Hicks v Mater Misericordiae Ltd

Case [2017] QSC 38

SUPREME COURT OF QUEENSLAND

CITATION:

Hicks v Mater Misericordiae Ltd [2017] QSC 38

PARTIES:

DIMPHIENA MARIA HICKS AND DAVID MAXWELL HICKS AS EXECUTORS AND TRUSTEES OF THE ESTATE OF ELVA JEAN HOOPER

(applicants)

v
MATER MISERICORDIAE LIMITED
(first respondent)
CHILDREN’S HEALTH QUEENSLAND HOSPITAL AND HEALTH SERVICE
(second respondent)
ATTORNEY-GENERAL FOR THE STATE OF QUEENSLAND

(third respondent)

FILE NO/S:

BS No 3636 of 2016

DIVISION:

Trial Division

PROCEEDING:

Originating Application

ORIGINATING COURT:

Supreme Court at Brisbane

DELIVERED ON:

17 March 2017

DELIVERED AT:

Brisbane

HEARING DATE:

28 June 2016

JUDGE:

Douglas J

ORDER:

A cy-près order is to be made in favour of the second respondent.

CATCHWORDS:

SUCCESSION – CONSTRUCTION AND EFFECT OF TESTAMENTARY DISPOSITIONS – CONSTRUCTION GENERALLY – ADMISSIBILITY AND USE OF EXTRINSIC EVIDENCE IN AID OF CONSTRUCTION – TO IDENTIFY PERSON OR OBJECT OF DISPOSITION – where testator’s will left residuary estate to public hospital for certain charitable purposes – where hospital operated by first respondent – whether gift actually intended for first respondent –where section 33C Succession Act 1991 sets out what extrinsic evidence is admissible in interpreting a will – where rules of construction continue to allow admission of extrinsic evidence – whether extrinsic evidence could be admitted to aid in construction of this will

CHARITIES – CHARITABLE GIFTS AND TRUSTS – VALIDITY AND PRACTICABILITY – NON-EXISTENCE OF OBJECTS – GIFT TO CHARITABLE INSTITUTION: INSTITUTION CEASING TO EXIST – PARTICULAR CASES – where testator’s will named hospital as residuary beneficiary under will for identified charitable purposes – where first respondent operated public hospital – where beneficiary hospital ceased to exist after testator’s death – where functions of beneficiary were ceded to different institution operated by second respondent – whether cy-près order should be made in favour of second respondent

Hospital and Health Boards Act 2011, s 275
Succession Act 1981, s 33C(1)
Trusts Act 1973 s 105(1)

G E dal Pont, Law of Charity (LexisNexis Butterworths, 2010)
Tudor on Charities (Sweet & Maxwell, 9th ed, 2003)

Beggs v Kirkpatrick [1961] VR 764, cited
Free Serbian Orthodox Church Diocese for Australia and New Zealand Property Trust v Dobrijevic [2017] NSWCA 28, cited
Mayor of Manchester v McAdam [1896] AC 500, cited
Public Trustee of Queensland v Attorney-General for the State of Queensland [2009] QSC 353, distinguished
Public Trustee of Queensland v State of Queensland [2009] 2 Qd R 327, distinguished
Re Tyrie (deceased) (No 1) [1972] VR 168, cited
Stratton v Simpson (1970) 125 CLR 138; [1970] HCA 45, cited
The Public Trustee v Smith [2009] 1 Qd R 26; [2008] QSC 339, cited

COUNSEL:

M E Pope for the applicants
C G C Curtis for the first respondent
No appearance for the second respondent

H Blattman for the third respondent

SOLICITORS:

Derek Legal for the applicants
HWL Ebsworth for the first respondent
No appearance for the second respondent

Crown Law for the third respondent

  1. Elva Jean Hooper died on 31 December 2013 leaving the residue of her estate to the…

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AGLC
Hicks v Mater Misericordiae Ltd [2017] QSC 38
Case
[2017] QSC 38
Decision Date

CaseChat Overview and Summary

In Hicks v Mater Misericordiae Ltd, the court dealt with a dispute over the interpretation of a testamentary disposition and the validity of a charitable gift. The will in question left the residuary estate to a public hospital for certain charitable purposes. The hospital in question, the Mater Children's Hospital, ceased to exist after the testator's death, and the functions of the hospital were transferred to another institution, the Lady Cilento Children's Hospital. The primary legal issue was whether the gift intended for the Mater Children's Hospital could be applied to the Lady Cilento Children's Hospital under a cy-près order or if it should be directed to the hospital's former operator, Mater Misericordiae Limited. The court also had to determine the admissibility and use of extrinsic evidence in interpreting the will and whether the charitable purpose had failed due to the hospital's closure.

The court held that the gift was intended for the Mater Children's Hospital specifically, and not for the hospital's operator, Mater Misericordiae Limited. It ruled that extrinsic evidence could be admitted to clarify the testator's intent regarding the specific institution. The court found that the Lady Cilento Children's Hospital, which was established to take over the functions of the Mater Children's Hospital, was the most suitable institution to benefit from the bequest under a cy-près order. The court concluded that a cy-près order should be made in favour of the Lady Cilento Children's Hospital as it best aligned with the testator's charitable intent. The court's decision was based on the nature of the charitable purpose set out in the will and the close alignment of the Lady Cilento Children's Hospital's objectives with those of the now-defunct Mater Children's Hospital. The court will hear further submissions regarding the form of any orders, including the identity of a proposed trustee and the continuing role of the executors.

Orders

Orders of the court

A cy-près order is to be made in favour of the second respondent.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

The question on this application is how the bequest should be applied, for the benefit of the first or the second respondent? Should I do so by making a direction or by applying the bequest cy-près? The value of the residue of the estate is approximately $1.04 million. Evidence The evidence led on behalf of Mater Misericordiae Limited established that it was a public company limited by guarantee whose constitution sets out charitable corporate objects primarily relating to health care services, including compassionate and non-discriminatory service and care to the sick and needy. Its constitution has terms prohibiting any distributions to its members so it is in that sense a “not for profit” entity. It is also registered as a charity and can accurately be described as a charitable institution. It operates hospitals in Queensland which have been operating through predecessor institutions and arrangements since 1906. It was established as a corporate entity to operate the Mater Hospitals from 2001. The main source of funding for its public hospitals, including the Mater Children’s Hospital, was initially the fundraising efforts of the Sisters of Mercy until about the 1970s. Since then most funding has been provided by the Queensland Government. The Mater Hospitals have not been, and are not, operated by separate individual legal entities or ownership structures for each hospital. They are all operated by the first respondent. When the will was executed and when the deceased died, there was no separate legal entity operating the Mater Children’s Hospital or any separate ownership structure for that hospital. The Mater Children’s Hospital operated from 1931. Its activities were originally conducted by the Corporation of the Trustees of the Order of the Sisters of Mercy in Queensland. When the will was executed on 6 July 2010 and also when the deceased died on 31 December 2013 the first respondent was continuing to operate the Mater Children’s Hospital. It did so until that hospital closed on 29 November 2014. There is a separate company proposed by the first respondent as a possible trustee if it is necessary to appoint a specified trustee instead of the non-existent “Medical Superintendent for the time being of the Mater Children’s Hospital in Brisbane” or to establish a cy-près scheme. It is known as Mater Hospitals’ Appeal Limited, is the trustee of a charitable trust named the “Mater Foundation” and a subsidiary of the first respondent. It has a general fund which it applies for the charitable purposes set out in its trust deed which include medical care, education in hospitals and medical research generally. It also administers about 20 other trusts for charitable purposes resulting from inter vivos and testamentary gifts. Mater Misericordiae Limited continues to provide medical services to seriously ill children of all ages from birth to 18. It operates the Mater Mother’s Hospital which has a fundamental service of treating newborn children. It is the busiest maternity unit in Australia and has a specialised neonatal nursery and critical care unit at the Mater Mother’s Hospital. That service relies on advanced equipment which can be expensive. Evidence was led of examples of medical equipment which could be purchased in the near term which would greatly benefit the treatment of seriously ill children in Mater Hospitals. The neonatal facilities are one of the largest and most advanced such units in Australia. The Lady Cilento Children’s Hospital does not provide a similar facility so that when newborn children are operated on there the Mater Mother’s Hospital provides the post-operative care. More generally, in its hospitals, the first respondent continues to provide a broad range of services to children across a number of specialties.

Decision

Reasons for decision

The institution having objects as near as possible to the objects of the extinct Mater Children’s Hospital must be the Lady Cilento Children’s Hospital. It was consciously built to take over the functions of the Mater Children’s Hospital as well as those of the Royal Children’s Hospital. The Mater interests had agreed to ensure the smooth transition of paediatric services from the Mater Children’s Hospital to the Lady Cilento Children’s Hospital. Significantly, from the testatrix’s point of view, it is a public hospital, and so falls within the spirit of the trust. Although Mater Misericordiae Limited continues to provide public hospital services to children, those objects of its continuing operation are not as near as possible to those of the Mater Children’s Hospital when compared to the operations of the Lady Cilento Children’s Hospital.Conclusion In my view, therefore, I should make a cy-près order in favour of the second respondent. I shall hear the parties further as to the form of any orders, including as to the identity of a proposed trustee and any continuing role for the executors having regard to the direction in the will that they “see to the proper expenditure of this money for this purpose”.

Ratio Decidendi

Legal Principle Established

Other evidence relied on by the Attorney-General was that the treatment which Mater Misericordiae Limited provides to ill children is now restricted to treatment at the Mater Children’s Private Hospital, the Mater Private Hospital emergency section and in the neonatal intensive care nursery at the Mater Mothers’ Hospital which operates both as a public and private hospital.[2] Counsel for her submitted there was no evidence that any of the services of the Mater Children’s Hospital had been transferred to those hospitals operated by Mater Misericordiae Limited with the exception that post-surgical care for neo-nates had been transferred from the Mater Children’s Hospital to the Mater Mothers’ Hospital. Neonatal surgery previously carried out at the Mater Children’s Hospital is now carried out at the Lady Cilento Children’s Hospital.[3] [2] See the affidavit of Dr John James O’Donnell filed 11 May 2016 at paras 20-21.[3] Affidavit of Professor David Tudehope filed 11 May 2016 at para 11.Submissions and consideration of the issues It was common ground that the bequest in the will evidenced a purpose gift of a charitable nature. There was a significant issue, however, as to whether the purpose had failed because of the closure of the Mater Children’s Hospital. The first respondent submitted that there were three issues to be determined. The first was whether the will should be interpreted as conferring a gift to Mater Misericordiae Limited or its Chief Medical Officer for the charitable purpose set out in the will. The second point was whether the testator had failed to appoint a trustee effectively while the third was whether a cy-près order should be made. The first issue raises as a preliminary question, however, the nature of the charitable purpose set out in the will. The argument urged by Mater Misericordiae Limited was that the purpose was simply “the purchase of medical equipment for the treatment of seriously ill children”, which could readily be performed by Mater Misericordiae Limited as the body which actually ran the institution known as the Mater Children’s Hospital. The submission was that Mater Misericordiae Limited has simply been misdescribed in the will. The submissions for the Attorney-General were, however, that “on the four corners of the will” the funds were given for the purchase of medical equipment for the treatment of seriously ill children at the Mater Children’s Hospital, where the naming of the institution “demonstrated an intention that the charitable work or purposes which the testator wishes to benefit are to be benefited through the instrumentality of the named institution and in no other manner”.[4] In that context, Ms Blattman submitted that the Mater Children’s Hospital was an institution even if it was not a legal entity, an institution including an undertaking formed to promote some defined purpose such as a hospital.[5] That submission seems to me to be correct. [4] See Re Tyrie (deceased) (No 1) [1972] VR 168, 177 and Stratton v Simpson (1970) 125 CLR 138, 144-146, 163.[5] Mayor of Manchester v McAdam [1896] AC 500, 507; Stratton v Simpson (1970) 125 CLR 138, 158.