John Francis Newnham as Executor of the Estate of the late Mary Margaret Palme

[2016] NSWSC 1308

Supreme Court

New South Wales

Medium Neutral Citation:	John Francis Newnham as Executor of the Estate of the late Mary Margaret Palme [2016] NSWSC 1308
Hearing dates:	19 August 2016 & 9 September 2016
Date of orders:	09 September 2016
Decision date:	09 September 2016
Jurisdiction:	Equity
Before:	Rein J
Decision:	See [20]
Catchwords:	WILLS & ESTATES- construction of will – bequest to charitable institution connected with a Sydney hospital- where beneficiary ceased to exist after death of testatrix, alternative charitable institution  CHARITIES – Charitable gifts and trusts-  whether specifically named charitable purpose has ceased to be realizable since testatrix’s death- where alternative beneficiary clause cannot be utilised because association was in existence at the time of the testatrix’s death -whether terms of gift now impracticable – whether cy-pres scheme should be ordered-HELD: Charitable purpose of the advancement of education and for the assistance of nurses to continue their career remains capable of completion- residual gift should be applied cy-pres
Legislation Cited:	Charitable Trusts Act 1993 (NSW)
Cases Cited:	Public Trustee v Cerebral Palsy Association of W.A (2004) WAR 496; [2004] WASCA 36 Re Finger's Will Trusts [1972] Ch 286
Texts Cited:	Heydon & Leeming’s Jacob’s Law of Trusts in Australia (7th edition, 2006, Lexis Nexis)
Category:	Principal judgment
Parties:	John Francis Newnham (Plaintiff)
Representation:	Counsel: B. Skinner (Plaintiff)   Solicitors: Newnhams Solicitors (Plaintiff)
File Number(s):	2016/221740
Publication restriction:	Nil

Judgment

1. Mr Newnham is the executor of the will of the late Mary Margaret Palme (“Ms Palme”). Ms Palme died on 7 May 2014 leaving no issue. Mr Skinner of Counsel appears in these proceedings for Mr Newnham.

2. By her will on 28 February 2014 she made a number of bequests to friends but the substantial beneficiaries of the will were her very good friend Mrs Colleen Carr (Mr Newnham’s sister) and an organisation known as the Mater Graduate Nurses Association “the Association.” Ms Palme granted a life interest in the proceeds of the sale of her house in Leichhardt to Mrs Carr and thereafter to the Association. The Association was also to receive the residue of the estate.

3. Ms Palme had an extensive career as a nurse and involvement with the Mater Hospital at North Sydney where she had been trained and then worked for many years.

4. The residue clause provided:

I GIVE DEVISE AND BEQUEETH

The balance unto the Mater Graduate Nurses Association, for the express purpose of providing an Education Scholarship or Scholarship for Undergraduate Nurses assigned to the Mater Hospital from time to time”

and the clause dealing with the capital of the proceeds of sale of the Leichhardt property was in similar terms.

The will also contained the following clause:

“Should the Association referred to above being the MATER GRADUATE NURSES ASSOCIATION not exist as at the date of my death then I GIVE DEVISE AND BEQUEATH the legacy that that Association would otherwise have received to such Association as my executor determines with the same or similar objects as those of THE MATER GRADUATE NURSES ASSOCIATION for the purposes herein mentioned.”

Which I shall call the “alternate beneficiary clause.”

5. In March 2015 Mr Newnham paid $320,000.00 out of the Estate to the Association.

6. In October 2015 the Association determined to disband. The Association’s members resolved to transfer the funds received from Ms Palme’s Estate to another organisation called the Friends of the Mater (“FOM”) the trustee of which is the Friends of the Mater Limited. The conditions of the transfer were:

1. That the quantum of the Educational Scholarship or Scholarships each year be approximately equivalent to the interest earned on the investment of the MGNA Palme Bequest during the previous year.

2. That any Scholarship arising from the MGNA Palme Bequest, be known as the MGNA Palme Scholarship.

3. That the education Scholarship or Scholarships each year be directed to Graduate Nurse(s) if there would be nil suitable Undergraduate Nurse(s) to receive a scholarship at the time.

4. That FOM would invite a Mater Graduate Nurse and Mater Hospital Nurse Educator/Director of Nursing to assist with the selection of Scholarship recipients(s) each year.

5. That FOM ensure that the MGNA Palme Bequest be utilised according to the terms of the Will of Mary Margaret Palme and the additional instructions of MGNA, until the MGNA Palme Bequest funds have been distributed in full

7. It will be observed that as at the date of Ms Palme’s death and the date of the transfer of the residue the Association existed but that now the Association does not exist. The alternative beneficiary clause cannot be utilised by the executor because the Association was in existence at the date of Ms Palme’s death. Mr Newnham therefore seeks the establishment of a cy-pres scheme to deal with the capital of the fund when, in the future, Mrs Carr dies.

8. It is also necessary to draw attention to the fact that the Mater Hospital itself has undergone something of an organisational restructure. The hospital which once operated as the Mater Hospital and was owned by the Mater Misericordiae Hospital Limited (“MHHL”) is now part of St Vincent’s Health Australia and is now known as St Vincent’s and Mater Health Sydney Limited (“SV&MHS”) The order of nuns connected with St Vincents are the Sisters of Charity whereas the order of nuns connected with the Mater were the Sisters of Mercy.

9. A further matter of significance of which I was informed by Mr Skinner is that as a result of changes in nursing education nurses employed in hospitals are graduates and not undergraduates making it unlikely that there will be any undergraduate nurses at the Mater Hospital or any other major hospital.

10. There is evidence of the steps that have been taken to ensure that the capital bequest will be dealt with in the same way as the residuary bequest. I think it is clear that Ms Palme wanted to provide assistance to nurses to help them continue with nursing as a profession and it is an obviously charitable purpose.

11. There have been filed and read in the proceedings two affidavits of Mr Newnham one of 22 July 2016 and one of 6 September 2016.

12. I raised with Mr Skinner:

1. The desirability of the scholarships being available to graduate nurses only if there are no undergraduate nurses.

2. The desirability of specifying that the nurses who are to benefit should the nurses employed at the Mater Hospital.

13. The Association had, by its constitution, as one of its objects, to raise funds to

“be used to support nurses providing direct patient care at the mater and/or to support nurse education at the Mater...”

14. FOM is a registered charity: see Annexure “D” to Mr Newnham’s second affidavit and FOM was primarily established for charitable purposes,

“and specifically for supporting the Mater Hospital.”

(see Exhibit 2 Recital D to Mr Newnham’s first affidavit)

Clause 4 of the original 1999 Constitution of FOM had as FOM’s objects (Exhibit 4):

(a) To act as trustee (whether sole or joint) of any trust or fund whose objects include an object which relates in any way to the provision, whether direct or indirect, of any money, property, benefits or support of any nature for any purpose, to the Mater Misencordiae Hospital Limited (ACN 054 594 375) or any Australian public hospital or other hospital carried on in Australia by a society or association,

(b) such other objects (whether in addition to or in substitution for the object in paragraph (a) as may at any time and from time to time be determined by the Directors and to undertake and pursue all such other similar, related or compatible objects as may from time to time be considered appropriate by the Company

The 2014 Trust Deed of the FOM acknowledges that the Mater Hospital,

“means the hospital presently operated by SV & MHS at Rocklands Road North Sydney NSW” (Clause 1.10)

15. “Trust Purposes” of the FOM are defined (cl 1.24) of the 2014 Trust Deed (Exhibit 2) as:

“means providing money by way of gift to the SV&MHS for any one or more purpose, from time to time of the Mater Hospital including anything incidental thereof and including but not limited to the following:

(b) to provide moneys by way of a gift for medical research and scholarships associated with the Mater Hospital including but not limited to those carried on at any premises occupied by the Mater Hospital.”

16. I note that by s.10 of the Charitable Trusts Act1993 (NSW) trust property cannot be applied cy-pres unless it is given with a general charitable intention but s.10(2) provides that:

“However a general charitable intention is to be presumed unless there is evidence to the contrary in the instrument establishing charitable trust.”

:see also Re Finger's Will Trusts [1972] Ch 286 at pp294- 297 and Heydon & Leeming’s Jacob’s Law of Trusts in Australia (7th edition, 2006, Lexis Nexis) [1084], and Public Trustee v Cerebral Palsy Association of W.A (2004) WAR 496; [2004] WASCA 36 [25]. In the latter case Barker J said:

[25] However, as the learned authors of Jacobs' Law of Trusts in Australia further emphasise at 270, modern authorities have introduced refinements to the law — they call them "some further complications in the law". They observe that it is no longer true to say that, if a gift displays a merely particular charitable intention, it will lapse. The learned authors state:

In the latter case, it is first necessary in every case to construe the gift in order to determine whether it is in truth a gift to a particular named charitable institution or a gift to a particular charitable purpose, and if it can be construed as a gift to a particular charitable purpose it will often, if not always, be upheld if that purpose remains capable of practical fulfillment.

The learned authors cite Sir Moses Montefiore Jewish Home v Howell & Co (No 7) Pty Ltd [1984] 2 NSWLR 406 in support of this proposition.

17. In my view by her will Ms Palme made clear that the gift was intended for the charitable purpose of the advancement of education and assisting nurses to continue in their career and not for the institution i.e. the Mater Graduate Nurses Association. I say this because the purpose of the gift was clearly identified and also because Ms Palme went to the trouble of specifically providing by the alternate beneficiary clause that the executor was to find another association having the same or similar objects as the Mater Graduate Nurses Association should the Association no longer exist at the time of her death.

18. There is identified a particular charitable purpose which remains capable of practical completion and accordingly I think that the residual gift should be applied cy-pres.

19. I am satisfied that FOM is a suitable replacement for the Mater Graduate Nurses Association given the history of the hospital and the change that has been wrought. FOM, it seems to me, is the appropriate charitable organisation to best serve the wishes of Ms Palme. I note that Mr Newnham has, following a suggestion by the Court, sought the agreement of the FOM to a change of wording which will ensure that if there should be a return of undergraduate nurses to the Mater Hospital it will be made clear that the scholarship will be awarded to one of their number (subject to general suitability) but that otherwise the scholarship will go to graduate nurses, and also that it will be made clear that the nurses eligible for the scholarship (whether undergraduate or graduate) will be nurses assigned to the Mater Hospital. FOM has communicated its consent to main these proposed changes: see Annexure “C” to Mr Newnham’s second affidavit.

20. Accordingly I am satisfied that the residual share under Ms Palme’s will should be paid in due course to FOM under the cy-pres scheme and I will make orders in accordance with the proposed Short Minutes which were handed up in Court this morning and which include sensible adjustment to clause 4(iv) of the Short Minutes that will widen the range of persons who can be appointed to the selection committee for bestowal of Scholarships.

**********

Decision last updated: 19 April 2018