Hickey v Attorney General of the State of New South Wales

Case •

[2021] NSWSC 772

•

21 June 2021

No judgment structure available for this case.

Supreme Court


New South Wales

Medium Neutral Citation: Hickey v Attorney General of the State of New South Wales [2021] NSWSC 772
Hearing dates: 21 June 2021
Decision date: 21 June 2021
Jurisdiction:Equity
Before: Ward CJ in Eq
Decision:

See orders at [85]

Catchwords:

EQUITY — Trusts and trustees — Charitable trusts — Charitable purposes

EQUITY — Trusts and trustees — Charitable trusts — Cy-près schemes

Legislation Cited:

Charitable Collections Act 1934 (NSW)

Charitable Fundraising Act 1991 (NSW)

Charitable Trusts Act 1993 (NSW), ss 6, 9, 11

Charitable Uses Act 1601 (43 Eliz I, c. 4)

Probate and Administration Act 1898 (NSW), s 44

Trustee Act 1925 (NSW), ss 57, 70, 92

Cases Cited:

Aid/Watch Inc v Commissioner of Taxation (2010) 241 CLR 539; [2010] HCA 42

Federal Commissioner of Taxation v Word Investments Ltd (2008) 236 CLR 204; [2008] HCA 55

Grain Growers Ltd v Chief Commissioner of State Revenue [2015] NSWSC 925

In Re Bucks Constabulary Widows’ and Orphans’ Fund Friendly Society (No 2) [1979] 1 WLR 936

In Re GKN Bolts & Nuts Ltd (Automotive Division) Birmingham Works Sports & Social Club [1982] 2 All ER 855

Income Tax Special Purposes Commissioners v Pemsel [1891] AC 531

Keys v Boulter (No 2) [1972] 2 All ER 303

Scottish Burial Reform and Cremation Society Ltd v Glasgow Corporation [1968] AC 138

Tasmanian Electronic Commerce Centre Pty Ltd v Commissioner of Taxation (2005) 142 FCR 371; [2005] FCA 439

Texts Cited:

AS Sievers, ‘The Dissolution of Non-Profit Associations’ (1981) 7(3) Monash University Law Review 141

Heydon and Leeming, Jacobs’ Law of Trusts in Australia (8th ed, 2016, LexisNexis Butterworths)

Category:Principal judgment
Parties: Peter John Hickey (Plaintiff)
Attorney General for the State of New South Wales (Defendant)
Representation:

Counsel:
P Russell (Plaintiff)
A Hochroth (Defendant)

Solicitors:
Pikes & Verekers Lawyers (Plaintiff)
Crown Solicitors’ Office (Defendant)
File Number(s): 2021/00123993
Publication restriction: Nil

Judgment

  1. HER HONOUR: Before me for hearing on 21 June 2021 was an application by summons filed on 4 May 2021 by Mr Peter John Hickey in proceedings the bringing of which has been authorised by the Attorney General of New South Wales pursuant to s 6 of the Charitable Trusts Act 1993 (NSW).

  2. At the hearing on 21 June 2021, the plaintiff moved for the relief sought in prayers 2 to 11 of the summons (with the exception of the relief sought in prayers 11(b) and 11(c) of the summons) as I will explain in due course. In support of his application for relief, the plaintiff relied upon an affidavit affirmed by him on 3 May 2021, together with affidavits from each of the proposed replacement trustees (Ms Kim Probert and Mr Mark Francis Green, each being a solicitor and partner of Pikes & Verekers Lawyers) (being the affidavit affirmed 18 April 2021 by Ms Probert, the plaintiff’s solicitor, and the affidavit sworn 11 May 2021 of Mr Green); and tendered a bundle of material exhibited to Ms Probert’s affidavit (Exhibit A).

  3. Counsel for the Attorney General of New South Wales, in his role as protector of charities, was joined as a defendant in the proceedings. Counsel appeared on the Attorney General’s behalf on the hearing of the application in order to assist the Court and, relevantly, made submissions as to one aspect of the matter in contention between the parties (to which I will refer shortly).

  4. At the conclusion of the hearing, I made orders, largely as sought by the plaintiff (and not opposed by the Attorney General) and indicated that I would provide my reasons as soon as practicable. These are those reasons.

Background

  1. Mr Hickey is the son and sole executor of the estate of the late Elizabeth Ellen Hickey (known as Betty), formerly of Marrickville, who died on 4 October 2019. With no intended disrespect, I will refer to the late Mrs Hickey as Betty. Prior to her death, Betty was the last known trustee or holder of trust property of two charitable unincorporated associations: the Our Lady of Snows Society (OLOSS) and The Underprivileged Peoples’ Association (UPA).

UPA

  1. In the 1970s, UPA was formed as an unincorporated association by the late George Mezher (George) and his sister, the late Marie Louise Mezher, also known as Nola Mezher (Nola), both formerly of Haberfield. Various versions of the Constitution of UPA have been located among George’s documents and papers (see Exhibit A at 27-161). Among other things, UPA operated a Sunday night food store at Belmore Park (see Ms Probert’s affidavit affirmed 18 April 2021 at [11]-[15]).

OLOSS

  1. In 1981, OLOSS was in turn formed as a charitable unincorporated association by George and Nola (see Ms Probert’s affidavit affirmed 18 April 2021 at [16]).

  2. Following its formation, OLOSS was registered or recognised, variously, as a charity under the Charitable Collections Act 1934 (NSW), the Charitable Fundraising Act 1991 (NSW) and by the Australian Taxation Office (see Ms Probert’s affidavit affirmed 18 April 2021 at [17]-[19]). From 3 December 2012 to 4 July 2014, when its registration was voluntarily revoked, OLOSS was a registered charity with the Australian Charities and Not For Profits Commission (see Ms Probert’s affidavit affirmed 18 April 2021 at [20]).

  3. For some time, OLOSS provided and operated 14 suburban refuges, a day centre and a soup kitchen for underprivileged people. The soup kitchen was operated from premises at Central Station in Sydney. The main undertaking of the refuges was to provide halfway houses for men recently released from prison. OLOSS provided short-term accommodation to former prisoners for minimal rent. The Department of Community Services assisted in funding the refuges (see Ms Probert’s affidavit affirmed 18 April 2021 at [21]).

  4. A difficulty has arisen in that it is not clear which of various versions or parts of versions of the Constitution of OLOSS found among George’s papers after his death represents the current version of the OLOSS Constitution (see Ms Probert’s affidavit affirmed 18 April 2021 at [22]; Exhibit A at 195-272); an issue of no little significance for the contemplated future cy-près application that is likely to be made. I will return in due course to the issue that arises as to the various versions of the Constitution of OLOSS. Suffice it here to note that in all of the versions (or parts of versions) of the Constitution that are in evidence and contain an objects clause, the objects or purposes of OLOSS include the following (which, other than the inclusion of reference to works of a “benevolent” nature, the Attorney General accepts is a charitable object or purpose):

(a)    To undertake works of a charitable, educational or benevolent nature unrestrained by sectarian belief or political ideology for the betterment of the quality of life of the people in the community who are less privileged than others because of illness, old age, poverty, mental retardation or otherwise.

  1. I interpose to note that the Constitution of UPA also included a similar charitable object or purpose to that set out above (see cl 3(a)).

  2. The various versions of the Constitution also contained clauses providing for the membership of OLOSS, its office-bearers; and for the membership and functions of the “Management Committee” or “Committee” of OLOSS. Relevantly, there was provision in one of the versions of the Constitution to the effect that membership of the association ceases if annual subscriptions remain payable and be unpaid (see, for example, cl 7(a) of the version in Exhibit A at 255-268). There was also provision in that version of the Constitution to the effect that all property belonging to the association shall be vested in three trustees who shall deal with and dispose of all such property in accordance with the directions of the Committee (provided those directions are not in violation of the trusts upon which the property is held) (see cl 44 of the version in Exhibit A at 255-268; assuming that the ending words of cl 44 which seem to be omitted in the copying of the document accord with the wording in the incomplete version at Exhibit A at 252).

  3. On 30 June 1990, UPA amalgamated with OLOSS and UPA’s assets were transferred to OLOSS (see Ms Probert’s affidavit affirmed 18 April 2021 at [27]; Exhibit A at 455-464). Ms Probert has deposed that, notwithstanding the resolutions passed regarding the amalgamation of UPA and OLOSS, there is no record with the Registrar-General noting the change in status of George, Nola and Betty in holding certain real property (the Tempe property to which I refer below) in their capacities as trustees for UPA to their capacity as trustees for OLOSS (see Ms Probert’s affidavit affirmed 18 April 2021 at [35]-[36]) but that, after the amalgamation, the Tempe property was accounted for as property of OLOSS and depreciation and other expenses were claimed in relation to the Tempe property (see Ms Probert’s affidavit affirmed 18 April 2021 at [37]).

  4. The last known officeholders of OLOSS whose whereabouts are now known to the plaintiff’s solicitors were: George (President), Nola (Vice President/Honorary Treasurer) and Betty (Honorary Secretary). A copy of the minutes of an Annual General Meeting of OLOSS on 15 October 2004 (the latest dated document Ms Probert has been able to find that records the election of officeholders of OLOSS) records three other persons in attendance – a vice president and two committee members – but Ms Probert has deposed that the whereabouts of those three persons is unknown (see Ms Probert’s affidavit affirmed 18 April 2021 at [29]).

  5. The last known trustees of both OLOSS and UPA, so far as Ms Probert can determine from the books and records available to her, were George, Nola and Betty (see Ms Probert’s affidavit affirmed 18 April 2021 at [28]-[32]).

  6. Ms Probert has deposed that, at some time before 31 July 2006, OLOSS appears to have stopped providing meals for the homeless at Central Station and providing accommodation (see Ms Probert’s affidavit affirmed 18 April 2021 at [48](g); Exhibit A at 755-756). Relevantly, by reference to the minutes of a meeting held on 31 July 2006, it appears that the charity was no longer serving meals or providing accommodation.

  7. Nola died on 13 February 2009 (see Ms Probert’s affidavit affirmed 18 April 2021 at [8]).

  8. Ms Probert has deposed that the minutes of meeting of any meetings of OLOSS in its books and records have disclosed that the last meeting took place on 2 February 2011, although there is no copy of the actual minutes of this meeting beyond the covering page (see Ms Probert’s affidavit affirmed 18 April 2021 at [48](f); Exhibit A at 754).

  9. There are no documents that identify any current or present members of OLOSS. Ms Probert has deposed that the books and records of OLOSS disclose that: all but one of the membership applications were dated in the 1980s and 1990s (the one exception being a membership application dated 10 November 2013 of a Mr Michael Hayek); there is no evidence of any membership subscriptions having been received since 2013; and the most recent reference to funds for membership being received is in the minutes of OLOSS of 10 March 1982 (see Ms Probert’s affidavit affirmed 18 April 2021 at [48]). I interpose to note that, by reference to cl 7(a) of the (longer) version of the Constitution referred to above, in the absence of evidence of any membership applications since 2013 or any annual subscriptions having been received since the application for membership of Mr Hayek, it would appear that there were no members of OLOSS by 1 January 2016 at the latest.

  10. The last known financial accounts or financial reports for OLOSS were for the financial year ending 30 June 2013 (see Ms Probert’s affidavit affirmed 18 April 2021 at [45]; [48](d); Exhibit A at 688).

  11. Ms Probert has deposed that the only transactions recorded in recent years in the bank statements of OLOSS appear to be related to the maintenance and payment of utilities associated with two properties (the Tempe property and the Enmore property), to which I refer below (see Ms Probert’s affidavit affirmed 18 April 2021 at [48](h); Exhibit A at 756-760).

  12. George died on 29 March 2016 (see Ms Probert’s affidavit affirmed 18 April 2021 at [7]).

  13. In about August 2016, the plaintiff’s solicitors, Pikes & Verekers Lawyers, commenced receiving instructions from Betty in relation to OLOSS and the OLOSS Trust (see Ms Probert’s affidavit affirmed 18 April 2021 at [50]).

  14. In the course of carrying out instructions for the estate of George and for Betty, the plaintiff’s solicitors have identified the following property of OLOSS (see Ms Probert’s affidavit affirmed 18 April 2021 at [33]-[35]; [38]-[39]): a property at 213 Enmore Road, Enmore NSW, Folio Identifier 603/752049 (the Enmore property), being a former post office, which was held by George, Nola and Betty as trustees for OLOSS; a property at 30 Smith Street, Tempe NSW, Folio Identifier 23/1230902 (the Tempe property) which was held by George, Nola and Betty as trustees for OLOSS (apparently as a result of the amalgamation of UPA and OLOSS); and money standing to the credit of OLOSS in two separate bank accounts (a Commonwealth Bank of Australia (CBA) account ending # 9745 and a CBA Term Deposit account ending # 6248). As at the date probate was granted in respect of Betty’s estate (Exhibit A at 4), the balance of the respective CBA accounts was $2,397.48 and $1,326,571.39.

  15. Other moveable assets among the property of OLOSS (including two Mitsubishi vans registered in the name of OLOSS, which were in very poor condition and subject to impounding notices) have been disposed of and otherwise accounted for by the plaintiff’s solicitors (see Ms Probert’s affidavit affirmed 18 April 2021 at [40]-[44]).

  16. On 22 May 2018, pursuant to Betty’s instructions, the plaintiff’s solicitors made an application to the Commissioner of Dormant Funds for a declaration that the property of OLOSS was dormant (supported by a statutory declaration made by Betty on 23 April 2018 and enclosing an earlier statutory declaration made by Betty on 28 October 2009). That application was rejected in November 2018 (see Exhibit A at 761-778).

  17. In January 2019, Counsel’s advice was obtained (see Ms Probert’s affidavit affirmed 18 April 2021 at [57]; Exhibit A at 804-811). Counsel’s memorandum of advice dated 15 March 2019 was in evidence on the present application (see Ms Probert’s affidavit affirmed 18 April 2021 at [57]; Exhibit A at 812-834).

  18. Subsequent steps were taken on Betty’s behalf to prepare a summons and supporting material for relief in proposed charitable trust proceedings, including that the trust property be dealt with by a cy-près scheme (see Ms Probert’s affidavit affirmed 18 April 2021 at [58]-[59]).

  19. On 4 October 2019, Betty died (see Ms Probert’s affidavit affirmed 18 April 2021 at [6]).

  20. On 14 January 2020, as adverted to above, probate of Betty’s Will was granted to the plaintiff. The property of OLOSS was described as trust property in Betty’s estate (see Ms Probert’s affidavit affirmed 18 April 2021 at [6]; Exhibit A at 1-5).

  21. In February 2020, the plaintiff was diagnosed with stage 4 metastatic melanoma. The plaintiff underwent lung surgery in April 2020. He has recently completed immunotherapy treatment and his immune system is compromised (see Mr Hickey’s affidavit affirmed 3 May 2021 at [7]). For understandable reasons, the plaintiff does not wish to be involved in the winding up of OLOSS (see Ms Probert’s affidavit affirmed 18 April 2021 at [60]; and Mr Hickey’s affidavit affirmed 3 May 2021 at [7]).

Relief sought

  1. The relief sought on the present application was for:

  1. a declaration for the dissolution of OLOSS and an order for its winding up (proposed orders 2 and 3);

  2. declarations and orders as to the property of OLOSS, the relevant charitable purposes of the OLOSS Trust upon which the property of OLOSS is held, the appointment of new trustees (where there are presently none), the vesting of the property of OLOSS in the new trustees and the granting of further additional powers for the new trustees (proposed orders 4, 5, 6, 7, 8 and 10); and

  3. the joinder of the new trustees as plaintiffs in substitution for the plaintiff and to note other matters (proposed orders 9, 11 and 12).

Plaintiff’s submissions

  1. It was submitted for the plaintiff that, if the proposed orders are made, then as trustees the proposed new plaintiffs (Ms Probert and Mr Green, both being solicitors and partners of Pikes & Verekers Lawyers, who have consented to appointment as trustees and are not aware of any conflict of duty or other interest that would make such appointment inappropriate) will be able to take proper and effective control of the OLOSS Trust and its property. Further, it was noted that the new plaintiffs as trustees would be duty bound to develop a proposed cy-près scheme for approval by the Court at a later date (reference here being made to s 11 of the Charitable Trusts Act).

  2. Reference was made to the principle that an unincorporated association may dissolve spontaneously (or lose the substratum of the association) (see below) and that, while mere inactivity is not enough, inactivity coupled with other circumstances may demonstrate that all concerned regard the association as having ceased to have any purpose or function; and so as no longer existing. In that regard, for the plaintiff it was submitted that short inactivity coupled with strong circumstances or long inactivity coupled with weaker circumstances may equally suffice.

  3. Reference was made to In Re GKN Bolts & Nuts Ltd (Automotive Division) Birmingham Works Sports & Social Club [1982] 2 All ER 855, where the Vice Chancellor (Sir Robert Megarry VC) said (at 860) that “the question is whether, put together, the facts carry sufficient conviction that the association is at an end and not merely dormant”. The plaintiff also pointed to authority that an association will be considered to have spontaneously dissolved when there is only one member (since it has been said that there can be no association as one can hardly associate with oneself or enjoy one’s own society) (citing In Re Bucks Constabulary Widows’ and Orphans’ Fund Friendly Society (No 2) [1979] 1 WLR 936 at 943 per Walton J).

  4. The plaintiff here invokes the jurisdiction of the Court to order the winding up and dissolution of any body of any kind, including an association, for which no appropriate statutory machinery exists for securing its proper winding up (citing Keys v Boulter (No 2) [1972] 2 All ER 303 at 304 per Megarry J).

  5. At this point it is relevant to note that the plaintiff’s solicitor (Ms Probert) has deposed in her affidavit to her belief (having carried out a review of the papers held by George in relation to OLOSS) that the most complete and current version of the Constitution of OLOSS is that which is found in Exhibit A at 255-268 (see Ms Probert’s affidavit affirmed 18 April 2021 at [22]). I refer to this as the Longer Version of the Constitution. However, and without in any way intending any disrespect, Ms Probert does not depose to the basis on which that belief or opinion has been formed. Instructions as to this issue were unable to be obtained at the time of the hearing of the application before me. Therein lies the point of contention on the present application that was raised by the Attorney General (see below).

  6. Leaving aside that issue for the moment, the plaintiff’s submission was that there is no provision in the Constitution of OLOSS for the dissolution or winding up of the association by way of resolution of the members (although it is accepted that such a possibility is clearly contemplated in cl 48 of the version appearing in Exhibit A at 255-268 – the Longer Version of the Constitution). It was noted that in other versions of the Constitution of OLOSS, there is provision for the dissolution of OLOSS (see for example cl 20 of the shorter versions of the Constitution found in Exhibit A – and which include provision for dissolution in the event of membership of less than three persons). In any event, there is no evidence that the members of OLOSS have unanimously agreed to its dissolution.

  1. In the plaintiff’s submission, the circumstances set out in the background facts above (and otherwise deposed to at [48] of Ms Probert’s affidavit affirmed 18 April 2021) demonstrate that OLOSS had spontaneously dissolved, at the latest, by 1 January 2016. (The Attorney General accepts, as I understand it, that such a conclusion may comfortably here be drawn.)

Proposed Orders 4, 5, 6, 7, 8 and 10

  1. As to the orders here proposed by the plaintiff, the plaintiff submitted as follows.

The charitable objects or purposes of OLOSS (proposed order 5(a) and (b))

  1. The plaintiff submitted that the objects of OLOSS are those set out in sub-cll 3(a) and 3(c) of the Longer Version of the Constitution (i.e., that found in Exhibit A at 255-268). Clause 3(a) of that version of the Constitution has been extracted above (and it is in substance identical to that contained in the Shorter Version of the Constitution appearing in Exhibit A at 220).

  2. Clause 3(c) of the Longer Version of the Constitution provides:

3(c)   To purchase, or otherwise acquire, homes, hostels, or other appropriate accommodation for people who could not otherwise accommodate themselves, particular emphasis being placed on the provision of accommodation for persons of pensionable age.

  1. The plaintiff submitted that sub-cll 3(a) and (c) of the Longer Version of the Constitution disclose charitable purposes of a public nature that fall within at least the first and fourth categories of charitable trust identified by Lord Macnaghten in Income Tax Special Purposes Commissioners v Pemsel [1891] AC 531 (Pemsel) at 583, namely: for the relief of poverty; and for other purposes beneficial to the community not falling under any other category.

  2. It was submitted that the other objects set out in cll 3(b) and 3(d)-3(k) of the Longer Version of the Constitution (which I do not propose here to set out) disclose objects which, while prima facie not of a charitable nature, would properly be construed as “of a machinery or facilitative nature” to achieve the otherwise charitable purposes disclosed in sub-cll 3(a) and 3(c).

  3. In answer to the contention of the Attorney General that the object in cl 3(c) of the Longer Version of the Constitution is properly construed as a powers clause (and not otherwise as a separate charitable purpose), the plaintiff submitted that: as a matter of construction, the members of OLOSS have agreed to set out this object separately from the other objects in cl 3; the object is clearly for the provision of “appropriate accommodation for people who could not otherwise accommodate themselves, particular emphasis being placed on the provision of accommodation for persons of pensionable age”; and that it is immaterial that this charitable object, as a matter of construction, may fall wholly or partly within the object in cl 3(a). As to the last of those matters, it was submitted that, once the charitable object has been specifically identified, it ought to be specifically expressed in any declaration notwithstanding that there may be an element of overlap with cl 3(a). It was further noted that cl 3(c) is not expressed in terms (as elsewhere expressed in cl 3) of being necessary, convenient, conducive or instrumental to achieve the purposes of the association (cf sub-cll 3(d), (f)-(k)).

No existing trustees (proposed orders 5 and 6)

  1. The plaintiff, pointing to the evidence that Betty was the last surviving trustee of the OLOSS Trust, noted that, on the death of the trustee (whether a sole trustee or one of a number of trustees), the office of trustee does not devolve on the trustee’s legal representatives; and that no one can legally execute a trust unless nominated to do so by the settlor or testator appointed so to do by or by direction of such settlor or testator, by Act of Parliament or by the Court. It was said that, therefore, if the deceased trustee was the sole or last surviving trustee, the office of trustee, where the trust is an active trust, becomes vacant. It was noted that the legal representative of such a deceased trustee (here, the plaintiff) has no power to act in the execution of the trust (although, where there are no active duties to perform, the legal representative has power to transmit the property to persons absolutely entitled); and that if (which does not appear here to be the case) the deceased trustee leaves surviving a co-trustee or co-trustees, then the office of trustee remains in the survivors who can exercise all of the powers vested in all the trustees, unless a contrary intention is expressed in the trust instrument (referring to s 57(1) of the Trustee Act 1925 (NSW) (Trustee Act) and Heydon and Leeming, Jacobs’ Law of Trusts in Australia (8th ed, 2016, LexisNexis Butterworths) (Jacobs’ Law of Trusts) at [15-75]).

  2. As to the estate vested in a trustee, where the deceased trustee was the sole or last surviving trustee, it was noted that the estate passes to the trustee’s legal representative in the same way as the deceased’s beneficial property and the legal representative will be obliged to hold the property until new trustees are appointed and any trust property is vested in them (c.f., the position where the deceased trustee is survived by a co-trustee or co-trustees, in which case the trust estate will usually vest in the survivor or survivors, because trustees usually hold trust property as joint tenants). The plaintiff noted that the position of trustees in this regard is to be contrasted with that of executors and administrators (since the executor of a sole or last surviving executor receives not only the unadministered estate but also the office previously held by the deceased executive – see Jacobs’ Law of Trusts at [15-75]).

  3. The plaintiff pointed to the evidence that, prior to her death, Betty was the last trustee of the OLOSS Trust and thus held not only the office of trustee but also the estate of the OLOSS Trust. On Betty’s death, the plaintiff (to whom probate of Betty’s Will was granted) received Betty’s estate in the OLOSS Trust but not her office as trustee. He is bound to hold that estate or property until new trustees are appointed (see s 44(1) of the Probate and Administration Act 1898 (NSW).

Appointment of new trustees and vesting order (proposed orders 7 and 8)

  1. Section 70 of the Trustee Act empowers the Court to make an order for the appointment of a new trustee or trustees although there is no existing trustee (see sub-ss 70(1), (2), (4), (6) and (8)).

  2. The plaintiff submitted that in the circumstances of this case, where there is no trustee, it would be expedient for the Court to appoint new trustees (referring to s 70(2) of the Trustee Act and Jacobs’ Law of Trusts at [15-46]).

  3. It was noted that the plaintiff has standing under s 92(1) of the Trustee Act to apply for an order for the appointment of a new trustee because of his status as executor of the estate of Betty; thus he is “interested in the property” of the OLOSS Trust for the purposes of that section.

  4. The plaintiff does not wish to be appointed as a trustee of the OLOSS Trust (for the health and other reasons set out in his affidavit affirmed 3 May 2021 at [7]). He proposes and supports the appointment of Ms Probert and Mr Green as trustees of the OLOSS Trust, each of whom has consented to the appointment and is both suitable and appropriate to be appointed trustees.

Trustees’ further powers (proposed order 10)

  1. The plaintiff submitted that the further powers sought for the new trustees are necessary because: under cl 44 of the Longer Version of the OLOSS Constitution, the trustees are mere custodian trustees, who may only act in accordance with the directions of the Committee, which no longer exists; and they are not otherwise clearly provided for in the OLOSS Constitution and, in the plaintiff’s submission, are necessary properly to secure and deal with the OLOSS Trust property for and until an appropriate cy-près scheme may be determined by the Court.

Attorney General’s submissions

  1. As adverted to above, on 8 April 2021, the Attorney General agreed to authorise the commencement of these proceedings under s 6 of the Charitable Trusts Act but raised issues as to the relief sought.

  2. The Attorney General held two principal concerns with the course initially proposed by the plaintiff. The first was that the plaintiff proposed the appointment of Mr Green and Ms Probert as trustees, in circumstances where the Attorney General considered that the plaintiff, as the executor of the last surviving trustee, had standing to seek a cy-près scheme. The second was that the plaintiff then proposed directions that the new trustees ready for sale and sell the two pieces of real property, in circumstances where the Attorney General considered that efforts should first be made to identify potential charitable organisations who might accept the properties pursuant to a cy-près scheme.

  3. Following correspondence between the parties, those issues were addressed to the Attorney General’s satisfaction as follows.

  4. As to the first issue, it was noted that the proposed new trustees are willing (should they be appointed) to carry out the steps which the Attorney General considers to be essential in order to formulate an appropriate cy-près scheme, namely the identification of suitable charitable organisations who might accept the properties pursuant to a cy-près scheme, and discussions with those organisations as to whether they would wish the properties first to be sold, and to what use they would propose to put the properties (or sale proceeds).

  5. As to the second issue, the plaintiff indicated that it would not presently press for a power of sale to be reposed in the trustees; rather (subject to any application that might be necessary for further orders in relation to the properties), the proposed trustees will first carry out the steps referred to above, as well as taking appropriate steps to insure, care for and maintain the properties.

  6. Accordingly, the sole remaining area of disagreement between the parties was as to O 5 in the plaintiff’s proposed consent orders, namely the terms of the relevant declaration as to trust purposes. The Attorney General’s position was that proposed O 5(b) does not, on the better view, form part of the trust purposes but is more in the nature of a power than a statement of trust purpose.

  7. In relation to this issue, the Attorney General raised for consideration the doubt as to what version of the OLOSS Constitution should be regarded as authoritative. It was noted that there are a number of versions of a constitution of OLOSS in evidence; that none of them appears to be dated and none appears to be complete; and that the only copy signed by subscribers to OLOSS is clearly incomplete.

  8. The Longer Version of the Constitution (which the plaintiff’s solicitor propounds as the most complete and current version) has 49 clauses; the shorter has only 23. The Attorney General submitted that there is reason to believe that the Shorter Version of the Constitution replaced the longer version, noting that the Longer Version is in substantially the same form as the UPA Constitution. It was submitted that there is a potential inference that the UPA Constitution served as the basis for the initial (longer) version of the OLOSS Constitution before being replaced by the shorter version (see T 13.27-T 14.4); although the Attorney General notes that there is no direct evidence of this and that the Court should not engage in speculation.

  9. In this context, it was noted that most copies of the Constitution in evidence provide that the “objects for which the Society is established” (Longer Version) or the “objects of the Society” (Shorter Version) include sub-cl (a) as extracted earlier. As to other matters listed in the objects clause (cl 3 in the Longer Version and cl 2 in the Shorter Version) of the OLOSS Constitution, it was said (and the plaintiff appears to accept) that these are more in the nature of powers which OLOSS may exercise with a view to achieving the object set out in sub-cl (a), rather than objects as such.

  10. The contention between the parties was as to the objects clause which appears at sub-cl (c). In the Longer Version of the OLOSS Constitution (see Exhibit A at 255), sub-cl (c) of the objects clause reads, as extracted above, as follows:

(c)   To purchase, or otherwise acquire, homes, hostels or other appropriate accommodation for people who could not otherwise accommodate themselves, particular emphasis being placed on the provision of accommodation for persons of pensionable age.

  1. In the Shorter Version (see Exhibit A at 221), sub-cl (c) of the objects clause reads:

(c)   To purchase, or otherwise acquire homes, hostels or other appropriate accommodation for the handicapped, the youth, the homeless, the aged, and all people who could not otherwise accommodate themselves or who need assistance due to their situation in society as outlined and described in (a) above.

  1. It is the former version of this which appears at order 5(b) of the plaintiff’s proposed orders.

  2. In the Attorney General’s view, while sub-cl (c) could have constituted a statement of the objects of OLOSS were it to have stood on its own, the better reading of it in context is that sub-cl (c) was intended to be a power conferred on OLOSS to be exercised in furtherance of the general object set out in sub-cl (a). It is submitted that the other sub-clauses in the “objects” clause, which are clearly not trust purposes, provide support for that reading, as does the fact that one version of sub-cl (c) (the Shorter Version) refers back to sub-cl (a). Further, it is submitted that the very fact that there are two versions of sub-cl (c), with no clear evidence as to which is to be regarded as the current version, may mean that there is not sufficient evidence to declare sub-cl (c) to be part of the trust purposes.

  3. While the Attorney General accepted that this as a matter for the Court, and that there is substantial overlap between the two putative trust purposes, it was submitted that it is an important matter to resolve as any cy-près scheme will need to be assessed by reference to what is as near as possible to the original trust purpose or purposes.

  4. As to the other orders contained in the proposed consent orders, the Attorney General made the following comments, by way of assistance to the Court.

  5. As to proposed orders 2 and 3, the Attorney General was satisfied, on the basis of the evidence relied upon by the plaintiff, that by 1 January 2016, OLOSS had spontaneously dissolved.

  6. As to the proposed order that the property and affairs of OLOSS be wound up under the direction of the Court, it was accepted that, while the Court in the case of ordinary unincorporated associations may appoint a liquidator to realise assets, pay debts and distribute surplus to members, in the case of a charitable association, such distribution is not appropriate, as instead the property needs to be directed cy-près. Here, it was noted that the appointment of Mr Green and Ms Probert as trustees and ancillary vesting orders would vest all property of the OLOSS Trust in them and that there was already an order proposed that they have power to pay from the trust property all debts and liabilities, if any, of OLOSS (proposed order 10(b)). In those circumstances, it was submitted that no further directions may be required to give effect to the order that the property and affairs of OLOSS be wound up.

  7. As to proposed O 4, the Attorney General was satisfied, on the basis of the evidence relied upon by the plaintiff, that the declaration in proposed O 4 is appropriate. It was noted that, in relation to the Tempe property, the evidence is that this was originally held not by OLOSS, but by the earlier association formed by the same persons (UPA); and that it was then treated as property of OLOSS when the two organisations amalgamated. The Attorney General notes that, arguably, a cy-près scheme was required before the property of UPA could be transferred to OLOSS in 1990. However, as the objects of the UPA were relevantly identical to the OLOSS objects, the Attorney General did not consider that anything turns upon this.

  8. As to proposed O 6, the Attorney General was satisfied, on the basis of the evidence relied upon by the plaintiff, that the declaration in proposed O 6 is appropriate. The Attorney General agreed with the plaintiff’s submission that the office of trustee did not devolve on the plaintiff when Betty, the last surviving trustee, passed away.

  9. As to proposed orders 7-9, the Attorney General was satisfied that these orders are appropriate on the basis that: there is no existing trustee of the OLOSS Trust; there are steps which should be undertaken before an appropriate cy-près scheme may be identified and put forward for the Court’s approval; and the plaintiff is not willing to take on the responsibility of carrying out those steps, on account of his age and ill-health.

  10. The Attorney General has no difficulty with the suitability of Mr Green or Ms Probert as trustees. Further, it was noted that the powers of Mr Green and Ms Probert will be circumscribed and subject to scrutiny by the Attorney General and (if necessary) the Court. The Attorney General considered order 9 to be primarily a matter for the Court, but accepted that the order would appear to be appropriate given the current plaintiff’s ill-health and expressed wish not to be involved in legal proceedings beyond what is necessary.

  11. As to proposed orders 10 and 11 (notation), the Attorney General considered these orders to be appropriate. It was accepted that, as submitted by the plaintiff, in the absence of a committee of OLOSS, the trustees would otherwise have no power to deal with the trust property. It was noted that the proposed trustees had given the undertakings referred to in the notation to the Attorney General, which will enable scrutiny of any costs incurred to date in respect of which indemnification from the trust assets is sought. It was noted that the proposed trustees would thereafter have the responsibility as trustees to ensure that only expenses reasonably incurred in connection with the administration of the trust are recouped from trust funds.

  12. Finally, the Attorney General noted that no order is presently proposed by the plaintiff declaring that circumstances exist (at general law or under s 9 of the Charitable Trusts Act) warranting application of the trust property cy-près. The Attorney General does not understand it to be in dispute, however, that such circumstances exist. It was accepted that, given that OLOSS has dissolved, there is no OLOSS committee and hence the trustees have no power (absent court order) to apply the trust property for the trust purposes.

  13. The Attorney General’s understanding is that, prior to the adjourned date to be set under proposed O 15, the new trustees intend to take the steps required to identify a suitable cy-près scheme, including a proposed new trustee or trustees, and to liaise with the Attorney General regarding the terms of such a scheme to be placed before the Court for approval.

Determination

  1. In the course of oral submissions, Counsel for the plaintiff proposed that, so as to address the issue as to which of the versions of the Constitution was the applicable version, an appropriate course would be to make the declaration as to the charitable objects of the OLOSS Trust by reference to cl (a) only (it being accepted that this sub-clause appears in both potentially applicable versions), reserving the position that the new trustees may be able in due course to put forward further evidence from which a determination could be made as to which version of the Constitution is applicable (and to enable a determination at that stage as to whether the relevant sub-cl (c) is properly construed as an object or purpose (or simply a mechanical provision)).

  1. I considered that to be an appropriate way forward. In particular, I had concern that, as a textual matter, there were aspects of the various versions of the Constitution that might well suggest that the Longer Version was not the final version of the Constitution (and my attention was drawn by Counsel for the Attorney General to statutory declarations made by the trustees in 1995 referring to the charitable objects of the society being listed in the Constitution at cl 2 – consistent with their understanding being that the shorter version was the applicable version – see Exhibit A at 472–474).

  2. I was therefore not prepared to make a declaration as to the charitable purposes extending to a version of sub-cl (c) until satisfied as to the relevant (final) version of the Constitution that was applicable. However, the purpose in sub-cl (a) (with the deletion of the words “or benevolent” – as to which, see below) is clearly charitable within the meaning of Pemsel at 583 per Lord Macnaghten.

  3. In that regard, I note that a determination as to whether an entity such as OLOSS is a charitable organisation involves an examination of the objects of its Constitution and the manner in which those objects were, or are, effected by its activities (see Grain Growers Ltd v Chief Commissioner of State Revenue [2015] NSWSC 925 (Grain Growers) at [37] per Black J; Federal Commissioner of Taxation v Word Investments Ltd (2008) 236 CLR 204; [2008] HCA 55 (Word Investments) at [17] per Gummow, Hayne, Heydon and Crennan JJ). Such an examination requires a holistic enquiry to discern the organisation’s purpose, not a separate analysis of each specific activity undertaken by the organisation (see Word Investments at [26]); the focus being on whether the main object is charitable. It is permissible for a charitable organisation to have objects that are incidental or ancillary to the main object (see Tasmanian Electronic Commerce Centre Pty Ltd v Commissioner of Taxation (2005) 142 FCR 371; [2005] FCA 439 at [41] per Heerey J). It is well known that the four categories of charitable purposes identified in Pemsel reflect those in the Preamble to the Charitable Uses Act 1601 (43 Eliz I, c. 4): trusts for the relief of poverty; trusts for the advancement of education; trusts for the advancement of religion; and trusts for other purposes beneficial to the community not falling under any of the preceding heads. Nevertheless, the concept of charity, as understood by reference to those four categories, evolves over time to accommodate new social needs and values (see Aid/Watch Inc v Commissioner of Taxation (2010) 241 CLR 539; [2010] HCA 42 at [18], [23]-[24] per French CJ, Gummow, Hayne, Crennan and Bell JJ; Scottish Burial Reform and Cremation Society LtdvGlasgow Corporation [1968] AC 138 (Scottish Burial) at 154 per Lord Wilberforce); and what is charitable in the legal sense should be considered in light of contemporary community values and beliefs and social infrastructure of contemporary society (see Scottish Burial at 154).

  4. I was satisfied that, on the evidence before me, the association known as OLOSS had come to an end, and therefore had spontaneously dissolved, (or, alternatively, had dissolved pursuant to the terms of the Constitution when membership fell to less than three, if the shorter version of the Constitution is the applicable version) by no later than August 2016; and that there is no trustee holding office by whom the trustee’s powers in relation to the trust property could be exercised; and that the plaintiff, in his capacity as executor of Betty’s estate, holds the trust property on trust and has standing to make the present application for the appointment of replacement trustees of the OLOSS Trust. (As to the dissolution of non-profit associations, see the article by AS Sievers, ‘The Dissolution of Non-Profit Associations’ (1981) 7(3) Monash University Law Review 141.)

  5. As to the proposed orders, I considered it appropriate to delete from proposed order 5(a) the words “or benevolent” on the basis that the declaration being sought was that the property was held on trust for the following charitable purposes but a purpose that is for a “benevolent” nature is not a charitable purpose (and would in any event be read down). I accepted that order 3 was not necessary in the circumstances (the power there sought being covered by order 10(b)).

  6. I should add that Counsel for the plaintiff noted that the two properties in question are unoccupied and in a parlous condition (see T 11.14) and adverted to the possibility that it might be necessary for an application to be made in relation to the properties earlier than any cy-près scheme could be formulated but that due notification would be given if that were to occur.

  7. I was otherwise satisfied that (with the modification suggested in submissions) the orders as proposed by the plaintiff (and as consented to or not opposed by the Attorney General) were appropriate to be made. For those reasons, I made the following orders:

  1. Note that the defendant Attorney General, by way of letter from the Crown Solicitors Office dated 8 April 2021, has authorised the bringing of these proceedings pursuant to section 6 of the Charitable Trusts Act 1993 (NSW).

  2. Declare that on or by 1 January 2016 the unincorporated association known as Our Lady of Snows Society (OLOSS) dissolved.

  3. Declare that the property belonging to OLOSS previously held by the now deceased trustees of OLOSS (the property of OLOSS) in accordance with its constitution includes:

  1. the moneys standing in credit in Commonwealth Bank of Australia (CBA) account, [account number ending # 9745];

  2. the moneys standing in credit in the CBA term deposit, [account number ending # 6248];

  3. the land and its improvements situated at 213 Enmore Road, Enmore NSW, Folio Identifier 603/752049 (the Enmore property);

  4. the land and its improvements situated at 30 Smith Street, Tempe NSW, Folio Identifier 23/1230902 (the Tempe property).

  1. Declare that until her death on 4 October 2019, the late Elizabeth Ellen Hickey, formerly of xxx Marrickville, and probate of whose will dated 13 June 2018 was granted by this honourable Court to the plaintiff on 14 January 2020 in proceedings 2019/00337606, was the last trustee of OLOSS and held the property of OLOSS on trust for the following charitable purposes of OLOSS, namely:

  1. to undertake works of a charitable or educational nature unrestrained by sectarian belief or political ideology for the betterment of the quality of life of the people in the community who are less privileged than others because of illness, old age, poverty, mental retardation or otherwise (OLOSS trust).

  1. Note that the plaintiffs to be joined to the proceedings in substitution for Peter John Hickey per order 9 below may in due course contend that the charitable purposes of OLOSS on which the property of OLOSS was held on trust also include the following:

(c)   to purchase, or otherwise acquire, homes, hostels or other appropriate accommodation for people who could not otherwise accommodate themselves, particular emphasis being placed on the provision of accommodation for persons of pensionable age;

and note that this issue (if raised) remains to be determined.

  1. Declare that there are no existing trustees of the OLOSS trust.

  2. Order that, pursuant to s 70 of the Trustee Act 1925 or the Court’s inherent jurisdiction, Mark Francis Green and Kim Probert of Pikes & Verekers Lawyers, 2/50 King Street, Sydney, be appointed trustees of the OLOSS trust.

  3. Order that, pursuant to s 71 of the Trustee Act 1925 or the Court’s inherent jurisdiction, the property of OLOSS now subject to the OLOSS trust vest in Mark Francis Green and Kim Probert jointly subject to the terms of the OLOSS trust.

  4. Order that Mark Francis Green and Kim Probert be joined as plaintiffs to the proceedings in substitution for the plaintiff Peter John Hickey.

  5. Order that, pursuant to s 81 of the Trustee Act 1925 and notwithstanding any of the terms of the OLOSS trust, the trustees of the OLOSS trust be conferred with the power to and be authorised to:

  1. insure, care for and maintain the Enmore property and the Tempe property;

  2. pay from the trust property all debts and liabilities, if any, of OLOSS;

  3. reimburse or indemnify the plaintiff Peter John Hickey or the estate of the late Elizabeth Ellen Hickey, as the case may be, or pay out of all trust property all expenses incurred by them in or about the execution of the OLOSS trust or powers including:

  1. all expenses incurred by them in relation to the insurance, care or maintenance of the Enmore property and the Tempe property;

  2. all legal expenses or charges incurred by them in relation to the ascertainment of the trust property, the OLOSS trust, the preparation of any possible cy-près scheme or these proceedings;

  1. reimburse or indemnify the trustees or pay out of all trust property all expenses incurred in or about the execution of the trustees’ trusts or powers including:

  1. all expenses incurred by the trustees in relation to the insurance, care or maintenance of the Enmore property and the Tempe property;

  2. all legal expenses or charges of or incurred by the trustees in relation to the ascertainment of the trust property, the OLOSS trust, the preparation of any possible cy-près scheme or these proceedings;

  3. any or all costs orders made in these proceedings;

  1. pay and transfer the balance of the trust property in accordance with any scheme that may be ordered in these proceedings.

  1. Note the undertaking given by the plaintiffs Mark Francis Green and Kim Probert to the defendant Attorney-General that in relation to those debts, liabilities and expenses referred to on orders 10(b), 10(c) and 10(d)(ii), which have been incurred prior to their appointment as trustees and which are proposed to be paid from the trust property, Mark Francis Green and Kim Probert will not make any payment in that regard unless and until:

  1. they have prepared and provided to the defendant Attorney-General a written account or summary of those debts, liabilities and expenses together with a copy of any invoice, statement of account or receipt relating to same; and

  2. they have waited for a period of not less than seven (7) days from the date on which they have provided the information referred to in 11(a) above before making any such payment.

  1. Note that the plaintiffs Mark Francis Green and Kim Probert reserve their position to seek relief of the kind set out in prayers 11(b) and 11(c) of the Summons regarding the sale of the Enmore property and the Tempe property.

  2. Order that the plaintiffs’ costs of and incidental to these proceedings be paid from the trust property on the indemnity basis.

  3. Order that the defendant’s costs of and incidental to these proceedings be paid from the trust property on the ordinary basis.

  4. Order that the proceedings be adjourned to the list of the Registrar in Equity on 20 September 2021, with liberty to either party to restore on 3 days’ notice.

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Decision last updated: 29 June 2021

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Cases Citing This Decision

3

Green v Attorney General of the State of New South Wales [2023] NSWSC 1229
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Cases Cited

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Statutory Material Cited

6

Aid/Watch Inc v Commissioner of Taxation [2010] HCA 42
Ex parte Professional Engineers' Association [1959] HCA 47
Aid/Watch Inc v Commissioner of Taxation [2010] HCA 42