In the Matter of David Wayne Swan - [2014] SASC 65

SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
In the Matter of DAVID WAYNE SWAN
[2014] SASC 65
Judgment of The Honourable Justice Gray
23 May 2014
CHARITIES - CHARITABLE GIFTS AND TRUSTS - VALIDITY AND PRACTICABILITY - TRUSTEES
CHARITIES - CHARITABLE PURPOSES - RELIEF OF AGED, IMPOTENT AND POOR - IMPOTENT - GIFT TO OTHER INSTITUTIONS
SUCCESSION - CONSTRUCTION AND EFFECT OF TESTAMENTARY DISPOSITIONS - TESTAMENTARY DISPOSITIONS GENERALLY - LAPSE
SUCCESSION - CONSTRUCTION AND EFFECT OF TESTAMENTARY DISPOSITIONS - CONSTRUCTION GENERALLY - ASCERTAINMENT OF TESTATOR'S INTENTION - GENERALLY
SA Health received a letter from the executor of the testator's estate with a cheque in the sum of the residue of the estate. Clause 8 of the testator's will provides a gift to the Hospitals Department to be managed by the Director General of Medical Services. The Hospitals Department and the Director General of Medical Services no longer exist. The plaintiff, the Chief Executive of SA Health, seeks an order that clause 8 of the will of the testator established a charitable trust, that the Court appoint the Health Services Charitable Gifts Board as the trustee of the charitable trust and that the Court approve a trust variation scheme. Counsel representing the next of kin submitted that if the next of kin are to have no entitlement upon an intestacy, the Court needs to be satisfied that clause 8 enables the Court to find a general charitable intention on the part of the testator.
Held:
(1) The testator evinced a general charitable intention. It is unlikely that the testator intended the gift of the residue to lapse in the event that the Hospitals Department or the Director General of Medical Services were unable to implement the purpose specified in clause 8.
(2) The testator’s intention with regard to the remainder can be given effect to, notwithstanding the Hospitals Department has ceased to exist.
(3) A charitable trust has been established. The gift does not fail.
(4) Deed to be drawn up to include the terms that the trust moneys may be applied for the benefit of any patient of a hospital incorporated under the Health Care Act 2008 (SA) who is suffering from a kidney disease or complaint and the trust moneys shall be expended on benefits that such patients would not normally receive or enjoy as patients of those hospitals.
South Australian Health Commission Act 1976 (SA); Trustee Act 1936 (SA) s 69B; Health Care Act 2008 (SA) s 29, s 76, s 78 and Pt 9; Hospitals Act 1934 (SA) s 22 and s 24; Public Service Act 1967 (SA); Public Charities Funds Act 1935 (SA) Sch 2; Health Services Charitable Gifts Act 2011 (SA) s 20, s 21, s 29 and s 30; Public Finance and Audit Act 1987 (SA), referred to.
In re Wright; Blizard v Lockhart [1954] Ch 347; In Re Cain deceased; National Trustees and Agency Co of Australasia Ltd v Jeffrey [1950] VLR 382; Australian Executor Trustees v Attorney-General (SA) (2010) 273 LSJS 494; Diocesan Trustees of the Church of England in Western Australia v Solicitor-General (1909) 9 CLR 757; Re Smith’s Wills Trusts [1962] 2 All ER 563, considered.

In the Matter of DAVID WAYNE SWAN
[2014] SASC 65
Civil
GRAY J.

The plaintiff, David Wayne Swan, the Chief Executive of SA Health, seeks an order that on its proper construction, clause 8 of the will of Dorothy Ethel Brown dated 13 August 1971 established a charitable trust. Further orders are sought that this Court appoint the Health Services Charitable Gifts Board trustee of the trust and that the Court approve a trust variation scheme to give proper effect to the terms of the charitable trust.
The testator died on 28 July 1974. Probate was granted to her executor on 7 January 1975. Through clause 8 of her will, the testator wished to leave part of her estate to be used for the benefit of sufferers of kidney disease. The gift the subject of the suggested charitable trust is a remainder interest in real property and forms part of the residue of the estate. At the time of the making of the will, the testator identified the Hospitals Department, a department of the South Australian government, and the Director General of Medical Services as being the persons to administer the trust. By the time of the termination of the life interest, the Hospitals Department and the office of the Director General of Medical Services had ceased to exist. New structures had been put in place. At the time of the application, the administration of hospitals was the responsibility of SA Health. It is the Chief Executive of SA Health who is the plaintiff in the within proceedings.
Having regard to the foregoing, the plaintiff, in substance, seeks a declaration that clause 8 of the will created a charitable trust and that the Court exercise its inherent powers and its powers under section 69B of the Trustee Act 1936 (SA) to appoint the Health Services Charitable Gifts Board as the trustee of the charitable trust. The Court is asked to approve a trust variation scheme under section 69B of the Trustee Act so that trust monies be applied for the benefit of any patient of a hospital incorporated under the Health Care Act 2008 (SA) suffering from a kidney disease or complaint and that the trust monies be expended on benefits that such patients would not normally receive or enjoy as patients of those hospitals.
Background
By her will, the testator:
-bequeathed her jewellery and personal effects to the Salvation Army (South Australia) Property Trust;
-granted a life interest in her property, including household furniture and effects, at Clapham, to her son, Geoffrey Reginald Brown, with the remainder interest to the Hospitals Department of the South Australian Government;
-gave the residue of her estate to her trustee on trust –
oto maintain the Clapham property;
oto maintain her son;
oto accumulate any surplus income and, after 21 years, to stand possessed of such accumulated surplus income for the Department;
oupon her son’s death, and after payment of his funeral and headstone expenses, to stand possessed of the entire remaining residue for the Hospitals Department; and
-gave certain powers and discretions to her trustee for the management of the life interest in favour of her son.
By clause 8 of her will, the testator provided for benefits in favour of the Hospitals Department as follows:
I DIRECT that the benefits hereinbefore referred to in favour of the Hospitals Department of the South Australian Government shall be utilised by the said Department for the benefit of sufferers from kidney diseases or complaints in such manner as the Director General of Medical Services (or such other person or persons as the said Director General may from time to time appoint) may from time to time decide and for the guidance of the said Department and Director General (but without in any way limiting or restricting the discretion hereinbefore given) I desire to state that it is my wish that such benefits as aforesaid shall be applied in or towards kidney machines.
On 15 October 2009, the trustee forwarded $266,435.40, being the residue of the estate, to the “SA Health Commission”.
At the time that the testator made her will, the Hospitals Department was a Department of the South Australian Government. It was not incorporated. The Hospitals Department was responsible for running certain public hospitals and for supervising other public hospitals to which it provided substantial financial subsidies. The term “public hospital” in this context refers to a hospital that had been declared as such under the Hospitals Act 1934 (SA) or its predecessor legislation. Under the Hospitals Act, a public hospital was under the care, management, control and supervision of a board of management. For all public hospitals maintained from the public purse to an extent greater than five sixths of their annual expenditure, all members of the board of management were appointed by the Governor. These hospitals were effectively under direct governmental control. Public hospitals which were maintained financially to the extent of one third or more of their annual expenditure by public subscription were entitled to have one third of the members of their board of management elected by those persons contributing to the hospital’s financial support.
At the time that the testator made her will, the Director General of Medical Services was a statutory office created by section 5A of the Hospitals Act. Section 5A required the Director General of Medical Services to be a medical practitioner and specified that the appointment was made under the Public Service Act 1967 (SA). A reference to the “Inspector General of Hospitals” in any other legislation was deemed to be a reference to the Director General of Medical Services. Although the Director General was required to be a medical practitioner, it is clear that the holder of the office had extensive administrative powers as well.
By section 22 of the Hospitals Act, the Director General was empowered to exercise, with respect to public hospitals, the duties and powers imposed or conferred by the Act or any other Act or by the Governor. Specifically, the Director General was empowered to make regulations for the running of a public hospital which had no board of management, for requiring a local council to contribute to the maintenance of a public hospital in the council’s area, recommending to the Governor the making of regulations fixing the rates payable by patients in public hospitals, and for the collection of treatment costs from insurers in respect of persons injured in motor vehicle accidents. By section 24 of the Hospitals Act, the Director General was the chairman of the board of management of the Royal Adelaide Hospital.
The administration of hospitals and other health services in South Australia underwent a major change with the enactment of the South Australian Health Commission Act. The Hospitals Department, as an administrative unit of the South Australian government, appears to have become defunct in the 1980s. It is not clear whether it was ever formally abolished.[1]
[1] Counsel for the plaintiff submitted that searches had failed to find a proclamation abolishing the Hospitals Department. It was submitted that the South Australian Health Commission, established by the South Australian Health Commission Act 1976 (SA) but not fully operational with respect to hospitals until 1 July 1978 (South Australia, Government Gazette, 29 June 1978, 2234), progressively took over the functions of the Hospitals Department and the Department of Public Health: SA Year Book 1980, 247. The last Gazette reference to the Hospitals Department located was South Australia, Government Gazette, 28 June 1990, 1710. This was a proclamation under the Government Management and Employment Act 1985 (SA) transferring certain employees from the Hospitals Department to the Department of Labour.
The office of Director General of Medical Services was abolished with the repeal of the Hospitals Act on 1 July 2008.[2]
[2] Health Care Act 2008, Schedule 4, Part 19.
SA Health is an administrative unit of the South Australian Government. The plaintiff is responsible to the Premier and the Minister for Health and Ageing in the management of SA Health.
As earlier noted, in October 2009, SA Health received a letter dated 15 October 2009 from Australian Executor Trustees Limited, the executor of the estate of the testator. Enclosed with the letter was a cheque in the sum of $266,435.40 – the residue of the estate. The letter was addressed to the SA Health Commission. The SA Health Commission ceased to exist with the repeal of the South Australian Health Commission Act and the commencement of the Health Care Act.
The plaintiff deposed, inter alia, that SA Health has continued to carry on many of the functions formerly performed by the South Australian Health Commission. For this reason, SA Health arranged for the monies received from the executor to be invested pending the resolution of the within proceeding. The monies have been invested in an interest-bearing deposit pursuant to section 21 of the Public Finance and Audit Act 1987 (SA) since 1 September 2011. At 30 June 2013, the balance was $282,844.10.
The first question for determination is whether the testator’s will was effective to create a charitable trust with respect to the residue of the estate received by SA Health in October 2009.
A Charitable Trust
The plaintiff submitted that the testator’s will was effective to create a charitable trust for the benefit of sufferers from kidney diseases or complaints who are patients of South Australian public hospitals. The charitable trust extends to the residue of the estate received by SA Health. The plaintiff acknowledged that a failure of the gift of the residue to the Department would result in an intestacy of the residue, there being no gift over to any other person or entity.
The testator was a widow at the time of her death with only one child, her son Geoffrey Reginald Brown. Geoffrey Brown had no children and died on 1 January 2008. He is survived by his wife, Beryl Marie Brown, whom he had married in about 1980 and also his wife’s sister, Lorraine Joan Pinder, who he appointed as his executor. He left his entire estate to his wife. The testator had one sibling, a brother, who died on 15 June 1961. Probate of his will was granted on 30 August 1961. There is no indication from his will that the testator’s brother ever married or had children. Leonie Evans Millard, a solicitor, was appointed to represent the interests of the next of kin.
The relevant date for determining the validity of the gift of residue is the date of the testator’s death, notwithstanding the life interest in favour of Geoffrey Brown. As Romer LJ observed in Re Wright; Blizard v Lockhart:[3]
… Once money is effectually dedicated to charity, whether in pursuance of a general or a particular charitable intent, the testator's next of kin or residuary legatees are for ever excluded and no question of subsequent lapse, or of anything analogous to lapse, between the date of the testator's death and the time when the money becomes available for actual application to the testator's purpose can affect the matter so far as they are concerned. This conclusion necessarily follows, I think, upon the reasoning in In re Slevin . In In re Soley (17 Times Law Reports, page 118) a testator bequeathed money on trust to pay the income thereof to a person for life and after his death the fund was given to the Drapers' Company to be applied by them for the benefit of their School at Tottenham either by founding a scholarship or scholarships for the encouragement of the scholars in various branches of learning or in such other manner as the Masters, Wardens and Court of Assistance in their absolute discretion should think most suited to remote the interests of the College. The gift, accordingly, was for the promotion of a particular charitable purpose. After the testator’s death but during the lifetime of the tenant the College ceased to exist. Mr Justice Byrne, following In re Slevin, held that there had been no lapse of the bequest and directed that it should be applied for charitable purposes cy pres. A similar decision was that of Mr Justice Neville in In re Geikie (27 Times Law Reports, page 484) and indeed the decision of Mr Justice Roxburgh in In re Koon itself proceeded on the same footing. It is true that in all these cases the funds which were in question were to be paid over to other persons or bodies to be applied by them to the designated charitable purposes whereas in the present case it is the Trustees themselves who were so to apply the residuary trust fund, but in my opinion no difference of principle arises from this the Testatrix's trustees hold the fund impressed with a charitable trust just as did the third parties in the other cases to whom the gifts were directed to be paid. I am accordingly of opinion that no legitimate distinction exists, either on principle or on authority, between the present case and In re Moon and that the learned Judge's decision upon this question was right and should be affirmed.
[3] In re Wright; Blizard v Lockhart [1954] Ch 347, 362-3.
The plaintiff submitted that the gift of residue was valid at the time of the testator’s death, that is, it remained valid when the life interest terminated. It was said that the testator did not intend to give the remainder to the Hospitals Department simpliciter and that, instead, the testator exhibited a charitable intention in requiring the residue to be applied for a charitable purpose, establishing by implication a charitable trust. It was argued that the want of appointment of trustee does not affect the validity of the disposition and that the Health Services Charitable Gifts Board is a suitable trustee. The plaintiff requested that the Court approve a scheme providing that the trust monies may be applied for the benefit of any patient of a hospital incorporated under the Health Care Act who is suffering from a kidney disease or complaint and that the trust monies shall be expended on benefits that such patients would not normally receive or enjoy as patients of those hospitals.
Counsel representing the next of kin submitted that if the next of kin are to have no entitlement upon an intestacy, the Court needs to be satisfied that clause 8 enables the Court to find a general charitable intention on the part of the testator. In the event that the Court finds a general charitable intention, it was contended that the Court must further be satisfied that the intention is one to which effect can be given, notwithstanding the Hospitals Department has ceased to exist. The Court must also, it was said, reach the conclusion that the testator did not intend to gift the remainder interest to the Hospitals Department simpliciter. Counsel pointed out that the will provides no substitutionary gift in the event of a failure of benefit.
Counsel representing the next of kin further noted that the testator, by the terms of her will, clearly contemplated that her son was likely to survive her and that she would not be in a position to foresee his personal circumstances at the date of his death, including whether there may exist at that time any persons who might be dependent upon him. The testator specifically limited in her will the entitlement of her son to use, occupation and a right to receive income, ceasing upon his death. It was suggested that, despite this, it is open to the Court to find that the testator would have been satisfied that the beneficiaries named in the son’s own will should subsequently become entitled to the remainder interest in the estate upon any failure of the testator’s gift of that remainder interest as specified in her will. Counsel informed the Court that if a charitable trust is established, the appointment of the Health Services Charitable Gifts Board as trustee for the testator’s gift in remainder would not be opposed.
Public Charities Funds Act 1935 (SA) and Health Care Act 2008 (SA)
The applicability or otherwise of the Public Charities Funds Act 1935 (SA) or the Health Care Act to the gift of the residue was raised by counsel for the plaintiff.
The Public Charities Funds Act vested all gifts, whether testamentary or otherwise, to the “public charitable institutions” specified in Schedule 2 of the Act in a statutory body known as the Commissioners of Charitable Funds. Schedule 2 listed the “public charitable institutions”, which were distinct and identifiable establishments, such as hospitals and health support clinics, with a specific location and which were involved in actual service delivery. The terms of the statutory trust laid down in the Public Charities Funds Act were impressed on those gifts.

The Public Charities Funds Act was repealed on 1 July 2011 by the Health Services Charitable Gifts Act 2011 (SA). The Health Services Charitable Gifts Act continued the Commissioners of Charitable Funds in existence as the Health Services Charitable Board and the property of the Commissioners vested in the Board as part of its “charitable assets”.[4] Charitable assets must be applied by the Board in accordance with section 18 of the Health Services Charitable Gifts Act.
[4] Health Services Charitable Gifts Act 2011 (SA) Schedule 2, section 4(2).
The testator’s gift did not become subject to the Public Charities Funds Act because it was not made to a public charitable institution listed in Schedule 2 of the Act and, as a result, the gift was not a charitable asset for the purposes of the Health Services Charitable Gifts Act.
Part 9 of the Health Care Act is entitled “Testamentary gifts and trusts”. Although Part 9 did not come into force until 1 July 2008, it operates retrospectively.[5] Section 78 of the Health Care Act provides that where a testamentary disposition has been made in favour of a prescribed entity and the prescribed entity has been dissolved and the functions transferred to an appropriate hospital, the disposition will be taken to be made to that hospital. Section 76 defines “prescribed entity” as follows:
In this Part—
prescribed entity means—
(a)a hospital or health centre incorporated under the repealed Act; or
(b)an entity incorporated under another Act which performs functions related to the provision of a health service, other than a private hospital; or
(c)an entity incorporated under this Act,
but does not include any entity excluded from the ambit of this definition by the regulations.
[5] Australian Executor Trustees Ltd v Attorney-General (SA) (2010) 273 LSJS 494, [30].
The testator’s testamentary disposition was not made in favour of or for the benefit of a “prescribed entity”. The Health Care Act does not apply to the disposition the subject of the within proceeding. The testator’s testamentary disposition is to be dealt with according to the general law.
The Lapse Rule
A bequest that is provided to a charitable institution that ceased to exist prior to the testator’s death ordinarily lapses. This situation is often termed the “lapse rule”.[6] At the date of the testator’s death, both the specified beneficiary of the remainder interest and the office-holder directed to oversee the application of the interests were in existence, but they were not when the remainder interest passed into possession. The gift of residue was valid at the time of death and so remained valid when the life interest terminated. No legal consequences flow from the Department ceasing to exist in the interval between the testator’s death and termination of Geoffrey Brown’s life interest as the Department was in existence at the date of the testator’s death. The lapse rule does not apply.
[6] See discussion Gino E Dal Pont, Law of Charity (LexisNexis Butterworths, 2010) [15.4].
Under the terms of the will, Geoffrey Brown was only ever granted use of the estate. The gift vested in the Hospitals Department at the date of the death of the testator, however it was only in remainder; and not in enjoyment. Now that Geoffrey Brown has died, the remainder may pass into enjoyment. It is a question of tracing the assets of the Hospitals Department and ascertaining whether a charitable trust is established in favour of SA Health.
Testator’s Intentions – a Charitable Trust
To be valid, a charitable trust requires certainty of intention, certainty of subject matter and certainty of object.[7] While the subject matter, namely the residue of the estate as held in the interest-bearing deposit, is certain, it is necessary to consider in greater detail whether certainty of intention and object can be ascertained.
[7] Gino E Dal Pont, Law of Charity (LexisNexis Butterworths, 2010) see chapter 17, in particular [17.5].
A gift to a government department, even if expressed simpliciter, is unlikely to be interpreted as an absolute gift. In In Re Cain deceased; National Trustees and Agency Co of Australasia Ltd v Jeffrey[8] a question was raised concerning the construction of a gift to the “Children’s Welfare Department”. Dean J observed:[9]
The present gift, however, is not expressed to be a gift to the State of Victoria, nor is it in terms a gift to the Government of Victoria. It is a gift simply to the Child Welfare Department. Such a gift is not in substance or effect a gift to the State or the Government. …
…
… The view there taken justifies me in holding that the present testator, by his gift to the Children’s Welfare Department, intended to benefit children under the care of the Department in some manner which is not a mere relief of Government expenditure. It is much more likely that the testator was intending to confer upon neglected children some additional benefits than that he intended to make a contribution to the funds of the Department in relief of consolidated revenue.   The absence of trustees of the Western Australian institutions was no reason for avoiding the gift, and here the impossibility of ascribing any legal standing to the Children’s Welfare Department equally does not, in my opinion, affect the validity of the present gift. …
[8]    In Re Cain deceased; National Trustees and Agency Co of Australasia Ltd v Jeffrey [1950] VLR 382.
[9]    In Re Cain deceased; National Trustees and Agency Co of Australasia Ltd v Jeffrey [1950] VLR 382, 386, 388.
In the within proceeding, the gift to the Hospitals Department in clause 8 is accompanied by a direction as to the use to which the gift is to be put. Rather than a benefit to the Hospital Department per se, the testator expressed in mandatory terms that the residue of her estate be applied for a particular purpose, namely “the benefit of sufferers from kidney diseases or complaints”.
The purpose to which the testator required the residue to be applied was charitable in that it was for the relief of suffering.[10] The purpose serves a public benefit in that the Hospitals Department was designated as the recipient of the residue.
[10] This head of charity was traditionally described as “the relief of the impotent”. It is now accepted that it encompasses the provision of relief to any person suffering sickness or disability: Re Smith’s Wills Trusts [1962] 2 All ER 563.
A general charitable intention is to be distinguished from a particular charitable intention. The distinction between the two was described by Kourakis J, as he then was, in Australian Executor Trustees v Attorney-General (SA) as follows:[11]
… A particular charitable intention exists where it is an essential condition of a gift that it be applied in a particular way or through, or by, a particular institution. A general charitable intention is an intention to give to a charity in preference to the residual beneficiaries of an estate such that the nominal terms on which the gift is made are no more than a directory indication of the mode in which the gift to charity should be applied.
[Footnote omitted.]
[11] Australian Executor Trustees v Attorney-General (SA) (2010) 273 LSJS 494, [41].
Several factors evinced a general charitable intention of the testator with respect to the application of the residue of her estate. There was no “gift over” in the will suggesting that the testator did not contemplate the failure of the gift. The gift was not made to the Hospitals Department simpliciter. The purpose to which the residue is to be applied was stated unequivocally in clause 8 of the will. This may be compared to the gift to the Salvation Army in clause 4. Finally, the purpose in clause 8 is clear, is stated in general terms and is not attended with significant detail or qualification.
I am satisfied that the testator evinced a general charitable intention. It is unlikely that the testator intended the gift of the residue to lapse in the event that the Hospitals Department or the Director General of Medical Services were unable to implement the purpose specified in clause 8.
The Scope of the Charitable Trust
The plaintiff sought directions on the scope of the charitable trust. While the testator’s charitable purpose is clear, the precise scope of the trust is not. In particular, the limits, if any, to the class of persons designated “sufferers from kidney diseases or complaints” are not specified.
As earlier noted, the Hospitals Department was responsible for running certain public hospitals and for supervising other public hospitals which it did not directly run but to which it provided substantial financial subsidies. The term “public hospital” meant a hospital that had been declared as such under the Hospitals Act or its predecessor legislation. Under the Hospitals Act, a public hospital was under the care, management, control and supervision of a board of management.
The plaintiff submitted that the expression “sufferers from kidney diseases or complaints” in clause 8 of the will should be interpreted as referring to patients in South Australian public hospitals. In this context the term “public hospitals” would mean a hospital incorporated under section 29 of the Health Care Act. Such hospitals are now responsible for the delivery of hospital services to the majority of South Australians.[12]
[12] In metropolitan Adelaide, the institutions known as the Royal Adelaide Hospital, Women’s and Children’s Hospital, The Queen Elizabeth Hospital, Flinders Medical Centre, Modbury Hospital, Lyell McEwen Hospital, Noarlunga Hospital and the Repatriation General Hospital are, or form part of, three incorporated hospitals under the Health Care Act2008 (SA). Outside the metropolitan area, almost all hospitals (as institutions) constitute the one incorporated hospital known as Country Health SA Local Health Network Inc. See South Australia, Government Gazette, No 25, 15 May 2008, 1646; South Australia, Government Gazette, No 35, 26 June 2008, 2566; South Australia, Government Gazette, No40, 24 June 2010, 3160; South Australia, Government Gazette, No 38, 9 June 2011, 2547.
It can be understood that the testator evinced an intention to benefit patients of public hospitals in giving the residue to the Hospitals Department and in specifying a role for the Director General of Medical Services. I consider it to be appropriate that the trust monies be applied for the benefit of any patient of a hospital incorporated under the Health Care Act who is suffering from a kidney disease or complaint.
Types of Expenditure
A further issue on which directions have been sought concerned the particular types of expenditure authorised under the trust. The testator expressed a preference for the application of trust monies “in or towards kidney machines” but also made it plain that this preference was not to be binding on her trustee.
Charitable gifts to government institutions are to be applied to provide benefits over and above those normally available from government funds. In Diocesan Trustees of the Church of England in Australia v Solicitor-General[13] the High Court upheld, as charitable gifts, testamentary dispositions in favour of a government “lunatic asylum” and two government “poor houses” but specified that the monies be used to provide extra comforts to the inmates. Griffith CJ approved a submission that:[14]
… a charitable gift for the benefit of the inmates of poor houses, as well as of lunatic asylums, might be applied in many ways for the amelioration of their condition and the increase of their comfort and pleasures of life, altogether apart from the mere maintenance of the institutions, and that a gift for such a purpose would be a good charitable gift.
Barton J, agreeing with Griffith CJ, observed:[15]
As the Chief Justice has pointed out, it is not necessary that the moneys which will thus come to the lunatic asylum and the poor houses should go to swell the Government revenue. If that were so, different considerations might arise as to the intention of the testator. Under the order proposed, in which I agree, these trusts will not be allowed to fail for want of a trustee, and the bequest, so far as it relates to the institutions now held to be benefited, will be dispensed under a scheme to be settled by the Supreme Court, under which care will be taken that the moneys will be used for the benefit of the inmates, and not for the ease of the Government in its expenditure. …
O’Connor J observed:[16]
… Public lunatic asylums and poor houses cannot be expected to supply from public moneys much beyond reasonably comfortable maintenance and medical care. But there are many ways in which private charity sympathetically and wisely administered may render the daily lives of both classes of inmates brighter and happier than they can be under the ordinary routine of Government administration. Some such object was no doubt in the testator's mind, and I see no reason why it should not be successfully accomplished under a well thought out scheme settled under the direction of the Supreme Court. …
[13] DiocesanTrustees of the Church of England in Western Australia v Solicitor-General (1909) 9 CLR 757.
[14] DiocesanTrustees of the Church of England in Western Australia v Solicitor-General (1909) 9 CLR 757, 765-6.
[15] DiocesanTrustees of the Church of England in Western Australia v Solicitor-General (1909) 9 CLR 757, 768.
[16] DiocesanTrustees of the Church of England in Western Australia v Solicitor-General (1909) 9 CLR 757, 772.
I accept the plaintiff’s suggestion concerning the expenditure and that the trust monies should be expended on benefits that such patients would not normally receive or enjoy as patients of those hospitals. The trust monies are not to be used to simply swell the Government’s revenue. There is nothing in the will to suggest that the testator would not wish the residue of her estate to be applied in the manner suggested by the plaintiff.
A Trustee
In requiring the residue to be applied for a charitable purpose, the testator established, by necessary implication, a charitable trust. The testator did not, however, expressly appoint a trustee. The Department, as an unincorporated body, would not have been a suitable trustee. In any event, with the demise of the Department, that possibility no longer exists. The Director General of Medical Services, a natural person with both medical qualifications and administrative responsibilities, may have been a suitable trustee but the office was abolished before the residue could pass into the hands of an incumbent.
The want of appointment of a trustee does not affect the validity of the disposition where a testator has otherwise established a charitable trust.
The Court has the inherent power to appoint a trustee if satisfied that the testator’s gift of the residue is valid and a charitable trust has resulted.[17] Section 21 of the Health Services Charitable Gifts Act authorises the Board to act as trustee in respect of a trust where the Board is named or otherwise asked to act as a trustee or co-trustee.
[17] Australian Executor Trustees v Attorney-General (SA) (2010) 273 LSJS 494, [45].
When introducing the Bill for the Health Services Charitable Gifts Act into Parliament, the Minister for Health commented in the second reading speech:[18]
The Bill enables the Commissioners [whom the Act continues in existence as the Board] to act as trustees or co-trustees where they are so named or asked to act in this capacity. Under such circumstances, they will have the same responsibilities that are required of any other trustee under the Trustee Act 1936. …
The Minister further observed:[19]
The Bill is a vast improvement on the existing Act under which the Board must operate. … The Bill provides greater flexibility to the Board in applying gifts to meet the changing circumstances of hospitals and research in South Australia as well as mechanisms to support them in them in their decisions. It provides for better reporting and therefore greater public transparency in the Board's decisions. Crucially, it maintains the independence of the Commissioners when making their decisions concerning the charitable assets vested with the Board. …
[18] South Australia, Parliamentary Debates, House of Assembly, 24 November 2010, 2144 (the Honourable J D Hill).
[19] South Australia, Parliamentary Debates, House of Assembly, 24 November 2010, 2146 (the Honourable J D Hill).
Section 20 of the Health Services Charitable Gifts Act, provides that the Board may establish charitable health trusts.[20]I consider that the Health Services Charitable Gifts Board is a suitable trustee for the residue. It is relevant to note that the audit and reporting requirements in sections 29 and 30 of the Health Services Charitable Gifts Act apply generally to all assets held by the Board.
[20] Section 20 of the Health Services Charitable Gifts Act 2011 (SA) provides:
20—Board may establish charitable health trusts
(1)    The Minister may direct the Board to establish a trust on terms determined by the Minister (a charitable health trust).
(2)    The Minister may transfer property of the Crown to the Board to hold on trust for the purposes of a charitable health trust.
(3)    The Board may only invest any funds transferred to the Board in accordance with subsection (2) in a manner determined by the Minister with the agreement of the Treasurer.
(4)    The Minister may determine that prescribed property should, instead of being held by the Board as part of the charitable assets, be held by the Board on trust for the purposes of a particular charitable health trust (and, on such a determination being made, the property will be taken to be held by the Board for the purposes of the charitable health trust and will not form part of the charitable assets).
(5)    The Minister may—
(a)    vary the terms of a charitable health trust; or
(b)    direct the Board to wind up a charitable health trust in accordance with any requirements prescribed by the regulations and any other directions of the Minister.
(6)    The Board must, at the request of the Minister, provide advice to the Minister in relation to a charitable health trust.
(7)    A person nominated by the Minister, or a delegate of that person, may be present at a meeting of the Board when the Board is discussing matters relating to a beneficiary of a charitable health trust at the meeting.
(8)    The regulations may make further provision in relation to the establishment of charitable health trusts generally, or a particular charitable health trust.
(9)    In this section—
prescribed property means property that—
(a)    is prescribed by regulation and was given in a manner prescribed by regulation; and
(b) was held by the Commissioners of Charitable Funds immediately before the commencement of Schedule 2 (and vested in the Board as part of the charitable assets on the commencement of Schedule 2),
but does not include property given (or purportedly given) to or for the benefit of a body specified in Schedule 1 clause 1.
The plaintiff submitted that the within proceeding does not require a cy-près scheme. The plaintiff referred to Australian Executor Trustees v Attorney-General (SA), where Kourakis J, approving a passage from Jacobs’ Law of Trusts, observed:[21]
… The Court may order a scheme where the testator has not given sufficient directions, or where nominated persons have not taken the contemplated steps, to effectuate his or her charitable purpose; schemes may also be ordered where the directions, even though perfecting the testator's purpose, are not capable of performance. Only the latter is a cy-pres scheme.
[21] Australian Executor Trustees v A-G (SA) (2010) 273 LSJS 494, [47].
Having found that a charitable trust is established and that the Health Services Charitable Gifts Board is an appropriate trustee, it is open to me to approve a trust variation scheme under section 69B of the Trustee Act. I consider it appropriate to do so.
Conclusion

For the above reasons, I am satisfied that the testator’s intention with regard to the remainder can be given effect to, notwithstanding the Hospitals Department has ceased to exist. I find that a charitable trust has been established. The gift does not fail.
With regard to the scope of the testator’s charitable purpose and the particular types of expenditure I direct that a deed be drawn up to include the following terms:
-the trust monies may be applied for the benefit of any patient of a hospital incorporated under the Health Care Act who is suffering from a kidney disease or complaint; and
-the trust monies shall be expended on benefits that such patients would not normally receive or enjoy as patients of those hospitals.
I will hear the parties as to the final terms of the order.