KERIN v Attorney-General (SA) - [2019] SASC 103

SUPREME COURT OF SOUTH AUSTRALIA
(Civil: Application)
KERIN v ATTORNEY-GENERAL (SA)
[2019] SASC 103
Judgment of The Honourable Justice Nicholson
24 June 2019
CHARITIES - CHARITABLE GIFTS AND TRUSTS - WHEN APPLIED CY-PRES - GENERALLY - STATUTORY PROVISIONS
CHARITIES - CHARITABLE GIFTS AND TRUSTS - WHEN APPLIED CY-PRES
EQUITY - TRUSTS AND TRUSTEES - APPLICATIONS TO COURT ON ORIGINATING PROCESS
The plaintiff applied pursuant to s 69B of the Trustee Act 1936 (SA) for orders approving a trust variation scheme for the E. W. Stevens Trust Fund, which is a charitable trust (the Trust). The purposes of the Trust include the advancement of education and relief from natural disasters. The Attorney-General neither consented to nor opposed the proposed orders, but raised matters for the consideration of the Court. The plaintiff sought the following four variations to the Trust:
1.       an additional new purpose;
2.       certain wording changes to remove ambiguity;
3.       a narrowing of the permissible fields of study with respect to the scholarship purpose; and
4.       to relax the Trust requirement concerning the proportion of income to be distributed to an available purpose in any given year.
Held:
1.       The plaintiff’s application for the approval of a trust variation scheme is allowed in part, but otherwise dismissed.
2. Pursuant to s 69B of the Trustee Act 1936 (SA) and the inherent jurisdiction of the Court, the terms of the charitable trust created pursuant to the will of EARNEST WILLIAM STEVENS dated 6 July 1987 with respect to which probate was granted by the Supreme Court of South Australia on 1 June 1989 is varied in accordance with the trust variation scheme as set out in paragraph [63] of the reasons.
3. The plaintiff’s costs of and incidental to the application pursuant to s 69B of the Act are to be paid out of the Trust.
Trustee Act 1936 (SA) s 59, s 69B, referred to.
Public Trustee (GD Butler Medal Trust) v Attorney General (SA) [2019] SASC 21; University of Adelaide v Attorney-General (SA) [2018] SASC 82, discussed.
Forrest v Attorney-General (Vic) [1986] VR 187, considered.

KERIN v ATTORNEY-GENERAL (SA)
[2019] SASC 103
Civil: Application
NICHOLSON J.
Introduction

The plaintiff applied pursuant to section 69B of the Trustee Act 1936 (SA) (the Act) for orders approving a trust variation scheme for the E.W. Stevens Trust. The purposes of the Trust, which include the advancement of education and relief from natural disasters, bring it within the category of a charitable trust. The Attorney-General is a necessary defendant to such an application as the formal representative of the objects of charities.[1] The Attorney-General neither consented to nor formally opposed the variations sought but provided very helpful submissions directed at assisting the Court in its consideration of the application.
[1] University of Adelaide v Attorney-General (SA) [2018] SASC 82 at [4].
History of the E.W. Stevens Trust Fund
The Trust was created under the last Will and Testament of Earnest William Stevens (the deceased) executed on 6 July 1987. The deceased was a retired builder who lived in Glenunga and died on 21 January 1988. On 1 June 1989, the Will was proved in the Supreme Court of South Australia and administration of the deceased’s estate was granted to the executors and trustees named in the Will, Frances Thomas Manfield and Beryl Frances Manfield.
Clause 5 of the Will provides:
5. AND I DIRECT my trustees after payment of my just debts funeral and testamentary expenses and all death estate and succession duties State or Federal upon the whole of my dutiable estate to GIVE the residue to the person for the time being holding office of Chief Executive of the United Farmers and Stock Owners of SA Incorporated (hereinafter referred to as “the Association”) and to persons nominated by the Executive and Finance Committee of the Association (such persons together with their successors are hereinafter referred to as “the Fund Trustees”) to HOLD the residue as Trustees for the purpose of providing assistance on a needs basis to persons residing in country areas upon the following terms and conditions:-
(a)     monies held by the Fund Trustees to have constituted a trust to be known as the “E.W. STEVENS TRUST FUND” (hereinafter referred to as “the Fund”);
(b)     the Fund Trustees shall invest the Fund and all accretions thereto in investments from time to time sanctioned by law for the investment of trust funds and shall apply the income therefrom in their discretion in the following manner:-
(i)as to one half thereof for the provision of an annual scholarship to assist student or students residing in isolated farming or grazing areas who are in or whose parents or guardians are in difficult financial circumstances to undertake courses of study at secondary or tertiary teaching institutions approved by the Trustees; and
(ii)as to one half thereof for the provision of financial assistance to farmers and/or graziers who have suffered hardship due to a natural disaster;
(c)     In the event that the Trustees do not make a grant of assistance under sub-clauses (i) and (ii) hereof in any one year the income of the Fund shall be reinvested and shall be applied at the discretion of the Trustees during any subsequent year;
(d)     The said executive and finance committee may remove any Trustee from office by written notice given to the Trustee and may appoint a new Trustee to take the place of any Trustee whose office shall be vacated or who is removed from office;
(e)     In the event of the proposed winding up of the Association the said Executive and Finance Committee shall appoint another Association having similar aims and objectives to the Association to act in the place of the Association for the purposes of the Trust hereby created.
The deceased directed his trustees to give the residue of his estate to the person (for the time being) holding the office of Chief Executive of the United Farmers and Stock Owners of SA Incorporated, and to such persons nominated by the Executive and Finance Committee of that Association, to hold the residue as trustees for the purpose of providing assistance on a needs basis to persons residing in country areas in accordance with the terms of clause 5 of the Will.
The United Farmers and Stockowners of SA Incorporated was formed through an amalgamation of various rural associations on 26 March 1976. As the plaintiff has deposed, in an affidavit sworn on 31 August 2018, this organisation later changed its name first to the “South Australian Farmers Federation Incorporated”, and then to “Primary Producers SA Incorporated”. The plaintiff is the Chief Executive Officer of Primary Producers SA Incorporated and has been acting as trustee of the Trust. No other persons have been nominated as permitted under clause 5 of the Will.
A set of rules, known as the “E. W. Stevens Trust Fund Rules”, dated August 1990, were made in connection with the Trust. They are exhibited to the affidavit of the plaintiff, sworn 31 August 2018. Their provenance is unknown although it is likely they were made by a person or persons who had earlier assumed the role of trustee. The Trust Fund Rules provide that the trustees are to hold the residue of the estate for the purpose of providing assistance on a needs basis to persons residing in country areas and upon terms and conditions that in practical terms replicate clause 5 of the Will. There is no suggestion that the Trust funds have been administered in the past in accordance with the Trust Fund Rules but contrary to the requirements of clause 5 of the Will.
The two purposes of the Trust can be summarised as follows:
1.for the provision of financial assistance in the form of an annual scholarship to assist students residing in isolated farming or grazing areas who are in, or whose parents or guardians are in, difficult financial circumstances, to undertake secondary or tertiary courses of study (the First Purpose); and
2.for the provision of financial assistance to farmers and/or graziers who have suffered hardship due to natural disaster (the Second Purpose).
These purposes are to be understood in the context of the chapeau to clause 5 of the Will and, in particular, the words “to HOLD the residue as Trustees for the purpose of providing assistance on a needs basis to persons residing in country areas …”.
The Trust is a charitable trust.[2] As at 31 October 2017, the Trust had cash assets in a National Australia Bank Maximizer Account of $464,973, and the net asset/equity position of the Trust was $464,973. Given the returns that have typically been available on trust investments for quite some time now, the annual income of the Trust has been and is expected to remain for the foreseeable future quite modest, so as to render appropriations in accordance with each of the two purposes, at least on an annual basis, a difficult exercise.
[2] The Trust is one for the advancement of the education of a sufficient section of the public as to be a charitable trust; Public Trustee (GD Butler Medal Trust) v Attorney General (SA) [2019] SASC 21 at [10].
The application
On 3 September 2018, the plaintiff filed a summons and interlocutory application seeking the Court’s approval of a trust variation scheme. Initial directions hearings were conducted by Masters of this Court following which, on 14 November 2018, the plaintiff filed a second summons and interlocutory application. The orders sought in the second summons included the following.
2.That pursuant to section 69B(1)(e) of the Trustee Act 1936 (as amended), to approve a trust variation scheme:
2.1     To add a third purpose for which the trustees may make a grant;
2.2     To vary the terms relating to one of the two existing purposes (the scholarship);
2.3     To remove the requirements for the trustees to apply the income of the trust in specific proportions (presently one half to each of the two existing purposes) and instead give the trustees discretion as to whether to:
2.3.1apply 100% of the income in one or more years to a single purpose; or
2.3.2divide the income between two or three purposes (assuming the variation in 1.1[3] is permitted) in such proportions as the trustees shall in their absolute discretion determine; or
2.3.3make no grant and accumulate the income.
3.That the trustees’ costs be paid out of the trust fund.
The new purpose referred to in 2.1 of the second summons was particularised as follows.
[F]or the promotion of studies in agriculture, horticulture, viticulture, animal husbandry and/or agribusiness and related fields.
[3]    This should be a reference to 2.1 not 1.1.
The second summons also outlined variations, as then sought, to the terms of the First Purpose provided for by clause 5(b)(i) of the Will as follows.[4]
[F]or the provision of ~~an annual~~ a scholarship or scholarships to assist a student or students residing in regional, rural or remote ~~isolated farming or grazing~~ areas who are in or whose parents or guardians are in difficult financial circumstances to undertake ~~courses of~~ study in agriculture, horticulture, viticulture, animal husbandry and/or agribusiness or related fields at a secondary or tertiary teaching institution approved by the trustees.
At the hearing of the plaintiff’s application on 11 April 2019, it was agreed by the parties that the words “regional, rural or remote” were to read “rural or remote”.
[4] The underlining denotes proposed new words and the strikethroughs denote proposed deletion of words.
On 17 December 2018, the Crown Solicitor for the state of South Australia filed a notice of acting and address for service on behalf of the Attorney-General. At the hearing of the application on 11 April 2019, the plaintiff read and relied on the first, second and third affidavits sworn by the plaintiff on 31 August 2018, 14 November 2018 and 11 February 2019 respectively in which he deposed to the factual background concerning the creation and administration of the Trust and to various other factual matters in support of the variations sought. At the hearing on 11 April 2019, I also had the benefit of extensive written and oral submissions from both parties.
Following the hearing of the application, the plaintiff submitted proposed minutes of order. Whilst the proposed minutes essentially reflect what was sought in the second summons, some changes have been made in an effort to accommodate matters raised during the argument. A marked up version of the proposed minutes on which the plaintiff now moves, with the mark ups showing proposed departures from clause 5 of the Will, is as follows.
1.Pursuant to s 69B of the Trustee Act 1936 (SA) and the inherent jurisdiction of the Court, the terms of the charitable trust created pursuant to the will of EARNEST WILLIAM STEVENS dated 6 July 1987 for which probate was granted by the Supreme Court of South Australia on 1 June 1989 be varied in accordance with the trust variation scheme as set out in Annexure A to these minutes of order.
2.The trustee’s costs of and incidental to the trustee’s application pursuant to section 69B(1) of the Act be paid out of the E.W. Stevens Trust Fund.
ANNEXURE A to Minutes of Order
Annotated Trust Variation Scheme for the Administration of the E.W. Stevens Trust Fund
1.The person for the time being holding office of Chief Executive of ~~the United Farmers and Stock Owners of SA Incorporated~~ Primary Producers SA Incorporated (hereinafter referred to as “the Association”) and persons nominated by the ~~Executive and Finance Committee~~ Board Members of the Association (such persons together with their successors are hereinafter referred to as “the Fund Trustees”) are to HOLD the residue of EARNEST WILLIAM STEVENS’ (deceased) estate as Trustees for the purpose of providing assistance on a needs basis to persons residing in country areas upon the following terms and conditions:-
(a)     monies held by the Fund Trustees to have constituted a trust to be known as the “E.W. STEVENS TRUST FUND” (hereinafter referred to as “the Fund”);
(b)     the Fund Trustees shall invest the Fund and all accretions thereto in investments from time to time sanctioned by law for the investment of trust funds and shall apply the income therefrom ~~in their discretion in the following manner~~ in such proportion(s) as the Fund Trustees may in their discretion determine to one or more of:-
(i)~~as to one half thereof~~ for the provision of ~~an annual~~ a scholarship or scholarships to assist a student or students residing in rural or remote ~~isolated farming or grazing~~ areas who are in or whose parents or guardians are in difficult financial circumstances to undertake ~~courses of~~ study in agriculture, horticulture, viticulture, animal husbandry and/or agribusiness or related fields at secondary or tertiary teaching institutions approved by the Trustees;
and/or
(ii)~~as to one half thereof~~ for the provision of financial assistance to farmers and/or graziers who have suffered hardship due to a natural disaster;
and/or
(iii)for the promotion to students and young people residing in rural or remote areas of studies in agriculture, horticulture, viticulture, animal husbandry and/or agribusiness or related fields and the provision of information about scholarships and other financial assistance (whether from the Fund or other sources) which may be available to those students and young people.
(c)     In the event that the Trustees do not make a grant of assistance under sub-clauses (b)(i)–(iii) ~~and (ii)~~ hereof in any one year, or make a grant or grants of less than the total income, the income of the Fund or unapplied balance thereof shall be reinvested and shall be applied at the discretion of the Trustees during any subsequent year;
(d)     the said executive and finance committee may remove any Trustee from office by written notice given to the Trustee and may appoint a new Trustee to take the place of any Trustee whose office shall be vacated or who is removed from office;
(e)     In the event of the proposed winding up of the Association the said Executive and Finance Committee shall appoint another Association having similar aims and objectives to the Association to act in the place of the Association for the purposes of the Trust hereby created.
Law relating to variation of charitable trusts
The plaintiff applied for relief pursuant to section 69B of the Act and rule 34 of the Supreme Court Civil Rules 2006 (SA). The Attorney-General represents the objects of charities and is a party to any application to vary the purposes of a charitable trust.[5] The Attorney-General is the guardian of the public interest in the administration and enforcement of charitable trusts on behalf of the Crown.[6]
[5]    University of Adelaide v Attorney-General (SA) [2018] SASC 82 at [4]; Ware v Cumberlege (1855) 20 BEAV 503 at 510-511, (1855) 52 ER 697 at 700-701; Metropolitan Petar v Mitreski [2001] NSWSC 976 at [1]-[6].
[6]    University of Adelaide v Attorney-General (SA) [2018] SASC 82 at [4]; Re Royal Society’s Charitable Trusts [1956] 1 Ch 87 at 92-93; National Trustees Executors and Agency Co of Australasia Ltd v Attorney-General (Vic) [1978] VR 374 at 375.
The Court has inherent jurisdiction in respect of charitable trusts. This jurisdiction has been supplemented by various statutory provisions including section 69B of the Act which allows for the alteration of the purposes of a charitable trust in certain circumstances.
69B—Alteration of purposes of charitable trust
(1)The purposes for which property is required or permitted to be applied in pursuance of a charitable trust may be altered by a scheme (a trust variation scheme) approved under this section in any of the following circumstances:
(a)     where the original purposes, in whole or in part—
(i)have been as far as possible fulfilled; or
(ii)cannot be carried out, or not according to the directions given and to the spirit of the gift; or
(b)     where the original purposes provide a use for part only of the trust      property; or
(c)     where the trust property could be more effectively used if combined with other property applicable for similar purposes and administered jointly with that property; or
(d)where it is not reasonably practicable having regard to—
(i)the value of the trust property; or
(ii)changes in circumstances that have taken place since the constitution of the trust; or
(iii)any other relevant factor,
to apply the trust property in accordance with the original purposes; or
(e)     where the original purposes, in whole or in part—
(i)have been adequately provided for by other means; or
(ii)have ceased to be charitable purposes; or
(iii)have ceased to provide a suitable and effective method of using the trust property.
(2)References in this section to the original purposes of a charitable trust shall be construed, where the purposes for which the trust property is required or permitted to be applied have been altered or regulated by a scheme or otherwise, as referring to the purposes for which the property is for the time being required or permitted to be applied.
(3)A trust variation scheme may be approved, on the application of the trustee, by—
(a)     the Supreme Court; or
(b)     if the value of the trust property does not exceed $300 000 or another limit prescribed by regulation—the Attorney-General.
(3a)The authority to which the application is made (ie the Supreme Court or the Attorney-General) is referred to in this section as the relevant authority.
(4)…
(5)…
(6)If the relevant authority is satisfied, on application under this section, that the variation of the terms of a trust proposed in a trust variation scheme—
(a)accords, as far as reasonably practicable, with the spirit of the trust; and
(b)is justified in the circumstances of the particular case,
the relevant authority may approve the trust variation scheme and the approved scheme prevails over inconsistent provisions of a relevant instrument or declaration of trust.
(7)The reasonable costs of an application under this section are payable at the direction of the relevant authority from the trust property.
(8)…
(9)…

In University of Adelaide v Attorney-General (SA),[7] Stanley J considered the application of section 69B.
While s 69B represents a significant legislative expansion of the Court’s capacity to vary charitable trusts,[8] a trust variation will not be justified on the basis of mere expediency or because it appears that the trust assets could be used more beneficially for another purpose.[9]
The effect of s 69B(6) is that a trust variation scheme should accord as closely as possible to the original purposes of the trust. This is consistent with the general law and equitable principles.
(Footnotes in original)
According to Stanley J, the “spirit of the trust” where referred to in subsection 69B(6) encompasses a broader conception than merely the original purpose(s) of the trust.[10]
What constitutes the spirit of the trust will comprise a broader conception than the original purposes of the trust. When determining the spirit of the trust, it is appropriate and necessary to have regard to the trust’s history and the social context of the time at which it was established. The ascertainment of the spirit of the trust requires an evaluative judgment.[11]
(Footnotes in original)
[7] University of Adelaide v Attorney-General (SA) [2018] SASC 82 at [8]-[9].
[8] The inherent jurisdiction to order a cy-près scheme remains, but given the greater breadth of s 69B it is less likely to be relied upon: Re Estate of Pitt [2002] SASC 332 at [40]-[44], (2002) 84 SASR 109 at 118-119.
[9] Re Trusts of Kean Memorial Trust Fund [2003] SASC 227 at [54]-[56], [66]-[68], (2003) 86 SASR 449 at 463-464 and 466.
[10] University of Adelaide v Attorney-General (SA) [2018] SASC 82 at [12].
[11] Free Serbian Orthodox Church Diocese for Australian and New Zealand Property Trust v Bishop Irinej Dobrijvic [2017] NSWCA 28 at [217], (2017) 94 NSWLR 340 at 385.
In Public Trustee (GD Butler Medal Trust) v Attorney General (SA), Hinton J provided the following analysis concerning section 63B with which I, respectfully, agree.[12]
In Re Estate of Pitt Duggan J considered that the chapeau to s 69B(1) did not exclude the operation of the cy-prés doctrine.[13] The inherent power to award a cy-prés scheme aside, the power to approve a trust variation scheme is contained in s 69B(3). The circumstances that must exist before the power may be exercised are set out in ss 69B(1)(a)-(e). That is, s 69B(1) conditions the power conferred by s 69B(3). If any of the circumstances set out in s 69B(1) are found to exist the power conferred by s 69B(3) is enlivened, however, such power may only be exercised if the requirements of s 69B(6) are also satisfied. Section 69B(6) contains two requirements. They are cumulative. With respect to the first requirement, the “spirit of the gift” was held in In Re Lepton’s Charity to “be equivalent in meaning to the basic intention underlying the gift, that intention being ascertainable from the terms of the relevant instrument read in the light of the admissible evidence”.[14] It follows that in determining the spirit of the gift one will have regard to the class or classes of beneficiary, the location, time or circumstances in which gifts are to be made to the beneficiaries, and the nature of the benefit intended to be achieved. With respect to the second requirement, it must always be borne in mind that the primary responsibility of this Court in the administration of charitable trusts is to give effect to the trusts as laid down by the settlor or testator.[15] Thus, if a trust variation scheme is to be made the circumstances must be of sufficient cogency to justify the alteration bearing in mind the settlor’s original intentions. Accepting this, a variation will not be justified on the basis of mere expediency or because the trust assets could be used more beneficially for a different purpose.[16]
(Footnotes in original)
[12] Public Trustee (GD Butler Medal Trust) v Attorney General (SA) [2019] SASC 21 at [18].
[13] (2002) 84 SASR 109 at [40].
[14] [1972] Ch 276 at 285.
[15] Phillips v Roberts [1975] 2 NSWLR 207 at 211-212 (Hutley JA).
[16] Baptist Churches of South Australia Inc v Attorney-General (SA) [2018] SASC 14 at [19] (Stanley J).
Approval of a trust variation scheme under section 63B is conditional upon satisfaction of one or more of the circumstances set out in subsection 69B(1) together with both of the requirements in subsection 69B(6). It will not be justified merely because it is expedient or because it appears that the trust assets could be used more beneficially for another purpose.[17]
[17] Re Trusts of Kean Memorial Trust Fund [2003] SASC 227 at [53]-[56], [66]-[68]; (2003) 86 SASR 449 at 462-464, 466; University of Adelaide v Attorney-General (SA) [2018] SASC 82 at [8]-[9]; Public Trustee (GD Butler Medal Trust) v Attorney-General (SA) [2019] SASC 21 at [18].
The plaintiff proposes four variations to the Trust, each of which is considered below.
Variation 1 – A proposed third purpose
Variation 1 proposes the addition of a new or third purpose for which the trustees may make a grant under the Trust. The proposed purpose, as now sought in accordance with the proposed minutes of order, is:
for the promotion to students and young people residing in rural or remote areas of studies in agriculture, horticulture, viticulture, animal husbandry and/or agribusiness or related fields and the provision of information about scholarships and other financial assistance (whether from the Fund or other sources) which may be available to those students and young people.
The proposed third purpose can only be added if the Court finds that one of the circumstances provided for in subsection 69B(1) is satisfied so as to enliven the power under subsection 69B(6). Under subsection 69B(6), the proposed new purpose must also be, as far as reasonably practicable, in accordance with the spirit of the Trust and be justified in the circumstances of the particular case.
The plaintiff relies primarily on subsection 69B(1)(e)(i) and (e)(iii) to justify Variation 1. The plaintiff submits, with reference to the affidavit evidence, that the two original purposes, in whole or part, are now adequately provided for by other means and that they have ceased to provide a suitable and effective method of using the Trust fund.
As to the First Purpose, the plaintiff contended that in 1988-1989, when the Trust was established, scholarships for students in rural or remote areas were more limited than today. There are now many scholarships in existence for rural students in various areas of study. The plaintiff, in his second affidavit, identifies 11 scholarships currently available to rural students in financial need in South Australia with a combined total value of up to $88,000. The plaintiff has also identified scholarships offered to rural, regional and remote students by local universities: the University of Adelaide offers in the order of 13 scholarships ranging between $2,500 and $15,000, the University of South Australia offers in the order of four scholarships ranging between $1,000 and $5,000, and Flinders University offers in the order of six scholarships ranging between $1,000 and $5,000. A further nine scholarships available to people living in remote, rural or regional areas outside of South Australia with a combined total value of up to $58,510 have also been identified.
The plaintiff submitted that this First Purpose, the provision of scholarships to rural students in difficult financial circumstances wishing to undertake further study (in any subject or field), is adequately provided for by other means. However, there remains a continuing need to promote amongst potential students within the target group the educational and funding opportunities for agriculture and related fields of study which do now exist.
According to the plaintiff, the size of the Trust fund and its capacity to earn income does not permit conventional type scholarships, such as for a student to attend and board at a private school in the city, to be considered. The First Purpose has ceased to allow for a suitable and effective method of using the Trust funds.
The Second Purpose of the Trust is also adequately provided for by other means and has ceased to be a suitable and effective method of using the Trust funds. In his third affidavit, the plaintiff deposed to a range of organisations and government departments that provide disaster relief for farmers and rural environments. Thirteen departments, agencies, companies, organisations and charities which provide relief to farmers in circumstances where they have suffered hardship due to natural disaster have been identified.
Examples of financial relief given to farmers, affected by the droughts of 2018, included: a contribution of $11.5 million by Red Cross in the form of grants of $3,000 to affected farmers, $15.5 million contributed by the Foundation for Rural and Regional Renewal, approximately $10 million made available by Rural Aid, $8.5 million contributed by the Country Women’s Association, $750,000 provided by the Salvation Army, and $10 million by Rotary. The Federal Government contributed $1.8 billion to drought aid in 2018, $1 billion of which was in the form of low-interest loans, and state governments contributed $1 billion (NSW), $679 million (QLD) and $5 million (VIC) to affected farmers.
The plaintiff submitted that these types of sources of financial relief demonstrate that the Trust’s Second Purpose is adequately provided for elsewhere. In addition, any contribution the Trust might make towards this Second Purpose would be so small as to be relatively negligible when viewed in the context of the nature of disaster relief typically required and other disaster relief available. As such, the Second Purpose no longer provides a suitable and effective method of deploying the Trust fund.
Whilst the plaintiff contends that subsection 69B(1)(e) has been satisfied, he does not seek to remove the provisions relating to scholarships and disaster relief. The proposed third purpose is to be in addition to the two original purposes.
The plaintiff accepts that the proposed third purpose must accord as far as reasonably practicable with the spirit of the Trust as required by subsection 69B(6) of the Act. To determine the spirit of the trust, consideration must be given to the classes of beneficiary, the location, time or circumstances in which gifts are made, and the nature of the benefit intended to be achieved.[18] The plaintiff submitted that the spirit of the Trust, with respect to the First Purpose, is to advance education in rural areas and with respect to the Second Purpose to provide aid to those in financial need in rural areas.
[18] Public Trustee (GD Butler Medial Trust) v Attorney-General (SA) [2019] SASC 21 at [18].
The plaintiff contended that the inclusion of a new purpose, to promote to students and young people residing in rural or remote areas studies in agriculture, horticulture, viticulture, animal husbandry and/or agribusiness or related fields, would complement the deceased’s intention to advance education in rural areas. Further, if there are insufficient young people from rural backgrounds studying agriculture and pursuing careers in primary production, then the communities which the deceased intended to benefit will suffer and decline.
The type of activities contemplated in order to promote studies in agriculture and related fields are not anticipated to be expensive. Accordingly, the plaintiff maintains that the additional third purpose would not impair significantly the Trustee’s present ability to continue to provide financial assistance for scholarships or natural disaster relief. However, it may result in such grants being made less frequently. The plaintiff wants to be in a position, as Trustee, to use a portion of the Trust funds for the broader purpose of advancing education by way of promotional and provision of information type activities, whilst still maintaining a capacity to provide scholarships and disaster aid on a needs basis to people living in rural areas.
The plaintiff expressed the view that the Trust has sufficient funds available to advance all existing and proposed purposes of the Trust. The new purpose is justified in this case because it would operate to complement the existing First Purpose of the Trust. The promotion in rural areas of education in agriculture and related fields will contribute to the support of a sustainable farming industry and falls within the spirit of the Trust by advancing rural education. Further, the new purpose is likely to provide a more suitable and effective method of using the limited capital and earnings of the Fund.
The defendant submitted that, at a general level, the original underlying intentions of the Trust are for the advancement of education among children of farmers or graziers and the provision of financial aid to farmers and graziers. The defendant accepted that the proposed third purpose is capable of falling within the broad notion of education. However, there is a qualitative difference between a direct benefit to students arising from the provision of financial assistance for education and the more indirect benefit arising from promoting awareness of educational and scholarship opportunities. It was submitted that the provision of such direct benefits to students was at the core of the deceased’s general charitable intention and that the provision of the more indirect form of benefit should be seen as further from the deceased’s intention; more to the periphery.
There is substantial overlap between placita (i) and (iii) in subsection 69B(1)(e). If the purposes of a trust are adequately provided for elsewhere, then the purposes of that trust will have ceased to be a suitable and effective method of using the trust property. However, the defendant argued that, in order to satisfy the legislative gateway in placitum (i) that the original purposes of a trust are otherwise adequately provided for, it is not sufficient to establish that there is some more beneficial or expedient application of the trust property. Nathan J, in Forrest v Attorney-General (Vic),[19] with reference to the materially similar Victorian provision, held that it must be shown that “the fundamental purpose and objective of the testator … is being frustrated by the terms of the will”, such that “that purpose and those objectives cannot be put into effect in the spirit of the gift.”
[19] 1986] VR 187 at 191-192 (Nathan J); University of Adelaide v Attorney-General (SA) [2018] SASC 82 at [11].
The defendant submitted that there are cases where a variation, of the nature as sought in Variation 1, would be justified. An example would be where a trust’s purposes fall entirely within the scope of statutory services provided by government such that the trust provides no greater benefits than that which government is obliged to provide. However, where, as here, the trust’s purpose could be used for filling in the gaps in public services, a variation would not be justified. Ultimately, according to the defendant, for so long as there are potential recipients available to receive a benefit in accordance with the Trust purposes, those purposes can still be carried out and will not be inexpedient. If so, a change will not be justified.
In addition, the defendant submitted that if the proposed new purpose cannot satisfy placitum (iii) of subsection 69B(1)(e), placitum (i) is also unlikely to assist.
The defendant recognised that the circumstances which satisfy subsection 69B(1)(d) would also likely satisfy subsection 69B(1)(e)(iii). Where the amount of income in the Trust is so low that it cannot practicably be used for an existing purpose then that purpose is unlikely to be a suitable and effective method of using the Trust fund.
Consideration of and conclusion with respect to Variation 1
It is readily apparent that the relatively modest size of the Trust funds and, consequently, the Trust’s relatively modest annual earnings present real difficulties for the Trustee in being able to effectively implement each of the First Purpose and the Second Purpose at least, on an annual basis. This is particularly so, given the amount of funds that are typically required in modern times for scholarship or disaster relief purposes. However, whilst the evidence establishes that numerous other sources of discretionary funds are significantly better placed to serve these two purposes and with substantially larger contributions, it does not go so far as to demonstrate that the Trust is no longer capable of making meaningful contributions to either purpose. And I do not understand the plaintiff to have suggested otherwise.
Nevertheless, it is readily understandable why the plaintiff would wish to expand the purposes of the Trust, particularly in terms of the proposed new purpose so as to, it is hoped, provide the Trust with a capacity to lend broader support to the education of rural residents with relatively limited expenditure of Trust funds. However, independently of whether subsection 69B(1)(d) or (e)(i) or (e)(iii) might be satisfied so as to enliven the Court’s power to alter the Trust purposes, I am not satisfied that subsection 69B(6) is satisfied with respect to the proposed new purpose.
I am not satisfied that the proposed new purpose falls within the spirit of the Trust. The intentions of the testator, to be discerned from the terms of the Will, comprised the following elements material to the First Purpose.
(i)Any assistance to be provided is to be on a needs basis to persons residing in country areas.
(ii)Assistance with secondary or tertiary education, unrestricted as to area or discipline, is to be provided by provision of scholarship assistance.
(iii)Such assistance is to be given to country[20] students whose parents or guardians are in difficult financial circumstances.
I have given consideration to the proper approach to a determination of the spirit of the Trust, as earlier set out. In my view, the spirit of the Trust with respect to the First Purpose is comprised of at least the following three elements: the recipients of its bounty are to be rural residents only; the recipients of its bounty are to be in difficult financial circumstances; and the provision of assistance is to relate to general educational purposes. With respect to the latter, it is clear, in my view, that the deceased was interested in education generally and did not wish to restrict any scholarship assistance to particular fields of study.
[20] The chapeau to clause 5 of the Will refers to “residing in country areas” whereas paragraph (b)(i) refers to “isolated farming or grazing areas” but this difference in terminology can be ignored for present purposes.
Arguably, there are two additional elements. The first is that, where there are competing objects of the bounty, that is, more than one person seeking scholarship assistance, some form of relative “needs” analysis may be relevant, if not determinative. Second, the First Purpose expressly envisages the provision of a scholarship, that is, as the defendant has observed, a form of direct financial assistance to a particular person. Even if these two notions do not directly inform the spirit of the Trust, they are relevant to the second limb of subsection 69B(6), the requirement that the variation in contemplation is justified in the circumstances of the particular case.
The proposed new purpose is expressed in general terms. It is not confined to assisting rural persons, much less rural persons in financial difficulty. In a practical sense, it is difficult to see how the Trustee could confine the operation of the new purpose so as to meet these requirements. Inevitably, the benefits of the Trust expenditure on promotion of and provision of information concerning scholarship opportunities in general would spread far and wide and indiscriminately. Further, to confine any promotional endeavours by reference to agricultural type opportunities would not conform to the deceased’s more general intentions in respect of the First Purpose. Finally, I accept the defendant’s submission that there is a material distinction between the deceased’s intentions to provide a direct and real benefit to a specified individual as compared with the indirect, more amorphous, and possibly negligible benefit of providing promotional and informational material to rural communities at large.

I am not prepared to approve Variation 1 as sought in the draft minutes. I add that even if Variation 1 were that as earlier proposed in the second summons, I would not approve it for the first and third reasons just given.
Variation 2 – Wording changes
The plaintiff seeks, by way of the proposed minutes, the following wording changes to the First Purpose provided in clause 5(b)(i) of the Will:
[F]or the provision of ~~an annual~~ a scholarship or scholarships to assist a student or students residing in rural or remote ~~isolated farming or grazing~~ areas who are in or whose parents or guardians are in difficult financial circumstances to undertake ~~courses of~~ study in agriculture, horticulture, viticulture, animal husbandry and/or agribusiness or related fields at secondary or tertiary teaching institutions approved by the Trustees.
Proposed Variation 2 encompasses all of the changes made in the above passage, except for the addition of the words “in agriculture, horticulture, viticulture, animal husbandry and/or agribusiness or related fields”, which is specifically addressed later as proposed Variation 3.
The plaintiff submitted that the qualifying phrase “isolated farming and grazing areas” is too amorphous to be given sufficiently certain content and that there are no readily available guidelines to assist in determining the areas that necessarily fall within the descriptor. However, the term “rural and remote” is used frequently by other stakeholders, including Federal and State Governments, to determine eligibility for scholarships and other funds. This amendment would remove uncertainty for applicants and provide clearer guidelines for the Trustee when distributing the Trust funds. The amendment would not cause any departure from the spirit of the Trust with respect to its First Purpose.
The plaintiff also submitted that the removal of the word “courses” would make it clear or remove any doubt that Trust funds could be used for expenses other than tuition or course fees. It was submitted that this may be important where recipients of a Trust scholarship are in receipt of another source of funding for tuition and the scholarship from the Trust is intended to cover associated expenses such as for books, electronic resources, and course materials. The plaintiff submitted that this variation to the wording is also well within the spirit of the original purpose of the Trust.
The plaintiff contended that the removal of the word “annual” was needed to remove ambiguity. Its removal would make clear the Trustees’ discretion to provide a scholarship that is not necessarily for one year in duration.
The defendant did not challenge the appropriateness of proposed Variation 2. The defendant observed that, insofar as the proposed changes to wording simply clarify what was intended and remove ambiguity without any alteration of purpose, such changes can be made pursuant to the Court’s jurisdiction to make an administrative scheme. The Court has power as part of its inherent jurisdiction to make administrative schemes to clarify, supplement or alter the machinery for the carrying out of charitable objects.[21]
[21] University of Adelaide v Attorney-General (SA) [2018] SASC 82 at [45]-[46].
Consideration of and conclusion with respect to Variation 2
I am satisfied that the proposed changes to wording (apart from that comprising Variation 3) do no more than update the language or otherwise clarify what was intended by the deceased and remove ambiguity. There is no material change of purpose. Variation 2 is approved.
Variation 3 – Narrowing the permissible fields of study under the scholarship
As indicated by the terms of proposed Variation 2, the plaintiff seeks to narrow the ambit of scholarships so that only students studying agriculture, horticulture, viticulture, animal husbandry and/or agribusiness or related fields will be eligible to receive Trust Funds by way of a scholarship. The plaintiff submitted that whilst there is now adequate provision for scholarships in general, what is not adequately provided for, according to the plaintiff, is support for students wishing to undertake studies specific to a future career in agriculture. The plaintiff contended that restricting the scholarship to students studying agriculture and related fields would “crystallise” the intent of the deceased by assisting the next generation of people living in rural areas.
The plaintiff contended that this change would encourage young people to train in these specific fields thus benefitting rural communities in the long term when they return to and/or work there. The plaintiff submitted that the restriction of the scholarship to agricultural studies is within the spirit of the Trust and is justified for the same reasons as relied on for Variation 1.
According to the defendant, the Court, ordinarily, would only narrow or downgrade the scope of an existing purpose or purposes in a case where the resources of a charitable trust were insufficient to meet the broader or more expansive purposes.[22] Here, the Will did not express any limit on what might be studied under the scholarship. On its face, the purpose of the Trust was simply to assist disadvantaged students in rural areas to obtain an education. The defendant also observed that the Trustee already has the power under the existing Trust terms to determine which courses of study and educational institutions will be approved for the purpose of a scholarship. The only practical restriction on the Trustee, as submitted by the defendant, is that they must act honestly and reasonably in the exercise of that discretion.
[22] University of Adelaide v Attorney-General (SA) [2018] SASC 82 at [32].
Consideration of and conclusion with respect to Variation 3
I agree with the submissions of the defendant with respect to this proposed variation. It would impose a significant limitation on the more generally worded terms of the Will and falls outside the spirit of the Trust with respect to the First Purpose, as earlier discussed. I am satisfied that the deceased wished to assist rural students in need with their education in an unrestricted sense. This is consistent with the language used by the deceased and with the spirit of the Trust in respect of the First Purpose. Further, such a variation operating to limit the Trustee’s discretion as conferred by the Will is unnecessary for the reasons proffered by the defendant. I am not prepared to approve Variation 3.
Variation 4 – Discretion as to distribution of Trust funds
The plaintiff proposes the removal of the equal division of the Trust Funds between the two original purposes. The Will requires that 50 per cent of the Trust Funds be used for assistance for disaster relief and 50 per cent be used for the provision of a scholarship to those in need of financial assistance. The plaintiff submitted that the added flexibility inherent in Variation 4 would allow the Trustee to use any percentage of the income in any year for any available purpose, or to make no grant in order to accumulate the income.
According to the plaintiff in his third affidavit, no Trust funds have been applied to disaster relief for some years. The plaintiff submitted that these retained funds could have been used for scholarships, had the equal divide between the purposes been removed. Variation 4 would allow the Trustees flexibility to fulfil a “needs based” approach so as to better effect the purposes of the Will.
The defendant submitted that, given that one of the two purposes for which the funds are to be equally divided was for assistance for disaster relief, the testator would not have expected that the Trust funds necessarily would be exhausted in any particular year. Clause 5(c) of the Will provides that unexpended income “shall be reinvested and shall be applied at the discretion of the Trustees during any subsequent year”. The defendant submitted that this has the effect that the Trust assets might expand each year. Any such accumulation was anticipated by the deceased with the expectation that the Trustee’s practical capacity to provide assistance in respect of the Trust purposes over time would be deliberately enhanced.
The defendant submitted that there is nothing to prevent the Trustee from amending its guidelines so as to provide for financial assistance in a broader range of circumstances as long as it remains within the scope of the purposes expressed in the Will. However, a change of the nature now sought in Variation 4 could only be justified if it complied with the requirements of section 69B of the Act. The proposed alteration of the defined allocations in the Will is not an administrative scheme but a change in the class of objects or purposes to which the Trusts funds can be applied.
The defendant observed that if the Court were to be satisfied that a variation to include a new purpose was justified, it would be necessary to vary the defined allocation presently stated in the Will to authorise expenditure on the new purpose.
Consideration of and conclusion with respect to Variation 4
Had Variation 1 been approved, Variation 4 also would need to be approved, if only to an extent necessary to accommodate Variation 1. However, that situation does not now arise. Nevertheless, it can be accepted that, even in the context of there being only the original First and Second Purposes, the flexibility allowed for by Variation 4 does make sense. However, that is not the test. Further, such a change would be quite contrary to the express terms of the Trust.
I am not satisfied that the evidence relied on by the plaintiff is sufficient to establish any of the requirements provided for in subsection 69B(1)(a)-(e), one of which must be satisfied before the power to approve Variation 4 would be enlivened. The restriction, in terms of the allocation of available funds provided for by the Will, is manageable, if not wholly desirable. As the defendant has observed, provided the income is notionally allocated evenly across the two purposes, there is nothing to prevent the Trustee from accumulating the income, rather than expending it every year, until sufficient is available to warrant a meaningful award for each purpose from time to time.
Variation 4 has not been justified. However, the plaintiff has also sought wording changes as reflected in paragraph 1(c) of the draft minutes. These were sought, as I understand the position, in the context of the consideration of Variation 4. However, they operate in any event to provide clarity and remove ambiguity and I grant approval on the same basis as expressed with respect to Variation 2.
Conclusion
For the foregoing reasons, and with some regret, I find that I am only able to approve Variation 2. Nevertheless, in the circumstances there is no good reason why the plaintiff’s costs of and incidental to this application should not be met out of the Trust fund and I will so order.
I make the following orders:
1.The plaintiff’s application for the approval of a trust variation scheme is allowed in part as provided for in order 2, but otherwise dismissed.
2.Pursuant to section 69B of the Trustee Act 1936 (SA) and the inherent jurisdiction of the Court, the terms of the charitable trust created pursuant to the will of EARNEST WILLIAM STEVENS dated 6 July 1987 for which probate was granted by the Supreme Court of South Australia on 1 June 1989 be varied in accordance with the trust variation scheme as set out in Annexure A to these minutes of order.
3.The trustee’s costs of and incidental to the trustee’s application pursuant to section 69B(1) of the Act be paid out of the E.W. Stevens Trust Fund.
ANNEXURE A to Minutes of Order
Trust Variation Scheme for the Administration of the E.W. Stevens Trust Fund
1.The person for the time being holding office of Chief Executive of Primary Producers SA Incorporated (hereinafter referred to as “the Association”) and persons nominated by the Board Members of the Association (such persons together with their successors are hereinafter referred to as “the Fund Trustees”) are to HOLD the residue of EARNEST WILLIAM STEVENS’ (deceased) estate as Trustees for the purpose of providing assistance on a needs basis to persons residing in country areas upon the following terms and conditions:-
(a)monies held by the Fund Trustees to have constituted a trust to be known as the “E.W. STEVENS TRUST FUND” (hereinafter referred to as “the Fund”);
(b)the Fund Trustees shall invest the Fund and all accretions thereto in investments from time to time sanctioned by law for the investment of trust funds and shall apply the income therefrom in their discretion in the following manner:-
(i) as to one half thereof for the provision of a scholarship or scholarships to assist a student or students residing in rural or remote areas who are in or whose parents or guardians are in difficult financial circumstances to undertake study at secondary or tertiary teaching institutions approved by the Trustees;
and
(ii) as to one half thereof for the provision of financial assistance to farmers and/or graziers who have suffered hardship due to a natural disaster;
(c)In the event that the Trustees do not make a grant of assistance under sub-clauses (i) or (ii) hereof in any one year, or make a grant or grants of less than the total income, the income of the Fund or unapplied balance thereof shall be reinvested and shall be applied at the discretion of the Trustees during any subsequent year;
(d)the said executive and finance committee may remove any Trustee from office by written notice given to the Trustee and may appoint a new Trustee to take the place of any Trustee whose office shall be vacated or who is removed from office;
(e)In the event of the proposed winding up of the Association the said Executive and Finance Committee shall appoint another Association having similar aims and objectives to the Association to act in the place of the Association for the purposes of the Trust hereby created.