Public Trustee v Cerebral Palsy Association of Western Australia Ltd - [2004] WASC 36

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: THE PUBLIC TRUSTEE As Administrator of the Estate of HERBERT SEBASTIAN HODGE (Dec) -v- CEREBRAL PALSY ASSOCIATION OF WESTERN AUSTRALIA LTD & ANOR [2004] WASC 36

CORAM: BARKER J

HEARD: 12 JUNE 2003

DELIVERED : 11 MARCH 2004

FILE NO/S: CIV 2777 of 2002

BETWEEN: THE PUBLIC TRUSTEE As Administrator of the Estate of HERBERT SEBASTIAN HODGE (Dec)
Plaintiff
AND
CEREBRAL PALSY ASSOCIATION OF WESTERN AUSTRALIA LTD
First Defendant
SALVATION ARMY (WESTERN AUSTRALIA) PROPERTY TRUST
Second Defendant

Catchwords:

Succession - Will - Construction - Testamentary disposition to association - Proviso to disposition - Association dissolved with practical successor - Whether association ceased to exist - Whether charitable trust - Application of lapse rule

Legislation:

Associations Incorporation Act 1987 (WA), s 34

The Salvation Army (Western Australia) Property Trust Act 1931 (WA), s 9

Result:

Estate passes to first defendant

Category: A

Representation:

Counsel:

Plaintiff:     Mr D L Jones
First Defendant             :     Mr I R Freeman
Second Defendant         :     Ms M A Kershaw

Solicitors:

Plaintiff:     Public Trustee
First Defendant             :     Phillips Fox
Second Defendant         :     Anderson Josland

Case(s) referred to in judgment(s):

Clark v Taylor (1853) 1 Drew 642; (1853) 61 ER 596
In re Harwood; Coleman v Innes [1936] Ch 285
In re Ovey; Broadbent v Barrow (1885) 29 Ch D 560
In re Quesnel (Dec) [1959] SASR 106
In re Rymer; Rymer v Stanfield [1895] 1 Ch 19; [1891‑4] All ER Rep 328
In re Vernon's Will Trusts [1972] Ch 300; [1971] 3 All ER 1061
Re Faraker; Faraker v Durell [1912] 2 Ch 488
Re Godfree (Dec) [1952] VLR 353
Re Stemson's Will Trusts; Carpenter v Treasury Solicitor [1970] 1 Ch 16
Sir Moses Montefiore Jewish Home v Howell & Co (No 7) Pty Ltd [1984] 2 NSWLR 406
Smith v West Australian Trustee Executor & Agency Co Ltd (1950) 81 CLR 320
Sydney Homeopathic Hospital v Turner (1959) 102 CLR 188

Case(s) also cited:

Boyes v Cook (1880) 14 Ch D 53
In re Bailey; Barrett v Hyder (1951) Ch 407
In re Binder; Sobels v Attorney-General [1942] SASR 251
National Society for Prevention of Cruelty to Children v Scottish National Society for Prevention of Cruelty to Children [1915] AC 207
Perrin v Morgan [1943] AC 399
Re Tyrie (No 1) [1972] VR 168

BARKER J:

The question

The Public Trustee as administrator of the estate of Herbert Sebastian Hodge, deceased, by an originating summons dated 30 December 2002, seeks the determination of a question arising in the administration of the estate of the deceased. The question is:
"Does the estate of the deceased pass to the First Defendant or to the Second Defendant?"

The circumstances in which the question arises

The deceased died on 1 June 2001. Probate of his last will and testament was granted to the Public Trustee, the executor appointed under the will, on 27 August 2001. At the time of his death, the deceased was a resident of Brightwater, Renegade Way, Kingsley, Western Australia and was a retired clerk. By his will, the deceased specified that:
"SUBJECT TO the payment of my just debts funeral and testamentary expenses I DEVISE and BEQUEATH the whole of my real and personal estate to the SPASTIC WELFARE ASSOCIATION OF WESTERN AUSTRALIA INCORPORATED provided however that if the said association does not exist at the date of my death to the SALVATION ARMY (WESTERN AUSTRALIA) PROPERTY TRUST." (Upper case in original)
The will was made on 27 October 1992. At the time the will was made, the Spastic Welfare Association of Western Australia Incorporated (Spastic Welfare Association) existed. It was then an association incorporated pursuant to the Associations Incorporation Act 1987 (WA). However, in the circumstances described later in these reasons, by virtue of an order made by the Acting Commissioner for Corporate Affairs published in the Government Gazette on 31 December 1992, the Spastic Welfare Association was dissolved and the property of the association became the property of the first defendant, the Cerebral Palsy Association of Western Australia Ltd (Cerebral Palsy Association) and the rights and liabilities of the Spastic Welfare Association became the rights and liabilities of the Cerebral Palsy Association. The Cerebral Palsy Association is a company limited by guarantee which was incorporated under the law of Western Australia on 3 November 1992.
Thus, the question has arisen, whether the estate goes to the Salvation Army (Western Australia) Property Trust (the Trust) or the Cerebral Palsy Association as the practical successor to the Spastic Welfare Association.

The Spastic Welfare Association and the Cerebral Palsy Association and the issue of succession

Since 31 December 1992, the Cerebral Palsy Association has carried on, in all material respects, the same undertaking and operations as were carried on by the Spastic Welfare Association prior thereto.
The objects of the Spastic Welfare Association, at all material times, were stated as follows:
"3.1The purpose of the Association is to:
-   enable people with disabilities (in particular people with cerebral palsy), through the development of competencies, to be self determining and maximise life opportunities, as dignified and productive members of the community;
-   assist families of people with disabilities (in particular people with cerebral palsy);
-   promote positive community attitudes and responses towards people with disabilities (in particular people with cerebral palsy);
-   provide an innovative research‑based service for people with disabilities (in particular people with cerebral palsy).
3.2The Spastic Welfare Association seeks to provide unique services and the development of resources to ensure that people with disabilities (in particular people with cerebral palsy) who have special needs are enabled to participate in community life."
The objects of the Cerebral Palsy Association, as stated in its Memorandum of Association, include the following:
"2.1The main object for which the Company is established is to take over (pursuant to Section 34 of the Associations Incorporation Act 1987 or otherwise) the undertaking, Property, rights and liabilities of the association known as 'The Spastic Welfare Association of Western Australia (Incorporated)' being an association incorporated under the Associations Incorporation Act 1987 and having registration number A0510015X.
2.2Subject to Clause 2.1 of this Memorandum of Association the additional objects for which the Company is established are:
2.2.1to enable people with disabilities (in particular people with cerebral palsy), through the development of competencies, to be self determining and maximise life opportunities, as dignified and productive members of the community;
2.2.2to assist families of people with disabilities (in particular people with cerebral palsy);
2.2.3to promote positive community attitudes and responses towards people with disabilities (in particular people with cerebral palsy);
2.2.4to provide an innovative research‑based service for people with disabilities (in particular people with cerebral palsy);
2.2.5to provide unique services and the development of resources to ensure that people with disabilities (in particular people with cerebral palsy) who have special needs are enabled to participate in community life."
The initial office bearers of the Cerebral Palsy Association included most of the persons who were the office bearers of the Spastic Welfare Association at the time of its dissolution. It appears that the office bearers and members of the Spastic Welfare Association, having received professional advice to this effect, formed the view that it would be more expedient for the objects, undertaking and operations of the association to be pursued through a non‑profit company limited by guarantee. As a result, the Cerebral Palsy Association was incorporated.
The Cerebral Palsy Association having been formed, the Spastic Welfare Association requested the Acting Commissioner for Corporate Affairs to cause the transfer of its undertaking and operations to the Cerebral Palsy Association pursuant to the Associations Incorporation Act.
Such a transfer is possible under s 34(1) of the Associations Incorporation Act which relevantly provides that:
"(1) Where the Commissioner is of the opinion —
(a)…
(b)that the undertaking or operations of an incorporated association are being carried on by a body corporate incorporated under some other Act, or would more appropriately be carried on by such a body corporate,
the Commissioner may give notice to the association under this section."
By s 34(2) of the Act if, within three months of the date of a notice under subs (1), the incorporated association requests the Commissioner to transfer its undertaking to a body corporate specified in the request, the Commissioner may, by order published in the Gazette, order that the undertaking of the association be transferred accordingly.
By s 34(3) of the Act, on the publication of an order under subs (2), the following things occur -
(a)the incorporated association is dissolved;
(b)the property of the association becomes the property of the body corporate referred to in the order; and
(c)the rights and liabilities of the association (whether certain or contingent) become rights and liabilities of the body corporate referred to in the order.
By s 34(4) of the Act, the Registrar of Titles, the Registrar of Deeds, the Commissioner, and any other person authorised by a written law to record and give effect to the registration of documents relating to transactions affecting any estate or interest in land or other property, may take cognizance of an order made under this section and is empowered to record and register in the appropriate manner such matters as are necessary to give effect to such an order. Thus, by way of example, the Registrar of Titles may ensure that a certificate of title to land previously specifying that the incorporated association is the registered proprietor thereof is altered to show that the body corporate referred to in the order is now the registered proprietor thereof.
Section 34, put shortly, enables the Commissioner for Corporate Affairs to permit a body corporate to become the successor body to an incorporated association in respect of the undertaking or operations of that incorporated association where the Commissioner considers that the undertaking or operations of the association would "more appropriately" be carried on by such a body corporate.
By a "Notice of Opinion" dated 19 November 1992, the then Acting Commissioner for Corporate Affairs formed the opinion, for the purposes of s 34(1)(b) of the Act, that the undertaking and operations of the Spastic Welfare Association "would be more properly carried on by The Cerebral Palsy Association of Western Australia Ltd".
The Spastic Welfare Association then requested the transfer of its undertaking to the Cerebral Palsy Association.
An order was then made by the Acting Commissioner on 14 December 1992 and published in the Gazette on 31 December 1992 ordering the undertaking of the Spastic Welfare Association be transferred to the Cerebral Palsy Association with effect from 31 December 1992.
Thus, by force of the Act, as and from 31 December 1992 -
(1)the Spastic Welfare Association was dissolved;
(2)the property of the Spastic Welfare Association became the property of the Cerebral Palsy Association; and
(3)the rights and liabilities of the Spastic Welfare Association, whether certain or contingent, became the rights and liabilities of the Cerebral Palsy Association.
It also follows that, as a result of the publication of the order in the Gazette, since 31 December 1992, the Cerebral Palsy Association has lawfully carried on the undertaking and operations formerly carried on by the Spastic Welfare Association.
As a matter of fact, upon the transfer of the undertaking and operations of the Spastic Welfare Association to the Cerebral Palsy Association -
(1)the chief executive officer of the Spastic Welfare Association became the chief executive officer of the Cerebral Palsy Association;
(2)the chairman and directors of the board of the Spastic Welfare Association remained as chairman and directors of the Cerebral Palsy Association until completion of their tenure;
(3)the management team of the Spastic Welfare Association took up the same position at the Cerebral Palsy Association;
(4)the "clients" of the Spastic Welfare Association became the "clients" of the Cerebral Palsy Association and received the same services provided by the same staff;
(5)the government funding for the work of the Spastic Welfare Association was provided in the same manner to the Cerebral Palsy Association;
(6)property, including land, buildings and vehicle fleet, of the Spastic Welfare Association became that of the Cerebral Palsy Association;
(7)the headquarters of the Spastic Welfare Association became the headquarters of the Cerebral Palsy Association;
(8)the letterhead of the Cerebral Palsy Association retained the "Forget‑Me‑Not" logo used by the Spastic Welfare Association and included the words "formerly Spastic Welfare Association of Western Australia (Inc)";
(9)beneficiaries of fund‑raising initiatives of the Cerebral Palsy Association remained the same as those of the Spastic Welfare Association;
(10)the mission statement of the Spastic Welfare Association was retained by the Cerebral Palsy Association until 2001.
Thus, for all practical intents and purposes, the undertaking and operations of the Spastic Welfare Association have been continued without change by the Cerebral Palsy Association since the Spastic Welfare Association was dissolved and the Cerebral Palsy Association has succeeded the Spastic Welfare Association in every practical way.

The lapse rule and its exceptions

Ordinarily, where a person or entity named as a beneficiary in a will is deceased or has ceased to exist at the date of the death of the testator, the gift, bequest or devise specified in the testator's will to that person or entity lapses. However, the lapse doctrine has exceptions where the object of the testator's testamentary disposition is a charitable institution or where the disposition has a charitable purpose.
In this regard the statement in Jacobs' Law of Trusts in Australia, 6th ed R P Meagher and W M C Gummow (eds), at [1084] encapsulates the doctrine and the exceptions, and its application, from a modern perspective:
"Where there is a gift to a particular named charitable institution which once existed but which has ceased to exist by the date of the testator's death, tests of considerable refinement have been invented by the courts in order to determine whether the gift will be upheld or not. Formerly, there was a simple rule: if the gift displayed a general charitable intention, the disposition was considered valid and a cy‑pres scheme ordered; whereas if the disposition displayed a merely particular charitable intention, the gift lapsed just as in the case of a gift to an individual who predeceased the testator. Thus, it was held that there was no lapse where it is clear that the testator had a general intention of charity and named the particular charity merely as one of the modes of giving effect to his intentions."
Thus, as the learned authors of Jacobs' Law of Trusts in Australia go on to illustrate, in In re Ovey; Broadbent v Barrow (1885) 29 Ch D 560, a bequest to an ophthalmic hospital which had ceased to exist at the date of the will was held to have lapsed and not to be administered cy‑pres. So too in In reRymer; Rymer v Stanfield [1895] 1 Ch 19; [1891‑4] All ER Rep 328, a gift to an institution which had ceased to exist shortly before the testator's death was held to have lapsed and the cy‑pres doctrine was held not applicable. Similarly, in Clark v Taylor (1853) 1 Drew 642; (1853) 61 ER 596, there was a gift to a particular charitable institution maintained voluntarily by private means. The institution had ceased to exist when the will took effect and it was held that the gift fell into the residue. Kindersley V‑C stated at 644 (ER at 597) that:
"The question is whether the gift in this will is to be considered as a gift intended for charitable purposes generally, or whether it was simply intended for the benefit of a particular private charity. Now, there is a distinction well settled by the authorities. There is one class of cases in which there is a gift to charity generally, indicative of a general charitable purpose, and pointing out the mode of carrying it into effect; if that mode fails, the court says the general purpose of charity shall be carried out. There is another class in which the testator shows an intention, not a general charity, but to give to some particular institution; and then if it fails, because there is no such institution, the gift does not go to charity generally; that distinction is clearly recognised; and it cannot be said that, wherever a gift to any charitable purpose fails, it is nevertheless to go to charity."
However, as the learned authors of Jacobs' Law of Trusts in Australia further emphasise at 270, modern authorities have introduced refinements to the law - they call them "some further complications in the law". They observe that it is no longer true to say that, if a gift displays a merely particular charitable intention, it will lapse. The learned authors state:
"In the latter case, it is first necessary in every case to construe the gift in order to determine whether it is in truth a gift to a particular named charitable institution or a gift to a particular charitable purpose, and if it can be construed as a gift to a particular charitable purpose it will often, if not always, be upheld if that purpose remains capable of practical fulfilment."
The learned authors cite Sir Moses Montefiore Jewish Home v Howell & Co (No 7) Pty Ltd [1984] 2 NSWLR 406 in support of this proposition.
However, counsel for the first defendant says there is a prior question which must be dealt with before the exceptions to the lapse doctrine are considered in a case such as this. It is whether the Spastic Welfare Association had in truth ceased to exist at the time the deceased's will took effect. If it had not, then the question of the application of the exceptions to the lapse doctrine does not arise.

The question whether the Spastic Welfare Association "ceased to exist"

If one is to approach the question whether the Spastic Welfare Association had ceased to exist at the time the will took effect as a question of whether or not it was incorporated at the relevant date, the answer must be that it had ceased to exist, because the order of the Acting Commissioner for Corporate Affairs published in the Gazette on 31 December 1992 had the express effect, provided for by s 34(3) of the Associations Incorporation Act, of dissolving it.
In Re Stemson's Will Trusts; Carpenter v Treasury Solicitor [1970] 1 Ch 16, a question not unlike that raised here was considered. In that case, the testator by his will gave the residue of his estate to the Rationalist Endowment Fund Ltd (REF), a company incorporated in England, for the purpose of founding a hostel for the benefit of rationalists in reduced circumstances. One of the objects of REF was to provide for the relief of poor and needy persons associated with rationalist or ethical groups or churches, or persons no longer connected with churches. But REF was dissolved in 1965 and, pursuant to its memorandum of association, which required the transfer of its assets on dissolution to some institution having similar objects, REF transferred its assets to the Rationalist Press Association Ltd, a company registered in England as a charity, with charitable objects, although none for the relief of poverty corresponding with those of REF. When the testator died in 1966, an application was taken out to determine whether the gift of residue lapsed.

In argument, Treasury counsel, at 18, submitted that three propositions might be put forward in such a case:
(1)the testator had evinced a general charitable intention and that his residuary estate should accordingly be applied cy‑pres; or
(2)the gift was not one to REF as a legal person but for charitable purposes, REF being merely a trustee for the carrying out of those purposes; or
(3)on the facts, the charitable institution to which the gift was made had not really ceased to exist.
It is this third proposition that is presently relevant.
The third proposition, that REF still existed, was propounded on the basis that "a charity never dies". It was said that this principle was reflected in a line of cases starting with Re Faraker; Faraker v Durell [1912] 2 Ch 488, which holds that a charitable trust which no‑one has the power to terminate retains its existence despite such vicissitudes as schemes made by charity commissioners, changes of name, amalgamations with other charities and the like, so long as it has funds.
However, that principle, it was contended, has no more application where the charity is a company formed under companies legislation, since it is inherent that companies have power to wind themselves up, than it has where there is a trust with a clause in its constitution enabling it to be wound up.
One of the cases in the Re Faraker line of cases referred to, was the then unreported decision of Buckley J in In re Vernon's Will Trusts (reported subsequently in a note at [1972] Ch 300; [1971] 3 All ER 1061). In that case, the testatrix died in 1960. Her will had been made in 1937. In her will she gave a share of the residue of her estate to a charity incorporated as a company and called "Coventry and District Crippled Children's Guild". The company owned premises used as an orthopaedic hospital and had certain endowments. On 5 July 1948 its hospital premises and the endowments vested in the minister free of any trust by virtue of ss 6 and 7 of the National Health Service Act 1946 (Eng). In 1952, the name of the company was struck off the register of companies under the Companies Act 1948 and the company was dissolved. At the date of the testatrix's death, the hospital formerly run by the company was still being carried on by the hospital management committee. The question which Buckley J had to decide was: what happened to the legacy?
Buckley J held, first, that the legacy was one to the company as part of its general funds and was not a trust or purpose legacy. He then went on to consider the effect of the National Health Service Act and stated as follows:
"The endowments thus became merged in the hospital endowments fund set up by the Act and ceased to have any separate identity. The immovable properties of the guild on the other hand and the equipment and furniture of them, although they ceased to be irrevocably dedicated to orthopaedic uses, continued to be used precisely as they were previously until after the testatrix died, except that from 1951 the uses of the hospital were extended by the admission of adults as well as children as patients. In these circumstances, in my judgment, the true view is that the charity, which at the date of the testatrix's will was being carried on by the incorporated guild, continued in existence down to and after the date of her death in the form of the orthopaedic clinic and hospital which were conducted by the first defendant … The fact that its continued existence after July 5, 1948, may be said to have been precarious, because those with power under the National Health Service Act, 1946, to decide such things might at any time have decided to discontinue the use of the properties for orthopaedic purposes and might possibly have done so without transferring the orthopaedic activities theretofore carried on at the clinic and the hospital and continuing them elsewhere, is, in my judgment, irrelevant. If on the true view the charity existed at the testatrix's death and so became entitled to the bequest, its subsequently ceasing to exist would not cause the bequest to fail (In re Slevin [1891] 2 Ch 236). As in In re Lucas [1948] Ch 424 the court held that the bequest to the Crippled Children's Home … was on its true construction a gift simply in augmentation of the funds of the charity so described, so in the present case I think the bequest to the 'Coventry Crippled Children's Guild' was on its true construction a gift simply in augmentation of the funds of the incorporated guild; and as in In re Lucas the bequest did not fail by reason of the physical home having been closed but took effect in favour of the charity in the new and different form into which it had been transmuted by an order of the Charity Commissioners, so by parity of reasoning, in my judgment, in the present case the bequest took effect at the death of the testatrix in favour of the charity then being conducted by the first defendant in unbroken continuance of the charity which at the date of the will was being conducted by the incorporated guild." (emphasis supplied)
Buckley J then directed a scheme.
In In re Stemson's Will Trusts (supra), Plowman J, having referred to this dicta of Buckley J, noted that the memorandum of association of the company in In re Vernon's Will Trusts (supra) included a clause, similar to cl 7 in the memorandum of association of REF, to the effect that on a winding‑up, any surplus assets should be transferred to some other institution having similar objects. Plowman J decided that the Re Faraker (supra) line of cases, including In re Vernon's Will Trusts, did not mean that the answer would be the same if the facts in In re Vernon's Will Trusts had been that, instead of there being a compulsory transfer of its property, the company had been wound up and transferred its property elsewhere. In other words, Plowman J treated the result in In re Vernon's Will Trusts as depending upon its own facts and was to be explained by reference to the compulsory transfer of property effected by the National Health Service Act.
Plowman J stated, at 26, what he considered to be the "true proposition":
" … a charitable trust, which no one has power to terminate, retains its existence despite such vicissitudes as schemes, amalgamations and changes of name so long as it has any funds.
It follows, in my judgment, that where funds come to the hands of a charitable organisation, such as REF, which is founded, not as a perpetual charity but as one liable to termination, and its constitution provides for the disposal of its funds in that event, then if the organisation ceases to exist and its funds are disposed of, the charity or charitable trust itself ceases to exist and there is nothing to prevent the operation of the doctrine of lapse."
Thus, Plowman J found that the gift to REF was to a charitable corporation as such and was not a gift for charitable purposes, or a "purpose gift", as it is sometimes called. He also held that the will did not disclose a general charitable intention. Plowman J noted that in In re Harwood; Coleman v Innes [1936] Ch 285, it was held that when a testator selects a particular charity and takes some care to identify it, it is very difficult for the Court to find a general charitable intention. He was unable to find such an intention in the case before him. Having found that the charity or charitable trust itself ceased to exist when REF ceased to exist, Plowman J concluded that the testator's residuary estate was undisposed of by his will.
Having regard to the decision in Re Stemson's Will Trusts (supra), and the authorities discussed in it, including In re Vernon's Will Trusts (supra), certain observations may be made in respect of the matter before me. First, it is clear that, not unlike the company REF, the subject of Re Stemson's Will Trusts, the Spastic Welfare Association was an incorporated body capable of being wound up at law. That, perhaps, suggests that the "true proposition" stated by Plowman J in respect of a charity can have no application in relation to this matter because there is, in fact, a charitable trust which someone has the power to terminate.
Secondly, there may be considered a material difference between a company such as REF, whose memorandum of association includes a power to wind up and transfer its assets to a like‑minded corporation, and an association such as the Spastic Welfare Association, which is an association incorporated under the Associations Incorporation Act and controlled by its terms. The Act is intended to enable, generally speaking, non‑profit or charitable organisations to be incorporated with all the benefits that flow from incorporation. While an association so incorporated may be wound up, the winding‑up of the company is subject to the provisions of the Act. Such an association is not entitled, by virtue of its own resolution, to wind itself up and transfer its assets and liabilities to some other person, corporation or incorporated association. On winding‑up, the Commissioner for Corporate Affairs has the power to regulate the proposed manner of distribution of surplus assets: s 33. Moreover, as noted above, the Commissioner has the power under s 34 to require an association to transfer its activities and undertaking to a body corporate which has been incorporated under some other Act. The Commissioner has a broad discretion to make an order to that effect where he or she considers the undertaking or operations of the association would "more appropriately" be carried on by that other body corporate: s 34(1).
A third point of difference is related to the question raised by Plowman J, namely, whether the funds of the organisation said no longer to exist have been disposed of. In In re Quesnel (Dec) [1959] SASR 106, at 110, Napier CJ made a similar point when he noted that there would be no lapse of a gift made in augmentation of the funds of a charity, "because the charity cannot die, ie, until the funds are completely expended and exhausted the trust for the charity is enforceable, and in that sense, subsisting … ".
Because of the regulatory regime under which the Spastic Welfare Association operated at material times, it appears to me that the circumstances of the case before me are much more akin to the Re Faraker (supra) line of cases than they are to the line of cases reflected by the decision in Re Stemson's Will Trusts. The essence of a decision such as In re Vernon's Will Trusts, and also in the matter before me, is that in practical and charitable purpose terms, the Spastic Welfare Association has not ceased to exist. But for the exercise of the discretionary power of the Acting Commissioner of Corporate Affairs and the operation of the Act, albeit at the request of the Spastic Welfare Association, the charitable institution would have continued in existence providing the same charitable undertaking and operations, and holding the same assets that are now generally provided and held by the Cerebral Palsy Association.
However, while there is some force in the argument that, because of the regulatory regime under which the undertaking and activities of the Spastic Welfare Association were transferred to the Cerebral Palsy Association, the Spastic Welfare Association did not, as of the date of the deceased's death, "cease to exist", I think the true question here is not so much whether the entity ceased to exist, as whether the gift to the Spastic Welfare Association was one disclosing a general charitable intention. I now turn to that question.

The question whether the lapse rule should apply in any event

If I should be wrong in considering that the Spastic Welfare Association did not cease to exist at the date of the deceased's death, the further question that then arises is whether any of the exceptions to the lapse rule would apply in this case.
In this regard, the primary question is whether the gift to the Spastic Welfare Association should be construed as disclosing a general charitable intention or as a gift to a named institution for its purposes. If the gift is to an institution for its named purposes, and the institution has in fact ceased to exist, then the gift will lapse. If, though, it were made for a general charitable purpose the lapse rule will not apply. In many respects, the question is similar to, if not the same as, the first question already dealt with.
In my view, having regard to the purposes for which the Spastic Welfare Association was formed, and the objects and undertaking of that association prior to its dissolution under the Associations Incorporation Act, the Spastic Welfare Association was entirely committed to a charitable purpose.
In those circumstances, I have little doubt that the deceased intended that the gift he made of his estate be for the charitable purposes carried on by the Spastic Welfare Association and not a gift to that institution for its purposes. Put another way, I consider it was a gift for the purpose of enabling or assisting the named institution to carry on the charitable enterprise in which it was engaged when the will was made, that is to say, as a gift in augmentation of the funds of that charity: see In re Quesnel (Dec) (supra), at 109 ‑ 110.
In this regard, I accept what Latham CJ said in Smith v West Australian Trustee Executor & Agency Co Ltd (1950) 81 CLR 320, at 322, that, in general terms, a gift to charitable institutions is prima facie a gift for charitable purposes and that such a gift to a body having a distinctive charitable purpose prima facie renders that a gift for such purposes.
In that regard, I note what Herring CJ said in Re Godfree (Dec) [1952] VLR 353, at 356, in relation to a gift to an institution incorporated by statute:
"The charitable nature of the gift derives from the fact that the purposes and objects of the institution are themselves charitable, for it is presumed that a gift to such an institution without more is to be held for its general purposes and objects. The devotion to charity is effected by the institution itself applying the income each year as it is received to its purposes and objects."
In Sydney Homeopathic Hospital v Turner (1959) 102 CLR 188 (at 220 ‑ 222) Kitto J made observations to similar effect. His Honour accepted that there were some limitations on this prima facie view, noting that:
"Not, of course, that a trust arises in every case of a gift to a body established for limited objects. The nature of the objects may have provided the donor with the motive for his gift, and yet the gift may be a beneficial gift entitling the body to apply the property as it sees fit within the scope of its powers as they exist from time to time. Property given to a company, for example, is not necessarily held on trust for the objects stated in the company's memorandum of association, nor is property which is given to a chartered corporation necessarily held on trust for application in accordance with the charter. 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. … an inference arises that the gift is upon trust for charitable purposes (or for charitable purposes and others which are no more than ancillary)."
I should observe that I would also consider a gift made directly to the Trust to be of a similar nature.
The Trust was constituted under The Salvation Army (Western Australia) Property Trust Act 1931 (WA). The stated purpose of the Act is to provide for the temporal affairs of The Salvation Army in the State of Western Australia.
Section 9(1) of the Act provides:
"All property from time to time vested in the body corporate shall, so far as the same is not subject to any express trusts other than the said recited Deeds Poll, be held and dealt with as follows:-
(a)Property so held for the general purposes of The Salvation Army shall be held and dealt with in accordance with and subject to such of the trusts, powers, and provisions of the Deed of Constitution and the Deed Poll of 26 July 1904, as are applicable to such general purposes;
(b)Property so held for the Social Work of The Salvation Army shall be held and dealt with in accordance with and subject to the said recited Deed Poll of 1 June 1920."
There are two separate funds within the trust into which bequests are paid. Bequests which are made specifically for the Social Work of the Salvation Army are used for the purposes stated in the preamble to the Act being:
" … for the social, moral, and temporal welfare and improvement of the poorer and more needy classes of society, and of persons who were destitute, vicious, or feeble‑minded, or suffering from injury or sickness, or ill‑health, or orphans, or other children needing care in orphanages or reformatories, and for other charitable purposes … "
Bequests not specifically directed to the purposes of the Social Work of The Salvation Army are paid into the account for the general purposes of The Salvation Army which includes acquisition, maintenance and refurbishment of churches and other buildings of The Salvation Army which, as well as being used by The Salvation Army, are used by community groups for various community purposes.
The gift in the will of the deceased does not specify that it is to be used for social work, and, so, in the ordinary course of events the proceeds of the gift would be paid into the account for the general purposes of The Salvation Army.
For the reasons suggested in the dicta of Herring CJ and Kitto J referred to above, I accept that a gift made to the Trust evidences a gift made for the purpose of enabling or assisting that named institution to carry on the charitable enterprise in which it was engaged when the will was made (or for charitable purposes and others which are no more than ancillary).
In these circumstances, if the gift in the deceased's will had merely been to the Spastic Welfare Association, without the proviso in the event that it did not exist at the date of the death of the deceased, I would have no hesitation in finding that the Cerebral Palsy Association should have the benefit of the gift as the institution which now wholly undertakes the charitable purposes to which the deceased intended his largesse should be applied.

The effect of the proviso to the gift

The complication simply is that, in his will, the deceased made an express proviso to such an absolute gift to take account of the circumstance that the Spastic Welfare Association did not exist at the date of his death. In that event, he expressly provided that the gift should be to the Trust.
Where the terms of a willed gift are clear and definite that a particular result is intended, then the will must be applied so that that result is achieved. For example, in In re Quesnel (Dec) (supra), the deceased by her will made in 1943 gave a pecuniary legacy to "The Church of England Men's Hostel, Wright Street, Adelaide" and left the residue of her estate in trust for "the Adelaide Children's Hospital Incorporated and the Church of England Men's Hostel, Wright Street, Adelaide, in equal shares, or for such one of the said institutions as shall be in existence at the time of my death absolutely".
At the time the will was made, the Church of England Men's Society conducted a hostel for aged and destitute men in rented premises in Wright Street, Adelaide. It was known as "the Church of England Men's Hostel", but was never incorporated and never had any formal constitution. In 1947, owing to its premises being sold, the hostel was closed and its operations were suspended. Its funds were invested and held in trust by a committee appointed by the society.

In 1950 the Synod of the Church of England established a Home for the Aged, and part of the hostel funds was paid to Synod to be used for the addition to the Home of a wing for the accommodated of aged men, to be known as the "Church of England Diocesan Men's Hostel Wing". The testatrix died in 1951. The hostel committee continued to meet at infrequent intervals until 1953, when the remaining funds of the hostel were paid to Synod for the purposes of the Church of England Diocesan Men's Hostel Wing at the home. The committee was then dissolved.
Napier CJ, in those circumstances, held, first, that the hostel was not "in existence" at the time of the death of the testatrix, and that the residue of her estate was to be held in trust for the Adelaide Children's Hospital Incorporated absolutely. However, the Chief Justice held, secondly, that the pecuniary legacy should be paid to the Synod of the Church of England to be applied for the purposes of the Church of England Diocesan Men's Hostel wing of the home.
So far as the gift of the residue was concerned, the Chief Justice, at 109, stated:
"In the result, I am clearly of opinion that the language of the will is too clear and definite to permit of the residuary gift to the Hostel taking effect. But, so far as the pecuniary legacy is concerned, I see no reason why that should not be applied as nearly as may be to the purpose for which the testatrix intended that it should be used."
In relation to the pecuniary legacy, the Chief Justice, at 110, considered that the gift was made in augmentation of the funds available for carrying on the charitable enterprise of the institution in question and not to that institution for its purposes.
However, in relation to the gift of the residue, the Chief Justice considered the language of the will too clear to admit payment to anyone but the particular institution named by the testatrix. The Chief Justice considered he was unable to regard that as anything but a gift to the particular institution. The Chief Justice stated, at 110 ‑ 111:
"I am unable to regard that as anything but a gift to the particular institution. The fact that the address is mentioned is not conclusive … But, be that as it may, I think that the intention expressed in this will is that the trust is to take effect if, and only if, the particular institution is in existence when the testatrix dies.
As I see it, an individual may be said to exist so long as he or she is living, and a body corporate may be said to be in existence while the law recognises the corporate entity, but I do not think that a loosely‑organised institution like this Hostel can be said to have any life or existence, except in so far as it is functioning for its particular purpose. The closing of the Hostel with a view to its re‑opening in other premises would not necessarily put an end to the institution, but it seems to me that when the testatrix died the Committee had given up any idea of re‑opening the Hostel and resuming its activities in their own premises … In these circumstances I think that it is impossible to say that the Church of England Men's Hostel, Wright Street, Adelaide, was still in existence."
The Chief Justice, however, added, at 111, that:
"I have no doubt that, in some circumstances, it may be a question of fact and degree whether an institution retains its existence and identity when it changes its name or transfers its activities to another site, or when it amalgamates with another institution, but in this case, I am unable to regard what happened as anything but a closing of the Hostel, and the handing over of its funds and enterprise to another - a different - institution."
In my view, the language of the will of the deceased in the present case is not so clear to admit application of the gift to anyone but the particular institution, namely, the Spastic Welfare Association, named first in the will. I do not think that the language of the will must be construed as "anything but a gift to the particular institution".
Unlike the situation with the Hostel in In Re Quesnel, at all material times the Spastic Welfare Association was a well‑organised incorporated association, not a "loosely‑organised institution" like the Hostel, was not named in the will by reference to a particular address, and the service that it had provided at the date when the deceased made the will continued to be provided.
There is, indeed, nothing in the context of the will and the facts and circumstances of the case before me to suggest that the deceased, by the language employed in the will, intended that the gift should be to the named institution and no other.
Nor do I consider that, by employing in his will, the words "provided however that if the said association does not exist" the deceased intended to exclude an organisation such as the Cerebral Palsy Association should it become, in every practical sense, the successor to the Spastic Welfare Association. Rather, in the circumstances, I consider that the deceased by employing those words simply intended that, should there be no organisation at the date of his death committed to the objects, and undertaking the provision of the services, that the Spastic Welfare Association exhibited and undertook at the time he made his will, then the gift of his estate should go to the Trust.

Answers to questions

On its proper construction, I consider the deceased in his will exhibited an intention that, if the charitable purposes served by the Spastic Welfare Association continued to be served by another organisation - that is to say, that the fulfilment of the charitable purpose had ceased to be possible - then the new institution serving that charitable purpose should take the gift.
In these circumstances, I consider the answer to the question posed is that the estate of the deceased passes to the first defendant under the terms of the will of the deceased.