IN THE ESTATE OF BRINE (DECEASED)
[2021] SASC 54
•13 May 2021
SUPREME COURT OF SOUTH AUSTRALIA
(Civil: Application)
IN THE ESTATE OF BRINE (DECEASED)
[2021] SASC 54
Judgment of the Honourable Justice Parker
CHARITIES - CHARITABLE GIFTS AND TRUSTS - VALIDITY AND PRACTICABILITY - NON-EXISTENCE OF OBJECTS - GIFT TO CHARITABLE INSTITUTION: INSTITUTION CEASING TO EXIST
This is an application for advice and direction under s 69 of the Administration and Probate Act 1919 (SA) lodged by Mr Franco Camatta in his capacity as executor and trustee of the estate of the late Shirley Winifred May Brine.
The last will of the deceased gifted 75 percent of her residual estate to “Animals Australia Inc (registered charity no. A00 200 712) of 37 O’Connell Street, North Melbourne, in the State of Victoria, for the general purposes of the Association.” As at the date of Ms Brine’s death there was no association in existence that matched the name of Animals Australia Inc.
In summary, the applicant submits that Animals Australia Inc. “migrated” from being an incorporated association to a company limited by guarantee pursuant to the Corporations Act 2001 (Cth), which ultimately became the entity Animals Australia Federation.
Held, per Parker J:
1.The combined effect of s 115(2) of the Associations Incorporation Reform Act 2012 (Vic) and s 601BM of the Corporations Act 2001 (Cth) is that Animals Australia Federation continues to be the same legal entity as Animals Australia Inc.
2.Alternatively, pursuant to the first exception identified by Newton J in Re Tyrie (No 1) [1972] VR 168, Animals Australia Federation can properly be regarded as the successor to Animals Australia Inc., the entity named in the last will of the deceased.
3.The applicant is directed to pay the balance of a gift of 75 percent of the deceased’s residual estate to: Animals Australia Federation (ACN 617 080 387) of 37 O’Connell Street, North Melbourne, in the State of Victoria for its general purposes.
Administration and Probate Act 1919 (SA) s 69; Corporations Act 2001 (Cth) s 109, s 601BA, s 601BM; Inheritance (Family Provision) Act 1972 (SA) s 6; Victorian Associations Reform Incorporation Act 2012 (Vic) s 110(1), 114(1), s 115, referred to.
Re Goodson [1971] VR 801; Re Tyrie (No 1) [1972] VR 168, applied.
NRG London Reinsurance Company Ltd [2006] FCA 872; The Estate of the Late Betty Crosby [2019] SASC 189, discussed.Attorney-General v Bray (1964) 111 CLR 40; Public Trustee v Clayton (1985) 38 SASR 1, considered.
IN THE ESTATE OF BRINE (DECEASED)
[2021] SASC 54Testamentary causes
PARKER J: Shirley Winifred May Brine died on 5 July 2020, aged 85 years. She was not survived by a partner, children or close relatives. The executor and trustee of Ms Brine’s estate has sought a direction from the Court as to the payment of a gift under her will.
On 23 April 2021, I provided brief oral reasons in answer to the question put to the Court by the executor and made orders to give effect to that answer. I indicated that I would provide more comprehensive reasons upon my return from leave. These are those reasons.
On 27 August 2020, the Court issued a grant of probate in respect of Ms Brine’s last will dated 9 August 2010. By clause 4.1 of that will Ms Brine gifted 75 percent of her residual estate to:
Animals Australia Inc (Registered Charity Number A00 200 712) of 37 O’Connell Street, North Melbourne in the State of Victoria, for the general purposes of the Association.
Ms Brine’s executor, Mr Franco Camatta of the firm of Camatta Lempens, has deposed that the value of the residual gift under clause 4.1 of the will is in excess of $4 Million. Mr Camatta has also deposed that upon the death of Ms Brine there was no association in existence that matched the name of Animals Australia Inc. It is therefore necessary to refer in some detail to the history of that entity.
History of the charity
The history of Animals Australia Inc (AAI) is set out in substantial detail in the affidavit of Mr Camatta affirmed on 1 April 2021 and that of Glenys Oogjes sworn on 15 April 2021 and the annexures to their respective affidavits. Ms Oogjes is the Chief Executive of the body now known as Animals Australia Federation Ltd (AAF).
AAI traces its origins to the Australian Federation of Animal Societies which came into being in 1980. That body changed its name to the Australian and New Zealand Federation of Animal Societies Inc (ANZFAS) in 1986. In the late 1990’s the New Zealand membership separated and ANZFAS then adopted the trading name of Animals Australia. On 7 June 2007, ANZFAS became AAI.
A letter from the Victorian Department of Justice and Regulation dated 7 March 2017 indicates that the registration of AAI had been cancelled with effect from 13 February 2017. The basis for that action was advice from AAI that it had “migrated” to a company limited by guarantee pursuant to the Corporations Act 2001 (Cth).
A certificate issued by the Australian Securities and Investments Commission (ASIC) also dated 13 February 2017 confirms that AAF (Australian Company Number 617 080 387) was registered as a public company limited by guarantee with effect from that date.
Ms Oogjes has deposed that AAF trades as Animals Australia and only uses its formal title of AAF for legal and regulatory purposes. As previously noted, AAI also used the same business name. She has also deposed that the Australian Business Number (ABN) assigned to AAF is the same as that formerly used by AAI, i.e. 65 016 845 767. I also note that the business address of AAF is 37 O’Connell Street, North Melbourne. Those premises were also used by AAI and Ms Brine referred to that address in clause 4.1 of her will.
The following information appears at page 38 of the Annual Financial Report for AAF for the financial year 2016/17:
Major developments
Animals Australia Inc, an Incorporated Association, was restructured as a Company Limited by Guarantee on 13th February 2017. The legal name of the organisation was changed to Animals Australia Federation as a result of the restructure.
The charity number which was required as an Incorporated Association is redundant and has been replaced by a new company number ‘ACN 617 080 387’.
The executive sub-committee and existing rules have been disbanded and replaced with a Board of Directors and new constitution.
Ms Oogjes has deposed that as at 9 August 2010 when Ms Brine made her will the purposes for which AAI were established were set out in its Statement of Purposes and Rules as adopted by AAI at its annual general meeting (AGM) on 16 October 2005 as follows:
As its principle purpose, to protect animals from exploitation and suffering and permanently improve the lives of all animals in Australia.
Further, but without in any way limiting the generality of the foregoing:
1.to conduct campaigns to inform and educate the community about improving the lives of animals in Australia and advocate change;
2.to initiate and facilitate the development, enactment and enforcement of effective animal protection legislation;
3.to facilitate, promote and encourage stronger protection of animals where legislation does not apply;
4.to provide a means whereby those bodies who subscribe to the aims and objects of the Society can have regular and formal communications with each other, and can consider matters of common interest, and determine common policy;
5.to act as a representative on that common policy and to do all things necessary to secure the adoption of or action of that common policy;
6.to provide a means of liaison with animal protection organisations; and
7.to provide information and assistance to any individual members and member groups where possible.
The Society is committed to achieving its purposes through peaceful means.
Ms Oogjes has further deposed that on 18 October 2014 AAI adopted a new Statement of Purposes and Rules at its AGM. However, the Statement of Purposes that had been adopted on 16 October 2005 was not changed.
The proposal to change the name of AAI to AAF, and also to change the legal basis of incorporation, was considered and approved as a special resolution at the AGM of AAI held on 15 October 2016. Prior to that meeting a question and answer document was distributed to members. Amongst other information, this document included the statement that incorporation as an association under Victorian legislation was appropriate as AAI was now a relatively large organisation that operates across all States of Australia. Under the proposed arrangement AAF would be registered with ASIC but would also be required to continue to report to the Australian Charities and Not-for-profits Commission (ACNC). However, it would no longer be required to report to the Victorian authorities. Senior counsel had advised that risks and responsibilities would remain virtually unchanged under the proposed arrangements. The proposed new constitution was based upon a template provided by ACNC for bodies that wished to convert to a company limited by guarantee.
Ms Oogjes has deposed that clause 2 of the constitution of AAF provides as follows:
The Company’s vision is for a world where kindness, compassion and respect extends to all living beings. To this end, the Object of the Company is to prevent or alleviate the suffering of animals, including by:
1.Raising public awareness of animal cruelty and its causes, and increasing human understanding of the ethical importance of the prevention and alleviation of animal suffering;
2.Providing representation to improve the treatment of animals through the introduction, updating or improvement to relevant law, policy, practice or custom;
3.Acting as trustee and performing and discharging the duties and function incidental thereto where this is incidental or conducive to the Object; and
4.Doing such other things as are incidental or conducive to the attainment of the Object.
Ms Oogjes has also deposed that Ms Brine made significant donations to AAI and AAF over the years. I note that the total amount of donations made by Ms Brine in the period from 2008 to 2019 was either $493,189.30 or $588,179.30.[1] A sum of either $211,689.30 or $261,679.30 was donated after the changes on 13 February 2017 to the name and the basis of incorporation.
[1] There are a number of inconsistencies between a table listing the donations made by Mr Brine from 2009 to 2019 and a computer printout of the receipts issued to her by AAI and AAF. The two documents are annexed to the affidavit of Ms Oogjes.
Other matters
AAF was represented by counsel but did not supplement the submissions made on behalf of the executor. The Attorney-General was named as the second interested party to the action and was represented at a directions hearing. That was necessary and appropriate given that the matter concerned a bequest for the purposes of a charitable trust. However, the Crown Solicitor’s Office subsequently advised that the Attorney-General did not wish to be heard on the application.
Mr Camatta deposed that his enquiries had established that Ms Brine had some cousins who are living but he did not know how closely they were related to her. A cousin is not entitled to make a claim under s 6 of the Inheritance (Family Provision) Act 1972 (SA). A notice was published on behalf of Mr Camatta in the Advertiser on 4 September 2020 calling for any creditors, beneficiaries or other persons having a claim against the estate of Ms Brine to contact his firm by 30 September 2020. There was no response to this advertisement.
In view of the circumstances referred to in the preceding paragraph, and as I was satisfied for the reasons stated below that there was no possible doubt that the bequest to AAI did not lapse and must be paid to AAF, I did not consider it necessary for the executor to take any further steps to notify the cousins of Ms Brine of the proceedings.
The executor’s submissions
The primary submission advanced on behalf of the executor relies upon Part 5B.1, and in particular s 601BM, of the Corporations Act. Section 601BA(1)(d) authorises a “body corporate that is not a company or corporation sole” to register as a company limited by guarantee. Part 5B.1 governs the registration of existing bodies corporate as companies. Section 601BM provides that registration under Part 5B.1 does not create a new legal entity nor does it affect the existing property, rights or obligations of the body except as against the members of the body in their capacity as members.
The executor also relies on Part 8 of the Associations Incorporation Reform Act 2012 (Vic) (the Victorian Act) which authorises the transfer of incorporation of an association incorporated under that Act to a “company within the meaning of the Corporations Act”. The executor notes that similar legislation exists in all States and Territories of Australia, other than South Australia, so as to permit an incorporated association to “migrate” to become a company under the Corporations Act.
The executor submits that the effect of s 601BM of the Corporations Act is that AAF is the same legal entity as AAI. Counsel submitted that it should be seen as “the same entity but in new clothes”. On that basis, the executor submits that the gift to AAI did not lapse and must be paid to AAF.
An alternative submission advanced on behalf of the executor expands upon an observation that I made during the course of a directions hearing when I drew the attention of counsel to the first of the three exceptions to the lapse rule identified by Newton J in Re Tyrie (No 1).[2] I will say more about that submission shortly.
[2] [1972] VR 168.
Consideration
It is first necessary to refer to the relevant provisions of the Victorian Act. Section 110(1) provides that an incorporated association may apply to be registered or incorporated as a prescribed body corporate if the association has passed a special resolution approving such an application. As I have previously noted, a special resolution to that effect was approved at the AGM of AAI held on 15 October 2016.
The term a “prescribed body corporate” is defined in s 109 to mean, amongst other things, a company within the meaning of the Corporations Act. Section 114(1) provides that on the transfer of incorporation by an incorporated association, the association ceases to be incorporated under the Victorian Act.
Most importantly, s 115(1) of the Victorian Act provides that s 115 applies subject to the law applicable to a prescribed body corporate formed by the transfer of incorporation of an incorporated association. Section 115(2) provides that the transfer of incorporation by an incorporated association does not affect the identity of the association which is taken to be the same body before and after the transfer. Subsections (3), (4) and (5) of s 115 provide that all rights and liabilities held by or against an incorporated association immediately before its transfer of an incorporation continue to apply under the new name of the body, as if the entity had not ceased to be incorporated under the Victorian Act.
I turn to the relevant provisions of the Corporations Act. As previously noted, s 601BA(1) provides that a body corporate that is not a company or corporation sole may be registered under the Corporations Act, amongst other types, as a company limited by guarantee. Section 601BM(1) provides that registration under Part 5B.1 does not create a new legal entity or affect the existing property, rights or obligations of the body except as against its members in their capacity as members or render defective any legal proceedings by or against the body or its members.
The only authority that I have been able to identify where s 601BM of the Corporations Act has been considered is the decision of Lindgren J of the Federal Court in NRG London Reinsurance Company Ltd.[3] In that case, his Honour simply noted that the effect of s 601BM was that registration of a foreign corporation under the Corporations Act did not create a new legal entity. However, in approving a scheme of arrangement between the company and its creditors, it was necessary to distinguish between the Australian and non‑Australian operations of the company because the Australian Prudential Regulation Authority (APRA) only regulated the Australian operations of the foreign corporation.[4] In other words, Lindgren J accepted that the foreign corporation and the body registered in Australia under the Corporations Act constituted the one legal entity but for practical reasons connected with the supervisory jurisdiction of APRA the orders to be made by the Court must be limited to issues that fell under its aegis.
[3] [2006] FCA 872.
[4] Ibid at [11].
I consider it to be clear that the combined effect of s 115(2) of the Victorian Act and s 601BM of the Corporations Act is that AAF continues to be the same legal entity as AAI. That being the case, the bequest made by Ms Brine in clause 4.1 of her will of 9 August 2010 must be regarded as a gift to AAF for its general purposes and paid by the executor to AAF.
Alternative analysis
I now turn to the alternative analysis. While I consider the application of the relevant provisions of the Victorian Act and the Corporations Act to the present facts to be quite clear, it is useful to consider the position at common law. For the additional reasons that follow, I found that the bequest made by Ms Brine in clause 4.1 of her will should be paid to AAL.
It is apparent from the resolution adopted at the AGM on 16 October 2005 that the principle purpose of AAI was “to protect animals from exploitation and suffering and permanently improve the lives of all animals in Australia”. The various matters listed thereafter at paragraphs (a) to (g) were, in substance, the particulars of how that principal purpose was to be carried into effect. The purposes adopted in 2005 remained in force when Ms Brine executed her will.
The sole object of AAF adopted on 19 October 2019, and in force at the date of the death of Ms Brine, was to “prevent or alleviate the suffering of animals”.
I consider that the differences between the principle purpose of AAI as expressed in 2005 and the sole object of AAF as adopted in 2019 are not matters of substance. In each instance, the goal was to prevent animals from suffering. While the 2005 purposes included additional references to protection from exploitation and permanent improvement in the lives of animals, I am satisfied that these were, in substance, particular avenues of preventing or alleviating the suffering of animals rather than a separate or distinct goal. On that basis, I accept the correctness of the submission by the executor that there is a practical identity between the 2005 purposes and those adopted in 2019. On that basis, and quite apart from the operation of s 115(1) of the Victorian Act and s 601BM(1) of the Corporations Act, I am satisfied that AAF is the successor institution to AAI. My conclusion is reinforced by the fact that both AAI and AAF use the trading name of Animals Australia and operate from the same address. Use of the same ABN lends further support to that conclusion.
The fact that Ms Brine’s substantial inter vivos gifts were made to both AAI and AAF, regardless of the change of name and the basis of incorporation, further supports my conclusion that her dominant charitable intention was to allow the gift in clause 4.1 of her will to take effect in favour of the body trading under the name of Animals Australia to prevent or alleviate the suffering of animals.
I am also satisfied that the objects of both AAI and AAF were and are clearly charitable. Gifts to animal welfare organisations to care for animals and to suppress cruelty have long been accepted as charitable.[5]
[5] Attorney-General v Bray (1964) 111 CLR 402; Public Trustee v Clayton (1985) 38 SASR 1.
In Re Tyrie (No 1) questions arose as to the validity of gifts made to a number of organisations. Newton J relied on a series of High Court authorities as establishing the principle that a gift by will to a particular charitable institution simpliciter must be treated as a gift for the advancement of the charitable work or purposes of that institution. However, a gift by will to a particular charitable institution which had at some time existed, but which had ceased to exist in the lifetime of the testator, whether before or after the date of their will, will ordinarily have lapsed. Importantly for present purposes Newton J identified three exceptions to the lapse rule. His Honour expressed the first of those exceptions in the following terms:[6]
If at the testator’s death there is in existence another institution which has taken over the work previously carried on by the named institution and which can properly be regarded as the successor of the named institution, and if the dominant charitable intention of the testator was wide enough to allow the gift to take effect in favour of that successor institution, then the gift will take effect in favour of the successor institution.
[6] [1972] VR 168 at 177.
This exception to the lapse rule was applied by Judge Bochner in The Estate of the Late Betty Crosby.[7] Her Honour found in several instances that at the date of the testator’s death there was in existence another institution which had taken over the work previously carried on by an institution named in the will and which could properly be regarded as its successor in circumstances where the dominant charitable intention of the testator was wide enough to allow the gift to take effect.
[7] [2019] SASC 189.
In the present case, if the relevant provisions of the Victorian Act and the Corporations Act had not been enacted, or if I have somehow misconstrued their application to the present facts, I am satisfied that the circumstances are covered by the first exception identified by Newton J in Re Tyrie. If these statutory provisions had not been enacted, AAI would have ceased to exist on 13 February 2017 and a new entity, AAF, would have come into existence upon that date. However, the circumstances are such that the new entity, AAF, can properly be regarded as the successor to the entity named in the will.
The executor has submitted that if the recipient of a charitable bequest is misdescribed in a will, the gift will not lapse and it is unnecessary to consider the possible application of the cy-pres doctrine. Support for this submission is drawn from a passage in the Law of Charity where Professor Dal Pont has stated:[8]
If, on the evidence, the court is convinced that the donee institution rather than being non‑existent, is simply misdescribed, there is no need to find a general charitable intention, and the cy-pres doctrine is irrelevant. This is because the court is not applying the gift to an object as near as possible to the donor’s purpose, but to the donor’s actual purpose. … The misdescription scenario can encompass where the same institution continues to operate but under another name … .
(Citations omitted)
[8] Gino Evan Dal Pont, Law of Charity (LexisNexis Butterworths. 2nd ed, 2017) [15.29].
The executor has observed that the principle referred to by Professor Dal Pont was applied in Cram Foundation v Corbett-Jones & Anor where the Court found that the question of lapse did not arise because the institution named in the will had not ceased to exist at the date of death but continued in existence under a different name.[9] Of course, that is precisely what I have found to be the effect of the action taken by AAI to “migrate” from its former status under the Victorian Act to incorporation under the Corporations Act.
[9] [2006] NSWSC 495.
I also note that in Cram Foundation Brereton J followed Re Tyrie to hold that even if a new body had come into existence it was the successor to the body named by the testator in her will and thus entitled to receive the gift for its charitable purposes.
The executor further submits that there is a “fine line” between the mis‑description of an institution in a will and the coming into being of a successor institution. As Professor Dal Pont puts the matter:[10]
A successor institution is, by definition, a different institution to the now non‑existent institutions named in the will, whereas the misdescription cases involve a testator misdescribing an existing institution. If, for example, a named unincorporated institution then incorporates, it can be seen both as a misdescription and as a successor institution.
[10] Gino Evan Dal Pont, Law of Charity (LexisNexis Butterworths, 2nd ed, 2017) [15.9].
An example of the latter situation arose in Re Goodson.[11]In that case the testator left a bequest in trust for “the general purposes of the Cat Protection Society”. [12] At the date of the will this body was an unincorporated association but it became incorporated as a company prior to the death of the testator. Adam J held that the Society was clearly a charitable body at the date of the will and thus the gift should be construed as creating a purpose trust. The charitable work of the Society had been continued by the company without practical interruption despite the change in legal status. The company had the same office bearers, used the same buildings and had the same bank account as the unincorporated association. Adam J held that the bequest should be paid to the company and was it unnecessary to establish a cy-pres scheme.
[11] [1971] VR 801.
[12] Its objects closely resembled those of AAI and AAF, albeit they were limited to the welfare of cats rather than animals generally.
The reasoning adopted by Adam J in Re Goodson would apply with equal force to the facts of the present matter if the relevant provisions of the Victorian Act and the Corporations Act had not been enacted.
Orders
For the preceding reasons, I made the following orders:
1.The Court declares that, on a proper construction of s 601BM of the Corporations Act 2001 and in the circumstances that have arisen, Animals Australia Inc (Registered charity no. A00 200 71Z) is the same entity as Animals Australia Federation (ACN 617 080 387).
2.Pursuant to s 69 of the Administration and Probate Act 1919 and s 60 of the Trustee Act 1936, the Court:
a. Advises the Applicant that he would be justified in deducting his costs of and incidental to this application on a solicitor and own client basis from the Residual Gift;
b. Directs the Applicant to pay the balance of the Residual Gift to:
Animals Australia Federation (ACN 617 080 387) of 37 O’Connell Street, North Melbourne, in the State of Victoria for its general purposes.
3.Save as aforesaid there be no order as to costs.
3
4
1