Melba Support Services Inc v Bell
[2014] VSC 425
•9 September 2014
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
PROBATE LIST
No. 3825 of 2014
IN THE MATTER of the will and estate of ALICE HALL, deceased
and
IN THE MATTER of s 2 of the Charities Act 1978
| MELBA SUPPORT SERVICES INC | Plaintiff |
| v | |
| DIANNE BELL | First Defendant |
| - and - | |
| DAVID BARRETT JONES and HOWARD ANDREW JONES (who are sued as trustees of the estate of ALICE HALL, deceased) | Second and Third Defendants |
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JUDGE: | McMillan J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 15 August 2014, further submissions filed 22 August 2014 | |
DATE OF JUDGMENT: | 9 September 2014 | |
CASE MAY BE CITED AS: | Melba Support Services Inc v Bell | |
MEDIUM NEUTRAL CITATION: | [2014] VSC 425 | |
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WILLS AND TRUSTS — Construction of residuary clause in will — whether residuary gift conditional or not — whether gift to charitable institution — whether charitable institution still in existence — cy-près scheme — Charities Act 1978, s 2
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Dr J Glover | Beaumont Lawyers |
| For the First Defendant | No appearances | |
| For the Second and Third Defendants | Mr H Jones, solicitor | Septimus Jones & Lee |
HER HONOUR:
Alice Hall (‘the deceased’) died on 15 October 1982. Probate of the deceased’s last will, dated 14 October 1981 (‘the will’), was granted to her husband, Herbert Edward Hall, and her solicitor, John Lawrence O’Connell, on 22 June 1983. By deed of appointment dated 17 July 1999, Mr O’Connell retired as trustee of the deceased’s estate and the second and third defendants (‘the trustees’) were appointed as the new trustees in place of Mr O’Connell. The deceased had two children who survived her death, Heather Mary Bell (‘Heather’) and Rex James Bell (‘Rex’).
Under cl 4 of her will, the deceased left half of her residuary estate to her husband. The other half passed under cl 4(b) of the will, which provides:
To invest the other equal part or share and to pay such part of the income and such part of the capital at such times and in such amounts as my Trustees in their absolute discretion think fit to the Treasurer for the time being of The Melba Centre of Silvan Road, Mt Evelyn so long as my daughter HEATHER MARY BELL is a resident of the ROSINE NURSING HOME of The Crescent Mt Evelyn. If my daughter HEATHER MARY BELL is not a resident of the said ROSINE NURSING HOME then I EMPOWER my Trustees to use the said income and capital at such times and in such amounts as my Trustees in their absolute discretion think fit for the care and welfare of my daughter HEATHER MARY BELL. If at the date of death of my daughter HEATHER MARY BELL she is a resident of the ROSINE NURSING HOME then I DIRECT that any undistributed income and capital shall be paid to the Treasurer for the time being of the Melba Centre to be used by The Melba Centre for such charitable and other purposes as it in its absolute discretion thinks fit. If at the date of death of my daughter HEATHER MARY BELL she is not a resident of the ROSINE NURSING HOME then I DIRECT that any undistributed capital and income shall be paid to my son REX JAMES BELL PROVIDED THAT if my son REX JAMES BELL should predecease my daughter HEATHER MARY BELL then I DIRECT that any undistributed capital and income shall be paid to the child or children of my son REX JAMES BELL living at the death of my daughter HEATHER MARY BELL and if more than one as tenants in common in equal shares.
Heather lived at the Rosine Nursing Home in Mt Evelyn from 26 May 1981 until October 1997. In 1997, Heather moved to De Felice Place in Mooroolbark, where she remained until she died. Heather died on 17 March 2013. Rex died on 26 November 2013. The amount held by the trustees under this clause as at 7 May 2014 is $38,186.07. This proceeding concerns how that sum ought to be distributed.
Procedural history
The plaintiff in this proceeding is Melba Support Services Inc, an organisation that provides support services to individuals with severe and profound disabilities. The plaintiff, and predecessor institutions to the plaintiff, previously ran the Rosine Nursing Home and continue to operate De Felice Place.
From the time of the death of the deceased until Heather’s death, the funds held by the original trustees, and then later the trustees, were distributed to the plaintiff for the use and benefit of Heather. No funds were distributed following Heather’s death.
By letter dated 30 January 2014, the solicitors for the trustees informed the plaintiff that a small amount of money remained held by them on trust. They noted that:
The gift is dependent on Heather Mary Bell residing at Rosine Nursing Home and as at the date of death, she had not been residing in that home but we understand at another home possibly also conducted by your organisation.
The amount of the Trust is less than $40,000 so we believe that we will need to apply to the Attorney-General for direction.
They also asked the plaintiff to supply them with proof that the plaintiff is ‘the same as the Melba Centre and the connection with the Rosine Nursing Home at The Crescent Mt Evelyn’.
The reference by the trustees to an application to the Attorney-General for directions is a reference to s 4(1) of the Charities Act 1978. That section provides:
Power of Attorney-General to sanction schemes
(1) The trustees of any property given for charitable purposes where—
(a)the total value of the corpus of the property is less than $500,000 or an amount fixed under section 4A, whichever is the greater; or
(b)the total value of the corpus of the property does not exceed $50,000 or an amount fixed under section 4A, whichever is the greater, and the property is given for specific charitable purposes which fail—
may (in lieu of making application to the court) in writing and upon payment of the relevant prescribed fee (if any) apply to the Attorney-General for directions for the application of such property cy près.
The trustees subsequently applied to the Attorney-General under that provision.
By letter dated 20 May 2014, the Victorian Government Solicitor’s Office notified the trustees of the estate of the result of the trustees’ request for a sanction pursuant to s 4 of the Charities Act 1978. In that letter, the Deputy Victorian Government solicitor, Mr James Ruddle, advised:
the Attorney-General does not consent to a sanction and that in his opinion the provisions of the will are plain and that any undistributed income and capital are to be paid to Mr Bell or his children.
By letter dated 22 May 2014, the trustees notified the plaintiff of the determination of the Attorney-General and informed it that they intended to distribute the estate within 14 days, pursuant to the direction in the letter from the Attorney-General.
By letter dated 29 May 2014, the solicitors for the plaintiff informed the trustees that the plaintiff claims to be entitled to all undistributed income and capital of the residue of the deceased’s estate.
On 28 July 2014, the plaintiff filed an originating motion seeking answers to certain questions concerning the disposition of the residue of the estate,[1] declaratory relief, and an order by way of cy-près scheme. In particular, the questions raised were:
[1]Pursuant to r 54.02(2)(a) of the Supreme Court (General Civil Procedure) Rules 2005.
1.Considering the events which have happened, and having regard to s 2 of the Charities Act 1978:[2]
(a)have the original purposes of the deceased, as reflected in part (b) of the residuary disposition contained in her will dated 14 October 1981, ceased to provide a suitable and effective method of using the proceeds of the realisation of part (b) of the residuary estate?
(b)is it no longer possible for the original purposes contained in part (b) of the said residuary disposition to be carried out according to the directions given and the spirit of the gift?
2.If the answer to either part of question 1 is ‘yes’, has the deceased manifested in part (b) of the residuary disposition in her will a general charitable intention?
3.If the answer to question 2 is ‘yes’ and given the events which have happened, should the second and third defendants administer the trusts relating to part (b) of the said residuary estate of the deceased cy-près?
[2] Section 2 provides for the circumstances whereby the original purpose of a charitable gift can be altered to allow the property given to be applied cy-près.
By letter dated 22 May 2014, the trustees wrote to the solicitors that had acted for Rex, Friend & Edwards, in relation to the deceased’s estate and Heather Mary Bell, requesting information of the class of potential interested parties to the proceeding. Friend & Edwards informed the trustees that Rex was survived by five of his seven children. Those surviving children are Heather Bell born 15 June 1959; Stephen Bell born 27 March 1960; Dianne Bell born 26 April 1961; Susan Williams born 13 January 1967 and David Bell born 8 January 1969. They also informed the trustees that the two children who predeceased Rex were his son, Anthony Bell, who has two children, Simon and Terry, and his daughter, Bernadette Bell, who has one known child and possibly another child.
Although not joined or formally served, all the descendants of Rex were notified of the application, apart from the possible other child of Bernadette Bell. None of them sought to appear on the hearing of the application. Given the size of the estate, at the hearing of the matter I did not require any further evidence that the descendants of Rex were on notice.
The trustees of the estate informed the Court that they are neutral in the dispute and they were excused from any further attendance in the proceeding.
The plaintiff’s evidence
In support of the plaintiff’s application, the plaintiff filed an affidavit of Mr Glenn Ian Foard, the Chief Executive Officer of the plaintiff affirmed 25 July 2014 and an affidavit of Dominica Sophia Tannock, a solicitor for the plaintiff, sworn 24 July 2014.
Following the hearing, and upon reviewing the material filed, I considered that the documentary evidence filed was not sufficient, and requested the plaintiff file further material concerning:
(a)the date Melba Centre Inc was incorporated;
(b)a copy of the memorandum and articles of association or constitution of Melba Centre Inc;
(c)a copy of the memorandum and articles of association or constitution of Melba Support Services Inc;
(d)any further evidence of the objects, purposes and activities of the two organisations and of the arrangements upon the dissolution of Melba Centre Inc on which the plaintiff wishes to rely;
(e)the address of the Rosine Nursing Home in Mt Evelyn;
(f)the address of Melba Residential Services in Mt Evelyn;
(g)any evidence of whether the renaming of Rosine Nursing Home to Melba Residential Services was a formal registered name or an informal renaming;
(h)any further evidence of the relocation of residents of the Rosine Nursing Home in 1997-98 on which the plaintiff wishes to rely;
(i)an explanation of whether Melba Community Living Support Services is a company or business name; and
(j)any evidence on the relationship between Melba Community Living Support Services and Melba Support Services Inc.
The plaintiff filed a further affidavit of Mr Foard affirmed 21 August 2014, exhibiting documentary material in response to that request.
The evidence given by Mr Foard covers events over a period of time from 1976 to the present. In his affidavits, he does not state whether his evidence is from his own knowledge, from information and belief or from the business records of the plaintiff. He also refers to a number of matters that could, in the usual course, be capable of proof by exhibiting the relevant document or record but he did not do so.
In his affidavits, Mr Foard deposed that the Melba Centre Inc was established in 1972 to provide support services to individuals with severe and profound disabilities. No supporting documentation was produced by Mr Foard to support this statement.
Mr Foard also deposes that Melba Centre Inc was incorporated under the Hospitals and Charities Act 1958 but does not state where he obtained this information or the date of incorporation of Melba Centre Inc in 1972 or otherwise.[3]
[3]There is a notation in the 1990 Annual Report for Melba Centre Inc as follows: ‘Incorporated: Hospitals and Charities Act 1958’, see exhibit ‘GIF-7’ to Mr Foard’s affidavit sworn 21 August 2014 being one page only of the 1990 Annual Report.
In 1976 Melba Centre Inc took over the management of the Rosine Nursing Home at The Crescent, Mt Evelyn.[4] Mr Foard deposed that the Rosine Nursing Home was administered by Melba Centre Inc and became a part of a congregate care facility comprising three residential buildings and an administration building with one of the residential buildings being the Rosine Nursing Home.
[4]1990 annual report for Melba Centre Inc, report of Mr Stuart Tillotson, Chief Executive Officer.
On 26 May 1981, Heather was admitted to Rosine Nursing Home and in October 1981, the deceased signed her will. The deceased died a year later.
Some evidence of the purposes of Melba Centre Inc was provided by Mr Foard in an undated document headed ‘Statement of Purposes’ for the Incorporated Benevolent Association Melba Centre Inc that states, among other matters, that it was to provide accommodation support services for persons with an intellectual disability within Victoria and to do all things incidental or conducive to the attainment of any of its purposes.[5]
[5]Exhibit GIF-2 to Foard’s affidavit sworn 21 August 2014.
In the 1990 Annual Report for the Melba Centre Inc it is stated that the name of the Rosine Nursing home had changed to ‘Melba Residential Services, Rosine House and Administration’. Mr Foard deposed that the renaming was informal and reflected ‘the evolving service model and the changing policy environment’. In that Annual Report, the Chief Executive Officer, Mr Stuart Tillotson of Melba Centre Inc, referred to the significant changes that had taken place in its residential services with alterations to government policy being responsible for those changes. The changes included alterations to the style of service delivery and a review of the physical location of the service and the ideal situation being involving the majority of residents benefitting from being placed in houses in the local community.
On 28 July 1992, a certificate of incorporation under the Associations Incorporation Act 1981 certifies that Melba Centre Inc was incorporated on and from 28 July 1992.[6] Another certificate of incorporation dated 30 December 1996 produced by Mr Foard certifies that as and from on 28 July 1992 the plaintiff originally called Melba Centre Inc was incorporated under the Associations Incorporation Act 1981.[7]
[6]Exhibit GIF-1 to Foard’s affidavit affirmed 21 August 2014 being copy certificate of incorporation of Melba Centre Inc under the Associations Incorporations Act 1981.
[7] Exhibit GIF-2 to Foard’s affidavit affirmed 25 July 2014.
Mr Foard deposes that in December 1996 Melba Centre Inc changed its name to Melba Support Services Inc (the plaintiff). In the 1996 Annual Report it states that although Melba Centre Inc had changed its name to Melba Support Services Inc its purposes remained the same, that is, to provide support services to individuals with severe and profound disabilities. The then President of the Melba Centre Inc referred to the financial difficulties that faced the organisation and its plans for the future and reported that the Centre looks
forward to a new start for Melba, with a new name and logo (with the name ‘Melba’ still included), that will more adequately reflect the services we provide and a new approach to models and delivery of those services.
Around October 1997, an undated document headed ‘Statement of Purposes’ of the plaintiff includes, among other matters, to provide accommodation support services for persons with an intellectual disability within Victoria and to do all things incidental or conducive to the attainment of any of its purposes.[8]
[8]A notation at the end of the document has the typed words ‘amended October 1997’.
Mr Foard deposed that it was in October 1997 that Heather moved from the Melba Residential Services (formerly the Rosine Nursing Home) to a purpose built home known as De Felice Place, one of seven purpose built homes a few kilometres away at 4 De Felice Place in Mooroolbark, also administered by the plaintiff.
In 1998, Melba Residential Services closed following a decision by the government to de-institutionalise those who were then in care. Mr Foard deposed that the homes in De Felice Place remain part of what is now known as Melba Community Living Support Services, a name that reflects the services provided by the plaintiff, being the business of providing accommodation services for the intellectually disabled. Melba Community Living Support Services was a business name owned by the plaintiff between 1997 until some time in 2006.
The ‘Statement of Purposes’ in the November 2013 rules of the plaintiff provides that its vision is ‘a society that values the individuality and rights of all people’ and its mission includes ‘individuals with a disability leading everyday lives’.
Mr Foard deposed that for approximately 32 years, from 26 May 1981 until she died on 17 March 2013, Heather resided at homes owned and controlled by Melba Centre Inc or the plaintiff. The statement of account of the funds held by the trustees for the period August 2001 to May 2014 show that over that period the capital of the fund started at $45,540 and is now $38,310. Interest has been added to the capital over the years and various payments were made for the benefit of Heather on items such as a wheelchair, shade cloth, chemist and clothing purchases and other items such as accountant’s fees and taxation.
The availability of an order in the nature of cy-près
The plaintiff’s submissions
The plaintiff submitted that the deceased made a charitable gift of the undistributed income and capital ‘to the objects and purposes of the plaintiff effective on’ the death of Heather. The gift is conditional on Heather being a resident of an institution that has ceased to exist, and the existence of the Rosine Nursing Home as her residence is not essential to the gift’s original purposes. It was submitted that because the original charitable purposes cannot be carried out then the purposes should be altered to allow the fund to be applied cy-près.
The plaintiff submitted that, where a donor has directed a disposition to a charitable object or purpose that is impossible or impractical to effect but has expressed a general charitable intention, the courts will allow the intention to be carried into effect as nearly as possible. The plaintiff relied on the decision of Newton J in Re Tyrie.[9] The plaintiff submitted that impossibility or impracticability had occurred when the Rosine Nursing Home ceased to exist in 1997 in compliance with a government policy direction. Because the Rosine Nursing Home ceased to exist in 1997 it was a case of initial and not supervening impracticability.[10]
[9][1972] VR 168, [177]–[178].
[10] Roman Catholic Trusts Corporation v Attorney General (Vic) [2000] VSC 360 (15 September 2000) [5] (Byrne J); Perpetual Trustee Co Ltd v Attorney General (NSW) [2007] NSWSC 1339 (22 November 2007) [3] (Windeyer J)
The plaintiff also submitted that the deceased’s dominant intention was to benefit Melba Centre Inc because during the lifetime of Heather and, after the death of Heather, the deceased desired to benefit the institution that was responsible for the care and welfare of her daughter. This, it was said, was made clear in cl 4(b) of the will, because the gifts to Melba Centre Inc were to be:
paid to the Treasurer for the time being of the Melba Centre to be used by the Melba Centre for such charitable and other purposes as it in its absolute discretion thinks fit.
This meant that the deceased was focused on the general charitable purposes of Melba Centre Inc and not endowment of the Rosine Nursing Home.
Preliminary issue as to the identity of the Melba Centre
The gift sought to be distributed cy-près is, under the will, to be distributed to the Treasurer of the Melba Centre to be used by the Melba Centre. The plaintiff submitted that it is uncontentious that the Melba Centre existed at all material times. Although, ultimately, I agree that the Melba Centre does indeed exist, I disagree that it is uncontentious.
The deceased referred to ‘The Melba Centre’ at The Crescent, Mt Evelyn in cl 4(b) of her will. At the time the deceased made her will, no such organisation existed. It remains unclear when Melba Centre Inc was incorporated other than to say a certificate of incorporation certifies it was on 28 July 1992 under the Associations Incorporation Act 1981. Before that I can infer that it may have been incorporated under the Hospitals and Charities Act 1958 but no date or certificate of incorporation under the latter Act was produced by Mr Foard. In addition, some of the exhibits to Mr Foard’s affidavits referred to Melba Centre Inc existing and the 1990 Annual Report refers to taking over the management of the Rosine Nursing Home at The Crescent, Mt Evelyn in 1976.
The misdescription of The Melba Centre instead of Melba Centre Inc is minimal and does not prevent the conclusion that, at the time of making the will, the deceased intended to refer to Melba Centre Inc. It is often the case that lay people will not be certain of an organisation’s legal name. Indeed, in this case, some of the historical documents exhibited to Mr Foard’s affidavits also show that Melba Centre Inc sometimes referred to itself as ‘Melba Centre’ only. It is also clear that the organisation took over the Rosine Nursing Home located at The Crescent, Mt Evelyn and where Heather resided at the time the deceased signed her will. The fact that the deceased incorrectly named the entity in her will in the manner that she did does not render the identity of the conditional gift in cl 4(b) of the will uncertain.
The terms of cl 4(b) of the will, coupled with the fact that Heather was a resident of the Rosine Nursing Home at the address named in the will when it was signed by the deceased, supports the conclusion that the deceased intended to refer to the incorporated association, Melba Centre Inc in her will.
It also is clear that Melba Centre Inc changed its name to that of the plaintiff at some stage, probably in 1996. In Re Coulson I considered the authorities concerning when a charity might cease to exist.[11] In that case, after considering relevant English and Australian authorities,[12] I concluded:
when it comes to charities, a simple dissolution and reincorporation may not result in the charity ceasing to exist. Incorporation in a particular jurisdiction or in a particular manner is merely the machinery by which the charity operates. If the charity organisation continues its work through a new body corporate, it may not have ceased to exist. This will depend on the objects and purposes, and arrangements upon dissolution, of the two organisations. This principle recognises that a charitable organisation may have conducted its charitable work continuously, yet made changes to its legal form depending on the vicissitudes of government regulatory policy or the benefits of incorporation in different jurisdictions. In such situations the charity organisation has not truly ceased to exist.[13]
[11][2014] VSC 353 (1 August 2014).
[12]Ibid [32]–[42].
[13]Ibid [43].
In circumstances where it can be established that the purposes of the new entity was the continuation of the previous legal entity or, alternatively, was the successor of the original organisation, then the charity organisation has not ceased to exist.
In this case, the purposes of the plaintiff are the same as the purposes of Melba Centre Inc, namely, providing support services and assistance for individuals with disabilities, and the work of Melba Centre Inc and the plaintiff continue along the same lines. In the circumstances, Melba Centre Inc has not ceased to exist as it is only the mechanics by which the organisation operates that have changed, seemingly caused in this case by changes in government policy and the financial circumstances at the time of the change of name of the incorporated entity.
Preliminary issue as to whether a charitable organisation
The plaintiff also submitted that Melba Centre Inc ‘is a registered charity’. The plaintiff submitted this was so because it was implicitly acknowledged by the Attorney-General in the letter from the solicitor for the Attorney-General advising that the Attorney-General did not consent to the application to distribute the gift cy-près. No proof of registration was produced. I would not be prepared to accept on this basis alone that the plaintiff is a registered charity
However, whether an organisation is registered as a charity is in any case not determinative of the status of that organisation as a charity. The evidence appears to be that the Melba Centre Inc was originally incorporated under the Hospitals and Charities Act 1958. Having noted the objects and purposes of the Melba Centre Inc, including that it is an organisation devoted to the provision of support services to individuals with severe and profound disabilities, I am prepared to accept that the Melba Centre Inc and its predecessor institutions are and were charities.
Conclusions as to the availability of a cy-près order
In my view, the construction and operation of cl 4(b) must first be considered by applying the principles for the construction of wills.
In Fell v Fell, Isaacs set out a detailed and succinct summary of the principles for the construction of wills.[14] Prima facie, the written words in the will must be given their ordinary meaning, with the Court making a determination of the issue by reference to the words used by the testator in the will, having regard to any established rules of construction and construing a ‘will as trained legal minds would do’.[15] As stated by Fullagar J in ANZ Executors & Trustee Co Ltd v McNab:
The search for testamentary intention must be a search for intention disclosed by the words used, and in this search words must prima facie be given their ordinary meanings and, if the law has consistently given a particular meaning to some word or phrase, that is the meaning which the word or phrase must prima facie be given. Nevertheless, the intention is to be gathered from a study of the will as a whole, and in the light of any relevant and admissible evidence of surrounding circumstances.[16]
[14] (1922) 31 CLR 268. See also Perrin v Morgan [1943] AC 399; ANZ Executors & Trustee Co Ltd v McNab [1999] 3 VR 666.
[15] Fell v Fell (1922) 31 CLR 268, 273, quoting Ralph v Carrick (1879) 11 Ch D 873, 878 (Cotton LJ).
[16][1999] 3 VR 666, 667.
Clause 4(b) of the will divides the gift into parts. The first part is referable to the disposition of the gift during the lifetime of Heather and the second part is referable to the gift after her death.
The deceased’s gift to Heather during her lifetime also comprised two parts:
(a)the first part was for the trustees to pay such part of the income and the capital as the trustees in their absolute discretion think fit to the Treasurer of the Melba Centre ‘so long as my daughter … is a resident of Rosine Nursing Home of The Crescent Mt Evelyn’;
(b)if Heather is not a resident of Rosine Nursing Home, the trustees are able to use the income and capital at such times and in such amounts as the trustees in their absolute discretion think fit for the care and welfare of Heather.
In my view, the gifts during the lifetime of Heather evidence an intention by the deceased that the payments to her by the trustees were to be for her benefit irrespective of whether she was a resident of Rosine Nursing Home.
In particular, if Heather was not a resident of Rosine Nursing Home (as she was not from October 1997 onwards), the intention of the deceased was for the trustees to pay such amounts from the fund for the care and welfare of Heather. These are the clear words of the gift. This is how the trustees have interpreted the clause, as evidenced by their payments from the trust fund set up by cl 4(b) of the will with the accounts from August 2001 showing that all payments from the fund were made for her care and welfare.
At all times during the lifetime of Heather she was the recipient of the benefits under cl 4(b) of the will, whether she was a resident in the Rosine Nursing Home or not. There was no evident or stated intention to benefit the plaintiff during the lifetime of Heather.
The second part of the gift in cl 4(b) of the will refers to what is to occur after the death of Heather. In that case, the deceased provided for the disposition of the undistributed income and capital also in two parts:
(a)if Heather is a resident of the Rosine Nursing Home when she dies, the undistributed income and capital is to be paid to the Treasurer for the time being of the Melba Centre Inc to be used by the Melba Centre Inc for such charitable and other purposes as it in its absolute discretion thinks fit; or
(b)if Heather is not a resident of the Rosine Nursing Home when she dies, the undistributed income and capital is to be paid to the deceased’s son, Rex, with a further provision for a gift over to his descendants in the event that Rex should predecease Heather.
The words used by the deceased in this part of cl 4(b) set out what is to occur in respect of the disposition of undistributed income and capital upon the death of Heather. The deceased has referred to two separate scenarios — one where Heather is a resident of the Rosine Nursing Home when she dies and the other where she is not. The disposition is clearly stated and her intention can be clearly gathered from a study of the words used in the clause.
On the death of Heather, the deceased provided that any gift to the plaintiff is conditional on Heather being a resident of the Rosine Nursing Home when she died. If not, the deceased has provided for a gift over to her remaining child, Rex. The gift over supports the finding that the deceased’s intention to make any gift to the plaintiff was only in circumstances where Heather was a resident of Rosine Nursing Home when she died, that is, the gift to the plaintiff was conditional. As Heather was not a resident of the Rosine Nursing Home when she died, the undistributed income and capital should be paid to the estate of Rex, who survived Heather.
My view of the construction and operation of cl 4(b) means that I do not accept the plaintiff’s submissions that the gift under cl 4(b) was a charitable gift to the plaintiff. The deceased did not provide for a gift to Melba Centre Inc during the lifetime of Heather. The disposition of the trust fund during the lifetime of Heather was always for her benefit — if she resided in the Rosine Nursing Home, funds were to be paid to the Treasurer of Melba Centre Inc and, if she did not, then the trustees of the fund applied such amounts as they thought fit for her care and welfare. In my view, the deceased’s intention was not to benefit Melba Centre Inc; it was to benefit her daughter wherever she resided during her lifetime, whether it was in the Rosine Nursing Home or otherwise.
Likewise, the gift to Melba Centre Inc after the death of Heather cannot be described as establishing a desire to benefit Melba Centre Inc because it was conditional on Heather being a resident of the Rosine Nursing Home at the date of her death. If the deceased had intended to benefit Melba Centre Inc as the plaintiff submits, cl 4(b) would either not have included the condition of residency at the Rosine Nursing Home, alternatively, it would have provided extra words such as ‘or another nursing home conducted by Melba Centre Inc,’ after the words ‘[i]f at the date of death of my daughter Heather Mary Bell she is a resident of Rosine Nursing Home’.
The difficulty that the plaintiff has failed to overcome in this case is apparent in the plaintiff’s very submissions. The doctrine of cy-près applies where a charitable trust cannot be performed, and so the funds held on trust would otherwise fail. However, where a gift fails and there is a valid gift over that can be applied on the very terms of the trust, there is no need and no occasion to consider an order in the nature of a cy-près order. In this case, if it were true, as the plaintiff submitted, that the Rosine Nursing Home no longer existed, and the primary gift under cl 4(b) therefore failed, that would be a ground for seeking a cy-près order had the deceased failed to provide for how the money would otherwise be distributed. But the deceased in this case catered for the eventuality that Heather would no longer reside at the Rosine Nursing Home by providing a gift to Rex. I cannot see how, in those circumstances, the plaintiff could be entitled to the orders sought.
Alternative ground of relief
Having formed a preliminary view that an order in the nature of cy-près was not available because of the correct construction of the will, I asked the plaintiff for further submissions on whether the plaintiff may in any event be entitled to an order that the undistributed capital and income comprising the proceeds of part (b) of the residuary estate be held by the second and third named defendants on trust for the plaintiff in accordance with the principles considered in Re Coulson.[17]
[17][2014] VSC 353 (1 August 2014).
Specifically, I sought submissions on:
(a)the application of the principles considered in Re Coulson to this case;
(b)whether the construction of the will is governed by the Wills Act 1958 as opposed to the Wills Act 1997; and
(c)the effect, if any, of the condition in cl 4(b) of the deceased’s will of Heather Mary Bell being or not being a resident of the Rosine Nursing Home at the date of her death.
In Re Coulson, the plaintiff also sought orders by way of cy-près where the two charities described in the will, Aglow International and Spirit of Life Church, did not exist. However, upon further investigation, it became clear that Spirit of Life Church did indeed exist under another name, and Aglow International had also previously existed under another name, Aglow Australia, and continued to exist by way of a successor incorporated association that had inherited the assets and purposes of the original organisation.
In that case, I also considered that, even if Aglow Australia had not survived by way of a successor institution, then it was appropriate that the nominal successor institution take the benefit of the gift by way of a cy-près order. In Re Coulson, there was no valid gift over, and if the gift was not recovered by way of the order made, it would have been distributed on an intestacy basis.
Plaintiff’s submissions
The plaintiff disavowed any reliance on the reasoning in Re Coulson that allowed the gift to be distributed to Aglow Australia as a successor institution, on the basis that it was uncontentious that the Melba Centre existed at all relevant times. I note specifically that the plaintiff did not seek to argue that the Rosine Nursing Home survived the 1997 closure in some fashion.
The plaintiff instead relied on the alternate reasoning in Re Coulson whereby I considered that, if I was wrong that Aglow Australia continued to exist, I would have ordered that the gift could be distributed to Aglow Australia by way of a cy-près order. The plaintiff submitted that, as the deceased’s gift to the Melba Centre was ‘also liable to defeat by reason of an institution going out of existence’, and as the will evidenced a general charitable purpose, the remaining funds could be distributed to the plaintiff cy-près.
Finally, the plaintiff accepted that, if the condition in cl 4(b) fails, the gift over to Rex becomes effective.
Conclusions
The plaintiff has not, and does not, rely on an interpretation of the provisions in the will in seeking to establish a right to the undistributed proceeds. Instead, the plaintiff seeks to adopt and rely upon the reasoning in Re Coulson only to affirm the earlier submissions that the will evinces an general charitable intention, and that a cy-près order is therefore appropriate.
In Re Coulson, I considered that the will evinced a general charitable intention to benefit the work carried on by Aglow Australia for six main reasons.[18] Each of those, applied to this case, go against the plaintiff:
(a)clause 4(b) specifies where the money should go if the primary gift fails;
(b)the other components of the residue clause divide the estate between the deceased’s family members, not solely to charitable organisations;
(c)there are no specific charitable gifts in the will that sit in contrast to cl 4(b), and cl 4(b) is in fact a very specific gift;
(d)there are limitations and directions on how the money distributed under cl 4(b) should be spent, although the limb on which the plaintiff relies is for such charitable and other purposes as the plaintiff in its absolute discretion thinks fit;
(e)the deceased chose to leave the gift dependent on Heather living in a specific home run by the plaintiff, rather than to the plaintiff simpliciter; and
(f)the objects and purposes of the plaintiff are quite specific.
[18]Ibid [75].
Accordingly, and for the reasons I have already expressed, I am not satisfied that the deceased evinced a general charitable intention, or that an order by way of cy-près is available in any case.
Orders
As a result of the conclusions reached concerning the construction and operation of cl 4(b) of the will, it is unnecessary to answer the questions in the plaintiff’s originating motion filed 28 July 2014.
I order that the second and third defendants as trustees of the estate of Alice Hall deceased be authorised to distribute the gift of the undistributed income and capital under cl 4(b) of the deceased’s will dated 14 October 1981 to the estate of Rex James Bell, or the beneficiaries thereof, and that this proceeding be otherwise dismissed.
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