Grant v Attorney General of NSW

[2009] NSWSC 51

CITATION:	Grant v Attorney General of NSW [2009] NSWSC 51
HEARING DATE(S):	06/02/2009
JUDGMENT DATE :	6 February 2009
JURISDICTION:	Equity
JUDGMENT OF:	Bryson AJ at 1
EX TEMPORE JUDGMENT DATE:	6 February 2009
DECISION:	My orders are: 1. Declare that on the true construction of the Declaration of Trust of the Holroyd Fespic Fund dated 28 July 1980 and in the events which have happened that the fund raised by public subscription for the purpose of benefiting and assisting disabled persons wishing to participate in the FESPIC Games constitutes a valid charitable trust within the provisions of the Charitable Trusts Act 1993. 2. Declare that on the true construction of the Declaration of Trust of the Holroyd Fespic Fund Clauses 2 and 3 and in the events which have happened it is not now practicable to carry the trust into execution in accordance with its terms. 3. Order that the capital and income of the Holroyd FESPIC Fund be disposed of according to the following cy prés scheme, that is, the trustees are to distribute the remaining funds equally between the NSW Wheelchair Sports Association Incorporated, and the Blind Sporting Association NSW Incorporated. 4. Order that the trustees or one of them within three months make a report to the Court on affidavit of the steps they have taken to carry out the cy prés scheme. The affidavit is to be filed, and a copy is to be delivered to the solicitor for the defendant. 5. Order that the court fees incurred by the plaintiffs be paid or retained by them out of the fund. 6. Order that the defendant's cost of the proceedings be paid by the trustees out of the fund on the indemnity basis.
CATCHWORDS:	CHARITIES - Cy prés scheme - Holroyd FESPIC Fund - fund collected from Government Grants and public subscription for Holroyd FESPIC Games 1977 - athletics for disabled persons - surplus remained and Deed dated 28 July 1980 declared trust for travel of those wishing to participate in the FESPIC Sporting Competition for disabled persons - funds applied for travel to FESPIC Games in cities in Asia about every 4 years - travel assistance to disabled persons from Australia and the countries in Asia and Pacific Islands - International FESPIC Federation dissolved after 9th FESPIC Games at Kuala Lumpur in 2006 - trustees regarded successor body's objects and purposes as significantly different and wished to terminate the trust - proposed scheme (supported by Attorney General) to distribute to two bodies operating in similar field in New South Wales - consideration - whether general charitable intention - whether purposes charitable - size of fund and considerations of expediency - Cy prés scheme ordered
LEGISLATION CITED:	Charitable Trusts Act 1993, s 9(1) Statute of Charitable Uses 1601
CATEGORY:	Principal judgment
CASES CITED:	Income Tax Commissioners v Pemsel [1981] AC 531 Oldham Borough Council v Attorney General [1993] Ch 210 Re Laidlaw Foundation (1984) 13 DLR (4th) 491
PARTIES:	Dr John Macdonald Falconar GRANT (as trustee of the Holroyd FESPIC Fund) (P1) Felicity Anne PURDY (P2) Robert William Doyle DEVLIN (P3) The Director General, Attorney General of New South Wales (D)
FILE NUMBER(S):	SC 1671 of 2008
COUNSEL:	Mr MD Broun OAM QC (Plaintiffs) Ms MT England (Defendant)
SOLICITORS:	Direct access brief Ms P Csenderits, Crown Solicitor's Office

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IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

BRYSON AJ

Friday 6 February 2009

1671/08 JOHN MACDONALD FALCONAR GRANT & ORS v ATTORNEY GENERAL OF NSW

JUDGMENT

1 HIS HONOUR: These proceedings are not contentious and in my opinion do not give rise to any substantial difficulty. The trustees of the Holroyd FESPIC Fund seek an order for a cy prés scheme to be settled to administer the capital and income of the Holroyd FESPIC Fund.

2 The scheme proposed is to direct the trustees to distribute the remaining funds equally between the NSW Wheelchair Sporting Association Incorporated and the Blind Sporting Association NSW Incorporated. The plaintiffs also seek decision of questions ancillary to the claim for the cy prés scheme.

3 The sole defendant is the Attorney General of New South Wales and his counsel's submissions support both an order for a cy prés scheme, and the particular scheme put forward.

4 At the hearing before me there was no contradictor or contrary view. I did have the benefit of submissions, including a carefully written submission by the defendant's counsel which surveyed the issues and relevant considerations and stated why the Attorney General supports the claim.

5 The FESPIC Federation is, or was, an organisation and its members were national sports organisations interested in organising games to be attended by persons with disabilities.

6 Paralympic Games were held in 1964. Interest and organisational support for athletics and games for persons with disabilities greatly increased in Europe, and also somewhat later in Asia and the South Pacific. A meeting called the FESPIC Games was held in Japan in June 1975, attended by 973 participants from 18 nations, and engaging in eight different sports. I do not know the origin of the word FESPIC, but FE refers to Far East, and PI to Pacific Islands.

7 In all the FESPIC Games have been held nine times, at intervals of several years, approximately four years, in countries in Asia and the Pacific, most recently in 2006 in Kuala Lumpur in Malaysia. The second FESPIC Games were held in November 1977 in Holroyd in Western Sydney. Championship meetings in particular sports have been held eight times, and there have been a number of seminars and workshops relating to administration, coaching and other matters related to organisation of sport.

8 The international body called the FESPIC Federation came into being early in these events. Its members were national member organisations, typically national Paralympic committees associated with the Olympic movement and in some cases other representative organisations. The governing body was a general assembly which met at least every four years. There were also an executive committee and standing committees to deal ad hoc with particular tasks.

9 The Holroyd FESPIC Fund can be traced to measures taken to raise funds to organise the games conducted at Holroyd in November 1977. The leading figure in endeavours to arrange those games and collect those funds was Dr John MacDonald Falconar Grant, the first plaintiff, who has been a trustee throughout.

10 Dr Grant had, for many years, been concerned with assisting people who had significant physical difficulties, particularly paraplegics and quadriplegics, including victims of cerebral palsy and spina bifida.

11 Major General Paul Cullen, who then held office in the Royal Blind Society and associated bodies, and Mr Ivan R Wilson, the Town Clerk of Holroyd Municipal Council were also trustees.

12 The trustees, particularly Dr Grant, called for and collected funds from a number of sources for the purpose specifically of conducting the games at Holroyd. The calls for donations referred specifically to games proposed to be conducted at Holroyd in November 1977. Evidence of Dr Grant, and also of Mr Devlin, who is now a trustee and was then interested in municipal affairs in Holroyd, later the Mayor, deals with the terms of these calls for donations. Dr Grant said in evidence:

7. On most of those occasions, Mr Devlin, now a trustee but then the Mayor of Holroyd, came with me in support of my appeal. I was the speaker at those occasions. I do not have any record of what I said to those various clubs or any note as to what I used to say, but as far as I can recollect, I made a similar address at each of the clubs in broad terms making the following points:
(a) I initially thanked them for their interest;
(b) I referred to the need to encourage sporting events for the handicapped;
(c) I then gave a brief summary of the history of the Fespic Games and the reasons why they were set up;
(d) Particularly, I referred to the fact that it was very expensive for the poorer island states to travel and attend European gatherings and hence my Japanese colleague, Dr Yutaka NakaMura and I conceived the idea of establishing games in the Far East and South Pacific region;
(e) The games would be for people in wheelchairs, people who had visual disturbances, and those who had suffered cerebral palsy;
(f) I referred to the people with disabilities such as those catered for now by organisations such as the Wheelchair Sports Association and the Blind Sporting Association. Although there were some such groups in 1977 they were not involved in the organisation and the appeal for the 1977 Games. The NSW Wheelchair Sports Association was not incorporated until 2001 and the Blind Sporting Association was not incorporated until about 2003.

13 Grants were obtained from the New South Wales Government and the Commonwealth Government, and donations were made by Holroyd Municipal Council, Parramatta City Council and Baulkham Hills Council. Considerable funds were also raised by Rotary clubs, Leagues Clubs and other sporting and services clubs. Many donations had sources associated with Holroyd and areas nearby. Some moneys were donated by charities or bodies concerned with disability sports, and some amounts, not large sums, were raised by sales of souvenir shirts and other minor trading activity.

14 A Statement of Income and Expenditure up to 18 January 1979 was produced and audited. This showed receipted donations totalling $131,637.78; receipts from sales $12,200.12; some bank interest and total receipts $147,652.51. The statement also shows expenditures totalling $777,766.43 and an excess of $69,296.08.

15 A number of large donors and the amounts they gave can be identified, but there is also a significant number who gave funds which were collected by clubs and sporting bodies in circumstances in which they cannot be individually identified. In some cases they never could be individually identified, and it would not be practically possible after this interval of time to locate them. Indeed, it could always have been difficult to identify and locate all donors because of the manner in which donations were collected.

16 The Holroyd Games were successful, but considerable surplus funds remained with the trustees when all expenses associated with the Holroyd Games had been met. At that stage there was no declaration of trust or document establishing with any formality the terms on which the funds had been collected. No claims were made, either by government or by other bodies, or by anybody else, for the return of unexpended funds.

17 The charitable intentions of the donors are to be understood from the calls for donations which were made, and the relatively informal manner in which donors acted when they subscribed money. It should in my view be understood that there was no contemplation that the money subscribed would be refunded in any circumstances.

18 The affairs of the Holroyd FESPIC Fund were put on a formal basis by a declaration of trust made by the three original trustees by a deed dated 28 July 1980, which recited the events which had brought about the existence of the fund, and declared the trust in these terms:

1. The Trustees shall hold the Holroyd Fespic Fund UPON TRUST that they shall either retain the same in its present state of investment or at this discretion realise the same and invest the proceeds in any investment hereby authorised and may from time to time at their like discretion transpose such investment into others hereby authorised.
2. The Trustees shall apply the whole or such part of the income of the Holroyd Fespic Fund as they in their discretion think fit for the arrangement, organisation and travel of those wishing to participate in the FESPIC GAMES sporting competition for disabled persons in venues inside or outside Australia"

19 The deed went on to make provisions about trustee's powers and liability and other relevant matters. The fund has been administered in accordance with the deed since then. If any donors wished to challenge the interpretation expressed in the deed, they have had almost 30 years to do so, and none have. This strongly suggests that the trustees were right to think that the surplus remained in their hands on trust for charitable purposes and also that they correctly defined the continuing purposes.

20 The three trustees themselves are the supporting organisation. They carried out activities and applied funds as indicated by clause 2 in the deed. In most years there has been an excess of income over expenditure and funds have accumulated, so in June 2007 the sums held by the trustees amounted to $263,053.59.

21 There were changes in the identity of the trustees. In 1995 Major General Cullen retired and Mrs Felicity Purdy became a trustee in his place, and also Mr Wilson retired and Mr Robert W Devlin a former Mayor of Holroyd became a trustee in his place.

22 The principal activity has been to spend money to assist and finance travel for participants in FESPIC games which have been held from time to time in Hong Kong, Indonesia, Japan, China, Thailand Korea and Malaysia. As well as providing travel finance for Australian participants, assistance has been given to participants travelling from to and from other countries in Asia and the Pacific Islands, that is Fiji, Tonga, Samoa and New Guinea and also Cambodia, Hong Kong and Japan.

23 It has never been questioned from any source that the purposes for which funds were collected in 1977 and the purposes stated in the deed were charitable. Although significant funds were donated, no one has ever objected to the retention of funds after meeting all the expenditures from the 1977 games; no one has ever objected to the purposes stated in 1980 or to expenditure of funds accordingly.

24 I will observe that I see no room for doubt that the purposes were charitable, both under the first informal arrangement and as restated. I see no difficulty in deciding that those purposes fall within the fourth highly general class of purposes beneficial to the community identified in Income Tax Commissioners v Pemsel [1981] AC 531 at 583.

25 Promoting particular sports, even amateur sports, has not been generally accepted by Courts as a charitable purpose, but providing sports grounds and such facilities for amateur sport has been accepted as conferring benefits on the public generally, not only on the participants, but on the whole community.

26 There have been cases in which trusts for promoting sports and sporting activities have not been regarded as charitable trusts: although trusts for sporting activities associated with education in schools and universities have been upheld. In Oldham Borough Council v Attorney General [1993] Ch 210 a trust to hold land as playing fields was accepted as valid without question, and there was no association with education, poverty, sickness or any other purpose mentioned in the Preamble to the Statute of Charitable Uses 1601. In Re Laidlaw Foundation (1984) 13 DLR (4th) 491 the Ontario Supreme Court upheld gifts to five organisations promoting amateur athletics, one of which was the Sports Fund for the Physically Disabled. The Court applied a restatement of charities law in an Ontario Statute, not the general law still in force in New South Wales, and regarded the promotion of amateur athletics that lead to physical fitness as falling within a statutory reference to "Any purpose beneficial to the community…" See Southey J at [1], [2], [20] and [23]. The question presented in New South Wales law is not quite the same as it is in Ontario. I am not concerned with amateur athletics generally but with the activities mentioned in cl 2 of the Deed.

27 In the present case, classification of the purposes as purposes beneficial to the community, to the whole community, and as charitable, is assisted by therapeutic as well as recreational aspects of providing persons with disabilities with opportunities to participate in competitive sport, not in a commercial environment.

28 While a person with a disability engaging in sporting activities would probably reject the classification of sickness, the provision of benefits in accordance with the deed in my opinion falls within the spirit and intendment of the reference to the relief of sickness in the preamble.

29 I see no difficulty in classifying persons with disabilities as a section of the public, as there are no elements of self-selection or choice, membership of a particular body, adherence to a particular belief or other narrow distinguishing factor. Disabilities can fall on anybody in the community. I have no difficulty in adopting the position conceded and supported by the Attorney General that the trust is charitable and valid.

30 The FESPIC Games will no longer be held. The Federation held its last games, the 9th FESPIC games, in Kuala Lumpur in November and December 2006. The FESPIC Federation has in effect dissolved itself and its activities have passed to the Asian Paralympic committee, a new regional body associated with the International Paralympic Committee and the International Paralympic movement. The new body is recognisably a successor of the old one, but it is a new body, and it acts in its own new way. The view of the trustees, expressed by Dr Grant, is that the Asian Paralympic Committee has significantly different objects and purposes, and functions in a different way to the previous organisation. It incorporates the whole of Asia and is not limited to the Far East and Pacific Islands. It does not have a special commitment to drawing in and encouraging recently handicapped persons in sporting activities. Dr Grant has observed: "There seems to be no requirement that a percentage of the applicants should be people who have never previously represented their country in handicapped games, which was a concern at the time of raising the funds." Dr Grant has also observed that the Asian Paralympic Committee has no special reference to the people of the New South Wales who provided the funds.

31 The effect of the application, with support from the Attorney General, is that it is contended that circumstances exist of the kind specifically referred to in s 9(1) of the Charitable Trusts Act 1993, and its reference to "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".

32 On an entirely literal level it is clear that the present circumstances fall within this classification because the FESPIC Games sporting competition referred to in cl 2 of the deed will no longer be conducted.

33 Looking at the matter on a more general level, the original circumstances have ceased to provide a suitable and effective method of using trust property, because the trustees take the view that the successor organisation does not appropriately continue the FESPIC Federation. A much wider geographical area and range of countries are involved and a different kind of competition is to occur. What the trustees see as an original focus on drawing in or involving newly handicapped persons in activities beneficial to them is altered towards a likely focus on athletic expertise. The trustees no longer wish to continue the activity in these circumstances. There is no significant supporting body from which some other initiative could emerge. The trustees themselves are the organisation. The Holroyd FESPIC Fund has run its course and finished its race.

34 I have in mind the provisions of s 10. In my opinion, the charitable trust was fully constituted and took effect in accordance with the deed, and the existence of a general charitable intention was not necessary for its validity, nor for exercising the power of the court to order a cy prés scheme. If it were necessary to establish that there was a general charitable intention, there is nothing to counterweigh the presumption in subs 10(2).

35 If, contrary to my view, the true terms of the charitable trust were established by events which happened earlier than the deed in 1980, the circumstances in which and the purposes for which money was collected would also show the existence of a general charitable intention. Many donations from different sources, a significant number of which cannot and could not ever be identified, were mixed together in an undifferentiated fund, and it was readily foreseeable at the time of making the donations that the originally stated purpose for which they were used was one which might lead to either a deficiency or a surplus when the stated purpose had been achieved. There was no expression of a limiting condition when the donations were made. There was no reason to expect that if there were a surplus the donors would be identified and given back their money in rateable proportions. That could not happen. There was no expression of the idea that it would happen. When the Holroyd Games were over and there was a surplus nobody claimed that it should happen.

36 If I held any doubt about the matter I would make an order on the basis that the events of 1977 gave rise to a charitable trust and showed the existence of a general charitable intention, and I would frame my order as a cy prés scheme dealing with that. However I do not see such doubt.

37 I have reviewed the constitutions of the two associations which will take benefits under the scheme. They are, according to their objects as declared, suitable to continue activities generally of the kind which the trustees pursued. Those associations would not receive the funds distributed subject to any further trust, so the funds would be an augmentation of their other funds, and they can be expected to be used by them in institutional integrity in accordance with their objects. I regard this as an appropriate scheme. For a much larger sum of money I would order a much more detailed scheme which would impose limits on the use of funds and provide some means of supervision. Detailed arrangements of that kind do not seem to me to be required in relation of a fund of the size now disposed of.

38 I felt some concern that the scheme deals only with two charitable bodies which operate in the relevant field whereas there may be one or more others which might feel they have claims for consideration. If I were dealing with a much larger fund I might well have required an enquiry surveying the charitable bodies which operate in New South Wales in relevant ways, or I might have given directions requiring advertisements and calling for applications. In this part of my consideration I should act administratively, and it is not necessary and often not appropriate to observe all the care which courts take where rights of parties have to be decided. I have to yield to considerations of expediency, and I have a particular concern with expense. It is unfortunately easy and distressingly disadvantageous to attaining charitable purposes for charity proceedings to slip into a contentious mode in which disproportionate legal costs are incurred, fall on the charitable fund and unsuitably diminish it. The money now involved is a sum of money which should be treated with respect, but it is not sufficient to make or break a charitable institution, and will do no more than modestly augment the funds of two institutions. It could not reasonably support creation of a new institution. Nothing useful would result from identifying more recipients and making smaller distributions.

39 After considering what I should do, my view is that I should accept the scheme put forward. No charity has any rights in the matter or standing to complain about this yielding to expediency, neither the two mentioned in the scheme, nor any which have not been considered.

40 I will make orders that adopt the scheme and require the trustees to report to the court and the Attorney General when they have carried out the scheme.

My orders are:

1. Declare that on the true construction of the Declaration of Trust of the Holroyd Fespic Fund dated 28 July 1980 and in the events which have happened that the fund raised by public subscription for the purpose of benefiting and assisting disabled persons wishing to participate in the FESPIC Games constitutes a valid charitable trust within the provisions of the Charitable Trusts Act 1993.

2. Declare that on the true construction of the Declaration of Trust of the Holroyd Fespic Fund Clauses 2 and 3 and in the events which have happened it is not now practicable to carry the trust into execution in accordance with its terms.

3. Order that the capital and income of the Holroyd FESPIC Fund be disposed of according to the following cy prés scheme, that is, the trustees are to distribute the remaining funds equally between the NSW Wheelchair Sports Association Incorporated, and the Blind Sporting Association NSW Incorporated.

4. Order that the trustees or one of them within three months make a report to the Court on affidavit of the steps they have taken to carry out the cy prés scheme. The affidavit is to be filed, and a copy is to be delivered to the solicitor for the defendant.

5. Order that the court fees incurred by the plaintiffs be paid or retained by them out of the fund.

6. Order that the defendant's cost of the proceedings be paid by the trustees out of the fund on the indemnity basis.

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