be brought, and continued, in the absence of authority granted by the Attorney.

15. At the same directions hearing, counsel for the plaintiff informed the Court that an entity associated with the now defunct OAN (the Oprah Winfrey Charitable Foundation) did not propose to appear on the Court’s hearing of questions about the proper construction of the deceased’s will, but might reasonably be expected to engage with the process of settling a cy pres scheme if the Court directs that the property the subject of clause 4.2 of the will be administered cy pres.

THE WILL

16. Omitting formal parts, the deceased’s will is in the following terms, so far as presently material:

“2. I APPOINT PAUL MICHAEL RUSSELL of ---------- [the plaintiff] as my Executor and Trustee BUT if he predeceases me or fails to survive me by thirty (30) days THEN I APPOINT FIONA KEATS of ----------- as my Executor and Trustee who in this Will is referred to as my “Executor”.

3. I GIVE the following bequests:

3.1 I GIVE my dog to SUSAN HILL and JANET BROADY of -----;

3.2 I GIVE my 2 paintings “Millennium” and “Tidal Waves” to PAUL

MICHAEL RUSSELL;

4. MY EXECUTORS [sic] shall hold the rest and residue of my Estate to divide as follows:-

4.1 As to a 50% part or share thereof to be used for research into the causes of and cures for MULTIPLE SCLEROSIS, the distribution and use of such funds, whether to any hospital, medical practitioner, scientist or research facility to be at the discretion of the Executor;

4.2 As to the remaining share thereof to ‘OPRAH ANGEL NETWORK’ 110N Carpenter Street, Chicago, Illinois 60607 United States of America.

5. I DIRECT that the receipt of the Chief Executive Officer / Treasurer of the beforementioned charity, hospital, research facility or the scientist or medical practitioner shall be a full and sufficient discharge to my Executors.

6. MY EXECUTOR shall have the following powers: -

6.1 to apply for the maintenance education or benefit of any beneficiary as my Executor considers fit the whole or any part of the capital of that part of my Estate to which that beneficiary is entitled or may in future be entitled;

6.2 to invest and change investments as freely as if my Executor is beneficially entitled and this power includes the right to invest in unsecured interest free loans or other non-income-producing assets including property for occupation or use by a beneficiary;

6.3 to sell lease or exchange or otherwise dispose of assets of my Estate on such terms as my Executor considers expedient as though my Executor is absolute beneficial owner;

6.4 to distribute at my Executor’s discretion all or part of any capital gain on any Estate asset and to determine at my Executor’s option that the nett income of any trust created by this Will should be the same as the taxable income.”

17. The plaintiff and the Attorney-General contend that the gif for which clause 4.2 provides was a gift of property to be held on trust for charitable purposes, in a will that manifests a general charitable intention attaching to that gift, such that, the mode of performance of the trust having failed, the Court can, and should, order that a cy-pres scheme be settled.

18. The second and third defendants contend that the gift for which clause 4.2 provides was a direct gift to a defunct (albeit charitable) institution without the intervention of a testamentary trust, with the consequence that:

1. it is not open to the Court, in any event, to order that a cy-pres scheme be settled, either under the Charitable Trusts Act or upon an exercise of the Court’s general jurisdiction;

2. the most that the Court can do (without the consent of the Attorney General) is to declare whether clause 4.2 manifests a general charitable intention, leaving any cy-pres scheme to be settled by the Crown in the event that such an intention is found; and

3. because any trust associated with the gift was established not by the deceased’s will but by the constitution of the donee of the gift (not in existence at the time of the deceased’s death), the presumption of a general charitable intention for which section 10(2) of the Charitable Trusts Act provides is deprived of any operation.

19. The second and third defendants’ submissions focused principally upon the third of these consequential propositions. However, their submission that the jurisdiction of the Court depends upon the existence of a (charitable) trust inferentially brings the first two propositions into play.

20. The second and third defendants expressly contend that, on its proper construction, unaided by the statutory presumption, clause 4.2 manifests no more than a particular charitable intention (which has failed).

21. The primary focus in these proceedings is on clause 4.2. However significance attaches to other provisions of the will because:

1. the description of the plaintiff as “Executor and Trustee” of the deceased in clause 2, the contrast between the words of gift in the respective introductory lines of clauses 3 and 4, and the powers conferred by clause 6 suggest that the deceased intended that the property the subject of clause 4.2 be held on trust rather than be an outright gift without the interposition of a trust.

2. the combination of two separate gifts in clause 4, and the terms of clause 5, support an inference that the deceased’s charitable intention (clearly manifest in clause 4.1 at least) was “general” rather than “particular” so far as concerns the proper characterisation of the gift for which clause 4.2 provides.

1. the existence of a general charitable intention also draws support from the absence in the will of any gift in favour of members of the deceased’s family, coupled with the fact that substantially the whole of her estate appears, on the face the will, to have been intended for charity.

22. The power of advancement contained in clause 6.1 appears incongruous with a disposition of substantially the whole of the deceased’s estate to charity (essentially, a gift to a purpose, or purposes, rather than a gift to a person); but the incongruity does not count for much, if anything, in the broad scheme of the will. The deceased appears to have contemplated that the plaintiff might advance the clause 4.1 gift by distributions to individuals, amongst others.

23. The existence of a charitable trust is a prerequisite for the operation of the Charitable Trusts Act, but, in my opinion, a trust is not essential to the Court’s general jurisdiction over charities.

24. For reasons explained in this judgment, and elaborated in the appendix to the judgment, I do not accept (as FM Bradshaw, in The Law of Charitable Trusts in Australia (Butterworths, Australia, 1983), at pages 145-146 and 157-158 and others, would have it) that the Court’s general jurisdiction to settle a cy pres scheme depends upon the existence of a trust.

25. This Court’s jurisdiction is not constrained, as that of the English High Court of Justice may still be, by self-imposed administrative constraints (adopted by Lord Eldon, as Lord Chancellor of England, in Moggridge v Thackwell (1802) 7 Ves 36 at 86; 32 ER 15 at 32 and Paice v Archbishop of Canterbury (1807) 14 Ves 364; 33 ER 560) that distinguish between “judicial cy-pres schemes” (involving a charitable trust) and “prerogative cy-pres schemes” (absent a trust), the latter type of which is reserved for the Crown’s consideration.

26. The terms upon which the Supreme Court of NSW was established in 1824, directed and authorised in 1828 to apply English law in NSW, and entrusted with additional, confirmatory jurisdiction by section 23 of the Supreme Court Act 1970 NSW do not confine the Court within the administrative structures within which Lord Eldon chose to operate. The very purpose of enactment of section 23 was to enable the Court to rise above procedural norms and jurisdictional demarcations that characterised the fragmented English Court system of the 1820s: Re AAA; Report on a Protected Person’s Attainment of the Age of Majority [2016] NSWSC 805 at [22]-[27].

27. If (contrary to my opinion) the jurisdiction of the Court to order a cy pres scheme does depend upon the existence of a (charitable) trust, and does not extend to property the subject of a direct gift made to charity (as suggested by In re Bennett, Deceased; Sucker v Attorney-General [1960] 1 Ch 18 at 24-26, applying Moggridge v Thackwell and Paice v Archbishop of Canterbury), the requirement that there be a trust is, in my opinion, satisfied in the present proceedings.

28. In any event, joinder of the Attorney in the proceedings, and her invitation to the Court to settle a cy pres scheme would, independently of the Charitable Trusts Act, overcome any jurisdictional impediment to the Court doing so (applying Re Conroy (1973) 35 DLR (3d) 752 at 755-756), drawing support from section 23 of the Supreme Court Act 1970 NSW (which confers on the Court “all jurisdiction which may be necessary for the administration of justice in NSW”).

29. Even if (contrary to my opinion) a want of a trust were to deprive the Court of jurisdiction to settle a cy pres scheme, it would avail the deceased’s parents of nothing because (on the English authorities summarised in In re Bennett) the Crown, as a royal prerogative, retains a power of disposition of property dedicated, by a direct gift, to charity.

30. There is little, if anything, to be gained in the administration of NSW charity law in recognising in the constitution of the Court jurisdictional limitations based on arcane modes of practice and procedure, driven by an historical demarcation of the judicial and executive functions of the Lord Chancellor in England, in a system of court administration foreign to NSW conditions, not reflected in the express terms of the constitution of the Court as established or developed.

31. Even if (as may be accepted) the Crown retains a power of disposition of property dedicated to charity by a direct gift, that provides no impediment to the existence of jurisdiction in the Court to adjudicate disputes about the due administration of charitable property or, upon an exercise of parens patriae jurisdiction, to give directions for the management of such property.

32. This is especially so given the symbiotic relationship between the Court (exercising parens patriae jurisdiction) and the Attorney General of NSW (as the State’s protector of charities) which is manifested, in practice, in the Court’s routine insistence that the Attorney General be consulted, and allowed an opportunity to be heard, in cases in which there is a risk that property may be lost to charity and, as and when necessary, in cases concerning the due administration of charitable property. Cf, Daniell’s Chancery Practice (8th ed, London, 1914), Volume 1, page 48; Uniting Church in Australia Property Trust (NSW) v Monsen [1978] 1 NSWLR 575 at 591.

33. The existence of a trust can be discerned, in the present case, in the language and structure of the deceased’s will. The factors noticed in paragraph 21(a) are sufficient to establish that.

34. Even if an actual intention that estate property be held on trust were not so clearly discernible, it is difficult to imagine a testamentary gift to charity (a gift to a purpose, not a person) that would be amenable to a finding that an executor holds estate property` the subject of the gift without coming under the obligations of a trustee.

35. Although a distinction is drawn between an executor and a trustee in analysis of the course of administration of a deceased estate, the nature of the powers and duties of a personal representative of a deceased person and the nature of a beneficiary’s interest in a deceased estate (eg. Commissioner of Stamp Duties (Qld) v Livingston [1965] AC 694 at 717C-F, upholding Livingston v Commissioner of Stamp Duties (Qld) (1960) 107 CLR 411 at 435, 451 and 459), it is nevertheless correct to say generally (as recorded in H Picarda, The Law and Practice Relating to Charities (Bloomsbury Professional, England, 4th ed, 2010) at page 479) that “all the property of the deceased devolves upon his [or her] personal representatives upon trust”.

36. In The Modern Cy-pres Doctrine (UCL Press, London, 2006) at pages 21-26, Rachael Mulheron’s survey of the authorities tends to suggest that little of practical significance is likely, in the modern era, to turn upon the distinction between “judicial and prerogative cy-pres powers” for a variety of reasons, including legislative developments and the fact that “the distinction between the two types of cy-pres has not always been observed in any event”.

37. In the course of her survey, she draws to attention the following observations by Slade J in Liverpool and District Hospital for Diseases of the Heart v Attorney General [1981] Ch 193 at 214B-D:

“In my judgment the so-called rule that the court’s jurisdiction to intervene in the affairs of a charity depends on the existence of a trust, means no more than this: the court has no jurisdiction to intervene unless there has been placed on the holder of the assets in question a legally binding restriction, arising either by way of trust in the strict traditional sense or, in the case of a corporate body, under the terms of its constitution, which obliges him or it to apply the assets in question for exclusively charitable purposes; for the jurisdiction of the court necessarily depends on the existence of a person or body who is subject to such obligation and against whom the court can act in personam so far as necessary for the purposes of enforcement.… “

38. Equity jurisprudence is familiar with analyses that require elaboration of the particular context in which the word “trust” is deployed and for the purpose of which, to provide a contrast, the term “trust in the strict sense” is used: eg, Clay v Clay (2001) 202 CLR 410 at 428[37]-432[43]. Such distinctions are commonplace upon an exercise of equity jurisdiction. They are not usually found, or readily justified, in delineation of the jurisdiction of a court (such as the Supreme Court of NSW) endowed with plenary equity jurisdiction.

39. At least some disputation about the existence or otherwise of a trust, as bearing upon the question whether the Court or the Crown provides the proper forum for administration of charitable property cy pres, seems to depend, not so much on whether there is a trust, as upon whether there is something more than a bare trust, some active duty for a trustee to perform and for the Court to enforce: AD Tyssen, The Law of Charitable Bequests (2nd ed, London, 1921), page 214; Tudor on Charities (10th ed, London, 2015), paragraph [13-008] note 30. This is a slender reed upon which to hang a denial of jurisdiction to a superior court constituted as a court of equity and entrusted, without qualification, as a repository of parens patriae jurisdiction.

40. If a cue is taken from the current edition of Tudor on Charities (10th edition, 2015), here cited, a failure of Macfarlane J in Re Conroy to appreciate that Re Songest [1956] 1 WLR 897 (a judgment followed by the Canadian court) did, in fact, involve a trust, rather than a direct gift to charity, lies on the fault line between In re Bennett (the principal modern authority for the proposition that the English High Court’s inherent jurisdiction over charities depends on the existence of a charitable trust) and Re Conway (regularly cited as a means by which a court can assume jurisdiction over a direct gift to charity sans a trust).

41. In some cases (as Mulheron suggests in The Modern Cy-pres Doctrine, at page 23) a direct gift to charity that fails may pass to the Crown bona vacantia, in which event it belongs to the Crown and the Crown can make its own decisions about how to deal with gifted property or (as Beggs v Kirkpatrick [1961] VR 764 at 767 illustrates) it can waive its bona vacantia claim and submit to an exercise of the Court’s general cy-pres jurisdiction. However, that such cases do not account for, or explain away, Moggridge v Thackwell, Paice v Archbishop of Canterbury, In re Bennett; and like cases (or the competing views associated with Re Conroy) is illustrated by the facts of this case. If the gift to OAN fails entirely, the property the subject of the gift does not pass to the Crown bona vacantia but to the deceased’s parents on a partial intestacy.

42. Although the different perspectives of In re Bennett and Re Conroy continue to be noticed in Australian texts (notably, HAJ Ford and WA Lee, Principles of the Law of Trusts (1st ed, Law Book Co, 1983), paragraph [2008] and the current edition, paragraph [20.290]; and Gino Dal Pont, Law of Charity (Lexis Nexis Butterworths, Australia, 2010), paragraphs [14.2]-[14.3]), I do not accept that the jurisdiction of the Supreme Court of NSW falls short of jurisdiction over a charitable gift, whatever might be the state of the law or practice in England, Canada or elsewhere.

43. The circumstances in which this Court was established in the 1820s, and subsequent developments, require that English case law on the subject be treated with caution in the different institutional setting of NSW.

44. The charity jurisdiction exercised as an incident of this Court’s “inherent” Equity Jurisdiction (preserved by section 22 of the Supreme Court Act 1970 and reinforced by section 23) is:

1. a compound of the general jurisdiction of the Court of Chancery over trusts, and the prerogative jurisdiction committed to the Chancellor, generally or in particular cases, by the sovereign as parens patriae; and

2. supplemented by section 23’s grant of “all jurisdiction which may be necessary for the administration of justice in NSW”.

45. The Charitable Trusts Act is not a universal code dealing with all questions that arise in charity law. It provides, rather, a legislative framework that includes (via the Attorney General as the State’s traditional “protector of charities” on a delegation from the Crown (Jordan, Chapters on Equity in NSW (6th ed, 1947, Sydney Law School), page 47) support for administrative arrangements designed to facilitate the due administration of charitable trusts, the guise in which problems relating to charity law most often appear. It does not displace the Court’s general jurisdiction over charities, described in Phillips v Roberts [1975] 2 NSWLR 207 at 222F-224B as including, but not limited to, an order that a charity be administered cy pres.

PARAMETERS OF CONTROVERSY

46. The focus for attention in these proceedings is on clause 4.2 and, incidentally, insofar as it may throw light on the deceased’s intention vis-a-vis clause 4.2, clause 4.1.

47. No party maintains that, if the clause 4.2 gift is taken to have failed entirely, the whole of the deceased’s residuary estate must be taken to have been absorbed in the gift for which clause 4.1 provides. The express limitation of the clause 4.1 gift to a 50% share of the deceased’s residuary estate stands in the way of a contrary construction.

48. The plaintiff and the Attorney General accept (in my opinion, correctly) that, if the clause 4.2 gift must be taken to have failed in its entirety, the property the subject of that gift is not disposed of by the deceased’s will and must be taken to have passed beneficially to her parents, the second and third defendants, on a partial intestacy.

49. Evidence establishes (and all parties accept) that, upon dissolution of OAN, there was no single charity which received its remaining assets upon an understanding that the recipient charity would carry on its work; there is no charity into which OAN merged or otherwise turned over its operations.

50. It is common ground between the parties that:

1. as understood in the law of charities, there is no successor to OAN and, OAN having been dissolved before the date of the testatrix’s death, the gift to OAN in clause 4.2 failed.

2. the definition of “charity” required to be applied is the standard legal definition enunciated in Commissioners for Special Purposes of the Income Tax v Pemsel [1891] AC 531 at 583-584.

3. the gift for which clause 4.1 of the will provides is a valid charitable trust (albeit that counsel for the second and third defendants contends that it depends for its validity on section 44 of the Succession Act 2006 because, he says, it effectively delegates the deceased’s will-making power to the plaintiff as executor).

4. the “corporate purpose(s)” of OAN, set out in article 4 of the company’s Articles of Incorporation ( constitution), are purposes which are “charitable” purposes within the meaning of Pemsel’s case.

5. the gift to OAN, in clause 4.2 of the deceased’s will, does not fall within categories A or B (but falls within the residual category C) of the exceptions to the lapsing rule for charitable institutions enunciated in Re Tyrie, deceased (No. 1) [1972] VR 168 at 177.

6. if the gift to OAN is regarded, upon the proper construction of the deceased’s will, to be a specific charitable gift (without manifestation of a general charitable intention) then it must be taken to have failed in its entirety and not to be amenable to a cy pres scheme: Re Estate Morgan [2015] NSWSC 184.

7. the principal question arising for determination as to the proper construction of clause 4.2 of the will is whether the deceased had a particular charitable intention that failed (as the second and third defendants contend) or whether she had a general charitable intention that enables, and requires, the gift to be applied cy pres (as the plaintiff and the Attorney General contend).

51. Category C of the exceptions to the lapsing rule for charitable institutions enunciated in Re Tyrie can be summarised as having the following field of operation in the current context: If the deceased is found, upon the proper interpretation of her will, to have had a dominant intention to benefit work or purposes of the kind which OAN carried out, notwithstanding that OAN itself might no longer exist at her death, and, if it was practicable as at the date of her death to apply the gift to OAN for the benefit of work or purposes of that kind, and in a way in which is in all respects consistent with any other elements of the dominant intention of the testatrix, then the gift is to be so applied by means of a cy pres scheme.

52. All parties accept (correctly) that the fact that OAN was established in the United States, and that its charitable purposes were carried out outside Australia, does not, of itself, affect the validity of OAN as a charity under the law of New South Wales: Lander v Whitbread [1982] 2 NSWLR 530; Goldwyn v Mazal [2003] NSWSC 427 at [37]-[46]; Dal Pont, Charity Law in Australia and New Zealand (Oxford UP, Melbourne, 2000), pages 26-29; Dal Pont, Law of Charity (2010), pages 75-78.

53. Implicit confirmation of this now orthodox view of the law may be found in section 4(1) of the Charitable Trusts Act 1983. It provides that the Act “applies in respect of a charitable trust even though: (a) it was established outside New South Wales, or (b) the trust property is not situated in New South Wales, or (c) the trustees are not domiciled or resident in New South Wales.”

54. In the Charitable Trusts Act, section 3 contains the following definitions:

“‘charitable trust’ means any trust established for charitable purposes and subject to the control of the Court in the exercise of the Court’s general jurisdiction with respect to charitable trusts.

‘Court’ means the Supreme Court of New South Wales.

‘Trust property’ means any property subject to the charitable trust concerned.”

55. No party in these proceedings contends that there is a territorial, jurisdictional impediment to settlement of a cy pres scheme for the gift for which clause 4.2 of the deceased’s will provides if the questions for determination in this judgment are answered in the affirmative.

56. In any event, for the record, I note that the deceased was domiciled in New South Wales, she died leaving property in the State, probate of her will was granted by this Court in exercise of its probate jurisdiction and the whole of estate presently remains within the State.

57. In their submissions, the second and third defendants flirted with (but did not press) a contention that a proper determination of the questions addressed by this judgment requires evidence of the law of the US State of Illinois. Nevertheless, no evidence of Illinois law was adduced by any party beyond extracts from legislation incorporated by reference in Article 4 of OAN’s Articles of Incorporation, together with correspondence from the Oprah Winfrey Charitable Foundation verifying the incorporation and dissolution of OAN, and the non-existence of an institutional successor.

58. Beyond that, it is sufficient for present purposes, to record that, in the absence of evidence to the contrary, the parties have proceeded upon the basis that the law of Illinois is presumed to be the same as the law of New South Wales: M Davies, AS Bell and PLG Brereton (eds), Nygh’s Conflict of Laws in Australia (9th ed, Lexis Nexis, Australia, 2014), chapter 17. For the purpose of these proceedings, at this stage of the proceedings at least, the Court can properly act on that basis: Damberg v Damberg (2001) 52 NSWLR 492 at 505 [119]-[120], 518 [148] and 522[160].

59. If trust property is to be administered cy pres outside NSW, the Court (or, upon a reference from the Court under sections 13-14 of the Charitable Trusts Act, the Attorney General) may need to give closer consideration to foreign law, practice and practicality in settling a scheme: Kytherian Association of Queensland v Sklavos (1958) 101 CLR 56 at 70-71; Story, Commentaries on Equity Jurisprudence (1st English ed, 1884), paragraph 1186; Dal Pont, Charity Law in Australia and New Zealand (2000), pages 259-260; Dal Pont, Law of Charity (2010), paragraph [3.55].

THE OBJECTS OF THE CORPORATE DONEE

60. So far as is currently material, Article 4 of OAN’s Articles of Incorporation provided as follows (with emphasis added):

“Article 4. Corporate purpose

The purposes for which Oprah Angel Network (the ‘Corporation’) is organised are to receive or maintain a fund or funds and to administer and apply the income and principal thereof solely for the betterment, support and enrichment of women and children in need or for educational purposes and to the extent the funds are not used for the aforementioned purposes, then for religious, charitable, scientific, literary or educational purposes, but only to the extent and in such manner that such purposes constitute exclusively charitable and educational purposes within the meaning of Sections 501(c)(3) and 170 (c)(2)(B) of the Internal Revenue Code of 1986, as amended from time to time (the ‘Code’), or any successor provisions thereto, including, for such purposes, the making of distributions to organisations that qualify as exempt organisations under Section 501 (c)(3) Code.

No part of the net earnings or assets of the Corporation shall inure to the benefit of, or be distributable to its members, directors or officers or other private persons (except that the Corporation shall be authorised and empowered to pay reasonable compensation for services rendered to and reimbursement of expenses incurred on behalf of the Corporation and to make payments and distributions in furtherance of its purposes as set forth in these Articles of Incorporation). No substantial part of the activities of the Corporation shall be the carrying on of propaganda or otherwise attempting to influence legislation, and the Corporation shall not participate in, or intervene in (including the publishing or distributing of statements) any political campaign on behalf of or in opposition to any candidate for public office.

Notwithstanding any other provisions of these Articles of Incorporation or the laws of any jurisdiction otherwise applicable, the Corporation shall not carry on any activities not permitted to be carried on and shall not make any distribution not permitted to be made (a) by an organisation exempt from Federal income tax under section 501(c)(3) of the Code, or (b) by an organisation contributions to which are deductible under section 170(c)(2) of the Code.

Gifts may be made to other corporations, trusts or community chests, funds or foundations, or associations operated exclusively for religious, charitable, scientific, literary or educational purposes, no part of the net earnings of which inures to the benefit of any private shareholder, member or individual having a personal or private interest in the activities of the Corporation, and no substantial part of the activity of which corporation is the carrying on of propaganda or otherwise attempting to influence legislation or participating in political activities on behalf of a candidate for public office.

Upon the dissolution of the Corporation, the Board of Directors [of the Corporation] shall, after paying or making provision for the payment of all the liabilities of the Corporation, dispose of all of the assets of the Corporation exclusively for organisations organised and operating exclusively for charitable and educational purposes as shall at the time qualify as an exempt organisation or organisation under section 501(c)(3) of the Code, as the Board of Directors shall determine….”

61. Section 170 of the Internal Revenue Code provided, within defined limits, a tax deduction for a “charitable contribution”. Section 170(c) provided that, for the purposes of the section, the term “charitable constitution” meant a contribution or gift to or for the use of particular entities. Section 170(c)(2)(B) identified as such an entity “[a] corporation, trust or community chest, fund or foundation… organised and operated exclusively for religious, charitable, scientific, literary, or educational purposes, or to foster national or international amateur sports competition (but only if no part of its activities involve the provision of athletic facilities or equipment), or for the prevention of cruelty to children or animals.”

62. Section 501 of the Internal Revenue Code provided a list of organisations exempt from taxation. Section 501(c)(3) provided for inclusion in that list: “corporations, and any community chest, fund or foundation, organised and operated exclusively for religious, charitable, scientific, testing for public safety, literary, or educational purposes, or to foster national or international amateur sports competition (but only if no part of its activities involve the provision of athletic facilities or equipment), or for the prevention of cruelty to children or animals, no part of the net earnings of which inures to the benefit of any private shareholder or individual, no substantial part of the activities of which is carrying on propaganda, or otherwise attempting, to influence legislation [except in defined cases to which no party attributes present significance], and which does not participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of (or in opposition to) any candidate for public office.”

GENERAL PRINCIPLES GOVERNING CONSTRUCTION OF THE WILL

63. Each of the questions for determination requires construction of the deceased’s will.

64. For the purpose of these proceedings, the principles governing construction of the will to which I have had regard can be summarised in the following terms:

1. As confirmed by Bryson J in Hatzantonis v Lawrence Cox [2003] NSWSC 914 at [6]-[8], the starting point is the following statement in Perrin v Morgan [1943] AC 399 at 406:

“… the fundamental rule in construing the language of a will is to put on the words used the meaning which, having regard to the terms of the will, the testator intended. The question is not, of course, what the testator meant to do when he made his will, but what the written words he uses mean in the particular case – what are the “expressed intentions” of the testator.”

2. As remarked by Powell J in Coorey v Coorey (NSW Supreme Court, 22 February 1986, unreported), repeated by Bryson J in Perpetual Trustee Co Limited v Wright (1987) 9 NSWLR 18 at 33 and adopted in subsequent cases (as illustrated by Hatzantonis v Lawrence Cox [2003] NSWSC 914 at [10] and Lockrey v Ferris [2011] NSWSC 179; 8 ASTLR 529 at [44]-[45]), the Court’s “task is, first, if it be possible, to ascertain what was the basic scheme which the deceased had conceived for dealing with his estate and then, so to construe the will as, if it be possible, to give effect to the scheme so revealed”.

3. Evidence of the circumstances surrounding the deceased is admissible to assist in construction of her will so that the Court can place itself in her “arm-chair” when she made the will: Boyes v Cook (1880) 14 ChD 53 at 56. The Court is entitled to put itself in the position of the deceased, and to consider all material facts and circumstances known to her with reference to which she is to be taken to have used the words used by her in her will: Allgood v Blake (1873) LR 8 Exch 160 at 162. Accordingly, the Court may admit evidence of the deceased’s habits and knowledge of persons or things: Parry v Haisma [2012] NSWSC 290 at [11].

4. The will must be construed as a whole: Fell v Fell (1922) 31 CLR 268 at 273-274.

5. By section 32 of the Succession Act 2006 NSW, evidence extrinsic to the will can be admitted to assist in interpretation of the language used in the will if that language makes the will, or any part of it, meaningless, ambiguous on the face of the will, or ambiguous in the light of surrounding circumstances.

6. The Court leans against an intestacy, and does not presume that a testator meant to die intestate if, on a fair construction, there is reason for saying the contrary: Fell v Fell (1922) 31 CLR 268 at 275-276.

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

8. If a donee exists exclusively for charitable purposes, a gift to it, absent a contrary intention, is a gift for its charitable purposes; a gift for a charitable institution is, prima facie, a gift for charitable purposes: Smith v West Australian Trustee and Executor & Agency Co Limited (1950) 81 CLR 320 at 322 and 325; The Sydney Homoeopathic Hospital v Turner (1959) 102 CLR 188 at 203; Stratton v Simpson (1970) 125 CLR 138 at 163.

9. Under the general law, a general charitable intention may be found if the will manifests a charitable intention wider than the execution of a specific plan involving the particular failed gift; that is, an intention which, while not going beyond the bounds of the legal conception of charity, is more general than a bare intention that the impracticable direction represented by the gift (in clause 4.2 of the deceased’s will) to the now defunct 0AN be carried into execution as an indispensable part of the will: Attorney General (NSW) v Perpetual Trustee Co Limited (1940) 63 CLR 209 at 225.

A STATUTORY PRESUMPTION IN FAVOUR OF A GENERAL CHARITABLE INTENTION?

65. The parties (the plaintiff and the Attorney General, on the one hand, and the second and third defendants, on the other) are at issue over the proper construction of the Charitable Trusts Act 1993 NSW, section 10. The plaintiff and the Attorney contend that the section applies to the deceased’s will. The second and third defendants contend otherwise. All are agreed that, if it does apply to the will, there is nothing in the will to rebut the statutory presumption.

66. Section 10 appears in Part 3 of the Charitable Trusts Act 1993, which is in the following terms (with emphasis added):

“Part 3 Application of charitable property cy pres

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.

10 Requirement for general charitable intention of donor

(1) This Part does not affect the requirement that trust property can not be applied cy pres unless it is given with a general charitable intention.

(2) However, a general charitable intention is to be presumed unless there is evidence to the contrary in the instrument establishing the charitable trust.

11 Duty of trustee to secure application of trust property cy pres

A charitable trust places a trustee under a duty, if the case permits and requires the trust property or any part of it to be applied cy pres, to secure its effective use for charitable purposes by taking steps to enable it to be so applied.”

67. The Attorney General submits, and I accept, that section 9 is not relevant to the construction issue that presently arises for determination; namely, whether a general charitable intention exists. Section 9 permits the Court to alter the purposes of a charitable trust where its original purposes have ceased to provide a suitable and effective method of using trust property, not merely where they have become impossible of performance: Attorney General (NSW) v Fred Fulham [2002] NSWSC 629 at [16]-[17]; Dobrijevic v Free Serbian Orthodox Church, Diocese for Australia and New Zealand Property Trust [2015] NSWSC 637 at [46] -[431].

68. On established authority, section 10(2), on its proper construction, is concerned, not with whether an intention is charitable, but with whether a charitable intention is general; there is nothing in the section which alters the requirement of the general law that, before a general charitable intention becomes relevant, the Court must find that a disposition is for a charitable purpose: Public Trustee v Attorney General(NSW) (1997) 42 NSWLR 600 at 609; McLean v Attorney General (NSW) [2002] NSWSC 371 at [49]-[ 53], [60] and [66]-[67].

69. The plaintiff and the Attorney General support this construction of the section.

70. The second and third defendants contend that section 10(2) should be construed as not applying to a disposition in a will that provides for a gift to a charitable institution simpliciter because:

1. any “charitable trust” established by such a disposition is established by the constitution of the institution (binding the institution to apply property for only charitable objects) rather than the will; and

2. if the will were to be characterised as “the instrument establishing the charitable trust”, section 10(2) would involve circular reasoning (of the type criticised in Independent Commission Against Corruption (NSW) v Cunneen [2015] HCA 14; 89 ALJR 475; 318 ALR 391 at [33] and [60]), no valid trust being “established” unless a “general charitable intention” (the subject of a statutory presumption) in fact exists.

71. I reject the first of these contentions because, correctly understood, “the instrument establishing the charitable trust” within the meaning of section 10 (2) is the will which makes a gift for charitable purposes (defined by reference to the charitable objects of the donee), not the constitution of the donee which implicitly circumscribes the gift.

72. A gift for a charitable institution is a gift for charitable purposes; and a trust for an institution whose objects are predominantly charitable may come within section 23 of the Charitable Trusts Act (formerly section 37D of the Conveyancing Act 1919 NSW), which saves a charitable trust from invalidity if its objects include some non-charitable, as well as charitable, purpose: Stratton v Simpson (1970) 125 CLR 138 at 163. The donee is bound to apply the gift for the charitable purposes for which it was given; if it does not do so, it is guilty of a breach of trust: Smith v West Australian Trustee Executor and Agency Co. Ltd (1950) 81CLR 320 at 322-323, 324 and 325. That the charitable nature of the gift arises from the objects of the donee (The Sydney Homoeopathic Hospital v Turner (1959) 102 CLR 188 at 202-203) does not detract from the fact that the instrument establishing a charitable, testamentary trust is the will, not the constitution of the donee.

73. I reject the second of the second and third defendants’ contentions for several, cumulative reasons.

74. First, section 10(2) is directed to an “instrument establishing [a] charitable trust”, an expression which (courtesy of the definition of “charitable trust “ in section 3) means a trust:

1. established for charitable purposes; and

2. subject to the control of the Court in the exercise of the Court’s general jurisdiction with respect to charitable trusts.

75. There is no circularity in the statutory definition of “charitable trust” because of the reference in the second limb of the definition to “charitable trusts”. The Court’s “general jurisdiction with respect to charitable trusts” exists independently of the Charitable Trusts Act and is not abrogated, but supplemented, by the Act.

76. Secondly, an ordinary incident of the Court’s “general jurisdiction with respect to charitable trusts” is the jurisdiction to determine whether a trust “established for charitable purposes” is, or is not, a valid charitable trust under the general law.

77. Under the general law a “trust established for charitable purposes” is not necessarily valid merely because it has been established “for charitable purposes”. But for section 23 of the Charitable Trusts Act, a trust established for charitable purposes could be invalid if the purposes for which it has been established include a non-charitable purpose. In any event, the validity of a charitable trust depends, not only upon the existence of a charitable object, but also upon a requirement that the trust benefit the public: Bradshaw, The Law of Charitable Trusts in Australia (1983), pages 53-55; JD Heydon and ML Leeming (eds), Jacobs’ Law of Trusts in Australia (Lexis Nexis Butterworths, Sydney, 7th ed, 2006), paragraphs [1006]-[1016]. It remains the case that a “trust established for charitable purposes” might fall short of a valid charitable trust. A trust established for a charitable purpose might, for example, as is suggested in the present case, fail, at least as to its mode of performance, by the donee of a charitable gift becoming defunct before a testamentary gift takes effect. A testamentary trust can be a “trust established for charitable purposes” even if, under the general law, it is held not to have established a valid charitable trust.

78. Thirdly, the expression “any trust established for charitable purposes” in the statutory definition of “charitable trust” finds an echo in the expression “the instrument establishing the charitable trust” in section 10(2).

79. Incorporating the statutory definition of “charitable trust” in section 10, section 10(2) reads, in its extended form, as follows:

“… a general charitable intention is to be presumed unless there is evidence to the contrary in the instrument establishing a trust established for charitable purposes and subject to the control of the Court in the exercise of the Court’s general jurisdiction with respect to charitable trusts” .

80. As apparent from this extended paraphrase of section 10(2), the reference in the subsection to “the instrument establishing the charitable trust” is a reference to an instrument that constitutes a “trust established for charitable purposes” which is subject to the Court’s control, whether or not the trust is ultimately found to be a valid charitable trust under the general law.

81. Fourthly, the reference in section 10(1) to “trust property” (defined by section 3 to mean “any property subject to the charitable trust concerned”), in the context of an affirmation of the general law requirement that property be dedicated to charity if a cy pres scheme is to be settled, confirms the field of operation of section 10(2) as one in which a “trust established for charitable purposes” may be held to have failed unless the instrument establishing the trust is found to have manifested a general charitable intention.

82. Fifthly, the statutory authority given to the Attorney General by section 12(1)(a) to “establish a scheme for the alteration of the original purposes of a charitable trust so as to enable the trust property or any part of it to be applied cy pres if it appears to the Attorney General that the trust property or any part of it may be so applied” is predicated upon an acceptance that a “trust established for charitable purposes” (within the definition of “charitable trust” in section 3) might fail but for establishment of a scheme that enables a charitable intention to be given effect by a different mode of performance.

83. Sixthly, in the context in which it appears, the ordinary meaning of the word “presumed” in section 10(2) is that of a synonym for “assumed”.

84. Seventhly, and importantly, an evident object of section 10(2) is to reverse the onus of proof on the question of “general charitable intention” in determining, if and when required for a determination of, the validity of a trust for charitable purposes.

85. In my opinion, the second and third defendants’ construction of section 10 cannot survive a close examination of the text of the Charitable Trusts Act as a whole. The construction given to section 10(2) by Public Trustee v Attorney General (NSW) and McLean v Attorney General(NSW) is, in my opinion, correct.

80. Its correctness may be corroborated by reference to the Interpretation Act 1987 NSW, section 33 (which enjoins a purposive construction of legislation) and, further and alternatively, extrinsic materials approved by section 34 of the Act as an aid to interpretation of legislation: (a) the Explanatory Note to the Parliamentary Bill that became the Charitable Trusts Act; (b) the second reading speech made on behalf of the then Attorney General of NSW in support of the Bill; and (c) the Report on the Law relating to Charitable Trusts (May 1989) made to the Victorian Parliament by its Legal and Constitutional Committee, identified in the Explanatory Note as a source for what became section 10 of the Charitable Trusts Act.

81. The following extracts from the Explanatory Note (with emphasis added) provide insight into the origins and purpose of the Charitable Trusts Act, in general, and section 10, in particular:

“The objects of this Bill [the Charitable Trusts Bill 1993 NSW] are:

(a)    to clarify, and to some degree extend, the jurisdiction of the Supreme Court with respect to the protection of charitable property; and

(b)   to extend the circumstances [in] which the original purposes of a charitable trust fail and those purposes can be altered to allow the trust property to be applied cy pres (ie for similar purposes); and

(c)   to enable the Attorney General (as well as the Supreme Court) to establish schemes for the administration of charitable trusts, including cy pres schemes; and

(d)   to consolidate existing statutory provisions relating to charitable trusts; and

(e)   to make other minor amendments to the law relating to charitable trusts. …

PART 3 – APPLICATION OF CHARITABLE PROPERTY CY PRES

Extension of the occasions for applying trust property cy pres

Clause 9 extends the circumstances in which the original purposes of a charitable trust fail and the trust property can be applied cy pres ie for a similar purpose. The circumstances are to extend to trusts whose original purposes have ceased to provide a suitable and effective method of using the trust property having regard to the spirit of the trust. A similar extension has been made in other States.

Requirement for general charitable intention

Clause 10 preserves the requirement of the existing law that charitable property cannot be applied cy pres if it was given only for the purpose of the trust and without any general charitable intention. However, the clause creates a presumption in favour of a general charitable intention.

The presumption was recommended by the Legal and constitutional Committee of the Victorian Parliament in its report on charitable trusts of May 1989.

Duty of Trustee to secure application of trust property cy pres

Clause 11 is being enacted to declare the duties of trustees of a charitable trust if the original purposes of a charitable trust fail. The duty to apply trust property cy pres was first stated in the National Anti-Vivisection Case (see National Anti-vivisection Society v Inland Revenue Commissioners [1948] AC at p 74.) The clause is in the same terms as section 13(5) of the UK Charities Act 1960 and section 2(4) of the Charities Act 1978 of Victoria.…

88. The following extracts are taken from the second reading speech as reproduced in Hansard (Parliamentary Debates) in the Legislative Council of NSW on 11 March 1993 (with emphasis added):

“The Charitable Trusts Bill has two principal objects. First, it will codify and, to some degree, extend the jurisdiction of the Supreme Court with respect to the management of charitable trusts. Second, the Bill will enable the Attorney General to establish schemes for the cy-pres administration of charitable trusts which have failed. To a large extent the bill’s objects have their origin in the United Kingdom’s Charities Act 1960. Similar provisions to that United Kingdom legislation have been enacted in Victoria, Queensland, South Australia and Western Australia. In drafting this bill the opportunity has been taken to learn from the experience of these other jurisdictions. The Supreme Court’s powers in relation to charities are primarily a result of its general and inherent jurisdiction. While this jurisdiction is extensive, it is not articulated. Accordingly, the bill will clearly identify certain specific powers of the court without in any way limiting the court’s jurisdiction.

The bill will clarify and make specific the powers of the Supreme Court to deal with misconduct or mismanagement in the administration of a charity and will give the court the power to remove a person associated with a charity and to freeze the funds of a charity. The Bill will also introduce a scheme whereby the Attorney General may settle administrative and Cy-pres schemes for charities and charitable trusts where the funds involved are less than $500,000. Cy-pres schemes are necessary in circumstances where the original purposes of a charitable trust fail but there is a similar purpose to which the trust property can be applied. Such circumstances can arise where a particular institution, which is intended to receive a charitable bequest, ceases to exist. Alternatively, the precise object of the testator’s charitable intention may prove to be impossible to achieve. The doctrine of Cy-pres, which literally means ‘so near’ or ‘or near’, allows property to be used for another similar charitable purpose as that which has failed. …

A number of other matters are also dealt with in this bill. First, the bill will provide that, in determining whether a trust is charitable, there should be a presumption in favour of a general charitable intention unless a testator indicates a contrary intention in his will. Second, the bill will provide that a trustee of a charitable trust is under a duty, where the case permits the trust funds or any part thereof to be applied Cy-pres to secure their effective use for charitable purposes. Third, the bill will expand the test of when a charitable trust fails, to provide that a trust also fails when it ceases to be a suitable and effective method of using trust property. Finally, the bill will re-enact section 37D of the Conveyancing Act. This section provides that no charitable trust will be invalid because of the inclusion of invalid non-charitable purposes. In view of the subject-matter dealt with in section 37D it is felt that it would be more appropriate for the section to be located with other laws governing charitable trusts. The Charitable Trust Bill will simplify the law and clarify the application of principles of charity law. It will assist in the administration of charitable trusts. …”

89. The Victorian Report on the Law relating to Charitable Trusts (at page 54) attributes to Professor WA Lee, then a Reader in Law at the University of Queensland, the suggestion that Parliament could enact a statutory presumption of general charitable intention.

90. Paragraph [4.3], on pages 52-55, of the Report, leading to the Committee’s Recommendation 9, is in the following terms (omitting formal references but with emphasis added, to the text, in bold):

4.3 General Charitable Intention

If a charitable purpose is unable to be carried out before any funds have been applied, there is what is termed an initial failure of the trust itself. Before the cy pres doctrine can be brought into play in such a case, the validity of the trust must be established. In order to do this, the courts have developed an additional requirement to be met. This obliges them to discern that the trust creator did not only have the particular (failed) charitable purpose in mind, but also had a general charitable intention to benefit charitable work of that kind.

This may happen because a particular institution named to benefit never existed or the property may be simply unsuitable for the specified purpose. This should be contrasted with those trusts the purposes of which have been implemented for a time, but which subsequently cannot be carried out.

The requirement justifies, as Ford and Lee have put it [in Principles of the Law of Trusts (Law Book Co, Sydney, 1983), paragraph 2014], ‘the deprivation of the creator’s family of a fund settled on trust while applying it for a purpose different from the impracticable purpose defined by the creator’. ... The modern rule was developed in the late 18th century, and can be neatly summarised in the statement of Lord Elden [sic] in the case of Moggeridge v Thackwell ((1802) 7 Ves 36, 69):

If a testator manifests a general intention to give to charities, the failure of a particular mode in which the charities is to be effectuated shall not destroy the charity; but if the general intention is charity the law will substitute another mode of devoting the property to charitable purposes, although the formal intention as to the mode cannot be accomplished.

Where a charitable trust failed before it took effect, it could no longer be presumed but had to be proved that the creator had a general charitable intention to dedicate the property to charities. In Australia, the High Court has interpreted the rule in a manner which, in Mr Lee’s words, is ‘in jurisprudential terms, virtually perfect and extremely liberal’. … In the case of the Attorney General for NSW v Perpetual Trustee Company Limited, it was said by Dixon and Evatt JJ, that the

‘general intention’ of charities means only an intention which, while not going beyond the bounds of the legal conception of charity, is more general than a bare intention that the impracticable direction be carried into execution is [sic] an indispensable part of the trust declared. ((1940) 63 CLR 209, 225)

The Charities Act 1978 [Vic] makes no specific mention of this common law requirement. However, it is commonly considered that subsection 2(ii) retains it .

The Committee notes that other jurisdictions have criticised the rule and some, such as New Zealand and Western Australia, have dispensed with it. ... The Ontario Law Reform Commission recommended that consideration of whether the creator had a particular or general charitable intention should be irrelevant. … One United States commentator referred to the doctrine as establishing the grip of ‘the dead hand’ of the creator over property. Professor Chester argued that the progress made by American courts in applying the cy pres doctrine had come to a standstill in the 1970s ‘due to the persistence of the requirements of general charitable intent, a remnant of the stress on individual property so prevalent in Anglo-American common law’. … Thus the American Restatement of Trusts suggests a thirty year period for operation of the rule and the doctrine after which a trust must remain permanently dedicated to charity. …

However the Victorian Chief Justice’s Law Reform Committee did not accept such proposals as desirable, and concluded that ‘the Court should not be empowered to take the property from those who would otherwise be entitled to it. … [it] appears to be unjust’. …

Evidence before the Committee supported the retention of the rule in some form. Submissions pointed to its significance in justifying the application of the cy pres doctrine, and its importance in relation to carrying out the creator’s wishes. However, Mr Bradshaw noted that ‘the courts are very ready to find a general [charitable] intention’. … Mr Lee suggested that the Parliament could legislate that a general charitable intention is to be presumed in all cases unless the will or deed establishing the trust provided to the contrary. It was also supported by other submissions as being, in effect, declaratory of the present practice of the courts.

The advantage of a legislative presumption is that it retains the rule but shifts the burden of proof. It would require a trust instrument to clearly demonstrate that if the purpose could not be carried out, then it should revert to the estate or to the residuary beneficiaries. It would thereafter enshrine in legislation the existing practice, but catch those cases in which there may be some doubt as to whether a charitable intention could be discerned and retain these for charitable purposes. This still allows the creator of the trust to negate the presumption. It may also, as Mr Lee suggests, avoid any unnecessary aspect of charitable trust litigation. The Committee notes that the Ontario Law Reform Commission qualified its proposal to remove the requirement. It provided that where there was clear evidence of the creator turning his or her mind to the consequences of a failure of the trust purpose, such as a gift over or reversion, then such a provision should take effect.

The Committee also notes that presumption is operative already in section 3 of the Charities Act. This section deals with the application of money given by donors for particular charitable purposes which fail, where the donors have disclaimed the right to have the money returned or cannot be found. This may be the case in a large public appeal for a particular community purpose which fails to reach the required money to carry out the purpose. The section allows funds raised for specific charitable purposes which have failed to be applied to cy pres as if given with a general charitable intention and is given by a donor who cannot be identified or found or has disclaimed. The Committee therefore recommends that a section be included in the Charities Act to make operative an assumption of a general charitable intent in a creation of a charitable trust unless specific provision is made to the contrary in the trust instrument.

Concern was expressed by one submission that trustees should be able to apply to be released from terms of trusts which they consider to be undesirable or inappropriate. The Committee is aware that trustees may encounter difficulties when faced with trusts which contain terms restricting their application by reference to race, gender or creed. However, it notes that such matters have on occasion been the subject of cy pres applications, and in these cases, as the editors of Tudor on Charities note, where such a subsidiary condition is attached, ‘the performance of which, in a state of public opinion existing in his death, is undesirable, and calculated to impair the carrying into effect the main purpose, the court can and will allow the legacy to be paid or acquired freed and discharged from the condition’. … In such cases, the courts are prepared to save the trust from the refusal of a reluctant but essential trustee by finding a general charitable intent which would justify the direction of a cy pres scheme. … This then falls squarely within the present cy pres doctrine. The Committee believes that the assumption of a general charitable intention in the absence of disclaiming words would give further freedom to trustees to bring to the court’s intention similar impediments to the successful fulfilment of the creator’s wishes.

RECOMMENDATION 9

The Committee recommends that the Charities Act 1978 be amended to provide that, for the purposes of any variation of the purpose(s) of a charitable trust, a general charitable intention on the part of the trust creator shall be assumed, unless there is clear evidence or a specific provision to the contrary in the trust instrument. …”

91. These extrinsic materials reinforce a determination that section 10 was intended to apply to testamentary charitable trusts; and to supplement the general law’s tendency towards finding a general charitable intention by providing a “presumption”, in the nature of an “assumption”, of a general charitable intention on the part of the trust creator.

92. On the whole, the extrinsic materials confirm that the proper construction of section 10(2) of the Charitable Trusts Act accords with the ordinary meaning of the text as discerned in Public Trustee v Attorney General (NSW) and Maclean v Attorney General (NSW).

93. There is no dispute in the current proceedings (and, in any event, I find) that OAN is correctly to be characterised as a “charitable institution”. Accordingly, the gift to it found in clause 4.2 of the deceased’s will is, prima facie, to be characterised as a gift for OAN’s charitable purposes. Although clause 4.2 does not, in terms, record that the gift is for OAN’s charitable purposes, that can be taken as read. The true focus of contention in these proceedings is not the existence of a “charitable intention” but the existence, or otherwise, of a “general charitable intention”.

VALIDITY OF THE DECEASED’S TRUST FOR CHARITABLE PURPOSE

94. Having satisfied myself that section 10(2) applies to the deceased’s will, I am no less satisfied that there is nothing in the will to rebut the statutory presumption of a general charitable intention.

95. It follows from this that, notwithstanding the failure of the gift to OAN as a mode of performance of the deceased’s charitable intention: (a) the property the subject of the gift for which clause 4.2 of the will provides is dedicated to charity; and (b) a cy pres scheme should be settled.

96. That determination is enough to conclude this phase of proceedings relating to the deceased’s estate, leaving only the question of costs.

97. Nevertheless, I record my determination that, upon an assumption that the statutory presumption for which section 10(2) provides does not apply to the deceased’s will, the will, construed from the perspective of the deceased’s armchair, manifests a general charitable intention .

98. I make this determination because:

1. read as a whole, the will manifests (in clauses 4 and 5) an intention that substantially the whole of the deceased’s estate pass to charity.

2. that expression of intention incorporates a deliberate passing over of family and friends of the deceased.

3. the gift to OAN, in substance, constitutes a trust not for a person but for a purpose (Attorney General (NSW) v Perpetual Trustee Co Limited (1940) 63 CLR 209 at 222; Perpetual Trustee Co v MacKenzie (1917) 17 SR (NSW) 660 at 667), primarily that identified in the first paragraph of Article 4 of OAN’s Articles of Incorporation; namely, “for the betterment, support and enrichment of women and children in need or for educational purposes”.

4. the character of the charitable causes favoured by the deceased, in both clause 4.1 and clause 4.2 of the will, suggests a wider philanthropic intention then a fixed, particular charitable purpose.

99. These manifestations of testamentary intention are reinforced by evidence extrinsic to the will: First, a statutory declaration made contemporaneously with the will in which the deceased recorded (perhaps unfairly to her family) that, in the 14 years since she had left the home of her parents, there had been no domestic or financial interdependency between herself, on the one hand, and, on the other hand, her parents and siblings; and, secondly, observations of a sister about the fact of Oprah Winfrey’s influence on the deceased with “stories about people rising above adversity”.

100. A fair inference (which I draw) from the will, and evidence extrinsic to it, is that, in naming OAN as the donee of a gift, the deceased intended to give that part of her estate the subject of the gift to the charitable objects for which OAN was a vehicle, not an end in itself.

SETTLEMENT OF A CY PRES SCHEME

101. A determination having been made that the gift for which clause 4.2 of the deceased’s will provides should be administered cy pres, the Attorney General invites the Court to give directions for the Court (exercising its general charitable jurisdiction, elaborated in Hunter Region SLSA Helicopter Rescue Services Limited v Attorney General for NSW (2000) NSWSC 456 at [1]-[5]) or the Attorney (on a referral, by the Court, under section 13(2) of the Charitable Trusts Act) to establish a cy pres scheme.

102. A determination by the Attorney General, upon a reference from the Court, is amenable to an appeal to the Court: Charitable Trusts Act, section 18.

103. The rights of appeal for which section 18 provides distinguish the administrative procedure for which Part 4 (sections 12-22) of the Act provides from similar procedures which the Court might follow on an exercise of original jurisdiction, giving directions for the Attorney General, or another party on notice to the Attorney, to bring in a draft scheme for the Court’s approval, utilising an order for general administration of a trust or, under Part 54 of the Uniform Civil Procedure Rules 2005 NSW, partial administration orders (McLean v Burns Philp Trustee Co Pty Limited (1985) 2 NSWLR 623; Jordan, Administration of the Estates of Deceased Persons (3rd ed, Sydney Law School, 1948), pages 42-44, reprinted in Sir Frederick Jordan’s Select Legal Papers (Legal Books, Sydney, 1983)). Section 18 provides a right of appeal for the trustee of a charitable trust and, for any other person, a right of appeal conditioned on a grant of the Court’s leave.

The passages in Lord Eldon’s judgment in Moggridge v Thackwell, which are considered the authority for what is now the rule, are the following: ‘It being established that where money is given to charity generally and indefinitely, without trustees or objects selected, the King, as parens patriae, is the constitutional trustee, it is very difficult to raise a solid distinction between an original gift absolutely indefinite and without qualification, and a case, in which by matter ex post facto, the gift stands before the Court in consequence of that accident, as if it had been originally given indefinitely, without any means for carrying it into execution prescribed. All I can say upon it is, I do not know, what doctrine could be laid down, that would not be met by some authority upon this point; whether the proposition is, that the Crown is to dispose of it, or the Master by a scheme’ (7 Ves 83). And after referring to authorities, Lord Eldon ends: ‘Therefore, I rather think the decree is right [a decree for a scheme]. I have conversed with many persons upon it. I have great difficulty in my own mind; and have found great difficulty in the mind of every person I have consulted: but the general principle thought most reconcileable to the cases is, that, where there is a general indefinite purpose, not fixing itself upon any object, as this in a degree does, the disposition is in the King by Sign manual: but where the execution is to be by a trustee with general or some objects pointed out, [there] the Court will take the administration of the trust’ (7 Ves 86). And in Paice v Archbishop of Canterbury, Lord Eldon says: ‘Where the bequest is to trustees for charitable purposes, the disposition must be in that mode; but, where the object is charity, without a trust interposed, it must be by Sign Manual. That is the distinction which I adopted in the case of Moggridge v Thackwell ’ (14 Ves at p 372).”

137. In this treatment of the topic, it should not escape attention that where the Crown exercised parens patriae jurisdiction “directly under the sign manual” it did so “upon the advice of the Chancellor”. By locating a power of decision about charitable property in the royal prerogative, Eldon LC did not thereby deny himself a power of decision but, rather, in the ordinary course of a Lord Chancellor’s business, adopted a particular procedure (closer to the executive, than the judicial arm of government) to deal with a particular type of problem.

138. The institutional infrastructure of English law has never been precisely replicated in NSW. Care needs to be taken not to import into NSW an English administrative regime not found in NSW.

139. It has always been axiomatic, in statements of principle governing the reception of English law in NSW, that English law was received only so far as applicable to local conditions. In Blackstone’s summary of the general law, this can be seen in his Commentaries on the Laws of England (1st ed, 1765-1769; 9th “received” ed, 1783), volume 1, page 107. In the Australian Courts Act, 1828 (Imp), 9 Geo IV c 83, it can be found in section 24. The Privy Council applied it, allowing for accretions in development of a colony, in Cooper v Stuart (1889) 14 App Cas 286 at 291-292.

140. The concept of “local applicability” is generally contemplated in what we, today, would think of as “substantive law”, rather than adjectival or procedural law; but that distinction was not as clear in the 1820s as we today imagine it always to have been. In any event, local law had to be administered purposively having regard to local conditions.

141. At critical dates in the establishment of the Court (on 17 May 1824, by public proclamation of the Third Charter of Justice pursuant to the New South Wales Act), and in the formal reception of English law required to be administered by the Court (25 July 1828, the effective date of commencement of the Australian Courts Act), the Court was declared to be a “court of equity”. As such, it was expressly clothed with “power and authority to administer justice, and to do, exercise and perform all such acts, matters and things necessary for the due execution of such equitable jurisdiction, as the Lord High Chancellor of Great Britain can or lawfully may within England” (New South Wales Act, section 9; Australian Courts Act, section 11). This conferral of power was effected without any explicit demarcation between the judicial and executive functions that may have attended the office of Lord Chancellor in England in the 1820s, but with a Chief Justice (initially the only judge of the Court) entrusted with broad public functions, including an appointment as Lieutenant Governor.

142. In the administration of justice, doing all things necessary for the due execution of equitable jurisdiction, as the Lord Chancellor could do in England, some adaptation of English procedures was both permissible and inevitably required. The respect afforded to English practice and procedure was fundamental to Imperial and colonial mindsets, but not definitive of this Court’s jurisdiction.

143. Historically, the jurisdiction under consideration derived from the Crown, via the office of Lord Chancellor, in which the Crown as parens patriae (parent of the nation), by a delegation to the Chancellor, exercised supervision over charities in much the same way as it did over infants and those unable to manage their own affairs: Hunter Region SLSA Helicopter Rescue Service Limited v Attorney-General for NSW [2000] NSWSC 456 at [4]; Blackstone’s Commentaries, Volume 3, Chapter 27, pages 427-428; Fonblanque, A Treatise of Equity (1st ed, 1792-1793), Volume 2, Part 2, Chapter 1, pages 205-208; Chitty, A Treatise on the Law of the Prerogatives of the Crown (1820), Chapter 9, Section 2, pages 161-162; Spence, The Equitable Jurisdiction of the Court of Chancery (1846-1849), Volume 1, Chapter 11, Section II, pages 588-589 and Volume 2, Chapter 6, pages 246-247; Story, Commentaries on Equity Jurisprudence (1st Eng ed, 1884), Chapter 32, paragraphs 1187-1191; Daniell’s Chancery Practice (8th ed, 1914), Volume 1, pages 34-35 and 48; LA Sheridan and VTH Delany, The Cy-pres Doctrine (1st ed, London, 1959), pages 17 and 140.

144. Through the medium of trusts, the Chancellor largely absorbed the jurisdiction over charitable gifts which, before the Reformation, English Ecclesiastical Courts routinely exercised: PW Young, C Croft and ML Smith, On Equity (Law Book Co, Sydney, 2009), paragraph [6.360].

145. Early expositions of the parens patriae jurisdiction in English texts were not free of controversy in their treatment of charities.

146. It has long been the case that, in its application to infants, idiots and lunatics, the parens patriae jurisdiction of courts exercising equitable jurisdiction by reference to the jurisdiction of the English Lord Chancellor has been regarded as unlimited except by reference to the purpose for which the jurisdiction is recognised: Secretary, Department of Health and Community Services v JWB and SMB (Marion’s Case) (1992) 175 CLR 218 at 258, citing Re Eve [1986] 2 SCR 388 at 407-411; (1986) 31 DLR (4th) 1 at 14-21. The same cannot be said of the parens patriae jurisdiction over charitable property. A basic fault line in the description of parens patriae jurisdiction over charities, appears in different observations made by Blackstone and Fonblanque.

147. Blackstone records the following:

“The king, as parens patriae, has the general superintendence of all charities; which he exercises by the keeper of his conscience, the chancellor. And therefore, whenever it is necessary, the attorney-general, at the relation of some informant (who is usually called the relator), files ex officio an information in the court of chancery to have the charity properly established. By statute also 43 Eliz. c 4 authority is given to the lord chancellor or lord keeper, and to the chancellor of the duchy of Lancaster, respectively, to grant commissions under their several seals, to inquire into any abuses of charitable donations, and rectify the same by decree; which may be reviewed in the respective courts of the several chancellors, upon exceptions taken thereto.”

148. Fonblanque says of this passage:

“[Blackstone] is too general; for, though it be true, that where a charity is established, and there is no charter to regulate it, as there must be somewhere a power to regulate, the king has, in such case, a general jurisdiction; yet, if there be a charter with proper powers, the charity must be regulated in the manner prescribed by the charter, and there is no ground for the controlling interposition of the Court of Chancery. Attorney-General v Middleton, 2 Vez 328. The interposition of the court, therefore, in those instances in which the charities were founded on charters, or by act of parliament, and a visitor, or governor or trustees appointed, must be referred to the general jurisdiction of the court, in all cases in which a trust conferred appears to have been abused, and not to an original right to direct the management of the charity, or the conduct of the governors or trustees…”

149. Chitty, in his Prerogatives of the Crown (1820), paraphrased both Blackstone and Fonblanque, without choosing between them. Fonblanque’s qualification on Blackstone can be accepted without impact on the question whether the jurisdiction of the court over a gift to charity depends on the interposition of a trust.

150. Particular notice might be taken of Chitty’s treatment of the different branches of parens patriae jurisdiction of the Court of Chancery and the Lord Chancellor upon a delegation from the Crown. This is because Chitty treated the court’s jurisdiction over infants, it’s lunacy jurisdiction and its jurisdiction over charities in a single chapter entitled “Of the king as parens patriae” (chapter 9, pages 155-162). It did so shortly before the time that the Imperial Parliament established the Supreme Court of New South Wales (as presently constituted), and declared the date upon which the colony of New South Wales was deemed to have received English law.

151. A different practice as to the mode of delegation appears to have attended different branches of the prerogative. Omitting footnotes, Chitty (at pages 155-161) drew the following contrasts:

“SECT. I – As to Infants, Idiots, and Lunatics

The King is in legal contemplation the guardian of his people; and in that amiable capacity is entitled, (or rather it is his Majesty’s duty, in return for the allegiance paid him,) to take care of such of his subjects, as are legally unable, on account of mental incapacity, whether it proceeds from 1st nonage: 2. idiocy: or 3. lunacy: to take proper care of themselves and their property.

1. This superintending power over infants was originally in the King by the common law, and was by his Majesty delegated to the Lord Chancellor, who seems to exercise it as a branch of his general jurisdiction; and no separate commission is necessary to legalise the chancellor’s jurisdiction in this respect. …

2. The superintendence of idiots, who are persons devoid of understanding from their births, and are presumed never likely to attain any, is also vested in the King, not however it seems by the common law, but by statutes for the benefit of the subject on the party being found an idiot by a jury of twelve men on the old common law writ of de idiota inquirendo….

This prerogative is generally, but not necessarily, exercised by the person who has the custody of the great seal. It may be delegated to any other person; and even when granted to the Chancellor, as it almost universally has been, a special authority, under the royal sign manual, seems necessary; for such authority does not appear to form a part of the Chancellor’s general jurisdiction. This warrant confers no jurisdiction, but merely a power of administration, and if that power be abused, or any erroneous order to be made under it, the appeal is not to the House of Lords, but to the King in Council. …

3. The King is also guardian of the lunatics; and his Majesty’s authority in this respect generally is and may be delegated to the Lord Chancellor or other person, in the same manner as that relative to idiots is delegated.…

SECT. II As to Charities

[After paraphrasing the observations of Blackstone and Fonblanque set out above, Chitty continued]: It is… the general right of the Court of Chancery, derived from the King, to appoint to what charity any gift shall be applied, where the donor does not name any particular charity. And, by statute 1 Edw.6.c.14., gifts to certain superstitious uses therein enumerated, are declared to vest in the Crown; but other gifts, not included within that enumeration, neither vest in the Crown nor in the heir, but shall be appointed to such uses as the King shall order.…”

152. Approaching the topic afresh, from first principles, the starting point in identification of the Court’s general jurisdiction over charitable property is found in the Supreme Court Act 1970, section 22 (which preserves the jurisdiction of the Court as established in the 1820s) and section 23 (which declares that the court has “all jurisdiction which may be necessary for the administration of justice in New South Wales”).

153. Historically, the jurisdiction preserved by section 22 is, perhaps, the jurisdiction correctly described as the Court’s “inherent jurisdiction”. However, the jurisdiction conferred by section 23 is sometimes also described as a source of “inherent jurisdiction”: Re AAA [2016] NSWSC 805 at [22]-[23].

154. Under the influence of section 23 there is, perhaps, a subtle change emerging in our use of the expression “inherent jurisdiction”. Earlier tied to the Court’s foundation in Imperial legislation referring to English institutions, an increasing tendency to view the concept through the prism of necessary incidents of a functioning court system can be discerned. As historical connections fade, function displaces form in the day-to-day imagination.

155. This process it is not unique to New South Wales. It can be seen at work in England as well. In 1960 the protective, Lunacy jurisdiction of the English High Court of Justice (which, in New South Wales, would be described as “inherent” parens patriae jurisdiction) was displaced by legislation predicated upon revocation of the Warrant under Sign Manual by which the jurisdiction of the Crown over persons unable to manage their own affairs had been assigned to the Lord Chancellor and judges of the High Court’s Chancery jurisdiction. The effect of those changes was perceived to sweep away the High Court’s previous statutory and prerogative jurisdiction in Lunacy, leaving the law to be governed solely by statute: In Re F (mental patient: sterilisation) [1990] 2 AC 1 at 57-58. Nevertheless, in that 1990 case, the House of Lords accepted that the High Court had “inherent jurisdiction” to make orders bearing upon management of the affairs of an incapable person. As subsequent English cases have described it, the House of Lords “rediscovered” a form of “inherent” protective jurisdiction: In Re L (Vulnerable adults with capacity: Court’s jurisdiction) (No. 2) [2012] EWCA Civ 253; [2012] 3 WLR 1439 at [55], approving In re SA (Vulnerable adult with capacity: marriage) [2005] EWHC 2942 (Fam); [2006] 1 FLR 867. In the ultimate analysis, the absence of a warrant under sign manual was not determinative of the Court’s jurisdiction.

156. Nor is the absence of a periodic, personal royal delegation determinative of the jurisdictional limits of the Supreme Court of New South Wales. In their confirmation of the continued operation of the Lunacy jurisdiction conferred on the Court by the Third Charter of Justice the Full Court, in In re WM (a person alleged to be of unsound mind) (1903) 3 SR (NSW) 552 at 565-570; 20 WN (NSW) 124, equated the jurisdiction of the Court with that of the office of Lord Chancellor, untroubled by antecedent details attending a warrant by sign manual.

157. The Full Court’s judgment stands as an important foundation for our understanding of the Court’s inherent, parens patriae jurisdiction. Whether it is altogether sound in its appeal to history may be a different matter. At 3 SR (NSW) 566, the Full Court relied upon an observation of Lord Campbell in his Lives of the Lord Chancellors (1845), at page 13 of volume 1, that, in his experience, Lord Chancellors exercised Lunacy jurisdiction by virtue of their office, at common law from the Court of Chancery, under the Great Seal, without the special authority of a warrant under sign manual. The historical correctness of that observation is challenged in HS Theobald, The Law Relating to Lunacy (Stevens & Sons, London, 1924) at pages 14-15. Theobald has generally occupied a position of authority in the exposition of NSW law and practice (W v H [2014] NSWSC 1696 at [30]-[35]) but, on this occasion, the weight of authority and the interests of the due administration of justice in NSW, tell in favour of Lord Campbell.

158. Much of the day-to-day business of the Court is now conducted within the procedural parameters of the Civil Procedure Act 2005 NSW and the Uniform Civil Procedure Rules 2005 NSW. However, CPA section 5(1) expressly provides that nothing in the Act or rules limits the jurisdiction of the Court.

159. The Charitable Trusts Act supplements, rather than diminishes, the jurisdiction of the Court. In any event, legislation is not lightly to be construed as abrogating, or limiting, the Court’s inherent jurisdiction. And a change in the administrative machinery attending an exercise of jurisdiction does not operate to abridge the Court’s inherent jurisdiction: In re WM (1903) 3 SR (NSW) 552 at 567 and 569.

160. The observations of the High Court of Australia in Kirk v Industrial Court of NSW (2009) 239 CLR 531 at 566-567[55] about the position of State Supreme Courts in the setting of the Australian constitution may provide additional support for continued recognition of the Court’s inherent jurisdiction as a fundamental component of the means by which justice is administered in this State.

161. SCA sections 22 and 23 are in the following terms:

“22 Continuance

The Supreme Court of New South Wales as formerly established as the superior court of record in New South Wales is hereby continued.

23 Jurisdiction generally

The Court shall have all jurisdiction which may be necessary for the administration of justice in New South Wales.”

162. SCA section 22 invites reference back to: (a) 4 Geo IV c 96 (Imp), colloquially known as the New South Wales Act 1823 (Imp) and the Third Charter of Justice promulgated pursuant to that Act; (b) 9 Geo IV c 83 (Imp), named the Australian Courts Act 1828 (Imp) by the Short Titles Act 1896 (UK); and (c) a chain of Imperial statutes culminating in 5 & 6 Vict c 76 (the Australian constitution Act 1842 (Imp)) pursuant to which the temporary operation of earlier Imperial legislation (and the Third Charter of Justice) was extended: Meagher, Gummow & Lehane, Equity: Doctrines and Remedies (LexisNexis Butterworths, Australia, 5th ed, 2015), paragraphs [1.120]–[1.140].

163. Of critical significance, in the current context, is section 11 of the Australian Courts Act (which conferred jurisdiction on the Court by reference to jurisdiction of the Lord Chancellor in England), read with section 24 of the Act, which implicitly nominated 25 July 1828 as the date for reception of English law in NSW.

164. In reviewing the law of England as received in NSW, it can be important to remember that:

1. “the Crown”, now generally identified as “the State”, was, in the 1820s, explicitly seen as the ultimate source of justice, and its due administration, throughout England and the British Empire;

2. the formative years of the Colony of NSW, between 1788-1850, coincided with the formative years of the Equity jurisdiction in England, often identified with Lord Eldon’s tenure as Lord Chancellor (1801-1806 and 1807-1827), just before the English system moved, by several steps, towards the Judicature Act system of court administration adopted in 1873-1875;

1. in three particular areas of the administration of justice (relating to jurisdiction over infants, the lunacy jurisdiction, and jurisdiction over charities) public interest questions were identified with the “prerogative” of the Crown as parens patriae (parent of the nation) and with the Lord Chancellor as “keeper of the conscience” of the King or Queen;

2. the Chancellor exercised what was perceived to be “common law” jurisdiction as well as “equity” jurisdiction, boundaries between which were not always distinct, if only because the Chancellor had responsibility for the issue of writs operative beyond jurisdictional boundaries; and

3. within England’s system of courts in the 1820s, this jurisdiction, so far as it fell to be exercised by the Chancellor, was sometimes, but not uniformly, described as jurisdiction conferred (albeit routinely) on the Chancellor personally, rather than an incident of the Chancellor’s ordinary jurisdiction.

165. It might also be remembered that decades of reform in the administration of the Equity jurisdiction in England commenced with a critical examination of charities, culminating in the Charities Procedure Act 1812 (52 Geo III c 101), known as Sir Samuel Romilly’s Act, in this State repealed and replaced by the Imperial Acts Application Act 1969 NSW, sections 5 and 17. That legislation provided a summary procedure for the determination of questions relating to the administration of charitable trusts by a petition authorised by the Attorney General or Solicitor General. Section 17 of the Imperial Acts Application Act 1969 was repealed by section 27 of the Charitable Trusts Act 1993, which Act provides (in section 6) for “Charitable trust proceedings” to be authorised by the Attorney or by a grant of the Court’s leave.

166. Upon its establishment in 1824 (with promulgation of the Third Charter of Justice”), section 9 of the New South Wales Act, 1823 (Imp) conferred upon this Court “power and authority to administer justice, and to do, exercise and perform all such acts, matters and things necessary for the due execution of equitable jurisdiction, as the Lord High Chancellor of Great Britain can or lawfully may within England”.

167. That jurisdiction was reaffirmed by the Australian Courts Act 1828 (Imp), section 11 in substantially similar terms. However, section 11 added to the conferral of jurisdiction in section 9 of the 1823 Act an additional grant of “power and authority to administer justice, and, to do, exercise, and perform… all such acts, matters, and things as can or may be done by the said Lord Chancellor within the realm of England, in the exercise of the common law jurisdiction to him belonging”.

168. This legislation, coupled with section 24 of the 1828 Act (which nominated 25 July1828 as the date for reception of English law in NSW), provided the foundations upon which the Court’s equitable jurisdiction is grounded: Meagher, Gummow and Lehane, Equity: Doctrines and Remedies (5th ed, 2015), paragraph [1-115] et seq.

169. It may be that a conferral of the Chancellor’s “common law” jurisdiction on the Court was thought necessary because some of the Chancellor’s routine business, such as jurisdiction over infants, was perceived to be “common law” jurisdiction (Chitty, Prerogatives of the Crown (1820), pages 155-156); other business, such as jurisdiction over idiots and lunatics had uncertain origins, but deployed procedures requiring the issue of a writ summoning a jury to conduct an inquiry and that business was perceived to be on “the law side of the Court of Chancery” (Chitty, pages 157-159; Blackstone’s Commentaries, volume 3, page 427; Winthrop v Winthrop (1845) 1 Coop.T.Cott.196; 47 ER 815; Theobald, The Law Relting to Lunacy (1924), pages 1-10 and 15); and yet other business, including jurisdiction over charities, was perceived to be “equitable” , invoked by an information, or other process, filed in the Court of Chancery (Chitty, page 161; Blackstone’s Commentaries, volume 3, pages 427-428).

170. Reformation of the English court system that occupied much of the 19th century (stretching, at least, from charity law reform in 1812 to enactment of the Judicature Acts of 1873-1875) is to be understood, if not embraced, as a product of a need to rationalise procedural complexity. It also reflected a growing tendency (documented by a AWB Simpson in “The Rise and Fall of the Legal Treatise: Legal Principles and the Forms of Legal Literature” (1981) University of Chicago Law Review 632, reprinted as chapter 12 in Legal Theory and Legal History: Essays on the Common Law (Hambldon Press, London, 1987)) to articulate law in terms of “scientific” principles rather than procedural forms of application for a curial remedy.

171. Whatever the nature of the Lord Chancellor’s common law jurisdiction (explored, generally, in D.M. Kerly, An Historical Sketch of the Equitable Jurisdiction of the Court of Chancery (Cambridge University Press, 1890) at pages 26 and 49-57), and obscure as may be the precise intent of the 1828 Act in expressly conferring on the NSW Supreme Court the common law jurisdiction of the Lord Chancellor, section 11 militates against a narrow construction of jurisdiction of the Court by reference to what the Chancellor could do.

172. So too does the conferral of “power and authority”, found in each of section 9 of the 1823 Act and section 11 of the 1828 Act, by reference to the office of Lord Chancellor and to what a holder of that office, in the 1820s, “can or more lawfully may” do. The parens patriae jurisdiction routinely exercised by Chancellors, in the performance of their office in England in the 1820s, was part of what the Crown, by its assent to the New South Wales Act 1823 (Imp) and the Australian Courts Act 1828 (Imp) and by its promulgation of the Third Charter of Justice, delegated to the Court as an established instrument of government in the broad sense. That delegation having been made, there was no need for, or utility in, recurrent “personal” delegations to each holder of a judicial office (half a world away) as may have been, or be, necessary in the English context.

173. The full implications of the formal language of the New South Wales Act, authorising establishment of the Court, should not be discounted merely because formal or familiar. The words of enactment found as a preliminary to section 1 of the Act recited that it was the Crown (with the advice, consent and authority of the Imperial Parliament) that enacted the Act. Section 1 proceeded, then, to record “That it shall be lawful for his Majesty, his heirs and successors, by charters or letters patent under the great seal of the United Kingdom of Great Britain and Ireland, to erect and establish courts of judicature in New South Wales and Van Diemans Land respectively, which shall be styled ‘the Supreme Court of New South Wales’, and ‘the Supreme Court of Van Diemans Land’…”.

174. The jurisdiction conferred on the Supreme Court of NSW, in subsequent sections of the Act and in the Third Charter of Justice, was jurisdiction conferred by reference to an instrument of the Crown “under the great seal”; that is, by and with the full authority of the Crown.

175. In their own way the New South Wales Act and the Third Charter of Justice, supplemented by the Australian Courts Act in 1828, endeavoured to confer on the newly established Supreme Court of New South Wales plenary jurisdiction of a kind more succinctly conferred by section 23 of the Supreme Court Act 1970 NSW.

176. Drawing all the threads together, for completeness, passing notice might be taken of the fact that, of the three areas of law treated by Chitty’s Prerogatives of the Crown (1820) under the rubric of parens patriae (jurisdiction over infants, lunatics and charities) only the first two were the subject of specific, express notice in the Third Charter of Justice (clause 18).

177. This appears to have been a consequence of two factors.

178. First, as we have seen the Chancellor’s jurisdiction over infants, idiots and lunatics was perceived to be part of the common law side of his work, with the supervision of charities part of the equity side. It was not necessary to provide specifically for the Court’s charity jurisdiction in the Charter. It was sufficiently conferred by the New South Wales Act.

179. Secondly, observations made by Commissioner J.T. Bigge in his Report of the Commissioner of Inquiry on the Judicial Establishments of New South Wales and Van Diemen’s Land (ordered by the House of Commons to be printed, 21 February 1823).

180. At page 53 of that Report, Bigge recorded his agreement with a proposal of Mr Justice Field (the judge of the Supreme Court constituted by the Second Charter of Justice in 1814) that there be “an augmentation of authority to the equity jurisdiction of the Supreme Court … [including] an express authority to appoint guardians to infants and their estates; [and] transfer to the Supreme Court of the custody of idiots and lunatics, now vested in the governor of the colony by his commission…”.

181. A fair inference from the course of events is that Field J sought augmentation of his jurisdiction; Bigge recommended that it be granted; the draftsman of the New South Wales Act 1823 (Imp) and the Third Charter of Justice did not appreciate that a conferral of infancy and Lunacy jurisdiction on the new Supreme Court by the Charter might, because that jurisdiction was on the common law side of the Chancellor’s work, go beyond the Act’s conferral of equity jurisdiction; and any formal deficiency in the constitution of the Court was rectified in the Australian Courts Act 1828 (Imp) which provided for the continued operation of the Charter.

182. Although I favour a more expansive view of the Court’s jurisdiction over charities within the confines of section 22, recognition must be given to the possibility that the narrow view evidently favoured by Bradshaw may have been more attractive to generations of Australian lawyers in practice before enactment of the Australia Acts of 1986 than now.

183. In fact, an eminent equity judge of this Court (Kearney J) appears, comfortably, to have proceeded, in McCormack v Stevens [1978] 2 NSWLR 517, on the basis that the Court’s jurisdiction has always extended to charitable gifts without the necessity of a trust.

184. The possibility that the narrow view favoured by Bradshaw might have held sway with earlier generations of judges (especially those of the colonial era) is hinted at in the judgment of Therry J in Ex parte Wilson [1846] NSWSupC 18, a case about the powers of the Court’s Primary Judge in Equity vis a vis those of the Court as a whole. It is not directly in point, but it displays a readiness to distinguish the judicial and prerogative functions of the Lord Chancellor in England: see, generally, ML Smith, The Early Years of Equity in the Supreme Court of NSW (1998) 7 2 ALJ 799, especially 804.

185. Even if the narrow view apparently favoured by Bradshaw is preferred, any residual doubts about the nature and extent of the Court’s “inherent jurisdiction” over charities can, and should, be taken to have been displaced by section 23 of the Supreme Court Act.

186. As explained in Re AAA [2016] NSWSC 805 at [22]-[27], the NSW Law Reform Commission (a driving force for enactment of the Supreme Court Act 1970 and the amending Acts of 1972 which, together, commenced operation on 1 July 1972) promoted, and explained, section 23 as a means of rising above English jurisdictional constraints.

187. Speaking to the NSW Bar Association on 19 November 1970, Mr RD Conacher, then Deputy Chairman of the Commission, said of section 23 of the 1970 Act (not subsequently amended):

“[7] Section 23 of the new Act will not, I believe, have an immediate effect in altering the jurisdiction of the Court. It will rather be the basis for new development as occasion arises, a more serviceable basis than the Acts and Charter of the 1820s with their references to the jurisdictions of the English Courts of that time. It is based on section 16 of the Judicature Act of 1908 of New Zealand. The New Zealand section was considered by the Court of Appeal in New Zealand in Ryder v Hall ((1905) 27 NZLR 385). In that case the section played a part in enabling the Court to hold that it had jurisdiction to give damages in lieu of an injunction, notwithstanding that legislation along the lines of Lord Cairns’ Act (the Chancery Amendment Act 1858, 21 & 22 Vict. c 27; cf Equity Act, 1901, s 9) had not been enacted in New Zealand…”

188. That the English Chancellor in the 1820s routinely, in one or another of his capacities, exercised decision-making powers over charities (both trusts and direct gifts) is, in my opinion, confirmatory (if confirmation be required) of the existence of a jurisdiction, based on section 23, no less extensive in the Supreme Court of NSW as presently constituted.

189. In the ultimate analysis, the jurisdiction of the Court is not now constrained (if it ever was) by the reasoning of Lord Eldon, about prerogatives of the Crown in the disposition of property, in Moggridge v Thackwell and Paicev Archbishop of Canterbury or its modern restatement in In re Bennett. The Court’s equity jurisdiction (as we naturally see it in contemporary practice) over property dedicated to charity extends to charitable gifts, as well as charitable trusts, and it knows no jurisdictional limitation by the name of a “prerogative of the Crown”. That is not to deny the ongoing importance to the Court, and the Attorney General as the State’s protector of charities, of cooperation and mutual deference in the administration of charities in the public interest.

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ADDENDUM (22 July 2016)

190. Upon publication of these reasons for judgment, and before making any orders, Lindsay J allowed the parties an opportunity to make submissions as to the form of orders (including orders as to costs) to be made.

191. The parties having taken that opportunity, his Honour (without objection by any party) made orders (respectively numbered 1 to 5) in the terms set out in paragraph 115 of the reasons for judgment, together with the following additional orders:

(6)   ORDER that the plaintiff’s costs of the proceedings be paid out of the residuary estate of the deceased on the indemnity basis.

(7)   ORDER that the costs of the defendants be paid out of the residuary estate of the deceased on the ordinary basis.

Decision last updated: 22 July 2016