Re AM McClelland Estate - [2025] VSC 343

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

TRUSTS, EQUITY AND PROBATE LIST

S ECI 2024 03080

IN THE MATTER of r 54.02 of the Supreme Court (General Civil Procedure) Rules 2015
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IN THE MATTER of ss 51, 63 and 71 of the Trustee Act 1958
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IN THE MATTER of s 2 of the Charities Act 1978
McCLELLAND ARTS LTD as trustee for AM McCLELLAND ESTATE (ACN 674 723 347) and Ors (according to the attached Schedule)	Plaintiffs
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ATTORNEY-GENERAL FOR THE STATE OF VICTORIA	Defendant

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JUDGE:	Harris J
WHERE HELD:	Melbourne
DATE OF HEARING:	25 March 2025
DATE OF JUDGMENT:	17 June 2025
CASE MAY BE CITED AS:	Re AM McClelland Estate
MEDIUM NEUTRAL CITATION:	[2025] VSC 343

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TRUSTS AND ESTATES – Trust created by terms of will – Bequest of real and personal property for creation of charitable trust for establishment and maintenance of art gallery and use of surrounding land for public educational purposes – Terms of trust include providing access to public free of charge - Bequest insufficient to fund building and ongoing maintenance of art gallery and all related activities - Charitable trust able to effect original purposes only with financial and other contributions from donors – Continuing operation of trust unsustainable without amendment to terms of trust – Variation of trust by way of cy-près scheme to enable continued operation of gallery, park and educational activities – Trustee Act 1958, ss 51, 52, 58 and 61 – Charities Act 1978, s 2.

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APPEARANCES:	Solicitor advocate	Solicitors
For the Plaintiffs	Mr C Scerri KC	Corrs Chambers Westgarth
For the Defendant	No appearance

TABLE OF CONTENTS

Introduction........................................................................................................................................ 1

The Trust.............................................................................................................................................. 2

Restructure plan............................................................................................................................ 6

The application................................................................................................................................... 7

The evidence....................................................................................................................................... 8

The Court’s powers under the Trustee Act 1958 and Charities Act 1978................................. 9

Vesting order – Legislative powers............................................................................................ 9
Vesting order – Analysis............................................................................................................ 10
Termination of custodian trusteeships.................................................................................... 12
Variation of Trust terms by way of a cy-près scheme........................................................... 13

Conclusion......................................................................................................................................... 20

HER HONOUR:

Introduction

On 24 November 1961, Ms Annie May McClelland died and bequeathed her estate of real and personal property for purposes that included the creation of a charitable Trust on terms identified in her Will.[1] The Trust’s purposes were broadly to establish a public art gallery to exhibit the art works of Ms McClelland including those of her late brother, Mr Harry McClelland, and for public educational purposes.[2] A stipulation of the Will was that the public be admitted to the gallery free of charge.[3]
[1]Affidavit of Lisa Maree Byrne affirmed 3 June 2024 (Byrne Affidavit), [22].
[2]Byrne Affidavit, [39].
[3]Byrne Affidavit [39], Exhibit LB-1, 37 (Last Will and Testament of Ms Annie May McClelland, clause ‘o’).

Probate of the Will was granted to the executors of Ms McClelland’s estate on 13 April 1962.[4] While working towards the establishment of the gallery, including the design and construction of a gallery building,…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Re AM McClelland Estate

Details

AGLC: Re AM McClelland Estate [2025] VSC 343
Case: [2025] VSC 343
Decision Date: 17 June 2025

CaseChat Overview and Summary

In the matter of the estate of the late AM McClelland, the executors of the will sought to establish a charitable trust for the creation and maintenance of an art gallery and the use of surrounding land for public educational purposes. The terms of the trust included the provision of access to the gallery and land free of charge. The bequest made in the will, however, was not sufficient to fund the building and ongoing maintenance of the gallery and all related activities. The charitable trust could only achieve its original purposes with financial and other contributions from donors, and without such contributions, the continuing operation of the trust was unsustainable. The executors sought to amend the terms of the trust by way of a cy-près scheme to enable the continued operation of the gallery, park, and educational activities.

The court was required to determine whether the terms of the trust could be varied by way of a cy-près scheme and whether such a scheme would enable the continued operation of the gallery, park, and educational activities in a manner that was consistent with the testator's intentions. The court also needed to consider whether the variation of the trust would be in the best interests of the beneficiaries and whether it was in accordance with the relevant statutory provisions.

The court held that the terms of the trust could be varied by way of a cy-près scheme and that such a scheme would enable the continued operation of the gallery, park, and educational activities in a manner that was consistent with the testator's intentions. The court found that the variation of the trust was in the best interests of the beneficiaries and was in accordance with the relevant statutory provisions. The court also held that the cy-près scheme was a valid and effective means of achieving the original purposes of the trust, despite the insufficiency of the original bequest.

The court made an order varying the terms of the trust by way of a cy-près scheme, enabling the continued operation of the gallery, park, and educational activities. The court also ordered that the executors take all necessary steps to implement the cy-près scheme and to ensure that the trust was administered in accordance with the varied terms.

Orders