Groote Eylandt Aboriginal Trust Inc v Deloitte, Touche Tohmatsu [No 2]

Groote Eylandt Aboriginal Trust Inc & Anor v Deloitte,
Touche Tohmatsu & Ors [No 2] [2017] NTSC 04
PARTIES:GROOTE EYLANDT ABORIGINAL TRUST INCORPORATED (NT 00142C)

THE ATTORNEY-GENERAL FOR THE NORTHERN TERRITORY
v
DELOITTE TOUCHE TOHMATSU (A Firm)
and
KPMG (A Firm)
and
MINTER ELLISON (A Firm)

TITLE OF COURT:  SUPREME COURT OF THE NORTHERN TERRITORY
JURISDICTION:  SUPREME COURT OF THE NORTHERN TERRITORY EXERCISING TERRITORY JURISDICTION
FILE NO:89 of 2014 (21441221)
DELIVERED:  20 January 2017
HEARING DATES:  5, 6, 7 and 8 December 2016
JUDGMENT OF:  HILEY J
CATCHWORDS:

INTERPRETATION – trusts – trust deeds – same approach as for construction of contracts – intention as revealed in the words used – resort to extrinsic evidence
TRUSTS – charitable trusts – legal principles – Pemsel categories – trusts for purposes not persons
TRUSTS – charitable trusts – benefit of the public or section of the public – class of potential beneficiaries – tests in Re Compton and Oppenheim – whether potential beneficiaries are defined by reference to a single propositus or several propositii – Aboriginal clans are a section of the public – no difference where non residents are excluded
TRUSTS – charitable trusts – trusts for the relief of poverty – trusts must be solely for the relief of poverty if not for the benefit of the public or a section of the public – Dingle exception
TRUSTS – charitable trusts – public benefit – sport and social facilities – may fall within advancement of education category in some cases – trust must not permit gifts that are not charitable
ABORIGINALS – clans – trusts for the benefit of traditional clans of Aboriginals residing in a particular area – clans are a section of the public for the purposes of charitable trusts – nothing arbitrary or capricious about the membership of Aboriginal clans – appreciably important class of the community
Aboriginal Land Rights Act 1983 (NSW)
Aboriginal Land Rights (Northern Territory) Act 1976 (Cth) sch I, s 4(2A)
Charities Act 2013 (Cth), s 9
Income Tax Assessment Act 1997 (Cth)
Statute of Charitable Uses 1601 (43 Eliz 1 c 4)
Native Title Act 1993 (Cth)
Commissioners for Special Purposes of Income Tax v Pemsel [1891] AC 531, Re Scarisbrick Cockshott v Public Trustee [1951] 1 All ER 822 CA, Verge v Somerville [1924] AC 496, applied
Aboriginal Hostels Ltd v Darwin City Council (1985) 33 NTR 1, Alice Springs Town Council v Mpweteyerre Aboriginal Corporation [1997] NTCA 78, 115 NTR 25, 139 FLR 236
Dareton Local Aboriginal Land Council v Wentworth Council (1995) 89 LGERA 120, Davies v Perpetual Trustee Co Ltd [1959] AC 439, Dempsey on behalf of the Bularnu, Waluwarra and Wangkayujuru People v State of Queensland (No 2) [2014] FCA 528, Dingle v Turner [1972] AC 601, Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7; (2014) 251 CLR 640, Latimer v Commissioner of Inland Revenue [2004] 3 NZLR 157, Plan B Trustees Limited v Parker [2013] WASC 216, Shire of Ashburton v BindiBindi Community Aboriginal Corporation [1999] WASC 108, Shire of Derby-WestKimberley v Yungngora Association Inc [2007] WASCA 233, Thompson v Federal Commissioner of Taxation [1959] HCA 66; (1959) 102 CLR 315, considered
Compton, In re; Powell v Compton [1945] 1 Ch 123, Oppenheim v Tobacco Securities Trust Co Ltd [1951] AC 297, distinguished
Flynn v Mamarika (1996) 130 FLR 218, Latimer v Commissioner of Inland Revenue [2002] 3 NZLR 195, followed
Anglican Trusts Corporation of Diocese of Gippsland v Attorney-General for the State of Victoria [2008] VSC 352, Ashfield Municipal Council v Joyce [1976] 1 NSWLR 455, Attorney-General (NSW) v Cahill [1969] 1 NSWR 85, Attorney-General for New South Wales v Perpetual Trustee Co (Ltd) (1940) 63 CLR 209, Attorney-General v Ross [1986] 1 WLR 252, ASIC v Carey (No 6) (2006) [2006] FCA 814; (2006) 153 FCR 509, Australian Executor Trustees Ltd (as trustee for the Martu Banyjima Charitable Trust) v Attorney-General (WA) [2015] WASC 439, ASIC v Carey (No 6) (2006) 153 FCR 509, BSH Holdings Pty Ltd v Commissioner of State Revenue [2000] VSC 302; (2000) 2 VR 454, Byrnes v Kendle [2011] HCA 26; (2011) 243 CLR 253, Cant v Kirby [2011] NSWSC 1193, Commissioner of Taxation of the Commonwealth of Australia v Bargwanna [2012] HCA 11; (2012) 244 CLR 655, FCT v Vegners (1989) 90 ALR 547, Federal Commissioner of Taxation v Vegners (1989) 90 ALR 547, Gibson v South American Stores (Gath & Chaves) Ld [1950] Ch 177, Grain Growers Ltd v Chief Commissioner of State Revenue [2015] NSWSC 925, Inland Revenue Commissioners v Baddeley [1955] AC 572, Inland Revenue Commissioners v City of Glasgow Police and Athletic Association [1953] AC 380, Inland Revenue Commissioners v McMullen [1981] AC 1, In Re Hilditch (1985) 39 SASR 469, In Re Income Tax Acts [No 1] [1930] VLR 211, Re Wilson’s Grant; Fidelity Trustee Co Ltd v Johnson [1960] VR 514, Kostka v The Ukrainian Council of NSW Inc [2013] NSWSC 222, McGarvie Smith Institute v Campbelltown Municipal Council (1965) 11 LGRA 321, Mabo v State of Queensland [No 2] [1992] HCA 23; (1992) 175 CLR 1, Members of the Yorta Yorta Aboriginal Community v Victoria [2002] HCA 58; (2002) 214 CLR 422, Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd [2015] HCA 37; (2015) 256 CLR 104, Re Best [1904] 2 Ch 354, Re Clifford [1912] 1 Ch 29, Re Coulthurst [1951] Ch 661, R (Independent Schools Council) v Charity Commission [2012] Ch 214, Re Gillespie [1965] VR 402, Re Mair [1964] VR 529, In Re Patten[1929] 2 Ch 276, Re Evans; Union Trustee Co of Australia Ltd v Attorney-General for Queensland [1957] St R Qd 345, In Re Tree [1945] Ch 325, In Re Wallace v Fatt [1908] VR 636, Royal National Agricultural and Industrial Association v Chester (1974) 3 ALR 486, Said v Barrington [2001] NSWSC 576, Scottish Burial Reform and Cremation Society v Glasgow City Corporation [1968] AC 138, State of Western Australia v Graham on behalf of the Ngadju People [2013] FCAFC 143, Strathalbyn Show Jumping Club Inc v Mayes [2001] SASC 73; (2001) 79 SASR 54, Union Trustee Co of Australia Ltd v Federal Commissioner of Taxation [1962] HCA 52; (1962) 108 CLR 451, Williams’ Trustees v Inland Revenue Commissioners [1947] AC 447, Wybenga v Mandandanji Ltd (as trustee for the Mandandanji Charitable Trust) [2014] FCA 861, referred to
REPRESENTATION:
Counsel:
1^st Plaintiff:  R Whitington QC
B Doyle
D McConnel
2^nd Plaintiff:  G Macdonald

1^st Defendant:  No appearance
2^nd Defendant:  No appearance
3^rd Defendant:   R Derrington QC
T Anderson

Solicitors:
1^st Plaintiff:  Roussos Legal Advisory, town agents for Johnson Winter & Slattery
2^nd Plaintiff:  Solicitor for the Northern Territory
1^st Defendant:  Paul Maher Solicitors, town agents for Thomson Geer
2^nd Defendant:   Hunt & Hunt Solicitors, town agents for Clifford Chance
3^rd Defendant:   Halfpennys, town agents for Lander & Rogers
Judgment category classification:    A
Judgment ID Number:  Hil1701
Number of pages:  127

IN THE SUPREME COURT
OF THE NORTHERN TERRITORY
OF AUSTRALIA
AT DARWIN
Groote Eylandt Aboriginal Trust Inc & Anor v Deloitte,
Touche Tohmatsu & Ors [No 2] [2017] NTSC 04

No. 89 of 2014 (21441221)

BETWEEN:
GROOTE EYLANDT ABORIGINAL TRUST INCORPORATED (NT 00142C)

First Plaintiff
THE ATTORNEY-GENERAL FOR THE NORTHERN TERRITORY
Second Plaintiff

AND:
DELOITTE TOUCHE TOHMATSU (A FIRM)

First Defendant
AND:
KPMG (A FIRM)
Second Defendant
AND:
MINTER ELLISON LAWYERS
Third Defendant

CORAM: HILEY J
REASONS FOR JUDGMENT
(Delivered 20 January 2017)

Introduction

Pleadings and Submissions
Question to be answered

The 2008 Trust Deed

Summary of Main Contentions

Factual background

The Indigenous Inhabitants of the Islands

Recent history

Earlier Trust Deeds

1989 Trust Deed
Flynn v Mamarika
1996 Trust Deed
1998 Trust Deed
2000 Trust Deed
2004 Trust Deed
2005 Trust Deed

Interpretation of Trust Deeds

Charitable trusts – relevant law

Trusts for the benefit of Aboriginals

Clear wording of clause 2

Class – the potential objects of benefaction

Legal principles

“Beneficiaries” defined by reference to a propositus
Compton
Oppenheim
The adoption of the Compton-Oppenheim principles in Australia
Section 9 of the Charities Act 2013
Two exceptions to the above principles

Authorities concerning trusts for Indigenous People

Aboriginal Hostels Ltd v Darwin City Council
Shire of Derby-West Kimberly v Yungngora Association Inc
Alice Springs Town Council v Mpweteyerre Aboriginal Corporation
Latimer v Commissioner of Inland Revenue
Plan B Trustees Limited v Parker

Contentions

Consideration

Descent from ascertainable particular persons
Clans and context of the Trust
Ambulatory operation of the Trust
Effect of excluding non-residents
Size of the class
Appreciably important class of the community

Conclusions

Defence paragraph 13(c)

Relief from Poverty

Charitable purposes

Sport and social facilities

Charitable purpose market garden

Conclusion

Conclusion and disposition

Introduction

On 18 July 2016 I made orders that the following questions be tried as preliminary questions ahead of the trial of the other issues in these proceedings:
(1)Do the matters alleged in paragraph 13 of the Defence of the Third Defendant to the Amended Statement of Claim filed 2 October 2015 filed on 29 January 2016, or any of them, deny to the Groote Eylandt Aboriginal Trust (as established and continued under the deeds of trust identified in paragraphs 7, 10, 19, 25 and 30-32 of the Amended Statement of Claim)[1] the status of a valid charitable trust at law? For the avoidance of doubt, this question includes whether the matters alleged are established.
(2)Does the Plaintiff have standing to bring these proceedings against Minter Ellison in the capacity of trustee given that the Plaintiff:
(a) has not been found liable for breach of trust; and
(b) has not been found responsible for the loss and damage it now claims against Minter Ellison?
In its Response to the Plaintiff’s Statement of Facts Issues and Contentions,[2] the third defendant withdrew its challenge to the plaintiff’s standing. Its defence is to be amended accordingly. As no party is now challenging the plaintiff’s standing the second question no longer needs to be answered.
Pleadings and Submissions
Pursuant to the orders made on 11 August 2016 the plaintiff, Groote Eylandt Aboriginal Trust Incorporated (GEAT), filed and served a detailed Statement of Facts, Issues and Contentions.[3] The first defendant, Deloitte Touche Tohmatsu, responded by not admitting that the Trust is a charitable trust and indicating that it did not intend to be heard on the Separate Questions. The third defendant, Minter Ellison, put in issue a significant number of the detailed factual assertions made in the Plaintiff’s Statement of Facts, Issues and Contentions by not admitting facts and declined to respond to the plaintiff’s contentions because they comprised submissions and because it was awaiting further material that had been requested of the plaintiff and the plaintiff’s evidence.[4]
Written submissions were filed and served on behalf of GEAT,[5] the third defendant,[6] and the Attorney-General of the Northern Territory.[7] The Attorney-General, who was added as a plaintiff, maintains that the Trust is a valid charitable trust.[8]
Question to be answered
In short, the plaintiff sues the defendants in relation to conduct that occurred from 1 January 2009 in relation to monies held by the plaintiff as trustee for the Trust.
The plaintiff alleges that by Deed of Trust dated 7 March 1989 and with the effect from 25 May 1965, a trust fund was established for royalty payments received and to be received from Groote Eylandt Mining Co Ltd (GEMCO) and/or Broken Hill Co Pty Ltd (BHP). The plaintiff, GEAT, was appointed as trustee to administer the fund. This was referred to in the pleadings as “the Old Trust”. The terms of the Old Trust were amended in accordance with a new deed of trust dated 25 June 1996 and the Trust was then referred to as “the New Trust”. The terms of the Trust were further amended by deeds of trust dated 21 September 1998, 31 July 2000, 21 December 2004, 26 October 2005 and 12 August 2008 (referred to in these proceedings as “the Trust Deed” or “the 2008 Trust Deed”).[9]
In paragraph 13 of the Statement of Claim the plaintiff alleges that:
As a charitable trust, the Trust is and was at all material times entitled to protection and enforcement by the Attorney – General of the Northern Territory as parens patriae.
Paragraph 13 of Amended Defence pleads as follows:
Minter Ellison denies paragraph 13 of the SOC and says that the Trust was not a valid charitable trust at law in that:
(a)thetrust deed at all material times permitted the charitable grant fund to be applied toward inter alia sport and social facilities, which purposes are not charitable purposes;
(b)the class of “beneficiaries” is restricted to those members of specific Aboriginal clans which are permanently residing at 3 geographical locations and thus the purported benefit is not of a public nature and is not for the community as a whole or for an appreciable, but unascertained or indefinite, portion of it; and
(c)even if the “beneficiaries” may rightly be recipients of charitable grants at a particular point in time, the possibility that they were not rightly recipients in the past or the possibility that they may not rightly be recipients in the future is inconsistent with the public benefit test.
The 2008 Trust Deed
It is common ground that the questions are to be answered primarily by reference to the 2008 Trust Deed, namely the deed dated 12 August 2008 as initialled by GEAT’s public officer.[10] That is the deed that defined the Trust at the time of the conduct which is the subject of the main litigation. However it will be relevant to consider previous versions of that Trust Deed because the Trust is said to have existed since 25 May 1965.
On page 2 of the Trust Deed the plaintiff, GEAT, is described as being the Association/Trustee and the Church Missionary Society Trust Ltd (CMS) is described as the Settlor. The Settlor did not execute the Deed. Rather it was executed as a deed by the affixing of the common seal of GEAT in the presence of its Public Officer, Rosalie Lalara.
The Trust Deed contains a number of Recitals including the following:
A.On 25 May 1965, the Settlor became beneficially entitled to the Royalty Payments and these payments were paid to the G.E. Trust.
B.It is and always has been the desire and intent of the Settlor that all Royalty Payments to which it is or may become entitled be used to establish a permanent Trust for the education, benefit welfare, comfort and general advancement of certain Aboriginal people resident upon Groote Eylandt and Bickerton Island.
C.On 28 August 1969, the Groote Eylandt Aboriginal Trust Incorporate (‘Association/Trustee’) was formed for the purpose of acting as trustee of the Trust.
D.On 7 March 1989, the Settlor and the Trustee entered into a deed of trust (‘the Old Trust’) to give effect to the charitable trusts originally contemplated with the establishment of the Trustee on 28 August 1969 (with effect from 25 May 1965).
E.The Settlor, for the purpose of giving effect to such desire, has throughout transferred to the Trust all Settled Property and the Trustee consented to become the trustee thereof subject to the powers and provisions hereinafter expressed.
F.Following consultation, recommendation and discussion amongst the people of Groote Eylandt and Bickerton Island, certain amendments to the Old Trust were made to better reflect the then present day circumstances of the Trust. During 1995 the Members of the Trustee agreed to amend the terms of the Old Trust to those contained in a new deed of trust dated 25 June 1996 (‘the New Trust’).
G.Pursuant to clause 14 of the New Trust, the Trustee may by instrument in writing (for example, by deed or by resolution) revoke, add to or vary all or any of the terms of the New Trust subject to certain restrictions contained within the said clause 14.[11]
H.On the 13 August 1998, in accordance with the provisions of the New Trust and in accordance with the Association’s rules, the Trustee held a special community meeting (SCM) at Angurugu to consult with the Aboriginal people of Groote Eylandt and Bickerton Island and to discuss the financial viability of the Trust for future generations of Beneficiaries.
I.At the SCM, the Beneficiaries of the Trust agreed with the Trustee that the recent financial decline of the Mothership Fund posed a significant threat to the future of the Trust.
J.A majority (in excess of two-thirds) of the beneficiaries present at the SCM voted in favour of the Trustee amending the provisions of the New Trust (and rules of the Association) so as to effectively and lawfully conserve the then present value of the Trust Fund with a view to achieving long-term growth of the Mother ship fund.
K.The Beneficiaries approved the Trustee’s recommendations:
(i)to ensure that the Mothership Fund is not used to pay any costs associated with the administration of the Expenditure Fund;
(ii)to ensure that the distribution of Grant Money is made from the Expenditure Fund and is not made from the Mothership Fund;
(iii)to use the Mothership Fund to pay costs and expenses which are necessary for:
(a)the preservation and maintenance of Trust assets; and
(b)the operation and administration of the Trustee and the Trust;
provided that such costs and expenses do not exceed twenty percent (20%) of the Income of the Trust Fund for the current Financial Year;
(iv)to exercise strict control over investment of Trust Funds;
(v)to henceforth prohibit the making of loans from Trust Funds (whether secured or otherwise) to Beneficiaries;
(vi)to establish a mothership committee for the purpose of allocating a fixed proportion of the Trust Fund each year to the Expenditure Fund, strictly in accordance with the provisions of the Deed;
(vii)to facilitate the establishment of three independent ‘grant committees’ to represent each community (namely, Angurugu, Umbakumba and Milyakburra) for the purpose of receiving monies from the Expenditure Fund and distributing the same strictly in accordance with the laws relating to charitable trusts and the charitable purpose test.
L.On 13 August 1998, the amendments were incorporated into the New Trust by the Trustee re-executing the New Trust (as amended) on 21 September 1998.[12]
M.On 19 July 2000, agreement was reached (at a special community meeting of the Trustee) to make further amendments to the terms of the New Trust, to become retrospectively effective as from 1 July 2000. These amendments changed the Financial Year of the Trust from 1 April each year to 30 March the following year and to 1 July each year to 30 June the following year, and were incorporated in the New Trust by the Trustee executing an Amending Trust Deed on 31 July 2000.
N.On 30 November 2004, agreement was reached (at an annual general meeting) to make further amendments to the terms of the New Trust to make provision for a Growth Period and for related purposes. These amendments were incorporated into the New Trust by the Trustee executing an Amending Trust Deed on 21 December 2004.
O.On 19 October 2005, approval was granted by the Attorney-General of the Northern Territory to further amend the New Trust pursuant to clause 20.3(a) of the New Trust, and in accordance with the terms of his letter, dated 19 October 2005. These amendments were incorporated into clause 20 of the New Trust by the Trustee executing an Amending Trust Deed on 26 October 2005.
P.With effect from 19 October 2005, the provisions of the new Trust were amended, altered, modified, substituted or cancelled to the extent necessary for those provisions to correspond with the amendments approved by the Attorney-General of the Northern Territory on 19 October 2005.

Clause 2 is as follows:
The Trust
The Trustee shall hold and apply the Trust Fund exclusively for such charitable purposes (in the strict legal sense) as may be served by the provision of money property or other advantages for the benefit welfare and advancement of the Beneficiaries.
Clause 1.1 contains a number of definitions.
Beneficiaries shall mean all Aboriginal people who are members of the traditional clans of and permanently resident on Groote Eylandt or Bickerton Island and their successor generations.
…
Trust Fund means:
(i)the Settled Property paid or transferred by the Settlor to the Trustee;
(ii)the Royalty payments paid to the Trustee
(iii)all moneys, investment and property paid or transferred to and accepted by the Trustee as additions to the Trust Fund; and
(iv)all income and accretions to the Trust Fund; and
(v)the investments and property from time to time representing the said money, investment property accumulations and accretions or any part or parts thereof respectively.
Clause 3 provides the trustee with powers of investment. Clause 4 defines the “Income of the Trust Fund” for the purposes of clause 6, and clause 5 defines the “Net Income of the Trust Fund”.
Clause 6 is entitled “Allocation of the Trust Fund”. It provides for the allocation of the Trust Fund into one or other of a Growth Fund, Asset Preservation Fund, Charitable Grant Fund and an Administration Fund. Income of the Trust Fund prior to its distribution to one or other of those funds, and any residue after such distribution and other certain monies is held in the Mothership Fund.[13]
Clause 6.3 is as follows:
6.3 Charitable Grant Fund[14]
6.3.1In each Financial Year the Trustee (as represented by the Trust Committee) shall allocate to the Charitable Grant Fund from the Income of the Trust Fund for the current Financial Year the remainder of the annual Royalty Payments subject to clauses 6.1, 6.2 and 6.4 for the purpose of providing benefits to the Beneficiaries.
6.3.2Without limiting the generality thereof, the Charitable Grant Fund may be applied towards the following charitable purposes:
(xi)to provide assistance for funerals and religious activities;
(xii)to provide medical and health benefits to Beneficiaries;
(xiii)to assist in the maintenance of ceremonial activities;
(xiv)to assist in the maintenance of cultural activities;
(xv)to provide education and sporting and social facilities;
(xvi)to pay the cost of supplying household electricity to Beneficiaries;
(xvii)to relieve extreme poverty by providing essential goods and services for Beneficiaries; and
(xviii)to provide assistance for other charitable purposes.
6.3.4If in any Financial Year the amount applied in accordance with clause 6.3.2 is less than eighty percent (80%) of the Net Income of the Trust Fund in that Financial Year, the Investment Advisory Committee may, from time to time, invest any uncommitted funds for that year in either the Mothership Fund or in the Growth Fund.
Most of the other provisions were clauses formerly in the 26 October 2005 Deed. These include clauses 14 and 17.
Clause 14 confers broad a discretion upon the trustee in relation to the exercise of its powers:
14.Discretion of the Trustee
Subject always to any express provisions to the contrary herein contained, every discretion vested in the Trustee shall be absolute and uncontrolled and every power vested in it shall be exercisable at its absolute discretion and the Trustee shall have the final discretion in deciding whether or not to exercise any such power. No Trustee shall be responsible for any loss or damage occasioned by the exercise of any discretion or power hereby or by law conferred on the Trustee or by failure to exercise any such discretion or power or for any loss or damage accruing as a result of concurring or refusing or failing to concur in any exercise of any power of discretion.
Clause 17 provides powers for amendment of the deed:
17.Amendments to this deed[15]
The Trustee may by instrument in writing revoke, add to or vary all or any of the terms of the Trust or terms of this Deed provided that:
17.1it has given twenty one (21) days' notice of its intention to do so to the Attorney-General of the Northern Territory of Australia;
17.2it reasonably believes that the majority of Beneficiaries agree and that at a general meeting of Beneficiaries two thirds of those present vote in favour of the variation or variations;
17.2.1fourteen (14) days’ notice of the general meeting shall be provided on public notice boards in the communities of Angurugu, Umbakumba and Milyakburra;
17.2.2the general meeting must have at least 100 persons in attendance and at least 20 persons from each of the communities of Angurugu, Umbakumba and Milyakburra;
17.3the law against perpetuities is not thereby infringed; and
17.4the Trust remains a trust for charitable purposes for the benefit of the Beneficiaries for all time.
Clause 18 provides that “[e]xcept as provided by clause 14 (sic) of this Deed, the trusts hereby created shall be irrevocable.”
Clause 21 provides as follows:
21.Commencement of the Trust[16]
21.1This Deed, as varied from time to time, shall be deemed to have commenced on 25 May 1965 and all and each and every power conferred and duty imposed by this Deed shall be deemed to have been conferred or imposed on that date and to have been continually binding upon the GE Trust, the Association, the Interim Trustee and the Trustee from that date.
21.2The amendments made to the provisions of the New Trust which incorporate the changes sought by the people at the SCM (as set forth in this Deed), shall be binding upon the Trustee from the Commencement Date.
Although clause 23 is similar to clause 20 of the 26 October 2005 Deed it includes specific references to maximum amounts that could be allocated to the Charitable Grant Fund, the “Charitable Grant Cap”, in particular financial years up to 31 March 2012.
By clause 24 an additional power was granted to make advances of money from the Charitable Grant Fund for the establishment of a charitable purpose market garden:
24.Ex gratia Payment
24.1The Trustee may make a payment up to but not exceeding $200,000 from the Charitable Grant Fund for the leasing of land and the establishment of a charitable purpose market garden.
24.2The Trustee may pay an annual amount of up to but not exceeding $200,000 per annum from the Charitable Grant Fund for two financial years following the payment in clause 24.1, to be used to develop and maintain the charitable purpose market garden.
Summary of Main Contentions
Written submissions
In its Statement of Facts, Issues and Contentions the plaintiff makes three main contentions:
(a)The plain and obvious intention of the Trust Deed, including in its various earlier forms, was to create a charitable trust. The governing principle is in clause 2 and in particular the express words: “exclusively for such charitable purposes (in the strict legal sense)”.
(b)The Trust is a trust for the relief of poverty and thus a charitable trust of the kind permitted under Dingle v Turner.[17] It is presumed to be for the public benefit.
(c)Alternatively, the potential objects of benefaction (loosely referred to as the class of beneficiaries) constitute a section of the public for the purposes of the law of charitable trusts. Accordingly the Trust is still a charitable trust if some of its purposes are not for the relief of poverty but all fall within one or other of the four Pemsel[18] categories (or are ancillary to such a purpose).
The third defendant advances two main reasons why it says the Trust is not a valid charitable trust:
(a)the purposes of the Trust include purposes which are non-charitable such as the promotion of sport and social facilities;[19]
(b)the class of beneficiaries who are entitled to benefit from the Trust are of a closed class because the members are defined by reference to their relationship with a single propositus or several propositi such that the Trust does not satisfy the public benefit test.[20]
As to the second point, the third defendant contends that the beneficial objects of the Trust are persons who are identified by reference to their relationship with a propositus or propositi: that is, they need to be members of the traditional clans of Groote Eylandt and Bickerton Island, the membership of which is via a patrilineal connection.
Unless the Trust is limited to the relief of poverty it is and always has been invalid because it does not comply with the principles set out in Compton,[21] and Oppenheim.[22] Here the Trust is not solely for the relief of poverty. The Trust Deed permits the funds to be used for non-charitable purposes and it is therefore void. In the result, the Trust is not a valid charitable trust.
Oral submissions
At the hearing, senior counsel for the plaintiff placed greater emphasis on the first and last of the contentions noted in [24] above and put the relief of poverty point as an alternative.
Senior counsel for the third defendant contended that the class of beneficiaries did not meet the Compton-Oppenheim test and so was not a section of the public. This was not cured by express wording such as that in clause 2.
Senior counsel for the third defendant also submitted that a number of the uses identified in clause 6.3.2 would not be for the relief of poverty, or even a charitable use within one or other of the Pemsel categories. The clearest example is clause 6.3.2(xv): “to provide education and sporting and social facilities”.
The plaintiff’s response to this was that the construction and operation of that and other uses permitted under clause 6.3.2 is limited by the clear intent in clause 2 of the Deed: that the trust fund could only be held and applied “exclusively for such charitable purposes (in the strict legal sense) as may be served by the provision of money, property or other advantages for the benefit, welfare and advancement of the Beneficiaries.”
Factual background
In addition to the factual background set out below, I have also been provided with other information of a factual kind that I am able to use if I consider it permissible, necessary and relevant in order to assist with the proper construction of the Trust. I shall refer to that material later, where appropriate.
The Indigenous Inhabitants of the Islands
At the time of European settlement it is likely that Groote Eylandt, Bickerton Island and nearby waters were occupied by a group of people more recently known as Anindilyakwa people under laws and customs pursuant to which they and their successors held rights of possession in the land to the exclusion of all others.[23]
The indigenous language of the islands is Anindilyakwa. The traditional owners of the islands identify themselves, and are identified by their neighbours on the mainland, as Anindilyakwa people.
At all material times:
(a)the Aboriginal people of the islands have belonged to various “clans”;
(b)membership of a clan is primarily by patrilineal descent, although matrilineal descent may also attract traditional responsibilities, and there are other ways to become a member of a clan in unusual circumstances, such as where a person’s father is European;
(c)upon marriage, a woman does not cease to be a member of her original clan but both husband and wife acquire some rights and responsibilities in connection with each other’s clan estates, which are contingent on the maintenance of the relationship;
(d)identification of clans is by ancestral connection too remote in time to be historically or objectively verifiable, in the sense that the Aboriginal people believe that the clans have existed from time immemorial and are believed to be descended from spiritual ancestors.
The earliest remembered ancestors may be a set of classificatory siblings, who are themselves believed to be descended from an unnamed common ancestor of the past who had interactions with a mythological ancestral being.[24]
Each clan is associated with totems, tracts of country focussed on important mythological sites, and the travels of ancestral heroes (linked by dreaming tracks).[25] The Anindilyakwa people believe that they are connected with mythological beings who interacted with a clan’s ancestors and are manifested as features of the landscape.[26] These interactions are believed to have happened beyond living memory.[27] “Clans are totemic groups and each clan has a totemic story.”[28]
Each clan is associated with a particular area of land and sea referred to as “country” or by anthropologists as an “estate”.[29] A clan is a “land owning entity”.[30] I take this to mean that the clan holds the primary rights and responsibilities in its “country” or “estate”.
According to Turner, “an individual is born with a spirit from another realm of existence in a particular stretch of country – always the country from which the father’s spirit came.” Individuals of the same generation in the same clan group are spiritually equivalent and refer to members of other groups and members of their own group by the same terms.[31]
Each clan of the islands has one or more names. Additionally, in more recent times, there has been a formalisation of surnames based upon clans, chosen partly for their ease of pronunciation by non-indigenous administrators, which have become common in the way clans are referred to. The clan names all relate to a feature of their mythology and spiritual ancestry, or the physical characteristics or a location in their country. There are approximately 14 traditional clans of Groote Eylandt and Bickerton Island.
There has been a degree of interaction (ceremonial, mythological, marriage and kinship) between the Anindilyakwa peoples and mainland groups (for example, the Warnungwamadada (Lalara) clan has country on Groote Eylandt as well as on the mainland and Bickerton Island).
It is common ground that the Anindilyakwa people of Groote Eylandt attempt to live, as much as is possible, a traditional lifestyle, and the maintenance of cultural and traditional practices form an important part of their lifestyle.[32]
Census statistics indicate that the Aboriginal population of the two islands was over 800 in 1969, almost 1000 in 1986, almost 1200 in 1991, about 1500 in 2001, over 1400 in 2006, over 1500 in 2011 and more than that now.
The plaintiff and the third defendant both tendered a lot of evidence about housing, education, employment, wages and earnings for Aboriginal people on the islands. In short that material shows that there has been, and remains to be considerable over-crowding in houses, only about one third of the relevant population having been educated to year 10 or higher, a very low level of employment, and the majority earning less than $21,000 per annum.
Recent history
On 15 May 1920, Groote Eylandt was gazetted as a reserve for Aboriginals under the Aboriginals Ordinance 1918.
The first recorded European settlement on the islands was by members of the Church Missionary Society Trust Ltd (CMS) which established a mission at Emerald River on Groote Eylandt in 1921. A flying boat base was established near present day Umbakumba in 1935. BHP established a mine and built a township at Alyangula in 1963.
No non-indigenous settlement has occurred on Bickerton Island.
In 1961, CMS obtained Permits to Enter on behalf of the Aboriginal community on Groote Eylandt, entitling it to prospect and apply for Mining Titles in the area of the permit.
By agreement dated 7 June 1963, between CMS and BHP, CMS transferred its rights to BHP in consideration of terms that included the payment of an annuity and royalties (payable to the Anindilyakwa people) for the lifetime of any leases, enabling BHP to mine manganese or other minerals in the area of the permits.
On 25 May 1965, mineral leases on Groote Eylandt were granted to BHP and thereafter transferred to GEMCO, a wholly owned subsidiary of BHP.
The islands were part of a larger number of islands which were described as the Arnhem Land (Islands) in Schedule 1 of the Aboriginal Land Rights (Northern Territory) Act 1976 (Cth) (ALRA). Accordingly they became Aboriginal land and were vested in an Aboriginal Land Trust “for the benefit of Aboriginals entitled by Aboriginal tradition to the use or occupation of the land … whether or not the traditional entitlement is qualified as to place, time, circumstance, purpose or permission.”[33]
One effect of that vesting was to restrict access to the islands by non-Aboriginal persons to those issued with a permit under the ALRA or the Aboriginal Land Act 1979 (NT).
In 1991 the Anindiliyakwa Land Trust (ALT) was established as the relevant land title holder for the islands pursuant to s 4(2A) of the ALRA. The ALT’s functions are undertaken at the direction of the Anindiliyakwa Land Council (ALC) in accordance with the ALRA.
Earlier Trust Deeds
As I have already noted, although the Trust was established on 25 May 1965, the terms of the Trust were first formally recorded in the 1989 Trust Deed. That trust deed was amended from time to time for various reasons. The most significant amendments were made in 1996 by the 1996 Trust Deed (sometimes referred to as the New Trust Deed) following this Court’s decision in Flynn v Mamarika.[34] Although the relevant trust deed for present purposes is the 2008 Trust Deed, it is convenient at this stage to note relevant parts of earlier deeds, particularly the 1996 Trust Deed as that was a major focus of many of the submissions.
Is also convenient to note that each deed had a number of features in common. These included that each deed:
(a)related to royalty payments paid and to be paid by BHP or its subsidiary GEMCO into a Trust Fund;
(b)acknowledged a desire for the royalty payments to be used for the benefit welfare comfort and general advancement of certain Aboriginal persons resident on Groote Eylandt and Bickerton Island;
(c)acknowledged GEAT as the trustee;
(d)acknowledged the name of the Trust to be Groote Eylandt Aboriginal Trust;
(e)specified as the objects of the Trust certain Aboriginal persons who were permanently resident on Groote Eylandt or Bickerton Island;
(f)contained a provision stating that the trustee shall hold and apply the Trust Fund “exclusively for such charitable purposes (in the strict legal sense) …”;
(g)conferred powers on the trustee to perform various functions including to apply the Trust Fund in various ways;
(h)contained provisions for the trusts to be revoked, added to or varied, but so that the law against perpetuities not be infringed; and
(i)provided that the trusts otherwise be irrevocable.
1989 Trust Deed
The 1989 Trust Deed[35] was executed on behalf of the parties CMS as the settlor and GEAT as the trustee, on 7 March 1989. It is deemed to have commenced on 25 May 1965.[36]
The recitals note, amongst other things, that:
(a)on 25 May 1965 the settlor became beneficially entitled to royalty payments upon the export of manganese ore won on Groote Eylandt by BHP or its subsidiary GEMCO;
(b)the settlor desires that “all royalty payments to which it is or may become entitled in respect of manganese ore or all minerals won upon Groote Eylandt be used for the education benefit welfare comfort and general advancement of certain aboriginal persons resident upon Groote Eylandt and Bickerton Island”.
Amongst other things the “Trust Fund” and “Royalty Payments” were defined, and the name of the Trust was Groote Eylandt Aboriginal Trust.
Clause 3 stated that:
The objects of the Trust shall be all aboriginal persons who are permanently resident on Groote Eylandt or Bickerton Island and who are members of the following clans:
It then listed 10 clans by reference to one or more names.

Clause 4 stated that:
The Trustee shall hold and apply the Trust Fund exclusively for such charitable purposes (in the strict legal sense) as may be served by the provision of money or property or other advantages for the benefit welfare and advancement of the objects of the Trust. Without limiting the foregoing purposes the purposes of the Trust shall include:
…
Three purposes were then stated, the only one relevant for present purposes being that in paragraph (b):
To use the Trust Fund and all other payments and donations for the education benefit welfare comfort and general advancement in life of the said objects of the Trusts in such manner and to such extent and upon such terms and conditions as from time to time may seem expedient to the Trustee.
Clause 15 empowered the Trustee to revoke, add to or vary any of the trusts “but so the law against perpetuities is not thereby infringed.” Clause 16 provided that the trusts are irrevocable except as provided by clause 15.
Flynn v Mamarika
In November 1995 this Court was asked to determine a number of questions arising in the execution of the Trust and to provide directions, mainly in relation to clause 4 of the 1989 Trust Deed. In his reasons for decision[37] Martin CJ set out the agreed facts concerning the history of the Anindilyakwa people and the formation of the Trust,[38] and the relevant provisions of the Trust Deed.[39] His Honour referred to each of the Pemsel categories and elaborated on their scope.[40] His Honour proceeded to consider particular grants and loans that were proposed and whether or not they may be for a charitable purpose.[41]
The litigation and the Court’s reasons proceeded on the assumption that the trust was a charitable trust. At pp 222-223:
Most of the cases to which the Court was referred deal with the question of whether a particular bequest or settlement created a charitable trust. Here there can be no doubt about that. What is in question is the purposes for which the trust fund may be applied so as not to breach the duty of the trustee to apply them for charitable purposes.
The trust is a charitable trust. The express words at par 4 of the deed make it so. What are charitable purposes are to be decided in the strict legal sense, as opposed to popular notions of what may be a charity or of a charitable nature.
(underlining added by me)
However that important question was not in issue in that case. All parties proceeded on the assumption that the Trust was a valid charitable trust.
His Honour proceeded to discuss the requirements of a charitable trust “in the strict legal sense” by reference to the four Pemsel categories. His Honour then said, at p 223:
Charitable trusts exist for the benefit of the public or a section of the public as understood in accordance with the law. The section of the public defined in the trust deed, being the Aboriginal persons referred to, is a section of the public for these purposes. (That section of the public is referred to as “the community”.) The reference in par 4 to the purposes of the trust as including the use of the trust fund for the education, benefit, welfare, comfort and general advancement in life of the community, is subject to the requirement that the trust funds be applied for charitable purposes. The funds are only to be used in such a way as will benefit the community as a whole. Use of the trust funds for the benefit of a particular Aboriginal person or persons (falling within the description contained within the trust deed), which is not beneficial to the community, will be in breach of the terms of the trust. Those particular enumerated purposes do not extend or over-ride the primary and only purposes of the trust, that is, charitable purposes; they are examples of the way in which the trust funds might be used, provided always that every such use of those funds falls within what is a charitable purpose in the strict legal sense.
(underlining added by me)
His Honour proceeded to discuss the duties of the trustee, the execution of the trust, delegation of powers and then to provide directions concerning a wide range of proposed trust purposes most of which found their way into the 1996 Trust Deed.
1996 Trust Deed
This deed was executed on 25 June 1996, some three months after the Court’s decision in Flynn v Mamarika. The parties to the deed were CMS as Settlor, GEAT referred to as “the Association”, and John Flynn and others referred to jointly as “the Interim Trustee”. It was deemed to have commenced on 25 May 1965. The trust established by the 1989 Trust Deed was defined as “the Old Trust”.
The recitals noted a number of things including that:
(a)on 7 March 1989 the Settlor and the Association entered into the Old Trust “to give effect to the charitable trusts originally contemplated with the establishment of the Association in 1969”;
(b)by an Interim Deed dated 2nd March 1995 the Interim Trustee was appointed to make recommendations “on appropriate amendments to the Old Trust to better reflect the present day circumstances of the Trust.”
Clause 1.1 contained a number of definitions including a definition of “Beneficiaries” and a definition of “Trust Fund”. Those definitions are identical to those which have appeared in successive versions of the trust deed including the 2008 Trust Deed. See [13] above.
Clause 2 was exactly the same as Clause 2 in successive versions of the trust deed including the 2008 Trust Deed. See [12] above.
Clause 4 provided for the allocation of monies from the Trust Fund. It stated, inter alia:
4. ALLOCATION OF THE TRUST FUND
4.1In each Financial Year the Trustees shall allocate from the Trust Fund an amount equal to 80% of the Income of the Trust Fund for the previous Financial Year (the “Expenditure Fund”) for the purpose of providing benefits to the Beneficiaries.
4.2SUBJECT TO THE REQUIREMENT OF CHARITABLE PURPOSE, but without limiting the generality thereof, the Trustees may use the Expenditure Fund to:
4.2.1increase the balance of the Trust Fund;
4.2.2make grants for the relief of poverty and for other charitable purposes;
4.2.3provide health housing and other benefits;
4.2.4provide education sporting and social facilities;
4.2.5assist in the maintenance of cultural activities;
4.2.6provide services for persons in need;
4.2.7make grants to Anglican Churches within the Angurugu, Umbakumba and Milyakburra Communities.
…
4.5The Trustee shall appoint an independent committee who may act as a sub-committee of the Trustee who shall include three Beneficiaries, one from each community, and at least an accountant, a legal practitioner and a financial advisor for the purpose of advising the Trustee of the calculation of the Expenditure Fund and or appropriate strategies for investment of the Mothership Fund.
4.6 The Mothership Fund or any part of it shall not be used directly for any purpose outlined in clause 4.2
Clause 14 related to amendments to the deed. It stated:
14. AMENDMENTS TO THIS DEED
The Trustee may by instrument in writing revoke add to or vary all or any of the terms of the trust or terms of this deed provided that:
14.1It has given twenty-one (21) days’ notice of its intention to do so to the Attorney-General of the Northern Territory;
14.2It reasonably believes that the majority of beneficiaries agree and that at a general meeting of Beneficiaries two thirds of those present vote in favour of the variation or variations:
14.2.114 days notice of the general meeting shall be provided on the notice boards of the towns of Angurugu, Umbakumba and Milyakburra
14.2.2the general meeting must have a t lease 100 persons in attendance and at least 20 persons from each of the towns of Angurugu, Umbakumba and Milyakburra.
14.3The law against perpetuities is not thereby infringed.
14.4The Trust remains a Trust for charitable purposes for the benefit of the Beneficiaries for all time.
I agree with the submissions made on behalf of the plaintiff that this deed continued the trust that had been documented in the 1989 Trust Deed.
In particular the clause which identified the purpose of the Trust(clause 2) was in substance the same as its 1989 predecessor (clause 4).
There were two relevant differences however:
(a)clause 2 of the 1996 Trust Deed (and its successors) described the potential objects of benefaction as “the Beneficiaries” (the definition of that term referring to the clan criterion before referring to the residency criterion) rather than as “the objects of the Trust” (which referred to the residency criterion before identifying the clans); and
(b)clause 2 of the 1996 Trust Deed (and its successors) omitted the additional provisions identifying particular “purposes” of the trust, more properly being powers and uses, and dealt with these separately in clause 4.
Another difference between the two deeds was to describe the potential objects of benefaction, “the Beneficiaries”, by reference to their membership of “the traditional clans” of the islands and “their successor generations” rather than their membership of one or other particular named clan.
I agree with counsel for the plaintiff that the different order of the two criteria as between the two definitions, and the addition of the temporal clause “and their successor generations” in the New Trust Deed, are of no relevant consequence. The changes were plainly effected out of an abundance of caution but not so as to change the intended meaning, that the essential purpose of the Trust is to provide financial assistance (directly or indirectly) to the indigenous residents of the islands at any time and from time to time for so long as the Trust endures. Further, the reference to “successor generations” more clearly reflected the intention to allow for a change in the composition or identity of the clans on the island.
The other main difference between the deeds of 1989 and 1996 was to introduce, by clause 4, a provision that provided for the allocation of a percentage of the income of the Trust Fund and to expressly state how the money could be used. This had the effect of more clearly distinguishing between the purpose of the Trust on the one hand (previously reflected in the first sentence of clause 4 of the 1989 Trust Deed), and the uses to which the trust fund could be put (previously reflected in the remainder of clause 4 of the 1989 Trust Deed).
The opening words of clause 4.2 of the 1996 Trust Deed, capitalised and underlined, emphasised the desire of the drafter of the deed to ensure that despite the various descriptions of potential uses, the Expenditure Fund could only be used for charitable purposes. The intent that the Trust remains a charitable trust is also manifest in clauses 14.3 and 14.4 of the 1996 Trust Deed.
1998 Trust Deed
The main changes brought about by this deed were to further define the way in which the Trustee was permitted to allocate the Expenditure Fund, and to protect the Mothership Fund from being depleted by requiring that certain monies be paid out of the Expenditure Fund rather than out of the Mothership Fund. The Deed permitted the Trustee to allocate portions of the Expenditure Fund to each of the three communities of Angurugu, Umbakumba and Milyakburra, in certain circumstances, provided they were for charitable purposes.
Clause 4 included the following:
4.ALLOCATION OF THE TRUST FUND
4.1In each Financial Year the Trustee (as represented by the Mothership Committee) shall allocate from the Trust Fund an amount NOT GREATER THAN eighty per cent 80% of the Income of the Trust Fund for the previous Financial Year (the “Expenditure Fund”) for the purpose of providing benefits to the Beneficiaries.
4.2SUBJECT TO THE REQUIREMENT OF CHARITABLE PURPOSE (but without limiting the generality thereof) the Trustees may allocate the Expenditure Fund to each of the three (3) communities of Angurugu, Umbakumba and Milyakburra during the Financial Year (in proportions and at intervals which the Trustee shall determine from time to time) PROVIDED THAT a community shall only be eligible to receive a part of the Expenditure Fund during the Financial Year if that community has established and maintained a community-based organisation which is represented by a committee elected by that community (“the Grant Committee”) and is governed by rules which ensure that the part of the Expenditure Fund (“Grant Money”) which is allocated to the community-based organisation is distributed and applied towards such charitable purposes (in the strict legal sense) as shall benefit the welfare and advancement of the Beneficiaries of that community.
4.3To remain eligible to receive Grant Money from the Trustee during the Financial Year, the Grant Committee of each community-based organisation must ensure that the Grant Money is distributed and applied within the community to which it was allocated strictly in accordance with the requirement of CHARITABLE PURPOSE. Without limiting the generality thereof, Grant Money may be applied towards the following charitable purposes:
4.3.1to relieve extreme poverty by providing essential goods and services for Beneficiaries;
4.3.2to provide medical and health benefits to Beneficiaries;
4.3.3to provide education and sporting and social facilities;
4.3.4to assist in the maintenance of cultural activities;
4.3.5to provide assistance for funerals and religious activities;
4.3.6to assist in the maintenance of ceremonial activities;
4.3.7to pay the cost of supplying household electricity to Beneficiaries;
4.3.8to pay the administrative costs of operating each community-based organisation which is established and incorporated with objects and powers to receive Grant Money under the terms of this deed, namely:
(a)the Angurugu Charitable purpose fund;
(b)the Umbakumba Charitable purpose fund;
(c)the Milyakburra Charitable purpose fund.
4.3.9to provide assistance for other charitable purposes.
…
4.6 The Mothership Fund or any part of it shall not be used directly for any purpose outlined in clause 4.3.
There were no other relevant differences between the terms of this deed and its predecessor.
2000 Trust Deed
The main change brought about under this deed was to change the Financial Year of the Trust to 1 July each year to 30 June the following year.
2004 Trust Deed
The main changes brought about under this deed were to introduce the concepts of a “Growth Period” and a “Charitable Grant Cap”, and to establish a number of separate funds, namely a Growth Fund, an Asset Preservation Fund, a Charitable Grant Fund and an Administration Fund. This was done by amendments to clause 4 and the introduction of clause 20.
Clause 4.4 referred to the Charitable Grant Fund and was in terms of the identical to clause 6.3 of the 2008 Trust Deed.[42]
Clause 20 provided for the calculation of a Charitable Grant Cap for each financial year and prohibited any expenditure being made under clause 4.4 that exceeded the Charitable Grant Cap for the relevant financial year. The clause was to operate during the Growth Period namely the period commencing 1 January 2005 and expiring 31 December 2012.
2005 Trust Deed
The main effect of the 2005 Trust Deed was to amend clause 20 to further define the maximum amounts that could be allocated to the Charitable Grant Fund.
Interpretation of Trust Deeds
Identification of the character of a trust as charitable, turns upon the interpretation of the instrument creating the trust and potentially, in some cases, upon the circumstances in which the instrument of trust as interpreted is to operate.
In Byrnes v Kendle,[43] Heydon and Crennan JJ considered the principles relevant to the construction of trusts. Their Honours said that “the rules for the construction of contracts apply also to trusts.”[44]
At [105]:
The authorities establish that in relation to trusts, as in relation to contracts, the search for ‘intention’ is only a search for the intention as revealed in the words the parties used, amplified by facts known to both parties.
And at [113]:
… The surrounding circumstances are material to the questions with the words used created a trust and what its terms are. Accordingly, Conaglen[45] was correct to say:
“The court’s focus when construing the terms of [a] bilateral arrangement [creating a trust] is on the objective meaning that those terms would convey to a reasonable person, just as it is when construing contractual arrangements.”
The question is what the settlor or settlors did, not what they intended to do.
More recently, in Commissioner of Taxation v Bargwanna[46] the High Court adopted the observations of the Judicial Committee in Latimer v Commissioner of Inland Revenue[47] as to the identification of the nature of charitable trusts and how a trust deed is interpreted to ascertain whether the charitable nature exists:
[29] … Whether the purposes of the trust are charitable does not depend on the subjective intentions or motives of the settlor, but on the legal effect of the language he has used. The question is not, [w]hat was the settlor’s purpose in establishing the trust? [B]ut, [w]hat are the purposes for which trust money may be applied?
The High Court recently considered the correct approach to the use of extrinsic evidence in the interpretation of a contract in Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd.[48] French CJ, Gordon and Nettle JJ held at 116-117 [48]-[50] that:
Ordinarily, this process of construction is possible by reference to the contract alone. Indeed, if an expression in a contract is unambiguous or susceptible of only one meaning, evidence of surrounding circumstances (events, circumstances and things external to the contract) cannot be adduced to contradict its plain meaning.[49]
However, sometimes, recourse to events, circumstances and things external to the contract is necessary. It may be necessary in identifying the commercial purpose or objects of the contract where that task is facilitated by an understanding "of the genesis of the transaction, the background, the context [and] the market in which the parties are operating"[50]. It may be necessary in determining the proper construction where there is a constructional choice. The question whether events, circumstances and things external to the contract may be resorted to, in order to identify the existence of a constructional choice, does not arise in these appeals.
Each of the events, circumstances and things external to the contract to which recourse may be had is objective. What may be referred to are events, circumstances and things external to the contract which are known to the parties or which assist in identifying the purpose or object of the transaction, which may include its history, background and context and the market in which the parties were operating. What is inadmissible is evidence of the parties' statements and actions reflecting their actual intentions and expectations.[51]
Kiefel and Keane JJ held at 131-133 [108]-[113]:
That regard may be had to the mutual knowledge of the parties to an agreement in the process of construing it is evident from Codelfa Construction Pty Ltd v State Rail Authority of New South Wales[52]. Mason J, with whom Stephen and Wilson JJ agreed, accepted that there may be a need to have regard to the circumstances surrounding a commercial contract in order to construe its terms or to imply a further term. In the passages preceding what his Honour described as the "true rule" of construction[53], his Honour identified "mutually known facts" which may assist in understanding the meaning of a descriptive term or the "genesis" or "aim" of the transaction. His Honour had earlier referred[54] to the judgment of Lord Wilberforce in Prenn v Simmonds[55], where it was said that:
"[t]he time has long passed when agreements … were isolated from the matrix of facts in which they were set and interpreted purely on internal linguistic considerations."
In a passage from DTR Nominees Pty Ltd v Mona Homes Pty Ltd[56], to which Mason J referred[57], it was said that the object of the exercise was to show that "the attribution of a strict legal meaning would 'make the transaction futile'". In Electricity Generation Corporation v Woodside Energy Ltd[58], French CJ, Hayne, Crennan and Kiefel JJ explained that a commercial contract should be construed by reference to the surrounding circumstances known to the parties and the commercial purpose or objects to be secured by the contract in order to avoid a result that could not have been intended.

In the present matter counsel for the plaintiff contend, and the third defendant does not appear to dispute, that the true character of the Trust falls to be determined by reference to the Trust constituted by the Deed of 25 June 1996. For these purposes, it does not matter whether it might be said that the 1996 Trust Deed (the New Trust Deed) constituted the Trust afresh, or merely reconstituted the terms of a pre-existing trust. That follows either because the 1996 Trust Deed represents an amendment to the 1989 Trust Deed (pursuant to the power of amendment contained in the 1989 Trust Deed), in which case no question of Codelfa evidence arises as reference to the former is necessarily permissible for interpretation of the latter, or because the Recitals to the 1996 Trust Deed expressly refer to the 1989 Trust Deed, which directly makes it an instrument which informs the interpretation of the 1996 Trust Deed.[59]
Counsel for the plaintiff also submitted that the “basal trust” has never changed despite the various amendments of the trust deed. Its purposes and its objects have remained the same throughout. It has always been a valid charitable trust.
Charitable trusts – relevant law
Following the Preamble to the Statute of Charitable Uses[60] and subsequent amendments, replacements and judicial consideration, the general law requires a valid charitable trust to have purposes which fall exclusively within one or more of the four “Pemsel” categories,[61] namely:
(a)the relief of poverty;
(b)the advancement of education;
(c)the advancement of religion; and
(d)other purposes beneficial to the community not falling under any of the preceding headings.
In order for a trust to be a valid charitable trust:
(a)the trust must be “of a public nature, that is, for the benefit of the public” (or a section of it) as distinct from having a “private” purpose;[62] and
(b)the carrying out of its objects must be of benefit to the public.[63]
Although public benefit is only expressly mentioned in relation to the fourth of the Pemsel categories, this element is a necessary prerequisite for valid charitable purposes under the second and third categories. A trust for the relief of poverty is presumed to be for the public benefit.[64] The relevant question is whether the purpose is “for the benefit of the community or of an appreciably important class of the community”.[65]
All charitable trusts are trusts for purposes not persons. This is a fundamental difference between charitable trusts and conventional private trusts.[66] Whereas in the case of a conventional private trust, the persons entitled to benefit either have a fixed interest in the corpus of the trust or rights as discretionary objects of a discretionary trust, in the case of a charitable trust the persons who might benefit are no more than the potential objects of benefaction out of the trust. They are not beneficiaries in the sense in which that expression is used in the discourse of private trusts.[67]
In relation to ascertaining whether the trust is “of a public nature, that is, for the benefit of the public”, Jacobs states, at [10-04]:
The purpose to which the property is devoted is what must be considered in determining whether any particular purpose is charitable. The source of the property or the person of the trustee is not relevant in determining this question.[68] And where the trust rests on writing, the characterisation of the trust as charitable depends on construction of the writing, not on subsequent activities.[69]
In relation to ascertaining whether the carrying out of the objects of the trust will be of benefit to the public, Jacobs states, at [10-10]:
The mere belief of the donor of the section of the public said to be benefited that the purpose of the trust is charitable is not effectual in itself to make the purpose charitable in the eyes of the law.[70] The court … must itself decide whether there is any basis for the donor’s views. In other words, the court must determine, first, whether the objects of the trust are such that benefit to the public in general must necessarily result from their execution. If the trust meets that first test, the court must decide whether the trust is beneficial to the community in a way which the law regards as being charitable.[71]
Trusts for the benefit of Aboriginals
Counsel for the third defendant acknowledged that a charitable trust may be settled for the benefit of Aboriginal persons generally.[72] Counsel submitted however that this is not such a case.
Counsel also acknowledged that it has been assumed in a number of cases that a trust which benefits indigenous persons who are members of a particular “clan group” or native title claim group (in the sense that they are descended from certain apical ancestors) are charitable.[73] However counsel submitted that none of those cases required judicial consideration of the issue and are therefore not authoritative for present purposes.
Counsel for the third defendant stressed that such an assumption was made in relation to the Trust when the Court gave the directions in Flynn v Mamarika.[74] The point in issue here was not raised nor argued in that case. No reference was made to the authorities concerning whether or not the class of beneficiaries was sufficiently wide or not. The conclusion that the Trust was charitable was agreed between the parties. It cannot be relied upon as authority for the purposes of asserting that the Trust was a valid charitable trust as that matter was not in issue. Counsel also pointed out that the decision in that case concerned the operation of a version of the Trust Deed which has been amended on a number of occasions.
While I accept that the validity of the trust was not in issue in Flynn v Mamarika it was certainly assumed to be the case, there being no point in that litigation at all if the true situation was otherwise. Further, it is clear, for example from what Martin CJ said at pp 222-223 (quoted in [64] and [66] above), that his Honour was fully aware of the relevant requirements of a valid charitable trust in the course of reaching his conclusions and providing the directions.
Clear wording of clause 2
The plaintiff contends that the predominant and governing provision in the Trust Deed is clause 2, that being the clause which identifies the purpose of the Trust. Counsel stresses the words “exclusively for such charitable purposes (in the strict legal sense) …”. The clear purport of clause 2 is to create a charitable trust within the limits of what the law permits to constitute a charitable trust. That is conclusive of the character and status of the Trust in law and does not require reference to any background facts or surrounding circumstances existing at the time of execution of the Trust Deed.[75]
Counsel submitted that clause 2 is, in effect, a self-validating provision: that is to say, it declares the Trust to be a charitable trust to the extent permitted at law. Accordingly the purpose or purposes of the Trust will be read down into validity to the extent necessary, and any specific object such as any of those in clause 4.2 of the 1996 Trust Deed or in clause 6.3 of the 2008 Trust Deed is expressly made subject thereby to a valid charitable purpose.[76]
Counsel also pointed to the clear words of intention expressed at the start of clause 4.2 of the 1996 Trust Deed: “subject to the requirement of charitable purpose”.[77] See also, similar express wording in clauses 4.2 and 4.3 of the 1998 Trust Deed.
From 1 January 2005, when the four separate funds were established, in particular the Charitable Grant Fund, the relevant part of the deed commenced with the words: “Without limiting the generality thereof, the Charitable Grant Fund may be applied towards the following charitable purposes: …”. See clause 4.4.2 of the 2004 Trust Deed[78] and the 2005 Trust Deed,[79] and clause 6.3.2 of the 2008 Trust Deed.
Counsel for the Attorney-General also referred to clause 14 of the 2008 Trust Deed, which confers very broad discretions upon the Trustee in the exercise of its powers, pointing out that those discretions are confined by the opening words: “Subject always to any express provisions to the contrary herein contained”.
I agree that the clear intent of the trust deeds is that the Trust is a trust for charitable purposes and that the trust funds can only be used for such purposes. This is particularly clear not only from the wording in clause 2 but also from the various other provisions that have been included in the trust deeds at various times.
Class – the potential objects of benefaction
Per Jenkins L.J. in In Re Scarisbrick; Cockshott v Public Trustee[80] at 648:
It is a general rule that a trust or gift in order to be charitable in the legal sense must be for the benefit of the public or some section of the public.
In this, and further paragraphs explaining this general rule, Jenkins LJ referred to several other decisions including the, then recent, decisions in Compton and Oppenheim.
Legal principles
In their written submissions counsel for the third defendant identified and explained the principles set out in Compton and Oppenheim and their application in Australia. Counsel also discussed two exceptions to those principles, one in relation to “nationality trusts”, and the other in relation to trusts solely for the relief of poverty following Dingle v Turner.
“Beneficiaries” defined by reference to a propositus
Counsel submits that the starting point to determine whether or not a putative charitable trust has the requisite public purpose is a consideration of the decisions in Compton[81] and Oppenheim. The principle to be drawn from these decisions, as stated in Oppenheim, is that a charitable trust is not valid if the following qualification describes the class of beneficiaries:
[a] group of persons may be numerous, but, if the nexus between them is their personal relationship to a single propositus or several propositi, they are neither the community nor a section of the community for charitable purposes.[82]
Counsel submitted that Lord Greene MR in Compton illustrated the point by explaining that:
Persons claiming to belong to the class do so not because they are AB, CD, and EF, but because they are poor inhabitants of the parish. If, in asserting their claim, it were necessary for them to establish the fact that they were the individuals AB, CD, and EF, I cannot help thinking that on principle the gift ought not to be held to be a charitable gift, since the introduction into their qualification of a purely personal element would deprive the gift of its necessary public character.[83]
Compton
In Compton a testatrix had left money in her will to be held on trust for the education of the lawful descendants of three named persons (Compton, Powell and Montagu). At the date of the testatrix’s death there were 26 such descendants.[84] The quintessential question in the case was stated by Lord Green MR as: “Is a trust for the education of the descendants in perpetuity of three named individuals, irrespective of their means, a valid trust?”[85]
At p 128 Lord Greene MR said:
The fundamental requirement of a charitable gift is, in my opinion, correctly stated in the following passage in Tudor on Charities, 5^th ed., p 11:
“In the first place it may be laid down as a universal rule that the law recognises no purpose as charitable unless it is of a public character. That is to say, a purpose must, in order to be charitable, be directed to the benefit of the community or a section of the community.”
Lord Greene MR identified a number of relevant passages in other authorities in support of this proposition including part of the speech of Lord Wrenbury when delivering the judgment of the Privy Council in Verge v Somerville:[86]
To ascertain whether a gift constitutes a valid charitable trust so as to escape being void on the ground of perpetuity, a first inquiry must be whether it is public – whether it is for the benefit of the community or of an appreciably important class of the community. The inhabitants of a parish or town, or any particular class of such inhabitants, may, for instance, be the objects of such a gift, but private individuals, or a fluctuating body of private individuals, cannot.
(underlining added by me)
Lord Greene MR alluded to the difficulty in attempting to define what is meant by “a section of the public”. He pointed out (at p 129) that:
In the case of many charitable gifts it is possible to identify the individuals who are to benefit, or who at any given moment constitute the class from which the beneficiaries are to be selected.
He then said:
This circumstance does not, however, deprive the gift of its public character. Thus, if there is a gift to relieve the poor inhabitants of a parish the class to benefit is readily ascertainable. But they do not enjoy the benefit, when they receive it, by virtue of their character as individuals but by virtue of their membership of the specific class. In such a case the common quality which unites the potential beneficiaries into a class is essentially an impersonal one. It is definable by reference to what each has in common with the others, and that is something into which their status as individuals does not enter.
(underlining added by me)
This was followed by the passage referred to by counsel quoted at [118] above.
Lord Greene MR continued (at 130):
It seems to me that the same principle ought to apply when the claimants, in order to establish their status, have to assert and prove, not that they themselves are AB, CD, and EF, but that they stand in some specified relationship to the individuals AB, CD, and EF, such as that of children or employees. In such a case too, a purely personal element enters into and is an essential part of the qualification which is defined by reference to something, ie, a personal relationship to individuals or an individual which is in its essence non-public.
Lord Greene concluded this part of his discussion at p 131:
I come to the conclusion, therefore, that on principle a gift under which the beneficiaries are defined by reference to a purely personal relationship to a named propositus cannot on principle be a valid charitable gift. And this, I think, must be the case whether the relationship be near or distant, whether it is limited to one generation or is extended to two or three or in perpetuity. The inherent vice of the personal element is present however long the chain and the claimant cannot avoid basing his claim upon it.
(underlining added by me)
In the result the trust, which was for the education of descendants of the three named ancestors, was invalid. It was in effect a family trust and not a trust for the benefit of a section of the community.
Oppenheim
The decision in Oppenheim v Tobacco Security Trust Co Ltd[87] concerned a trust which was established for the education of children of employees or former employees of British American Tobacco Co Ltd and its subsidiaries. The number of employees of the companies was 110,000 such that the number of potential beneficiaries for the trust would have been significantly higher.
At p 306 Lord Simonds noted that “the establishment of a college or university is beyond doubt a charity” as is “the endowment of a college, university or school by the creation of scholarships or bursaries” notwithstanding that “competition may be limited to a particular class of persons.” He then said:
It is upon this ground, as Lord Greene, M.R., pointed out in In re Compton that the so-called Founder’s Kin cases can be rested. The difficulty arises where the trust is not for the benefit of any institution either then existing or by the terms of the trust to be brought into existence, but for the benefit of a class of persons at large. Then the question is whether that class of persons can be regarded as such a “section of the community” as to satisfy the test of public benefit.
(underlining added by me)
Then follows the passage frequently quoted:
These words “section of the community” have no special sanctity, but they conveniently indicate first, that the possible (I emphasise the word “possible”) beneficiaries must not be numerically negligible, and secondly, that the quality which distinguishes them from other members of the community, so that they form by themselves a section of it, must be a quality which does not depend on their relationship to a particular individual. It is for this reason that a trust for the education of members of a family or, as in In re Compton, of a number of families cannot be regarded as charitable. A group of persons may be numerous, but, if the nexus between them is their personal relationship to a single propositus or to several propositi, they are neither the community nor a section of the community for charitable purposes.
(underlining added by me)
His Lordship observed, at p 306, that whether the beneficiaries were the children of the employees or the employees themselves, the common quality was the employment by particular employers. He concluded, at p 307, that “there is no justification in principle or authority, to regard common employment as a quality which constitutes those employed a section of the community.”
Lord Normand reached a similar conclusion. At p 309 his Lordship referred to the requirement that a valid charitable trust must be a trust beneficial to the community or to a section of the community. He said:
No general rule has yet been formulated by which to distinguish trusts which have this essential element of public benefit and those which have not … I am, however, satisfied, that the element of public benefit must be found in the definition of the class of persons selected by the truster as the objects of his bounty. … The truster may have selected a class of persons which forms an aggregate that is not a section of the community, and if he has done that the trust will fail for perpetuity. All depends on the attribute by which the selection of the class is determined.
His Lordship pointed out, at p 310, that the common attribute of each member of the class was a contract of service with a particular employer.
A contract of service is in a high degree personal, and it constitutes a personal and private relationship between the parties. Whatever the number of the employees in the service of the same employer each still stands independently in this personal and private relationship to the employer…
In principle I am unable to say that any public element can be born out of the several private contracts between a particular employer and his employees.
Lord Morton implied that if a trust was for the “poor” employees of a business, a different result may arise.[88]
Lord MacDermott disagreed with Lord Simonds’ emphasis on the personal element, observing that a gift for the education of the children of the poor or blind would be charitable notwithstanding that attributes such as poverty, blindness or ignorance are very personal attributes.[89]
The adoption of the Compton-Oppenheim principles in Australia
As counsel for the third defendant pointed out, what they refer to as the Compton-Oppenheim principles have been accepted as applicable in Australia,[90] including by the Privy Council at a time when that Court was the final appellate court in Australia.[91]
Davies v Perpetual Trustee Co Ltd[92] was a decision of the Privy Council following an appeal from the Supreme Court of New South Wales. The testator had devised some land “to the Presbyterians, the descendants of those settled in the Colony hailing from or born in the north of Ireland to be held in trust for the purpose of establishing a college for the education and tuition of their youth in the standards of the Westminster Divines as taught in the Holy Scriptures.” Their Lordships concluded that the class of persons eligible to attend such a college was defined simply by relationship to one or more of a number of persons living on 21 January 1897. Moreover, a particular youth would only be eligible if three other particular criteria were satisfied. This would lead to “curious results” depending upon the particular circumstances of each youth and his ancestors.

This warning reflected what his Honour had earlier emphasised, including in the passage quoted in [66] above that the references to purposes of the Trust in paragraph 4 of the 1989 Trust Deed were “subject to the requirement that the trust funds be applied for charitable purposes” and that “those particular enumerated purposes do not extend or override the primary and only purposes of the Trust, that is, charitable purposes.”
This point was further emphasised by the addition of the words, in capitals, “Subject to the requirement of charitable purpose”, at the beginning of clause 4.2 of the 1996 Trust Deed and the 1998 Trust Deed.
With the exception of the provision of “sport and social facilities” no party has seriously contended that the other purposes set out in clause 6.3 are not charitable purposes.
Sport and social facilities
The third defendant contends that the trust is not a valid charitable trust at law because the trust deed “permitted the charitable grant fund to be applied toward inter alia sport and social facilities, which purposes are not charitable purposes.”[162] This is part of the purpose stated in clause 6.3.2(xv) of the Trust Deed, namely “to provide education and sporting and social facilities.”
Counsel for the third defendant points out that the power of the trustee under the trust is not to provide the specified benefits to the public generally or even to the Aboriginal Community. It is to provide the benefits to a limited class of persons who are defined by their membership of a clan. Included in the powers are the power to provide education and sporting and social facilities. I interrupt at this point to note that it does not matter if persons other than those entitled also benefit as a result of the exercise of the power.[163]
Counsel for the third defendant contend that trusts for the promotion of sport have never been accepted as trusts for charitable purposes because they do not fall within the kind of purposes contemplated by the Preamble to the Statute of Charitable Uses.
Numerous trusts for the purposes of the promotion of sport have been held not to be charitable.[164] That is so even though it is accepted that the encouragement of sporting activity is beneficial generally. In Said v Barrington[165] Windeyer J said:
There is, in these cases, some temptation to extend the public benefit requirement to any good cause and I think this has to be resisted. There would be little doubt, I think, that right thinking members of the community would regard encouragement of sailing for children to be generally beneficial, but not so as to bring it within the requirements to make it a charitable purpose to obtain the protection given to what would otherwise be a perpetual trust.[166]
In Royal National Agricultural and Industrial Association v Chester[167] the High Court appears to have accepted the trial judge’s conclusion that a trust for the promotion of sport (in that case the breeding and racing of pigeons) is not, of itself, a trust for a charitable purpose and that, even if such gifts have side effects which advance charitable purposes they are not charitable where the promotion of such purposes is not the direct and necessary object of the bequest. In relation to the trial judge’s references to authorities concerning those propositions the Court said:[168]
His Honour referred to the cases to emphasize that, although the side effects of the gift may indirectly serve such purposes, the promotion of such purposes is not the direct and necessary object of the bequest. The cases were properly regarded as instances of the application of the rule that, if a gift permits applications for uses which are not charitable, it is not charitable in the legal sense. Although we have put our decision upon a somewhat broader basis, we do agree with the learned trial judge that the provision of racing facilities and trophies would certainly be within the discretion of the trustee and that such an application of the income of the estate would not be for charitable purposes. (underlining added by me)
The third defendant contends that there is nothing in the trust deed which limits the power of the trustee in relation to the provision of facilities for sport to associate that with some other relevant charitable purpose such as for a school or church.
Similarly, the courts have rejected the suggestion that trusts for the provision of social activities fall within the spirit and intent of the Preamble. A trust for the promotion of moral, social, spiritual and educational welfare of Welsh people in London by the provision of a social centre was held not to be valid in Williams’ Trustees v Inland Revenue Commissioners[169] as was a trust for the promotion of the religious, social and physical well-being of Methodists in certain counties in England in Inland Revenue Commissioners v Baddeley.[170] The Courts have noted that no matter how beneficial the encouragement of social activity may be seen to be it is not within the scope of the Preamble because it does not satisfy the necessary requirement of general public utility.
The principles in these cases have been followed in Australia where trusts have been held to be not charitable and invalid where they were for a girls’ friendly society,[171] and where they were for a “Catholic Boys Club.[172] In the latter case it was expressly stated that the expenditure of funds for social intercourse or sporting activities cannot be regarded as being within the Preamble.[173]
In their written submissions counsel for the plaintiff responded to paragraph 13(a) of the Defence in the following way.
In the first place, by reason of the express terms of the Trust Deed, the Trustee was empowered to provide benefits from the Expenditure Fund to provide education sporting and social facilities “[s]ubject to the requirement of charitable purpose”. Even if, which is not conceded, the use of the fund to provide such benefits was not inherently charitable, the express requirement of charitable purpose is cumulative. That is, the Trust Deed contemplates expenditure upon education sporting and social facilities insofar as that involves a charitable purpose.[174]
In the second place, if the object of a trust is to relieve poverty, the method to achieve that result is immaterial: Jacobs at [10-19]. The opening words of clause 4.2 of the 1996 Trust Deed (“Subject to the requirement of charitable purpose”) make it abundantly clear that clause 4.2 and the objects specified in it are subject to clause 2 and the purposes it legitimately attracts. Hence, it is intrinsically open under the Trust Deed to apply the trust fund to provide those specific benefits in the interests of relief of poverty without there being any suggestion of any invalidity. Accordingly, if relief of poverty were found to be the only valid charitable purpose embodied in clause 2, nonetheless clause 4.2 and the more specific objects in it, being subordinate to clause 2, such as the provision of sporting and social facilities (clause 4.2.4), could be used to relieve poverty.
I interrupt here to reject this point in so far as it assumes that the Trust is solely for the relief of poverty, a proposition which I have rejected. However I think the point is valid where the provision of sporting and social facilities are ancillary to that or another charitable purpose set out in the Deed.
Thirdly, and in any event, it is recognised in authority that expenditure of trust funds on the promotion of sporting and recreational activities is itself a legitimate charitable purpose essentially on two grounds.
First, the provision of the means of public recreation such as playing fields, parks and gymnasiums, is an accepted charitable object within the fourth Pemsel category.[175] This is so, even though the purpose of the trust is to provide such facilities for the benefit of inhabitants of a defined area.[176] Further, in Flynn v Mamarika, Martin CJ in his directions held that the promotion of sport and recreation for the benefit of the community may be a charitable purpose.
Secondly, and in any event, if provision for sporting or social facilities is associated with the advancement of educational work (even if not of a particular educational institution) it may be a valid charitable purpose under the second Pemsel category.[177]
In McMullen, the House of Lords held that, while the mere playing of games or enjoyment or amusement or competition was not charitable by itself, nor necessarily educational, the totality of the process of education consisted in a balance between spiritual, moral, mental and physical elements and was not limited to formal instruction and did not exclude pleasure and the exercise of skill.[178] In that matter the gift was specifically for the provision of facilities for the benefit of pupils at schools and universities in any part of the United Kingdom. While the stipulation of schools and universities was a consideration in the reasoning in the relevant speeches that gave the gift a character of advancing education, Lord Hailsham (with whom Lords Diplock and Salmond agreed and Lord Keith relevantly agreed) did not discount adult education as an aspect of the advancement of education more generally.
Further, in Flynn v Mamarika, Martin CJ accepted both that the promotion of adult education was within the charitable purpose of the advancement of education, and that the promotion of sport and recreation may be regarded as for the advancement of education, particularly physical education or the enhancement of physical proficiency and efficiency.
In the present case, although the specific object of the expenditure on sporting and social facilities was not limited to facilities within an educational institution, in the obvious context of the communities on Groote Eylandt and Bickerton Island, the provision of such facilities will entail the advancement of education in the broader sense. If that were not self-evidently the case, then it would result from the opening words of clause 4.2 (and as well the reference to “education” in clause 4.2.4).
Whilst, for reasons already expressed, I do not accept that all of the purposes are for relief of poverty, I do accept that the provision of sport and social facilities may be a charitable purpose, as contemplated by the authorities referred to including Re Haddin, Re Morgan, McMullen and, in particular, Flynn v Mamarika. Accordingly the purpose in clause 6.3.2(xv) of the Trust Deed is a valid charitable purpose, notwithstanding that the Charitable Grant Fund can only be used for sporting and social facilities that fall within the scope of one or other of the Pemsel categories.
Unlike the situation in Chester the trustee is not permitted to apply funds to a purpose that is not charitable. This is clear from the Trust Deed, in particular the clear wording in clause 2. Also, as counsel for the Attorney-General points out, the Trustee’s broad powers are “subject always to any express provisions to the contrary herein contained”. These include, as stressed by Martin CJ in Flynn v Mamarika, the fundamental requirement that the funds only be applied for charitable purposes.
Charitable purpose market garden
In its written submissions, as part of its submissions regarding relief against poverty, the third defendant raised a new point, namely that
Clause 24 of the deed makes specific provision for the distribution of funds for a community market garden. It is difficult to fit that use of funds into the spirit and intent of the Statute of Charitable Uses.[179]
The third defendant submitted that even if a trust is “dressed up” as a charitable trust it may well not be such if it permits the funds to be used for non-charitable purposes.[180] This may arise unintentionally where the draftsperson had subjectively thought that they were creating a valid charitable trust but had failed to do so by the inclusion of non-charitable purposes or by failing to cast the scope of objects widely enough.
In fact clause 24.1 permits the Trustee to “make a payment up to but not exceeding $200,000 from the Charitable Grant Fund for the leasing of land and the establishment of a charitable purpose market garden” and clause 24.2 permits the Trustee to pay an annual amount “for two financial years following the payment in clause 24.1 to be used to develop and maintain the charitable purpose market garden.”
The clear intent of that clause, having regard to the words that I have underlined, is that such money only be paid for a market garden that will serve a charitable purpose. Even if such a garden might be described as a “community market garden” as the third defendant describes it, there is no basis for the assumption implicit in the footnote to the third defendant’s contention, that it will only be “for the benefit of a few”. To the contrary, one can readily conclude that such a charitable purpose market can be established and maintained for a charitable purpose, for example to educate members of the community in the growing of vegetables, flowers and other produce or to assist people in poverty by providing them with such produce.
Conclusion
I conclude that none of the grants or payments contemplated or permitted under the Trust Deed, in particular clause 6.3.2, may be made for a purpose that is not a charitable purpose. Accordingly the trust satisfies Pemsel requirements.
Conclusion and disposition
The answer to Question 1 is “No”. Question 2 no longer needs to be answered.
I will conduct a directions hearing in order to discuss costs and the further advancement of this matter.
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[1] Referred to in these reasons as the Trust.

[2] “Minter Ellison’s Response to the Plaintiff’s Statement of Facts, Issues and Contentions dated 9 September 2016” dated 23 September 2016 (Third Defendant’s Response).

[3] “Plaintiff’s Statement of Facts Issues and Contentions” dated 9 September 2016 (Plaintiff’s Statement of Facts Issues and Contentions).

[4] Third Defendant’s Response.

[5] “Plaintiff’s Submissions on Questions of Law” dated 30 November 2016 (Plaintiff’s Written Submissions).

[6] “Written submissions of the Third Defendant” filed 1 December 2016 (Third Defendant’s Written Submissions).

[7] “Submissions on behalf of the Attorney-General” dated 6 December 2016 (Attorney-General’s Written Submissions).

[8] In these reasons Groote Eylandt Aboriginal Trust Incorporated shall be referred to as GEAT or as the plaintiff.

[9] Statement of Claim [7], [10], [19], [25] and [30] – [32].

[10] Statement of Claim [31] – [33].

[11] This was formerly Recital C in the Amending Trust Deed made on 26 October 2005.

[12] This was formerly Recital D in the Amending Trust Deed made on 26 October 2005.

[13] These clauses were footnoted as being formerly clauses 4.1, 4.2, 4.4 and 4.5 in the Trust Deed made on 26 October 2005.

[14] This was formerly clause 4.4.

[15] This was formerly clause 14.

[16] This was formerly clause 18.

[17] Dingle v Turner [1972] AC 601 (Dingle).

[18] Commissioners for Special Purposes of Income Tax v Pemsel [1891] AC 531 (Pemsel).

[19] Defence [13(a)].

[20] Defence [13(b)].

[21] Compton, In re; Powell v Compton [1945] Ch 123 (Compton).

[22] Oppenheim v Tobacco Securities Trust Co Ltd [1951] AC 297 (Oppenheim).

[23] Mabo v State of Queensland [No 2] [1992] HCA 23; (1992) 175 CLR 1 at pp 57-62 and 70[6].

[24] Ex P17 [30].

[25] Ex P17 [34]. See too Sansom Ex D3A [40].

[26] Ex P17 [36].

[27] Ex P17 [38].

[28] Ex D3A [40].

[29] Ex P17 [39].

[30] Ex P17 [31]. See too Sansom Ex D3A [40].

[31] Ex P17 [40] referring to Turner 1974 at [26].

[32] Third Defendant’s Written Submissions [23].

[33] Aboriginal Land Rights (Northern Territory) Act 1976 (Cth) s 4.

[34] Flynn v Mamarika (1996) 130 FLR 218 (Flynn v Mamarika).

[35] Ex P6 (Tab 14).

[36] Clause 18.

[37] Flynn v Mamarika.

[38] Ibid at 219-220.

[39] Ibid at220-1.

[40] Ibid at 223.

[41] Ibid at 226-9.

[42] Reproduced in [16] above.

[43] Byrnes v Kendle [2011] HCA 26; (2011) 243 CLR 253at 286 – 291 [102] – [118].

[44] Ibid at 286 [102] (Heydon and Crennan JJ).

[45] Matthew Conaglen, ‘Sham Trusts’ (2008) 67 Cambridge Law Journal 176, 181.

[46] Commissioner of Taxation of the Commonwealth of Australia v Bargwanna [2012] HCA 11; (2012) 244 CLR 655.

[47] Latimer v Commissioner of Inland Revenue [2004] 3 NZLR 157 at 168 [29].

[48] Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd [2015] HCA 37; (2015) 256 CLR 104.

[49] CodelfaConstruction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 at 352 (Codelfa). See also Sir Anthony Mason, ’Opening Address’ (2009) 25 Journal of Contract Law 1,3.

[50] Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640 at 657 [35], citing Codelfa at 350, in turn citing Reardon Smith Line Ltd v Yngvar Hansen-Tangen [1976] 1 WLR 989 at 995-996; [1976] 3 All ER 570 at 574.

[51] Codelfa at 352; Reardon Smith Line Ltd v Yngvar Hansen-Tangen [1976] 1 WLR 989 at 995-996; [1976] 3 All ER 570 at 574.

[52] Codelfa.

[53] Ibid at 351-352.

[54] Ibid at 348-349.

[55] Prenn v Simmonds [1971] 1 WLR 1381 at 1383-1384; [1971] 3 All ER 237 at 239.

[56] DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423 at 429; [1978] HCA 12, referring to Prenn v Simmonds [1971] 1 WLR 1381 at 1384; [1971] 3 All ER 237 at 240.

[57] Codelfa at 351.

[58] Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640 at 656-657 [35]; [2014] HCA 7.

[59] Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640 at 656 [35], Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104 at 116 [46]).

[60] Statute of Charitable Uses 1601 (43 Eliz 1 c 4) (Statute of Charitable Uses), sometimes referred to as the Statute of Elizabeth.

[61] Pemsel at 583 (Lord Macnaghten).

[62] J. D. Heydon and M. J. Leeming, Jacobs’ Law of Trusts in Australia (LexisNexis, 8^th ed, 2016) (Jacobs) [10-04] and [10-06].

[63] Jacobs [10-10].

[64] Dingle v Turner.

[65] Verge v Somerville [1924] AC 496 at 499 (Verge v Sommerville).

[66] Attorney-General for New South Wales v Perpetual Trustee Co (Ltd) (1940) 63 CLR 209 at 222; BSH Holdings Pty Ltd v Commissioner for State Revenue (2000) 2 VR 454 at 456 [9].

[67] FCT v Vegners (1989) 90 ALR 547 at 551-552; ASIC v Carey (No 6) (2006) 153 FCR 509 at 515-519 [17]-[30].

[68] Robinson v Stuart (1891) 12 LR (NSW) Eq 47; Perpetual Trustee Co Ltd v Shelley (1921) 21 SR 426.

[69] R (Independent Schools Council) v Charity Commission [2012] Ch 214.

[70] National Anti-Vivisection Society v Inland Revenue Commissioners [1947] AC 31; [1947] 2 All ER 217.

[71] Re Hummeltenberg [1923] 1 Ch 237 at 242; [1923] AllER Rep 49 at 50; Re Grove Grady [1929] 1 Ch 557 at 558; [1929] All ER Rep 158 at 160; Williams’ Trustees v Inland Revenue Commissioners [1947] AC 447; [1947] 1 All ER 513; Royal Society for the Prevention of Cruelty to Animals, NSW v Benevolent Society of New South Wales (1960) 102 CLR 629; [1960] ALR 223; R (Independent Schools Council) v Charity Commission [2012] Ch 214; [2012] 1 All ER 127 at [42]-[53].

[72] Aboriginal Hostels Ltd v Darwin City Council (1985) 33 NTR 1 at 13-8 (Nader J); Alice Springs Town Council v Mpweteyerre Aboriginal Corporation [1997] NTCA 78, 115 NTR 25 at 40-1, 139 FLR 236 (1997) 139 FLR 236 at 253-4 (Mildren J, Martin CJ agreeing); Cant (liquidator of Billa Downs Aboriginal Corporation (in liq)) v Kirby [2011] NSWSC 1193 at [46]-[47] (Gzell J); [18]-[19]; Shire of Derby-West Kimberley v Yungngora Association Inc [2007] WASCA 233 [50]-[57] (Newnes AJA, Buss and Miller JJA agreeing).

[73] Australian Executor Trustees Ltd (as trustee for the Martu Banyjima Charitable Trust) v A-G(WA) [2015] WASC 439 at [5], [10] (Martin CJ); Wybenga v Mandandanji Ltd (as trustee for the Mandandanji Charitable Trust) [2014] FCA 861 at [1]-[2] (Logan J).

[74] Flynn v Mamarika at 222-4.

[75] Plaintiff’s Written Submissions at [28].

[76] Plaintiff’s Written Submissions at [52].

[77] Plaintiff’s Statement of Facts Issues and Contentions at [59].

[78] Ex P 10.

[79] Ex P 11.

[80] In Re Scarisbrick; Cockshott v Public Trustee [1951] Ch 622; [1951] 1 All ER 822 (Re Scarisbrick).

[81] Compton at 136 (Lord Greene MR).

[82] Oppenheim at 306 (Lord Simmonds); see also 311 (Lord Normand).

[83] Compton at 130.

[84] As Lord Green noted, it did not matter for the purposes of validity whether or not the numbers were small or substantial or considerable:Compton at 128.

[85] Compton at 127.

[86] Verge v Sommerville at 499.

[87] Oppenheim v Tobacco Security Trust Co Ltd [1951] AC 297 (Oppenheim).

[88] Oppenheim at 312-313

[89] Ibid at 317.

[90] See Evans (decd), Re; Union Trustee Co of Australia Ltd v Attorney-General for Queensland [1957] St R Qd 345 where a trust for an apprenticeship of an employee of a limited company was agreed to be invalid in light of the principle established in Oppenheim. See too Re Mair, deceased [1964] VR 529 at 534 (Adam J); Re Gillespie [1965] VR 402 at 404 (Little J); Ashfield Municipal Council v Joyce [1976] 1 NSWLR 455 at 466 (Lord Wilberforce); Strathalbyn Show Jumping Club Inc v Mayes (2001) 79 SASR 54 at [93] (Bleby J); Shire of Derby-WestKimberley v Yungngora Association Inc [2007] WASCA 233 [50] (Newnes AJA, Buss and Miller JJA agreeing).

[91] Davies v Perpetual Trustee Co Ltd [1959] AC 439; 2 WLR 673 (PC) (Davies).

[92] Ibid.

[93] Ibid at 454

[94] Thompson v Federal Commissioner of Taxation (1959) 102 CLR 315 at 323-4 (Dixon CJ, Fullagar and Kitto JJ agreeing) (Thompson).

[95] In Re Income Tax Acts (No 1) [1930] VLR 211 (In Re Income Tax Acts (No 1)) at 222-3.

[96] In re Income Tax Acts (No.1) [1930] VLR 211 at 222-3.

[97] C.f Native Title Act 1993 (Cth) ss 224 and 193(2)(e)

[98] Native Title Act 1993 (Cth) s 223.

[99] Kostka v The Ukrainian Council of NSW Inc [2013] NSWSC 222 (Young AJ).

[100] Re Gillespie [1965] VR 402 at 405-6 (Little J).

[101] Aboriginal Hostels Ltd v Darwin City Council (1985) 33 NTR 1 (Aboriginal Hostels).

[102] Alice Springs Town Council v Mpweteyerre Aboriginal Corporation [1997] NTCA 78, 115 NTR 25, 139 FLR 236 (Alice Springs Council v Mpweteyerre Aboriginal Corporation).

[103] Aboriginal Hostels at 14.

[104] Aboriginal Hostels at 15. See also McGarvie Smith Institute v Campbelltown Municipal Council (1965) 11 LGRA 321 at 323, and Dareton Local Aboriginal Land Council v Wentworth Council (1995) 89 LGERA 120.

[105] Aboriginal Hostels at15.

[106] Shire of Derby-West Kimberly v Yungngora Association Inc [2007] WASCA 233, 157 LGERA 238.

[107] Ibid at [10(5)].

[108] Ibid at [11].

[109] Ibid at [12].

[110] Ibid at [44].

[111] Dareton Local Aboriginal Land Council v Wentworth Council (1995) 89 LGERA 120.

[112] Third Defendant’s Written Submissions [108].

[113] Alice Springs Town Council v Mpweteyerre Aboriginal Corporation and others (1997) 115 NTR 25.

[114] Ibid at 39.

[115] Ibid at 40.

[116] Ibid at 40.

[117] Ibid at 40.

[118] Shire of Ashburton v BindiBindi Community Aboriginal Corporation [1999] WASC 108

[119] Third Defendant’s Written Submissions at 113.

[120] Latimer v Commissioner of Inland Revenue [2002] NZLR 195 (Latimer).

[121] Re Mathew, deceased [1951] VLR 226.

[122] Citing Native Title Act 1993 (Cth) s 223(1).

[123] Latimer v Inland Revenue (New Zealand) [2004] 3 NZLR 157 (Latimer PC).

[124] Ibid at [43] – [44].

[125] The reports of the experts refer to the clans as the “land owning” entities, not individuals.

[126] Plan B Trustees Limited v Parker [2013] WASC 216 at [117]-[118] (Edelman J).

[127] Latimer v Commissioner of Inland Revenue [2002] NZLR 195.

[128] Counsel submitted that to the extent to which Edelman J referred to the New Zealand Court of Appeal decision in Latimer it was in the context of a point which did not appear to be in issue. Indeed, it appears that all parties agreed that the trust was a valid charitable trust [115]; his Honour was not referred to the decision in Oppenheim and his discussion was in the context of whether or not “the promotion and protection of Aboriginal culture (by protection of the native title rights of the MIB people) was for Community Benefit” comprises an object that satisfies the requirements of the Income Tax Assessment Act 1997. [117].

[129] Third Defendant’s Written Submissions at [84] - [88].

[130] In Re Tree [1945] Ch 325 (Evershed J).

[131] Citing Western Australia v Ward (2000) 99 FCR 316 at 379 [232] (Beaumont and von Doussa JJ) which was concerned with the common law notion of Aboriginal clans.

[132] Citing State of Western Australia v Graham on behalf of the Ngadju People (2013) 305 ALR 452 at 467 [91]-[92] (Jagot, Barker and Perry JJ) (Ngadju); Dempsey (on behalf of the Bularnu, Waluearra and Wangkayujuru People) v Queensland (No 2) (2014) 317 ALR 432 at 494 [495] (Mortimer J).

[133] Laverty v Laverty [1907] 1 IR 9 (A trust invalid when it was settled for the education of any Roman Catholic boy with the surname O’Laverty, Laverty, O’Lafferty or Lafferty).

[134] Third Defendant’s Written Submissions at [102].

[135] Plaintiff’s Statement of Facts Issues and Contentions from [76].

[136] Noting the reference by the third defendant to Davies in the submission set out in [210] above.

[137] State of Western Australia v Graham on behalf of the Ngadju People (2013) 305 ALR 452 at 467-8 [91]-[102].

[138] See also clause 17.4 of the Trust Deed which requires that “the Trust remains a trust for charitable purposes for the benefit of the Beneficiaries for all time.”

[139] See, for example, Members of the Yorta Yorta Aboriginal Community v Victoria [2002] HCA 58; 214 CLR 422 at [46] and [79].

[140] See, for example, the passages referred to above from Compton, Oppenheim, Thompson, Aboriginal Hostels, Alice Springs Town Council v Mpweteyerre Aboriginal Corporation and Kostka.

[141] See the passages quoted and underlined by me at [121] above.

[142] See the passages quoted and underlined by me at [123], [125], [130], [139], [142], [144] [146] and [167] above.

[143] See, for example, the words that I underlined at [168] above in the quote from [58] of Newnes AJA’s reasons.

[144] See, for example, discussion by Martin CJ in Flynn v Mamarika at 224 regarding execution of the trust.

[145] Dingle v Turner [1972] AC 601.

[146] Ibid at 617.

[147] In Re Hilditch (1985) 39 SASR 469 at 471 (King CJ, Milhouse J agreeing), 479-80 (O’Loughlin J).

[148] Re Scarisbrick at 639 (Sir Raymond Evershed MR).

[149] Compton at 137-9 (Lord Greene MR); Gibson v South American Stores (Gath & Chaves) Ld [1950] 1 Ch 177 at 194 (Evershed MR); Oppenheim at 308-9 (Lord Simonds).

[150] In re Wallace Trustees Executors and Agency Co Ltd [1908] VR 636, at 638 and 639 where the trust for the payment of passage for immigrants was solely for the relief of poverty on the basis that if the persons needed the fare paid they were undoubtedly poor. That was so even though the word “poor’ was not used in the bequest.

[151] Re Gillespie [1965] VR 402 at 405-6 (Little J).

[152] Jacobs at [10-20], citing Union Trustee Co of Australia Ltd v Federal Commissioner of Taxation (1962) 108 CLR 451 at 456.

[153] Jacobs at [10-17], citing Re Coulthurst’s Will Trusts [1951] Ch 661 at 666.

[154] Alice Springs Town Council v Mpweteyerre Aboriginal Corporation [1997] 115 NTR 25.

[155] Jacobs at [10] - [19].

[156] Third Defendant’s Written Submissions [6].

[157] Flynn v Mamarika at 226-228.

[158] Flynn v Mamarika at 226-9.

[159] Ibid at 227 [2].

[160] Ibid 227 [7].

[161] Ibid 228 [3].

[162] Defence [13(a)].

[163] See for example Blanchard J’s reference to Pemsel in [31] of Latimer, quoted in [190] above.

[164] Re Clifford [1912] 1 CH 29 a trust for improving angling in certain rivers was not charitable; in Re Pattern [1929] 2 Ch 276 a trust for the promotion of cricket was not charitable; in Inland Revenue Commission v City of Glasgow Police and Athletics Association [1953] AC 380, a trust for the promotion of sports and general pastimes for officers and ex-officers of the police was not charitable.

[165] Said v Barrington [2001] NSWSC 576.

[166] Ibid at [9].

[167] Royal National Agricultural and Industrial Association v Chester (1974) 3 ALR 486 (Chester).

[168] Ibid at 489.

[169] Williams’ Trustees v Inland Revenue Commissioners [1947] AC 447.

[170] Inland Revenue Commissioners v Baddeley [1955] AC 572.

[171] In Wilson’s Grant [1960] VR 514.

[172] Attorney-General v Cahill [1969] 1 NSWR 85. This was followed in Anglican Trusts Corp of Diocese of Gippsland v Attorney-General (Vic) [2008] VSC 352 where money had been left to establish a girls’ camp for girls of the Church of England.

[173] Attorney-General v Cahill [1969] 1 NSWR 85, 93 [10] – [30].

[174] Citing Re Best [1904] 2 Ch 354.

[175] Citing Re Haddin [1932] 1 Ch 133 and Re Morgan [1955] 2 All ER 632.

[176] Oldham Borough Council v Attorney-General [1993] Ch 210.

[177] Inland Revenue Commissioners v McMullen [1981] AC 1 (McMullen); In re Mariette [1915] 2 Ch 284 (where a gift to build additional squash courts was held to constitute a gift for the advancement of education).

[178] Ibid 17-18 (Lord Hailsham).

[179] The provision of a market garden for the benefit of a few is not analogous to the promotion of agriculture generally: Grain Growers Ltd v Chief Commissioner of State Revenue [2015] NSWSC 925.

[180] Attorney-General v Ross [1986] 1 WLR 252 at 263.

[2017] NTSC 4

20 January 2017

Key Legal Topics

Areas of Law

Trusts & Equity

Legal Concepts

Statutory Interpretation

Charitable Trusts

Public Benefit

Native Title