Re Coulson
[2014] VSC 353
•1 August 2014
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
PROBATE LIST
No. 4161 of 2013
IN THE MATTER of an application by STATE TRUSTEES LIMITED (as administrator of the Estate of CHRISTINE COULSON, deceased) pursuant to r 54.02 of the Supreme Court (General Civil Procedure) Rules 2005 for directions in relation to the administration of the Estate
| STATE TRUSTEES LIMITED (ACN 064 592 148) | Plaintiff |
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JUDGE: | McMillan J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 25 October 2013, 7 March 2014, 20 June 2014 | |
DATE OF JUDGMENT: | 1 August 2014 | |
CASE MAY BE CITED AS: | Re Coulson | |
MEDIUM NEUTRAL CITATION: | [2014] VSC 353 | |
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WILLS AND TRUSTS — Gifts to charitable institutions — Whether charitable institutions still in existence — Cy-près scheme — Supreme Court (General Civil Procedure) Rules 2005, r 54.02
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr T Mah | State Trustees Limited |
HER HONOUR:
Introduction
This is an unopposed application by the plaintiff, State Trustees Limited, concerning the construction and operation of cl 4 of the will of Christine Coulson (‘the deceased’) dated 11 March 1998 (‘the will’).
The application centres on the ambiguity in the description of the beneficiaries in cl 4 and whether the intended beneficiaries have ceased to exist, and if so, whether the purported gifts otherwise take effect.
The deceased died on 18 March 2011. The deceased never married nor had children. The plaintiff has found three siblings of the deceased who it believes are likely to be the deceased’s closest next of kin: Ms Janice Weeding, Mr Lawrence Coulson, and Mr Andrew Coulson. The plaintiff has notified the deceased’s three siblings of this application.
Butler, McIntyre & Butler, solicitors for Ms Weeding, wrote to the plaintiff setting out their views on the efficacy of the purported gifts in cl 4 of the will. However, as Ms Weeding does not seek to be added to or separately represented in this application, I shall not refer to her submissions any further.
The Victorian Government Solicitor’s Office notified the plaintiff that the Attorney-General does not wish to intervene in these proceedings.
The plaintiff has not utilised s 4(1) of the Charities Act 1978 which, in certain circumstances, allows trustees to apply to the Attorney-General for directions for the cy-près application of property given for charitable purposes.
Clause 4 of the will purports to make the following gifts:
I direct and give and devise and bequeath after meeting the costs of funeral and other personal debts that the rest and residue of my estate of whatsoever nature and wheresoever situate are to be sold and the proceeds divided equally between Aglow Australia Pty Ltd of 9th floor, 243 Edward Street, Brisbane QLD and Abundant Life Family Church 40 Beecher Street, Preston in the said State and that such proceeds of my residuary estate are to include monies from my Westpac Bank accounts at Ivanhoe & the Austin hospital and all fixed term annuities and roll overs and employment funds.
The two beneficiaries there specified are Aglow Australia Pty Ltd (‘Aglow’), and Abundant Life Family Church (‘Abundant Life’).
The plaintiff has been unable to locate any organisation with the name Aglow as specified in cl 4, but has found an organisation formerly known as Aglow Australia Inc and now known as Aglow International Australia Ltd (‘Aglow International’). It appears no organisation named ‘Aglow Australia Pty Ltd’ ever existed.
Further, the plaintiff has been unable to locate any organisation named Abundant Life but has found an organisation known as Spirit of Life Family Church, formerly located at 40 Beecher Street, Preston.
By originating motion filed 13 August 2013, the plaintiff asks the Court for answers to the following questions:
(a)Is the reference to Aglow in cl 4 of the will a reference to Aglow International?
(b)Is the reference to Abundant Life in cl 4 of the will a reference to Spirit of Life Family Church?
(c)If yes, does the gift to Spirit of Life Family Church create a valid charitable trust?
(d)Has the purported gift to Abundant Life in cl 4 of the will failed?
After the initial hearing of the proceeding, the Court requested the plaintiff to provide further evidence concerning both Aglow and Abundant Life. For the reasons that follow, because of that further evidence, it was no longer necessary to answer any of the questions in the originating motion as the Court was satisfied that final orders in respect of the gifts in cl 4 could be made.
Ambiguity in Description
In its submissions dated 24 October 2013, the plaintiff submitted the construction of the will is governed by the Wills Act 1958, rather than the Wills Act 1997.
The 1997 Act commenced operation on 20 July 1998, after the will was made. Section 52(2) of the 1997 Act says that, apart from specified sections of the 1997 Act that have retrospective effect, the 1958 Act applies to wills made before the commencement of the 1997 Act. Section 36 of the 1997 Act governs when evidence is admissible to clarify a will, but it is not one of the specified retrospective sections. Accordingly, admissibility of evidence if the will is unclear is governed by the 1958 Act.
Section 22A(1) of the 1958 Act provides:
In the construction of a will acts, facts and circumstances touching intention of the testator shall be considered and evidence of such acts, facts and circumstances shall be admitted accordingly but evidence of a statement by the testator declaring the intention to be effected or which had been effected by the will or any part thereof shall not be received in proof of the intention declared unless the statement would apart from this section be received in proof of the intention declared.
In determining the identity of the intended beneficiaries under the will, recourse may be had to acts, facts and circumstances touching the deceased’s intentions.
In this regard, the plaintiff relies on personal papers, consisting of letters and newsletters, of the deceased. The Court may take these into account as acts, facts and circumstances touching the intention of the deceased. To the extent that the personal papers are evidence of statements by the deceased as to her intentions, they may not be taken into account when construing the will.
Aglow — Identity of the Intended Beneficiary
It appears that the Aglow organisation, as named in cl 4 of the will, has never existed. However, when the will was made there was in existence an organisation named Aglow Australia Inc, which I shall refer to as Aglow Australia Inc (QLD).
In relation to the purported gift to Aglow, the plaintiff relies on the following personal papers of the deceased as extrinsic materials shedding light on the deceased’s intentions:
(a)a letter to the deceased dated 30 October 1997 from Reverend Joan Morton, the national president of Aglow Australia Inc (QLD), thanking the deceased for a gift that she had sent the organisation;
(b)a letter to the deceased dated 27 January 1998 from Maureen Barrett of ‘Aglow Australia — Essendon’. Ms Barrett thanked the deceased for her generosity towards Ms Barrett and willingness to support her financially. The letter also mentioned an occasion when ‘we visited the women’s prison’. This may be a reference to Ms Barrett and the deceased visiting the prison, or the organisation visiting the prison. The letter also suggests a future meeting between the Ms Barrett and the deceased;
(c)an ‘Aglow’ newsletter dated May 1997;
(d)a ‘Melbourne Aglow’ newsletter dated February 2008;
(e)an ‘Aglow Australia’ handout for ‘Heidelberg Night’ in April 2008; and
(f)an ‘Aglow’ handout for an April 2008 meeting.
The extrinsic evidence shows that the deceased was not involved with an organisation with the name she put in cl 4 of her will. Rather, she was involved with Aglow Australia Inc (QLD).
The will helpfully refers to the address of the intended beneficiary as the 9th floor, 243 Edward Street, Brisbane, in Queensland. The office of Aglow Australia Inc (QLD) was, until 31 July 2005, located at 243 Edward Street, Brisbane.[1]
[1]See the minutes of special meeting dated 12 July 2005, and the letter to the Office of Fair Trading dated 8 August 2005, both discussed below.
As in the case of Re Edwards; Turner v Roberts (‘Edwards’),[2] at the time of making the will, there was only one entity that met the description in the will, and the fact that the deceased incorrectly named the entity does not create such a level of uncertainty as to render the gift invalid.[3]
[2][1981] VR 794.
[3]Ibid 797. Although in Re Edwards; Turner v Roberts, the gift was to an individual, not an entity.
The terms of the will, coupled with the extrinsic evidence, lead inexorably to the conclusion that the deceased intended to make her gift to Aglow Australia Inc (QLD).
The answer to the plaintiff’s first question is, therefore, no. The reference in the will to Aglow is not a reference to Aglow International. Rather, it is a reference to Aglow Australia Inc (QLD). The intended beneficiary of the gift was Aglow Australia Inc (QLD). The gift to Aglow Australia Inc (QLD) may nonetheless take effect in favour of Aglow International.
The matter is complicated, however, by the fact that subsequent to the making of the Will, but before the deceased died, Aglow Australia Inc (QLD) was wound up and then, potentially, reincarnated twice, first as Aglow Australia Inc (QLD) and secondly as Aglow International. As the plaintiff submits, this may have the effect that the gift has lapsed.
I accept that Aglow Australia Inc (QLD) was a charity. As will be seen below, it was an organisation devoted to the advancement of religion, and its activities, which were open to the public, provided a public benefit to its members and the public generally. Although not determinative of the status of Aglow Australia Inc (QLD) as a charity, it is relevant to note that the register of the Australian Charities and Not-for-profits Commission (‘ACNC’) records Aglow Australia Inc (WA) and Aglow International as charities.
Principles on Lapse of a Gift
A gift lapses when the named beneficiary has ceased to exist at the time of the deceased’s death. As Aglow Australia Inc (QLD) was a charity that may have ceased to exist by virtue of being wound up, the regular lapse rule is modified.
In Re Tyrie,[4] Newton J said that the following principles apply when deciding whether gifts to charitable organisations have lapsed:
[4][1972] VR 168.
A gift by will to a particular charitable institution simpliciter must be treated as a gift for the advancement of the charitable work or purposes of that institution …
Nevertheless, a gift by will to a particular charitable institution (which I shall call ‘the named institution’), which at some time existed, but had ceased to do so in the testator’s lifetime, whether before or after the date of his will, ordinarily lapses … The reason for this general rule appears to be that by designating the named institution as the donee the testator has prima facie at least demonstrated an intention that the charitable work or purposes which he wishes to benefit are to be benefited through the instrumentality of the named institution and in no other manner … For convenience I shall hereafter refer to this general rule as ‘the lapse rule’.
To the lapse rule there are the following three exceptions, so far as material for present purposes: —
(A)If at the testator’s death there is in existence another institution which has taken over the work previously carried on by the named institution and which can properly be regarded as the successor of the named institution, and if the dominant charitable intention of the testator was wide enough to allow the gift to take effect in favour of that successor institution, then the gift will take effect in favour of the successor institution … [This was later explained by his Honour to be an aspect of the cy-près doctrine.]
(B)If upon the true interpretation of the will the testator intended that the gift should operate simply as an accretion to the assets of the named institution so as to become subject to whatever charitable trusts were from time to time applicable to those assets, and if after the named institution itself ceased to exist its assets remained subject to charitable trusts which were still on foot at the testator’s death, then the gift will be treated as taking effect as an accretion to any property which was at his death subject to those trusts …
(C)If in cases not falling within exceptions (A) or (B), the testator is nevertheless found upon the proper interpretation of the will to have had a dominant intention to benefit work or purposes of the kind which the named institution carried out, notwithstanding that the named institution itself might no longer exist at his death, and if it is practicable as at the death of the testator to apply the gift for the benefit of work or purposes of that kind, and in a way which is in all respects consistent with any other elements of the dominant intention of the testator (or to put it in another way, consistent with any indispensable or essential elements of his charitable intention), then the gift will be so applied by means of a cy-près scheme. This is simply one aspect of the cy-près principle… But although the existence of this third exception is well recognized…I have myself found no reported case where it has been applied in the case of a gift to a named charitable institution simpliciter …[5]
[5]Ibid 177–8 (citations omitted).
A fourth exception may exist, as set out by A Lyons J in Public Trustee of Queensland v A-G (QLD):
Recently the courts have developed a fourth exception which is a way of extending the second exception, which is if, upon the proper interpretation of the will, the gift is not made to a particular named charitable institution but is a gift to a particular charitable purpose, it may be upheld if that purpose remains capable of fulfilment. This does not require that there be a true successor institution, nor does it require a cy-près scheme. If this exception applies, the money may be paid to a suitable person or entity to apply the funds to that purpose.[6]
[6][2009] QSC 353 (7 October 2009) [13].
It has been suggested that this fourth exception is merely a subset of exception (A) in Re Tyrie.[7]
[7]G E Dal Pont, Law of Charity (LexisNexis Butterworths, 2010) [15.15].
Has Aglow Australia Inc (QLD) Ceased to Exist?
Before concluding that the gift to Aglow Australia Inc (QLD) has lapsed and considering whether any exceptions to the lapse rule apply, the threshold question, whether Aglow Australia Inc (QLD) has ceased to exist, must be answered. In this regard, it is helpful first to consider the English authorities.
In Re Faraker; Faraker v Durell, a gift was made to a named charity.[8] No purposes were mentioned. Cozens-Hardy MR and Farwell and Kennedy LJJ held that the gift had not lapsed as a result of the Charity Commissioners amalgamating the charity with other charities, to be administered by a newly constituted body of trustees, and significantly expanding its purposes. The original class of persons intended to be benefited by the charity, poor widows, continued to be benefited by the charity in its amalgamated form. The charity never ceased to exist. There was therefore no lapse. Farwell LJ said the following:
In all these cases one has to consider not so much the means to the end as the charitable end which is in view, and so long as that charitable end is well established the means are only machinery, and no alteration of the machinery can destroy the charitable trust for the benefit of which the machinery is provided.[9]
[8][1912] 2 Ch 488.
[9]Ibid 495 (emphasis added).
Kennedy LJ said:
but the question which I have felt some doubt about is, if the continuance — that word has been used throughout — of a charity is requisite, what is the essential thing to constitute the continuance of that charity as the subject of a charitable gift in a will? … no case has been shewn to me in which an endowed charity has been treated as having, so to speak, lost its life by reason of the exercise of the perfectly competent authority under parliamentary sanction of the Charity Commissioners, or the equally competent authority of this Court, under which its funds have come to be applied somewhat differently to the way in which they were applied under the original foundation. … It seems to be the law, that an endowed charity, to whatever purpose its funds are devoted, if and so long as they are devoted to some charitable purpose under some duly authorized scheme, remains still existent so as to draw to it a sum of money given by a will for, presumably, the same purpose as the original charity.[10]
[10]Ibid 496–7.
I also note that in that case the testatrix had incorrectly named the intended beneficiary, but the Court was not troubled by the error. The charity was named ‘Hannah Bayly’s Charity’; however, the deceased had made her gift to ‘Mrs Bailey’s Charity Rotherhithe’.
In Re Vernon’s Will Trusts; Lloyds Bank Ltd v Group 20 Hospital Management Committee, the deceased had made a gift to ‘Coventry Crippled Children’s Guild’.[11] At the time the will was made, in 1937, there was an incorporated charity named ‘Coventry and District Crippled Children’s Guild’. Later, in 1952, before the testatrix’s death, the incorporated charity was dissolved. But in 1949, a new unincorporated charity named ‘Coventry and District Cripples’ Guild’ had been established. The new charity ceased to perform one function undertaken by the incorporated charity (orthopaedics) and expanded its service to crippled persons generally, instead of only children. The endowments and functions of the incorporated charity were not transferred to the new unincorporated charity. Rather, they were transferred to Group 20 Hospital Management Committee, which continued to run and provide orthopaedic services in the clinic and hospital formerly operated by the incorporated charity. Buckley J held that the testatrix intended to benefit the incorporated charity, despite incorrectly naming it.[12] Holding that the gift was simply in augmentation of the funds of the incorporated guild, Buckley J then said:
The bequest was, in my judgment, a simple bequest to the incorporated guild which that body, had it survived the testatrix, would have been entitled to receive as part of its general funds unfettered by any trust imposed by the testatrix as to the purposes for which it should be used. Had the incorporated guild been other than a charitable body, that would be the end of the matter, for the bequest would lapse on account of the dissolution of the incorporated guild in the lifetime of the testatrix. The guild was, however, incorporated for exclusively charitable purposes, and its memorandum of association was so framed that its funds could never be distributed among its members and that in a winding up any surplus assets would continue to be applied for objects similar to those of the incorporated guild. … In no circumstances — at least without the intervention of Parliament — could any of those funds have been used otherwise than for charitable purposes of the kind for which the guild existed so long as those purposes remained practicable. Even if those purposes ceased to be practicable, the charity would not cease to exist, although its funds would be applied cy-près. Such a charity, considered as a charity and apart from the mechanism provided for the time being and from time to time for holding its property and managing its affairs, could never cease to exist except by exhaustion of all its assets and cessation of its activities. A change merely in its mechanical aspect could not involve the charity ceasing to exist. The principle of the decisions in In re Faraker [1912] 2 Ch 488 and In re Lucas [1948] Ch 424 is, in my judgment, equally applicable to an incorporated charity of this kind as to a charity constituted by means of a trust. In such cases the law regards the charity, an abstract conception distinct from the institutional mechanism provided for holding and administering the fund of the charity, as the legatee, and so long as the charity as so conceived continues in existence the bequest will not lapse.[13]
[11][1972] Ch 300
[12]Ibid 302.
[13]Ibid 303–4 (emphasis added).
Buckley J held that the gift did not lapse, but rather it took effect in favour of the Hospital Management Committee that operated the orthopaedic clinic and orthopaedic hospital:
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.[14]
[14]Ibid 305.
The principle of a charity continuing to exist despite changes to its form or the mechanics by which it operates was limited by Plowman J in Re Stemson’s Will Trusts; Carpenter v Treasury Solicitor.[15] In that case, his Honour limited the principle to unincorporated charities that continue in perpetuity because no one has the power to terminate the charitable trust, or in the case of incorporated charities, where on dissolution surplus funds must be transferred to another organisation having similar objects.[16] Otherwise, if the charity ceases to exist, the lapse rule applies, subject to exceptions.
[15][1970] Ch 16.
[16]Ibid 26.
The English authorities may treat gifts to incorporated charities simpliciter differently from gifts to unincorporated charities simpliciter.[17] This has the effect that in England the concept of a charity continuing to exist despite changes to its legal form essentially only applies to gifts to unincorporated charities.[18]
[17]See Re Vernon’s Will Trusts; Lloyds Bank Ltd v Group 20 Hospital Management Committee [1972] Ch 300, 303.
[18]J G Ross Martyn, C Ford, A Learmonth and M Oldham, Theobald on Wills (Sweet & Maxwell, 17th ed, 2010) 21-056.
In Australia, however, there is no difference in treatment of unincorporated and incorporated charities, as is seen in Re Tyrie.[19] The effect of this is that a gift to a charitable institution simpliciter, whether incorporated or unincorporated, will take effect as a charitable trust for the purposes of the institution rather than as a gift for the institution to apply as it sees fit.
[19][1972] VR 168. See also Australian Executor Trustees Ltd v A-G (SA) [2010] SASC 348 (20 December 2010) [48]; Australian Executor Trustees Ltd v Ceduna District Health Services Inc [2006] SASC 286 (18 September 2006) [23]; Sir Moses Montefiore Jewish Home v Howell and Co [No 7] Pty Ltd [1984] 2 NSWLR 406, 416.
Accordingly, Australian courts have applied the principles established in the above English authorities in respect of when charitable institutions cease to exist, without discriminating between incorporated and unincorporated charities.[20]
[20]See The Public Trustee of Queensland v QLD [2009] 2 Qd R 327, 328–30; Australian Executor Trustees Ltd v Ceduna District Health Services Inc [2006] SASC 286 (18 September 2006) [17]–[21]; Public Trustee v Cerebral Palsy Association of Western Australia Ltd (2004) 28 WAR 496, 507; Sir Moses Montefiore Jewish Home v Howell and Co [No 7] Pty Ltd [1984] 2 NSWLR 406, 417.
Most relevant of those Australian authorities is Public Trustee v Cerebral Palsy Association of Western Australia Ltd,[21] where it was held that the Spastic Welfare Association of Western Australia Inc, an incorporated association, had not ceased to exist. This was because, although the association was dissolved, its rights and liabilities, and undertaking and operations had been transferred to a newly established body corporate named the Cerebral Palsy Association of Western Australia Ltd. The objects and purposes of the body corporate were consonant with those of the former incorporated association. Barker J first held that the organisation had not ceased to exist, and then went on to consider that, even if it had ceased to exist, the will evinced a general charitable intention and, accordingly, the gift took effect in favour of the Cerebral Palsy Association of Western Australia Ltd.
[21](2004) 28 WAR 496.
Forbes v NSW, on which the plaintiff relies, also illustrates the point.[22] There, the deceased made gifts in his will to several hospitals, including ‘Prince Henry Hospital of Anzac Parade Little Bay’. The Court was required to determine whether that gift had lapsed, and if so, the consequences. When the will was made, Prince Henry Hospital was part of the South Eastern Sydney Area Health Service. Later, it became part of a new area health service. The legislation that achieved this transfer stated that the new area health service was the continuation of and the same legal entity as the previous incorporated health service. So, between the making of the will and the deceased’s death, the hospital had ceased to exist in its original form. It became the second defendant, the South Eastern Sydney and Illawarra Area Health Service. The second defendant was the continuation of and same legal entity as the original incorporated health service. Hallen AsJ held that the gift did not lapse. In the alternative, his Honour held that the second defendant was the statutory successor of the original health service.
[22][2010] NSWSC 1439 (16 December 2010) [23]–[31].
From the abovementioned cases it is seen that, 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.
I turn now to the organisations at issue here: Aglow Australia Inc (QLD) (which, as I decided above, was the intended beneficiary), Aglow Australia Inc (WA), and Aglow International.
Originally, Aglow Australia Inc (QLD) was an association incorporated on 12 January 1984 in Queensland as Women’s Aglow Fellowship of Australia Inc. On 20 May 1996 it changed to Aglow Australia Inc. By letter to the Office of Fair Trading dated 8 August 2005, the Queensland association sought its own cancellation as an association incorporated in Queensland, because Aglow Australia Inc had incorporated in Western Australia as a new association. The President informed the Office of Fair Trading that Aglow Australia Inc (WA) had received the surplus assets (financial and fixed) of Aglow Australia Inc (QLD). Aglow Australia Inc (WA) became an incorporated association in Western Australia on 12 August 2005. Aglow Australia Inc (QLD) was deregistered on 21 November 2006.
Unsigned minutes of a special general meeting of Aglow Australia Inc (QLD), dated 12 July 2005, record the passing of a motion to wind up Aglow Australia Inc (QLD), and to transfer assets to Aglow Australia Inc (WA). The resolution also noted that the national office and new national board were in the process of being established in Perth. The chairperson of the special general meeting was Reverend Joan Morton, national president of Aglow Australia Inc (QLD).
The ACNC register states that Aglow Australia Inc (WA) was established on 1 January 1984.[23] Since 3 December 2012, it has been registered as a charity, subtype advancement of religion/advancing religion. The register lists the responsible persons as Glenda Curran, Marilyn Grave, and Kerry-Ellen Logan.
[23]This date may be a reference to the establishment of Aglow Australia Inc (QLD). Aglow Australia Inc (WA) was incorporated on 12 August 2005.
The ABN register details of Aglow Australia Inc (WA) reveal that it was registered as a charitable institution from 1 July 2004 to 1 July 2013.
Minutes of the annual general meeting of Aglow Australia Inc (WA), dated 2 February 2011, record the passing of a motion to wind up Aglow Australia Inc (WA) and transfer surplus assets to Aglow International, a company incorporated under the Corporations Act 2001 (Cth).
Kerry-Ellen Logan is the National President of Aglow International. In her letter to the plaintiff dated 21 September 2011 Ms Logan confirmed that Aglow Australia Inc (WA) now operates as Aglow International.
A current and historical company extract of Aglow International shows that the company was incorporated on 3 March 2011 and the ACNC register states that it benefits Aborigines or Torres Straight Islanders. Since 3 December 2012, it has been registered as a charity, subtype advancement of religion/advancing religion. The register lists the responsible persons as Dawn Blackburne, Glenda Curran, Marilyn Grave, and Kerry-Ellen Logan.
With the exception of Dawn Blackburne, the responsible persons for Aglow Australia Inc (WA) and Aglow International are the same.
It is therefore apparent that Aglow Australia Inc (QLD) did not, in fact, cease to exist; but rather it metamorphosed into Aglow International. This is borne out by the further relevant factors identified below.
The identity among the stated objects of Aglow Australia Inc (QLD), Aglow Australia Inc (WA) and Aglow International supports the finding that Aglow Australia Inc (QLD) has not ceased to exist.
The objects of Aglow Australia Inc (QLD) and Aglow Australia Inc (WA) were identical, namely:
(a) To worship, praise, and glorify God in all areas of our lives.
(b) To win souls for Christ, especially those not reached by commonly used methods of evangelism.
(c) To share with believers everywhere the full gospel of Jesus Christ, including Jesus as Saviour, Baptizer in the Holy Spirit, Deliverer and Healer.
(d) To work for spiritual unity among Christian Believers.
(e) To foster fellowship among women.
(f) To encourage each woman to be a member of and to participate in the activities of her local church.
(g) To help women recognise their role in relationships according to the Scriptures.[24]
[24]Women’s Aglow Fellowship of Australia Inc also had these objects.
The objects of Aglow International were the same with the addition of the following words: ‘and to undertake and pursue all such other similar, related or compatible objects as may from time to time be considered appropriate by’ Aglow International.[25]
[25]Clause 3 and the First Schedule to the Constitution of Aglow International.
The application of funds of Aglow Australia Inc (QLD) and Aglow Australia Inc (WA) were substantially identical, namely:
The income and property of the organisation whensoever derived shall be used and applied solely in promotion of its objects and in the exercise of its powers as set out herein and no portion thereof shall be distributed paid or transferred directly or indirectly by way of dividend bonus or otherwise by way of profit to or amongst the members of the organisation provided that nothing herein contained shall prevent the payment in good faith of interest to any such member in respect of moneys advanced by her to the organisation or otherwise owing by the organisation to her or of remuneration to any officers or servants of the organisation or to any member of the organisation or other person in return for any services rendered to the organisation and provided further that nothing herein contained shall be construed so as to prevent the payment or repayment to any member of out-of-pocket expenses money lent reasonable and proper charges for goods hired by the organisation or reasonable and proper rent for premises demised or let to the organisation.[26]
[26]Clause 19.11 of the Rules of Aglow Australia Inc (QLD) and clause 21.11 of the Rules of Aglow Australia Inc (WA).
The dissolution and transfer of surplus funds of Aglow Australia Inc (QLD) provide:
Distribution of Surplus Assets If the organisation shall be wound up in accordance with the provisions of the Associations Incorporation Act 1981 and there remains after satisfaction of all its debts and liabilities any property whatsoever the same shall not be paid or distributed among members of the organisation but shall be given to or transferred to some other institution or institutions having objects similar to the objects of the organisation and which shall prohibit the distribution of its or their income and property among its or their members to an extent at least as great as is imposed on the organisation under or by virtue of Rule 19.11 such institution or institutions to be determined by the members of the organisation.[27]
[27]Clause 25 of the Rules of Aglow Australia Inc (QLD).
The relevant paragraph for the dissolution and transfer of surplus funds of Aglow Australia Inc (WA) is missing from the Rules provided to the Court; however, given that a special resolution for the winding up of the organisation dated 15 February 2013 records that any surplus assets after discharge of all liabilities be transferred to Aglow International as a company that: has similar objects pursuing charitable purposes; is approved by the Commissioner of Taxation as an income-exempt charity; and is not carried out for the purposes of profit or gain to its individual members, I infer that the relevant provision is substantially identical to that of Aglow Australia Inc (QLD).
On application of funds, dissolution and transfer of surplus funds, the constitution of of Aglow International says the following:
5. Application of income
5.1. The derived income and property of the Company will be applied solely towards the promotion of the objects of the Company as set forth in this Constitution. No proportion thereof will be paid or transferred, directly or indirectly by way of dividend, bonus or otherwise to Members provided that:
(a) nothing contained in this Constitution will prevent the payment in good faith of remuneration to any Officer, employee or Member of the Company (including any firm or corporation in which any such Officer, employee or Member has an interest) in return for any services actually rendered or for any goods supplied to the Company in the ordinary and usual way of business, nor prevent the payment of interest, in good faith, on money borrowed by the Company from any Member, or reasonable and proper rent for the premises let by any Member to the Company;
(b) except as provided by (a), no Director of the Company (other than the Executive Director if he or she is a Director, and provided any necessary approval under any applicable legislation relating to charities and charitable fundraising in each State and Territory of Australia has been obtained) will be paid any fee, commission, honorarium or other remuneration for acting as a Director other than reasonable out of pocket expenses.
7. No distribution of property
If upon the winding up or dissolution of the Company there remains, after satisfaction of all debts and liabilities, any property whatsoever, the same will not be paid to or distributed among the Members of the Company, but will be given or transferred to some other institution or institutions having objects similar to the objects of the Company, and whose constitution or rules prohibit the distribution of its or their income and property among its or their Members to an extent at least as great as is imposed on the Company under this Constitution, such institution or institutions to be determined by the Members of the Company at or before the time of the dissolution and in default thereof by application to such court as may have or acquire jurisdiction in the matter.
As may be seen from the various sets of objects and purposes, Aglow International continues the work of Aglow Australia Inc (WA), which continued the work of Aglow Australia Inc (QLD). These organisations also consistently require that the funds of the organisation must be spent on the objects and purposes of the organisation and, upon dissolution, that any surplus funds be transferred to an institution with similar objects and purposes and restrictions on the application of funds.
The deceased’s personal papers show that Aglow Australia Inc (QLD) arranged prison visits, tours, prayer meetings, retreats that were open to all women and not just members, and international conferences. The personal papers show that Aglow Australia Inc (WA) arranged prayer meetings, bible study sessions, special event nights with guest speeches, and conventions. It appears that the activities of Aglow Australia Inc (WA) were substantially similar to those of Aglow Australia Inc (QLD) and Aglow International continues to engage in those same activities.
It is also apparent from the personal papers that the deceased continued to be involved with the organisation after it transformed into Aglow Australia Inc (WA). There is, however, no evidence of the deceased being involved with Aglow International, which is not surprising, as she died on 18 March 2011, only 15 days after the incorporation of Aglow International.
The various personal papers were from ‘Melbourne Aglow’, ‘Sunbury Aglow’ and ‘Aglow Australia – Essendon’. Aglow Australia Inc (WA) continued, and Aglow International continues, to provide those services, and operate those branches/chapters.
In the circumstances, Aglow Australia Inc (QLD) has not ceased to exist. It is merely the mechanics by which the organisation operates that have changed. This does not have the effect that the charity has ceased to exist. The gift therefore does not lapse. Rather, it takes effect in favour of Aglow International.
In my view, the intended beneficiary is Aglow Australia Inc (QLD). Aglow Australia Inc (QLD) has not ceased to exist, but now operates as Aglow International. The gift to Aglow Australia Inc (QLD) takes effect in favour of Aglow International.
There is no need for a cy-près scheme in this case.
Aglow — If the Gift Has Lapsed because the Intended Beneficiary Has Ceased to Exist
If I am wrong in my conclusion that Aglow Australia Inc (QLD) has not ceased to exist and that the gift does not lapse, then I consider that the gift is saved by exceptions (A) and (C) in Re Tyrie.
Aglow International is a successor institution to Aglow Australia Inc (QLD), as it carries on the same work, and received the surplus assets of Aglow Australia Inc (WA), which carried on the same work as and received the surplus assets of Aglow Australia Inc (QLD). The deceased’s charitable intention, which I find below to be a general one, is wide enough for the gift to take effect in favour of the successor institution. Exception (A) therefore applies and the gift takes effect in favour of the successor institution.
Exception (C) applies where a will evinces a general charitable intention. The lapsed gift is then applied cy-près. In Re Tyrie, Newton J suggested that exception (C) might not apply where the gift is to a named institution simpliciter. There has also been the suggestion that a general charitable intention is more difficult to find where the named institution previously existed than it is when the named institution never existed to begin with.[28] In A-G (NSW) v Public Trustee the New South Wales Court of Appeal disavowed a general rule against finding a general charitable intention where the gift is to a named charitable institution that once existed.[29] There, a general charitable intention was found where a gift had been made to a named institution simpliciter, and the institution had previously existed. The gift was administered cy-près.
[28]G E Dal Pont, Law of Charity (LexisNexis Butterworths, 2010) [15.68]–[15.69].
[29](1987) 8 NSWLR 550, 553–4.
Exception (C) is therefore available in cases such as the present.
Subsequent to Re Tyrie, the Charities Act 1978 was enacted. The power to apply a gift cy-près that is relevant to this case is in s 2(1)(a)(ii), which states that:
2 Occasions for applying property cy près
Subject to subsection (2), the circumstances in which the original purposes of a charitable gift can be altered to allow the property given or part of it to be applied cy près shall be as follows —
where the original purposes, in whole or in part —
…
(ii) cannot be carried out, or not according to the directions given and to the spirit of the gift; or …
The effect of s 2(2) is that the common law requirement of a general charitable intention is still required in order to apply a gift cy-près.
The fact that the deceased has specified the charity by name and address does not necessarily mean the deceased had a particular charitable intention.[30]
[30]See G E Dal Pont, Law of Charity (LexisNexis Butterworths, 2010) [15.53].
In my view, the following factors support the finding that, in respect of the gift to Aglow, cl 4 of the will evinces a general charitable intention to benefit the kind of work carried on by Aglow Australia Inc (QLD), rather than a particular charitable intention:
(a)There is no gift over. Clause 4 of the will does not specify where the money should go if the gifts fail;
(b)Under cl 4 the entire residue of the estate is given to two religious organisations;
(c)In cl 3 of the will, the deceased shows a particular intention. By cl 3 the deceased directs that any of her animals that survive her be cared for by an RSPCA nominated organisation, that 10 per cent of the residuary estate be used for their upkeep and care until their passing, and that any remaining balance after the animals’ death go to the carer/organisation. Contrasted with cl 3, cl 4 is in very general terms;
(d)There is no limitation on the purpose to which the gift under cl 4 may be put, that is, where, when, how, by who, and/or on what it may be spent;
(e)It was open to the deceased to leave a gift to a Melbourne branch/chapter of the organisation, such as in Essendon or Sunbury, even if the branch/chapter was not in itself a legal entity. Rather, the deceased chose to make the gift to the overarching organisation, whose office the deceased knew was in Brisbane; and
(f)The objects and purposes of Aglow Australia Inc (QLD) are general and broad.
Although this list is not long and it is recognised that some of the support for this finding of general charitable intention comes from a lack of evidence against such afinding, nevertheless, ‘the court leans, it is said, in favour of charity, and is ready to infer a general intention. But little is therefore required as a ground for treating a wider purpose as the essential object of the trust’.[31]
[31]A-G (NSW) v Perpetual Trustee Co (Ltd) (1940) 63 CLR 209, 228 (Dixon and Evatt JJ). This part of their Honours’ judgment was also relied on in A-G (NSW) v Public Trustee (1987) 8 NSWLR 550, 554–5.
In my view, the deceased had a general charitable intention to benefit the purposes of Aglow Australia Inc (QLD). If Aglow Australia Inc (QLD) has ceased to exist, it follows that the Court must set up a cy-près scheme, but given the identity between the objects and purposes of Aglow International and Aglow Australia Inc (QLD), applying the gift cy-près in favour of Aglow International best fulfils the deceased’s general charitable intention.[32]
[32]See G E Dal Pont, Law of Charity (LexisNexis Butterworths, 2010) [15.71], where the author describes the process as finding the alternative that ‘most nearly approximates to the intention of the donor’, or the alternative that is ‘as close as possible to the particular manner which the deceased chose for the achieving of that general charitable intention’.
Abundant Life
At the initial hearing of this proceeding, the plaintiff submitted that the relevant gift in the will to Abundant Life lapsed. It submitted that there has never been in existence an organisation known as Abundant Life. The deceased specifies the address for Abundant Life as 40 Beecher Street, Preston. At that address there was formerly an organisation known as Spirit of Life Family Church. Currently at that address is Plumbers’ Supplies Co-Operative.
In an affidavit sworn by Jasmine Berger of the plaintiff on 6 August 2013, Ms Berger deposed that the plaintiff had failed to locate an existing organisation named Spirit of Life Family Church. The plaintiff did not attempt to locate any officers of the former organisation Spirit of Life Family Church located at 40 Beecher Street, Preston or any constitutive documents in respect of the organisation.
The plaintiff submitted that, as Spirit of Life Family Church no longer exists and there was no evidence as to Spirit of Life Family Church’s purposes and activities, there was no evidence as to whether the organisation meets the test for determining its status as a charity. Although the name ‘Spirit of Life Family Church’ might suggest it to be a charitable organisation, charity-like names are not dispositive of the issue. Without such evidence, the Court is unable to apply the principles on ceasing to exist, lapse, and exceptions, which apply only to charitable gifts.
If the organisation is not a charity, a change in legal form, such as dissolution followed by reincarnation as a new body corporate or incorporated association, will have the effect that the organisation has ceased to exist, and the gift fails. Consequently, the laws of intestacy would apply to the sum of money that was to be allocated to that gift. Given the state of the plaintiff’s submissions and evidence, the Court was also unable to come to a conclusion that the laws of intestacy apply.
Without any attempts being made to locate any officers of Spirit of Family Life Church, it would have been premature to hold that the gift lapses and is to be distributed according to the laws of intestacy. Accordingly, the further hearing of the proceeding was adjourned so the plaintiff could explore and determine whether further evidence could be produced concerning Spirit of Life Family Church and its purposes.
As a result, the plaintiff filed further material in the form of an affidavit sworn by Joseph Aloysius Vandenberg on 9 April 2014. In his affidavit, Mr Vandenberg deposed:
(a) he is a director and the secretary of Spirit of Life Ministries Ltd;
(b) the company extract and certificate of incorporation of Abundant Life Ministries Ltd recorded its incorporation on 27 March 1987;
(c) on 18 September 1998 Abundant Life Ministries Ltd resolved to change its name to Spirit of Life Ministries Ltd, which occurred formally on 22 September 1998;
(d) between 1992 and 2001, the company conducted its church services at 40 Beecher Street Preston in Victoria;
(e) since August 2001, the company has conducted its meetings at 18 Kirkbride Way, Craigieburn and church services at Roxburgh Park Homestead and Community Learning Centre and Roxburgh Park Youth and Recreation Centre. The company also conducts bible study and lectures with the general public being welcome to attend the church services and to become members of the church; and
(f) the ASIC company extract for Spirit of Life Ministries Ltd lists its registered office as 18 Kirkbride Way, Craigieburn in Victoria.
Mr Vandenberg also deposed that the deceased was a member of the church operated by the company since at least 1998 and, prior to 1998, she enrolled in a bible course conducted by the company. The company also maintains a list of current members and Mr Vandenberg produced a list of members, partners and adherents dated June 1999 that showed the deceased as a member of the Spirit of Life Family Church.
The memorandum and articles of association for Abundant Life Ministries Ltd (as amended 21 November 1997) and the constitution of Spirit of Life Ministries Ltd show the main purpose of each company is to establish a church for the worship of God and to promote and disseminate the teachings of the Christian faith. Mr Vandenberg deposed that Spirit of Life Ministries Ltd is registered as a charity. In addition, Spirit of Life Ministries Ltd is registered with the ACNC as a charity for the advancement of religion.
As can be seen from the evidence of Mr Vandenberg, Spirit of Life Ministries Ltd is the successor of Abundant Life Ministries Ltd with the main purpose of establishing a church for the worship of God and to promote and disseminate the teachings of the Christian faith. Both organisations operated from 40 Beecher Street Preston between 1992 until 2001.
The deceased was a member of the church operated by the company and enrolled in a course conducted by the company.
Abundant Life Ministries Ltd has not ceased to exist, but its name has changed to Spirit of Life Ministries Ltd.
In my view, in respect of the deceased’s gift to Abundant Life in cl 4 of her will, the intended beneficiary is Spirit of Life Ministries Limited.
Conclusion
As a result, it is no longer necessary to answer any of the questions in the originating motion filed 13 August 2013. Instead final orders can be made as follows:
1. The plaintiff as the administrator of the estate of Christine Coulson, deceased, be authorised to:
(a) distribute the gift under cl 4 of the deceased’s will dated 11 March 1998 of a share of the residue to Aglow Australia Inc to Aglow International Australia Ltd (ACN 149 653 994); and
(b) distribute the gift under cl 4 of the deceased’s will dated 11 March 1998 of a share of the residue to Abundant Life Family Church to Spirit of Life Ministries Ltd (ACN 006 636 488).
2. The costs of this proceeding be costs in the administration of the estate of the deceased.
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CERTIFICATE
I certify that this and the 23 preceding pages are a true copy of the reasons for Judgment of McMillan of the Supreme Court of Victoria delivered on 1 August 2014.
DATED this first day of August 2014.
Associate
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