Permanent Trustee v Attorney General of NSW

[1999] NSWSC 288

CITATION:	Permanent Trustee v Attorney General of NSW [1999] NSWSC 288
CURRENT JURISDICTION:	Equity
FILE NUMBER(S):	4013 of 1998
HEARING DATE(S):	3rd March 1999
JUDGMENT DATE:	9 April 1999
PARTIES :	Permanent Trustee Company Limited (Plaintiff) The Attorney General of the State of New South Wales (First Defendant) Bruce William Tricklebank (Second Defendant) Janet Anne Colello (Third Defendant) Neville Maurice Tricklebank (Fourth Defendant) Pamela Mary Frith (Fifth Defendant)
JUDGMENT OF:	Windeyer J at 1

COUNSEL :	Mr. Page (Plaintiff) Mr. R. Lancaster (First Defendant) Mr. G. Seib (Second, Third, Fourth and Fifth Defendants)
SOLICITORS:	E.H. Tebbutt & Sons (Plaintiff) I.V. Knight (First Defendant) Cashman & Partners (Second, Third, Fourth and Fifth Defendants)
CATCHWORDS:	CHARITIES - Charitable gifts and trusts - gift to charitable institution - charitable institution ceased to exist before death of testator - evidence of a general charitable intention - application of a cy-prés scheme administered by Attorney General pursuant to s13 of the Charitable Trusts Act 1993; CHARITIES - Charitable gifts and trusts - gift to charitable institution - charitable institution ceased to exist before death of testator - evidence of a general charitable intention - application of a cy-prés scheme administered by Attorney General pursuant to s13 of the Charitable Trusts Act 1993
ACTS CITED:	Charitable Trusts Act 1993, ss10(1)(2), 13(2)
CASES CITED:	Attorney-General for NSW v The Public Trustee (1987) 8 NSWLR 550 2 Re Tyrie deceased (No 1) [1972] VR 168 at 177-8 5 Re: Slatter’s Will Trusts [1964] 1 Ch512 6 Sydney Homoeopathic Hospital v Turner (1959) 102 CLR 188 at 220-21 4
DECISION:

- 8 -

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

WINDEYER J

FRIDAY 9 APRIL 1999

4013/98 PERMANENT TRUSTEE COMPANY LIMITED v THE ATTORNEY GENERAL OF THE STATE OF NEW SOUTH WALES & ORS

JUDGMENT

Question
1 The question for decision is whether a scheme should be established for the administration cy-prés of one half of the estate of Melbourne Earl Siebert deceased in accordance with a general charitable intention, expressed in his will, or whether there is an intestacy in respect of that part of the estate.

Facts
2 Melbourne Earl Siebert (the testator) died on 22 December 1992, having made a will on 21 February 1950 which was admitted to probate on 27 July 1993. The value of the one half share in question is about $107 000. Clauses 3, 4 and 5 of the will deal with gifts made to the wife, children and parents in law of the testator, all of whom predeceased him. As a result clause 6 of the will comes into operation. It is as follows:

6. Should my said wife predecease me and no children of mine attain the age of twenty one years and my said father-in-law and mother-in-law dying before entitled to a vested interest under this my will then I GIVE DEVISE AND BEQUEATH the whole of my estate whether real or personal and wheresoever situate to the Spastic Centre of 6 Queen Street Mosman New South Wales and the Margaret Reid Orthopaedic Hospital Pittwater Road St.Ives New South Wales in equal shares as tenants in common AND I DECLARE that the receipt of the Secretary or Treasurer for the time being of the said institutions shall be sufficient discharge of all moneys paid under this my will and also in this event I APPOINT the Permanent Trustee Company of New South Wales Executor and Trustee Company of this my will.

3 There is no problem with the gift of one half of the estate to the Spastic Centre. It is the remaining gift made to the Margaret Reid Orthopaedic Hospital (the Hospital) which is at issue in this case, because the Hospital ceased to exist before the death of the testator. So a question arises as to whether the gift lapses so that one half of the estate goes to the next of kin on partial intestacy, or does not lapse but is to be applied for purposes similar to those carried on at the Hospital.
4 Before determining the legal character of the gift, it is necessary to consider the nature of the hospital. The evidence is that there has never been an institution called the Margaret Reid Orthopaedic Hospital, but there was for many years an orthopaedic hospital for children called the Margaret Reid Home which was carried on by the New South Wales Society for Crippled Children (now the Northcott Society). That organisation also conducted and still conducts the Spastic Centre at Mosman. It is perfectly clear that the description in the will is a reference to the Margaret Reid Home. It was accepted that the same “hospital” was considered by Hope JA in Attorney-General for NSW v The Public Trustee (1987) 8 NSWLR 550. In his judgment, Hope JA sets out the history of the Margaret Reid Orthopaedic Hospital, which is accepted by Mr.Benson, the Secretary for the Northcott Society, and is as follows:

“The New South Wales Society for Crippled Children (the Society) was incorporated on 5 August 1930. The objects of this Society as set out in its memorandum of association are charitable in nature. The objects include the assisting and providing for the medical, educational and vocational needs of crippled and handicapped children, including the provision of facilities to meet these needs. The functions carried out by the Society include conducting hospitals and nursing homes for orthopaedically handicapped children, sheltered workshops, special schools, welfare therapy and orthopaedic appliances. In pursuance of its objects the Society established the Margaret Reid Orthopaedic Hospital (the Hospital) at Mona Vale Road, St Ives, to care for orthopaedically handicapped children and to provide for the accommodation and education of school-aged disabled children. The Hospital was administered by the Society’s Board of Directors. It did not have any separate administrative supervision. It did not own any assets independently of the Society and was funded by a maintenance subsidy paid by the Health Commission of New South Wales and as regards capital expenditure by the funds of the Society. On 19 February 1981 the Board resolved to close the Hospital for a variety of reasons including the cutting off of subsidies by the Health Commission. The Hospital closed on 30 June 1981 and in the following year its premises were sold by the Society.

The Gift as a Direct/Absolute Gift or as a Charitable Trust
1 The preliminary question to be determined is whether the gift is an outright gift to the Hospital or whether it constitutes a charitable trust for the purposes of the Hospital. In Attorney General of NSW v The Public Trustee, Hope JA in considering a bequest to the same named Hospital, found that it was a gift to the legal entity conducting the Hospital, namely, the Society, for the general purposes of the Hospital (553). However, the gift there was to the Margaret Reid Hospital for " the general purposes thereof" (551). Counsel for the Attorney General relied on the reasoning of Hope JA in this case to argue that in the present case the gift was one for the general purposes of the Hospital, focusing in particular on the matters which Hope JA considered to be most relevant to this point and applying them to the present case: (1) As all the people named in the will predeceased the testator, the whole of the testator’s estate has been applied to charity, (2) the hospital was not a legal entity and was merely a place where certain charitable purposes were carried out, being purposes of the society, (3) that where the receipt is to be paid to the Secretary or Treasurer, on the evidence, it could be no other person than the Secretary or Treasurer of the Society, (4) finally both charities named by the testator in his will were concerned with handicapped children.

6 Counsel for the plaintiff, who took a more positive and assertive stance than is usual for counsel for a trustee in a construction suit, argued that Attorney General v Public Trustee should be distinguished because in the present case, the testator has not used the words “for the general purposes thereof” and an address was given for the hospital. This argument would not carry the day. In Sydney Homoeopathic Hospital v Turner (1959) 102 CLR 188 at 220-21, Kitto J stated in the context of a bequest to an unincorporated association which operated a hospital, that:

“There is, I think a strong implication of an intention that, through the medium of the unincorporated association, the relevant income should be devoted to the purposes which that association announced by its rules and was serving by carrying on its hospital.”

He then goes on to say:

Not, of course, that a trust arises in every case of a gift to a body established for limited objects…..But if the objects of a body are limited to altruistic purposes, it is as an instrument of altruism that it is likely to attract benefactions. Very often, to say the least, it will be a proper inference, when a gift is made to such a body, that the donor intends the gift to operate as a devotion of the subject property to the relevant purposes, and that the donee accepts it as such. Where that is the case all the elements necessary for the creation of a binding trust are present. Accordingly a gift which would be invalid unless it operates to create a charitable trust may be upheld because when the objects of the body which is the donee are taken into consideration, an inference arises that the gift is upon trust for charitable purposes.
The objects of the Hospital are clearly charitable in nature, and an inference should I consider be drawn that the gift was one for the purposes of the hospital, thus constituting a valid charitable trust.

Is there a General Charitable Intention?
7 Having decided the gift constitutes a valid charitable trust, it is necessary to ascertain what type of charitable intention the testator had when making the gift. If there is a gift to a particular body for its purposes, the gift must lapse; if there is evidence of a general charitable intention but the gift would otherwise fail then a cy-prés scheme should be ordered which fulfils as closely as possible the testator’s charitable intention. The distinctions were considered in Re Tyrie deceased (No 1) [1972] VR 168 at 177-8 by Newton J who held that there were three exceptions to what he called “the lapse rule”, that is that “a gift by will to a particular charitable institution…which at some time existed, but had ceased to do so in the testator’s lifetime … ordinarily lapses”. He held that one such exception was where the testator had a dominant intention to benefit purposes of the kind which the named institution carried out, then the gift will be so applied by means of a cy-prés scheme.
8 I consider that there was a general charitable intention. The fact that both charities named in the will were concerned with handicapped children, and there being no evidence showing the testator to have had any particular association with the Margaret Reid Orthopaedic Hospital supports this; it also enables the present case to be distinguished from cases such as Re: Slatter’s Will Trusts [1964] 1 Ch512 where the testatrix made a bequest to a hospital which had ceased to exist at the time of her death, the daughter of the testator having been a frequent patient in that hospital.

Charitable Trusts Act
9 Once it has been concluded that there is a charitable trust the relevant provisions of the Charitable Trusts Act 1993 really determine the matter. Section 10 of that Act is as follows:

Requirement for general charitable intention of donor
10.
(1) This Part does not affect the requirement that trust property can not be applied cy pres unless it is given with a general charitable intention.

(2) However, a general charitable intention is to be presumed unless there is evidence to the contrary in the instrument establishing the charitable trust.

There is no contrary evidence and therefore the statutory presumption applies.

10 It follows that the court should direct that a scheme for the administration of the trust be ordered which would enable the general purposes of the trust to be fulfilled as closely as possible. Counsel for the Attorney General argued that in those circumstances the establishment of such a scheme it should be referred to the Attorney General to establish the scheme pursuant to s13(2) of the Charitable Trusts Act.
11 I consider this to be the most appropriate course of action which would save further costs being incurred as the fund involved is quite small. This would be consistent with the purpose of the Charitable Trusts Act which seeks to provide a mechanism for the administrative establishment of cy-prés schemes by the Attorney General where the value of the trust funds is less than $500 000.
12 The appropriate declarations and orders are therefore as follows:

Declarations:

1 A declaration that there is no body in existence answering the description "Margaret Reid Orthopaedic Hospital, Pittwater Road, St. Ives" in Clause 6 of the will of Melbourne Earl Seibert, made 21st February 1950.

2. A declaration that the gift by the testator to the Margaret Reid Orthopaedic Hospital evidenced a general charitable intention.

Orders

1. Order the amount of the gift by applied cy-prés.

2. Order pursuant to s13 of the Charitable Trusts Act 1993 that it be referred to the Attorney General to establish a scheme for the administration of the charitable trust.

3. Order the costs of all parties be paid out of the fund, those of the plaintiff on the trustee basis.

I certify that paragraphs 1 to 11 are a true copy of the Reasons for Judgment given by Mr Justice Windeyer in matter 4013/98 Permanent Trustee Company Limited v Attorney General of the State of New South Wales & Ors.

______________________________
Laurel Laurent
Associate to Mr. Justice Windeyer

9 April 1999

**********

Last Modified: 04/12/1999