Gray v Australian Cancer Foundation for Medical Research; Estate Harold Boardman (No 2)
[1999] NSWSC 725
•8 July 1999
CITATION: Gray v Australian Cancer Foundation for Medical Research; Estate Harold Boardman (No 2) [1999] NSWSC 725 CURRENT JURISDICTION: Equity Division FILE NUMBER(S): 4161/95 HEARING DATE(S): 08/07/99 JUDGMENT DATE:
8 July 1999PARTIES :
Lloyd William Gray (P)
Australian Cancer Foundation for Medical Research (D1)
Attorney General for New South Wales (D2)
New South Wales State Cancer Council (D3)
University of Sydney (D4)
Stephen Warren Boardman (D5)
Children's Cancer Institute Australia for Medical Research (Applicant 1)
Skin & Cancer Foundation Australia (Applicant 2)JUDGMENT OF: Young J
COUNSEL : Solicitor for plaintiff: William J Player
1st defendant: M Dempsey
Solicitor for 2nd defendant: P Singleton
3rd defendant: J B Whittle
4th defendant: D Stewart
Applicant 1: D Nelson
Solicitor for Applicant 2: A MorrisonSOLICITORS: Plaintiff: William J Player (Katoomba)
1st defendant: Allen Allen & Hemsley
2nd defendant: I V Knight
3rd defendant: Turner Freeman
4th defendant: Blake Dawson Waldron
Applicant 1: John S Zouroudis & Co
Applicant 2: Clayton UtzCATCHWORDS: Associations [46]- Incorporated association- Registration as company- No change of indentity. Charities [24]- Cy-pres scheme- Order not yet taken out- Application for additional charities to participate- Principles- Application refused with costs. Corporations [42]- Registration of association incorporated under Associations Incorporation Act as a company- No change of identity. ACTS CITED: (NSW) Associations Incorporation Act 1984, s 57(3)
(NSW) Charitable Trusts Act 1993 ss 11, 13(2), 16
Corporations Law ss 133, 601BACASES CITED: Attorney-General v Bishop of Worcester (1851) 9 Hare 328; 68 ER 530
Attorney-General v Stewart (1872) LR 14 Eq 17
Autodesk Inc v Dyason (No 2) (1993) 176 CLR 300
Ware v Cumberlege (1855) 20 Beav 503; 52 ER 697DECISION: See paras 33-35
THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISIONYOUNG, J
THURSDAY 8 JULY 1999
4161/95 - LLOYD WILLIAM GRAY V AUSTRALIAN CANCER FOUNDATION FOR MEDICAL RESEARCH & ORS; ESTATE OF HAROLD BOARDMAN (NO 2)
JUDGMENT
1 HIS HONOUR : On 11 May this year I gave judgment on a number of issues arising in this case. The first issue was whether there was any charity which exactly answered the description in the testator's will, "The Cancer Research Foundation". The answer to that question was, no.
2 The second question was on the basis of that answer, whether the testator had shown a general charitable intent. The answer to that question was, yes.
3 The third matter I considered was what was the purpose of the testator's gift. On that I said in pars 28 to 34, that one had to look to the four words in the testator's will to describe the sort of body that he wished to have his benefaction so that one could fulfil the object of the law, that the fund must be used as nearly as possible, or, in the old law French, “cy-pres” with the testator's intention.
4 I said that the word "The" meant that the money should all go to the one body and that "Cancer" referred to all sorts of cancer and that "Research" was fairly general but "Foundation" normally connoted a body who contributed funds to other bodies rather than doing the work itself.
5 Having done those three exercises, I then turned to how the court could apply the funds cy-pres. The Attorney-General's counsel submitted that in the circumstances it would be appropriate to split the fund between the three bodies whose claim had been brought to the notice of the court. Although there were arguments between some of those bodies that they should get the whole fund, or that one of the other claimants should not get any of the fund, in the end I formed the view that as near as possible to what the testator would have intended was what the Attorney-General submitted.
6 As $3,000,000 was involved and because of the nature of the case, it received quite considerable publicity in the press of 11 May and I think the day before and after. That publicity attracted the attention of the officers of the Children's Cancer Institute Australia for Medical Research. They moved to stop the order being taken out so that they could apply to vary what the court had done to include themselves as a beneficiary. Today, another body made a similar application, namely, the Skin & Cancer Foundation Australia.
7 Today has been set aside to determine whether some recall or adjustment of the order should be made in the light of those applications. To start with the simple aspects, there are a few minor errors in the judgment of 11 May 1999. For instance, in par 4 the words "a solicitor" are wrong and should read "an accountant". Paragraph 38 should read "Accordingly, in my view, the fund should be distributed equally between the three claimants." In paragraph 40 the word "deem" should read "need". None of these make any vital difference.
8 The essential point is whether the scheme which was referred to the Attorney-General under s 13(2) of the Charitable Trusts Act, 1993 for implementation under that Act should be altered or whether it should be further considered.
9 Mr Nelson of counsel appeared for the Children's Cancer Institute Australia for Medical Research. That is the body's current title: it has had a series of names over the last twelve years. It commenced as an association incorporated under the Associations Incorporation Act 1984 in 1988 and became registered under the then s 133 of the Corporations Law in 1995 so that it became a corporation under that scheme. Section 601BA of the current form of the Corporations Law is the present form of the provision. The Corporations Law does not specify whether such registration continues the same body in existence or whether it becomes a new legal personality, but I prefer the view that it is the same body as existed before it was registered. The matter is, however, quite clear in respect of an association originally incorporated under the Associations Incorporation Act 1984 as s 57(3) of that Act specifies that the registration does not change the body’s identity.
10 Mr Nelson's first point was that there had been inadequate advertising and it was unfair to his client that the proceedings had not been brought to its attention so that it could have fully participated in the hearing of May 1999. It was implied in those submissions that had it been heard it would have been a beneficiary under the cy-pres scheme.
11 A similar application was made by Mr Morrison, solicitor, on behalf of the second applicant. This second application was founded more on the proceedings having gone ahead whilst the applicant, a possible claimant was not a party. That is no basis for interference because the way in which charitable proceedings are dealt with by the Court is that for reasons of costs and otherwise the Attorney-General represents charities generally and, particularly, the unnamed charities who might be benefited: see Ware v Cumberlege (1855) 20 Beav 503, 511; 52 ER 697, 700.
12 The evidence as to advertising was that initially the proceedings came before me in 1995 for judicial advice. In short, the judicial advice I gave was that the executor should commence proceedings and that he should make inquiries for representatives of the next of kin and for charities, who might be claimants, either because they claimed to have a name which exactly fulfilled the testator's statement or because they might be a beneficiary under a cy-pres scheme.
13 In 1996 the executor put an advertisement in the Sydney Morning Herald newspaper and in the Australian Medical Association Journal which named the testator, mentioned the words "The Cancer Research Foundation" and asked for claimants either under that exact name or that might be a claimant under a cy-pres scheme. In addition, the executor wrote to four organisations who had general titles indicating that they were able to have access to such information. They were the Cancer Patients Assistance Society of Double Bay, the Cancer Information and Support Society of St Leonards, the New South Wales Cancer Council of Woolloomooloo and the Cancer Care Centre of the Royal Prince Alfred Hospital at Camperdown.
14 The last mentioned letter was referred on to the fourth defendant. However, no other cancer research body came forward apart from the first and third defendants.
15 The evidence from Mr Nelson's client is that the advertisements were not sighted by its officers though the evidence filed by the first applicant shows that they do keep a look out for that sort of advertisement. It would appear that the second applicant also did not see the advertisements although it has not directly said so.
16 Mr Nelson says that there must be fair and conscionable advertising and what has happened in this case is, to use his words, "uniquely unfair". The case went on in May, his client was a possible beneficiary under a cy-pres scheme and yet the cy-pres scheme was formulated without its input. Mr Nelson says that there is, at least now, a data base, and there probably was in 1995, and that there are listed 152 charities which are involved with cancer. He says it would take very little effort to note the thirteen or so who are involved with research and just send them a letter. He says that had this simple search and writing of a dozen or so letters taken place all the unfairness would have gone away. Those submissions are joined in by Mr Morrison.
17 Various questions of principle arise out of those submissions. As I said, the present estate consists of over $3,000,000 and there are some funds to advertise widely for prospective claimants but that will not always be the case with charitable funds. Often there are a large number of potential claimants and very little in the bequest and the Court would not countenance the expenditure of all the fund on advertising or legal fees with virtually nothing left for the charitable purpose to be carried out. The Charitable Trusts Act itself shows a legislative intention that this should not happen.
18 If the two applicants were claiming that one or other of them exactly answers the description things might be different. However, each of them is only claiming that they should get an equal share with the first, third and fourth defendants of the fund under a cy-pres scheme. As Mr Whittle, of counsel, for the third defendant points out, there are no bodies who are “entitled” under the cy-pres scheme. The cy-pres scheme is a method of carrying out a charitable purpose. It may be that particular bodies are selected to carry out the charitable purpose, but that is really incidental.
19 The key question is how best does one carry out a charitable purpose which the testator has imperfectly specified. That key purpose was worked out in the third of my decisions that I have indicated earlier and neither of the applicants quarrelled with that way of looking at things. The essential question is not whether extra bodies who might have put in a claim would have been ferreted out had there been more advertisements but, rather, whether there would be any better carrying out of the charitable purpose if that had been the case.
20 Mr Morrison quarrels with that. He says that his client’s claim is good, even though, perhaps, no better than the other claimants and the real question is whether the fund should be split four or five ways rather than three ways and it is insufficient to look to see whether the charitable purpose has been sufficiently carried out by the scheme as formulated at present. I do not really think that that is the right way of looking at it.
21 I do not believe that it is incumbent on the executor to advertise extensively. He looked to the guidance of the Court, and did put in advertisements which, ordinarily, one would have expected would have come to the attention of those involved in charities for two reasons: first, most major charities have fund raising sections which scan public notices. Secondly, most cancer charities involving research have doctors either as board members or associates who read the Australian Medical Association Journal and would pass on any useful information to the charities. It might have been better, in hindsight, to have advertised a little more but I certainly do not agree with the submission that it was incumbent on the trustee to examine relevant data bases and write letters to a dozen or so people who might possibly be claimants. What the executor was after was a scheme which would effectuate the purpose of the will and not to benefit particular bodies.
22 However, even if this were wrong, the real question still remains, whether the scheme as it was settled before should be adjusted. Perhaps, the question is, really, a little different and that is: have either of the applicants shown that if they had been heard on 11 May that there was an appreciable chance that a different scheme would have been settled? In my view, the answer to the second question is, no. Accordingly, the wider question must also be answered, no.
23 One of the indications on the evidence in this case was that the fund should be split up as little as possible. There was a lot of evidence on behalf of the first defendant and to a degree corroborated by the third defendant, that cancer research is a very expensive business and that it is necessary for grants sometimes to be made of over $1,000,000. Unless the first defendant got at least $1,000,000 it is not really able to make use of the benefaction. Secondly, the indication in the will that it was to go to one body reinforced the view that the fund should not be split into too many segments. Thirdly, the indication was that general charities rather than specific charities should be benefited.
24 The first and third defendants were in this category. I had some doubt about the fourth defendant but, eventually, Mrs Stewart convinced me that on the evidence that was before the Court, the fourth defendant whose focus was melanoma was, in fact, conducting general cancer research. Admittedly, the two applicants have not addressed the evidence in the same detailed way as the other three claimants but what is before the Court leaves a bit of doubt as to whether they really do fall within the concept that I had in mind in my judgment.
25 The first applicant focuses on children and to a degree on leukaemia and has indicated that although its Board has not made up its mind as to what it might do with any money, its first thought is that it should use it for funding a young person’s Ph D research in the cancer field. Why a young person has been selected I don't know. Funding a particular thesis for a Ph D degree does not seem to be as broad an application of the fund as the activities undertaken by the other three charities.
26 Mr Nelson says that if you do research into cancer for children you are going to benefit the general community. I take that point, but the focus is on children.
27 So far as the second applicant is concerned, the historical documents that have been put before the Court indicate that its focus is on problems of the skin, including dermatological problems generally. The history it has presented is, perhaps, a little unfortunate because it tends to suggest that a lot of the moneys in the years in question went on buildings and structures. It might not have been a typical year but again it does not seem to indicate the same general application of funds as the other bodies.
28 It is a little unfortunate that these two bodies were not here to begin with but we cannot set the clock back. I consider that the scheme as originally settled does carry out the charitable purpose. I do not think it is a situation of just saying: well, there are five worthy charities, they are all reputable bodies dealing with cancer research, let us just split it five ways, because the evidence is that the money does need to be handed out in large slabs for it to be really useful.
29 Mr Singleton, the solicitor for the Attorney-General submits that no alteration should be made to the order already pronounced.
30 The position taken by the Attorney-General is significant as the authorities show that any application to alter a cy-pres scheme must be made by or with the consent of the Attorney-General: Attorney-General v Stewart (1872) LR 14 Eq 17 and see Attorney-General v Bishop of Worcester (1851) 9 Hare 328; 68 ER 530. Mr Nelson says that s 11 of the Charitable Trusts Act 1993 has displaced this rule. I would disagree. Apart from alleviating some technicalities, the Act really enhances the position of the Attorney-General as protector of charities.
31 No order has yet been taken out, but the principles in those cases should be taken as a good guide on current applications.
32 I might add that some argument was also addressed that the Court should not in any event reopen the argument. This argument was based on Autodesk Inc v Dyason (No 2) (1993) 176 CLR 300, 302 and 308 and other high authority. In view of my conclusions on the merits, it is not necessary to rule on this argument.
33 Accordingly, in my view, the original order should stand and I should now lift the stay that I made on 26 May. What will now happen, as I understand it, is that under the order that I made pursuant to s 13(2) of the Charitable Trusts Act the Attorney-General will now by order under s 16 formally publish the scheme in the Gazette.
[Discussion ensued between his Honour and counsel re costs]
34 I make orders 1, 2 and 3 in the short minutes of 11 May 1999, as initialled by me and amended today.
35 So far as costs are concerned, up to and including 11 May I make the order on the Associate's page for 11 May as order 4. Order 5: Costs after 11 May of all parties to be paid by the applicants, Children's Cancer Institute Australia for Medical Research and the Skin & Cancer Foundation Australia. I grant liberty to apply should there be difficulty with assessment of those costs. Order 6: The exhibits may be returned.
*************
0