Executor Trustee Australia Ltd v Jamestown District Homes for the Aged Inc - [2007] SASC 262

SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
EXECUTOR TRUSTEE AUSTRALIA LTD v JAMESTOWN DISTRICT HOMES FOR THE AGED INC & ORS
[2007] SASC 262
Judgment of The Honourable Justice Anderson
13 July 2007
SUCCESSION - WILLS, PROBATE AND ADMINISTRATION - CONSTRUCTION AND EFFECT OF TESTAMENTARY DISPOSITIONS - GENERALLY - GENERAL PRINCIPLES OF CONSTRUCTION - ASCERTAINMENT OF TESTATOR'S INTENTION AS EXPRESSED OR IMPLIED BY WORDS OF WILL
CHARITIES - CHARITABLE GIFTS AND TRUSTS - WHEN APPLIED CY-PRES - WHERE GENERAL CHARITABLE INTENTION - ASCERTAINMENT OF INTENTION
Testatrix left residuary estate for her sister and then for Belalie Lodge Homes for the Aged in the event of her sister pre-deceasing her - sister pre-deceased testatrix - Belalie Homes for the Aged not legal entity - Helping Hand legal owner of Belalie Lodge at time of death - whether testatrix intended to provide for the institution known as Belalie Lodge for its purposes - whether Helping Hand entitled to residuary estate.
Held: testatrix intended to provide for charitable institution known as Belalie Lodge and for its purposes - no lapse of gift to charitable institution - in the alternative, exceptions to lapse rule apply - application of cy-pres doctrine - Helping Hand entitled to residuary estate on trust for the purposes of Belalie Lodge.
Aged or Disabled Persons Care Act 1954 (Cth), referred to.
Re Tyre, deceased (No 1) [1972] VR 168; Re Hart, deceased (1972) 3 SASR 147; Re Constable [1971] VR 742, applied.
Australian Executor Trustee Ltd v Ceduna District Health Services Inc [2006] SASC 286, distinguished.
Re Pace (1938) 38 SASR 336; Re Daniels, deceased [1970] VR 72, considered.

EXECUTOR TRUSTEE AUSTRALIA LTD v JAMESTOWN DISTRICT HOMES FOR THE AGED INC & ORS
[2007] SASC 262
Civil
ANDERSON J.
Introduction

In this matter the plaintiff, the executor of the last will and testament of Edna Eileen Axford, seeks a declaration in relation to a particular clause of the will which provides as follows:
3.I GIVE the whole of my estate to my Trustee UPON TRUST TO PAY my debts and funeral and testamentary expenses and any duties payable in respect of my estate without any adjustment or apportionment of such duties AND TO HOLD the balance then remaining (hereinafter referred to as my residuary estate) for my sister NINA LEONY AXFORD absolutely provided she shall survive me and in the event that my said sister shall fail to survive me THEN for BELALIE LODGE HOME FOR THE AGED situate at Jamestown in the said State absolutely in memory of my late parents William Henry Axford and Lydia Lena Axford.
The last will of the deceased is dated 7 December 1994. The deceased died on 28 September 2005. Probate of the will was granted on 23 November 2005.
The declaration sought is whether upon a true construction of the will of Edna Eileen Axford deceased, the benefits that are provided in clause 3 of the will of the deceased should be paid to:
(i)     Jamestown and District Home for the Aged Incorporated;
(ii)    Helping Hand Aged Care Incorporated; or
(iii)   Some other, and if so what, entity.
Background
At the time of the death of the testatrix, the institution known as Belalie Lodge Home for the Aged (“Belalie Lodge”) was owned and operated by the second defendant Helping Hand Aged Care Inc (“Helping Hand”). At an earlier point of time the legal entity that owned and operated Belalie Lodge was the first defendant, Jamestown District Homes for the Aged Incorporated (“Jamestown District Homes”).
Between the time that the will was made and the date of death of the testatrix, Belalie Lodge continued to operate in the same way, and the only difference was the change in the legal ownership.
Mr Edmonds-Wilson, counsel for Helping Hand, tendered a copy of the affidavit of Mr Brown dated 6 March 2007. Mr Brown is the Chief Financial Officer of Helping Hand. In his affidavit he states that for those persons living at or having connections with Jamestown, a reference to “Belalie Lodge” would be generally understood to be a reference to the aged care facility first established by Jamestown Homes in 1978. There is no dispute about this general understanding.
Annexed to the affidavit of Mr Brown is the certificate of incorporation of Jamestown Homes. According to the affidavit of Rodney Brown, clause 2 of the initial constitution and rules of the Jamestown Homes states that the general object of Jamestown Homes was to provide accommodation for aged persons pursuant to the “Aged or Disabled Persons Homes Act”, by which I think he is referring to the Aged or Disabled Persons Care Act 1954 (Cth).
The minute book of Jamestown Homes records that at a meeting on 25 April 1978 it was resolved that the home be called “Belalie Lodge”.
The name “Belalie” has always been associated with the Jamestown area because the Belalie Creek runs through the town. Earlier the local government area encompassing Jamestown was called the District Council of Belalie.
A local publication known as The Jamestown Journal periodically referred to Belalie Lodge in articles, according to the affidavit of Mr Brown. References to Belalie Lodge were contained under headings such as “Belalie Lodge News”, “Belalie Lodge” and “News from the Lodge”.
Jamestown Homes is no longer the legal entity in control of the Belalie Lodge. Helping Hand has since acquired, by deed of gift, all of the assets of Jamestown Homes including the Belalie Lodge. In the deed of gift tendered during the trial, it states that:
Helping Hand is an association incorporated under the Associations Incorporation Act 1995 (SA) as a welfare institution established by the Uniting Church in Australia for public benevolent purposes and has the like objects to those of Jamestown Homes.
It also states that:
Under clause 3 of the Constitution the income and the property of Jamestown Homes must be applied towards the objects of Jamestown Homes which include the providing accommodation for aged persons.
The deceased’s sister, Nina Leony Axford, died on 30 July 2003.
In his affidavit Mr Brown deposes to a connection between Belalie Lodge and the deceased’s late brother, Walter Rex Axford. Mr Brown deposes to the fact that Walter Axford was admitted as a permanent resident on 2 May 1994. He died in the home on 13 February 1996. Before May 1994 he had been a respite resident, having been admitted on 2 September 1989. He had again been admitted as a respite resident on 17 February 1994.
The third defendant, Dorothy Jean Noble, is the sister of the deceased. At the commencement of the trial I granted the third defendant leave to represent all of the next of kin of Edna Eileen Axford. The trial proceeded on this basis.
The trial
On 18 June 2007 the trial of this matter commenced. It was completed later that day. The parties provided written outlines of submission. These outlines were very helpful in clarifying the issues. The plaintiff adopted a neutral stance in relation to the issues to be decided. Counsel for the plaintiff, Mr Frost, did not make any submissions on the proper interpretation of the will. The plaintiff simply seeks a declaration, as executor, as to whom the residuary estate should be paid.
Jamestown District Homes for the Aged was not represented at the hearing before me.
Mr Edmonds-Wilson argued that upon the proper construction of the will, there is a valid gift to the institution known as Belalie Lodge. He submitted that the gift is prima facie a gift for charitable purposes rather than a gift to the particular person or legal entity carrying on the Lodge at the time of the making of the will. As such, the residue of the estate should go to Helping Hand to be held on trust for Belalie Lodge.
Mr Roder, counsel for the third defendant, submitted that the gift was to an entity that did not exist at the time of death and therefore the gift fails, and the next of kin should take the gift unless it falls within one of the specific “exceptions” to the lapse rule, as summarised by Newton J in Re Tyrie, deceased (No 1) [1972] VR 168 at 177. I deal with this decision later in these reasons. He submitted that none of the exceptions had been shown to apply and that the will does not demonstrate a general charitable intention, as a consequence of which the gift fails.
The will expressly states that the residue of the estate is to go to “Belalie Lodge Home for the Aged situate at Jamestown in the said State absolutely” (my emphasis). The proper construction of the will is complicated by the fact that there is no legal entity known as the Belalie Lodge Home for the Aged. The first issue to be determined is what was the true intention of the testatrix? Although Belalie Lodge was not a legal entity, it was, as I have indicated earlier, well known in the district.
It has been submitted by Helping Hand that the reference in the will should not be construed as a misnomer or misdescription of “Jamestown District Homes for the Aged Incorporated”, as this was not the intention of the testatrix. Instead, counsel submitted that the gift was to an institution, which was in existence at the date of the death of the testatrix, and for its associated purposes. Belalie Lodge had been owned and operated by Helping Hand since 1 January 2005 and, relevantly, at the time of the death of the testatrix. Prior to this date, and at the time the will was written, Jamestown District Homes was the legal entity that owned and operated Belalie Lodge.
Mr Edmonds-Wilson submitted that as the gift was not to a juristic personality, the will should be construed as being for the purposes of the Belalie Lodge and not as a gift to a legal entity. It was also submitted that this was a case where, from its inception, the institution was given a distinctive name, Belalie Lodge, different from that of the legal entity that owned and operated it and that, as such, it was the testatrix’s intention to benefit the institution and its purposes.
The Law
In his submissions, Mr Edmonds-Wilson referred to Theobald, Wills (16^thed 2001) at par 35-45 at 485 where the author states:
If, however, there is a gift to an entity which has no juristic personality, (eg “the Pilsdon Community House” or “the Ormond Home for nurses” or “St Mary’s Home for Women and Children”, the courts may be able to construe it as a gift for the purposes carried on there.
As an example, Mr Edmonds-Wilson relied on the Victorian case of Re Constable [1971] VR 742 and its somewhat analogous facts.
In that case the gift was left to the “Methodist Homes for the Aged at Cheltenham” but there was in fact no such entity in existence. The court found that there were two possible claimants of the gift: the Methodist Church in connection with its work in providing homes for the aged but which had no geographical connection with Cheltenham; and another body, then known as the Cheltenham Home and Hospital for the Aged, which had no connection with the Methodist Church. The court found that there was no organisation that precisely answered the description in the will but that it was evident that there was an intention on behalf of the testatrix to leave a gift for a charitable purpose. The court ordered that the residue should be divided equally between the two institutions.
Pape J at 745 states:
Here I think it is plain that the gift although intended to benefit an existing organization, or what the testatrix believed to be an existing organization, is in reality a gift for a purpose and not for an individual or body of individuals. The gift is not in terms to a body or a person conducting a home for the aged, but purports to be to the institution itself, and this is thus a gift for the purposes of that institution. In reality the ultimate beneficiaries are intended to be the aged people who are in need of accommodation and assistance in a home, and not the proprietor of the home.
With respect, I adopt and apply the reasoning of His Honour set out above.
In Tyrie’s case the testatrix left her residuary estate to the Neerim South, Lorne, Glen Wills and Berriwillock centres of the Victorian Bush Nursing Association, the Melrose Farm of the William Forster Try Boys Society, and the Salvation Army Toddlers Home. Newton J found that gifts to some of the institutions had lapsed because the charities had ceased to exist. In relation to the Melrose Farm, His Honour found that the farm had closed down some six years before the will was made. The finding was that the gift had lapsed and no exceptions to the lapse rule applied.
However the gift to the Salvation Army Toddlers Home was different. The Army had up until 1947 conducted a home at North Carlton for babies and small children. It then started the Kardinia Children’s Home at Geelong. The children at North Carlton were transferred to the Kardinia Home. This was still operating at the time of the hearing and was in fact the only such home run by the Salvation Army in Victoria.
Newton J held that the gift was a valid charitable gift. He found that the testatrix by her description of “the Salvation Army Toddlers Home” must have meant the establishment known as Kardinia Children’s Home.
In relation to the question of a gift to an institution, Newton J in his reasons at 185 said:
For the purposes of the relevant propositions of law, which I have earlier set out in the course of my discussion of the gift to the Lorne Centre, I consider that the establishment or activity known as Melrose Farm was itself an “institution”: see, for example, Stratton v Simpson (1970) 44 ALJR 487 at p 493; [1971] ALR 117 at p 128, and Mayor etc of Manchester v McAdam [1896] AC 500 at pp 507-9 and 511-3. Indeed the testatrix assumed as much in the last sentence of cl 10 of her will. I consider it plain that the gift cannot be construed as an outright gift to the Try Youth Clubs. It was a gift for the purposes or work of the special establishment or activity of Try Youth Clubs known as Melrose Farm: cf Re Slatter’s Will Trusts [1964] Ch 512 at pp 516-9; [1964] 2 All ER 469.
Charitable purposes of Belalie Lodge
It is obvious from the deed of gift and from the background information referred to in par [4] to par [14] inclusive of these reasons that it may be inferred that the testatrix intended the residue to benefit the charitable purposes associated with Belalie Lodge.
In my opinion, this matter is in some ways similar to both Re Constable and Re Tyrie. The gift in this matter was intended to benefit what the testator believed to have been an existing organisation, in reality it is a gift for a purpose. It was at all times the intention of the testatrix to benefit the aged persons from in and around the Jamestown area who resided at the Belalie Lodge and who benefited from it.
The gift here was plainly intended as a gift to the institution locally known as Belalie Lodge and its associated purposes, those being the relief of the aged in the Jamestown Area. It was not in dispute that Belalie Lodge operated within the concept of a charity for charitable purposes. I rely on the extrinsic materials referred to earlier to assist in determining the testatrix’s intention. (See In re Pace, deceased (1985) 38 SASR 336.)
It is accepted that where a gift, and in particular a residuary gift, is made by a testator to a non-existent body, but from the description of the body set out by the testator in his will, it may be assumed that the testator intended it to be a body carrying on a charitable activity, then a Court of Equity will lean in favour of finding a general charitable intention to save the gift from lapse. (See Re Daniels, deceased [1970] VR 72 at 76 and Re Pace (1985) 38 SASR 336 at 341.)
I do not agree with the submissions put by Mr Roder. In my view, the gift does not fail because Belalie Lodge had no juristic identity. The gift was never intended for the legal entity that ran the Belalie Lodge but rather for Belalie Lodge and its associated purposes. It was correctly pointed out by Mr Edmonds-Wilson, that Helping Hand is bound to apply the gift for the purposes of that particular institution and not for any of the other aged care facilities that it runs elsewhere.
This is not a case of a gift to a charitable institution having lapsed. There is no lapse on my findings.
The Tyrie Exceptions
Even if there were a lapse, the exceptions to the lapse rule are relevant. In my view both exceptions A and C as set out in Re Tyrie, deceased (No 1) [1972] VR 168 at 177 would apply. Exception A is:
If at the testator’s death there is in existence another institution which has taken over the work previously carried on by the named institution and which can properly be regarded as the successor of the named institution, and if the dominant charitable intention of the testator was wide enough to allow the gift to take effect in favour of that successor institution, [citations omitted] where it is stated that “there is no lapse where an institution which has ceased to exist was named merely as the channel for carrying out a charitable intention, or for carrying on a particular charitable work which is still being carried on although by different persons or a different institution”.
In addition it is my view that exception C would apply. That exception is:
If in cases not falling within exceptions (A) or (B), the testator is nevertheless found upon the proper interpretation of the will to have had a dominant intention to benefit work or purposes of the kind which the named institution carried out, notwithstanding that the named institution itself might no longer exist at his death, and if it is practicable as at the death of the testator to apply the gift for the benefit of work or purposes of that kind, and in a way which is in all respects consistent with any other elements of the dominant intention of the testator (or to put it another way, consistent with any indispensable or essential elements of his charitable intention), then the gift will be so applied by means of a cy-près scheme.
These exceptions were canvassed recently by Vanstone J in Australian Executor Trustees Ltd v Ceduna District Health Services Inc [2006] SASC 286 at [10]. Her Honour regarded the gift as having lapsed in that case where the legal entity had changed. In this case there was never any legal entity in existence known as Belalie Lodge.
This is not a case of a gift to a non-existent body. However, if it were, it is my view that the principles of a cy-près scheme would apply. This is for two reasons. The first reason is that it is evident from an examination of the materials referred to that the testatrix’s intention was clear, namely, to leave a gift for the benefit of Belalie Lodge. The second reason is that such a gift is a gift for a charitable purpose. (See Re Hart deceased (1972) 3 SASR 147.)
Conclusion
Belalie Lodge comprises a building well known in the district, within which there is an infrastructure that provides services and facilities to the aged people of the Jamestown district. That is the institution known as Belalie Lodge. The intention of the testatrix was clear. In my view she wanted to leave the residue of her estate for charitable purposes associated with Belalie Lodge.
Therefore, for the reasons given, the gift to Belalie Lodge should go to Helping Hand, as the legal entity administering the institution intended by the testatrix to benefit from the gift and to be applied for the purposes of Belalie Lodge only. It cannot be used for general purposes or for other aged care facilities owned and operated by Helping Hand.
The formal declaration I make is as follows:
I declare that upon a true construction of the will of Edna Eileen Axford deceased the benefits provided by clause 3 of the will to which the deceased has given her residuary estate to “Belalie Lodge Home for the Aged situate at Jamestown” are to be paid to Helping Hand Aged Care Incorporated on trust for the purposes of Belalie Lodge.