Re Niall
[2019] VSC 423
•25 June 2019
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
TRUSTS, EQUITY & PROBATE LIST
S ECI 2018 01009
IN THE MATTER of the Will and Estate of MICHAEL LLOYD NIALL, Deceased
-and-
IN AN APPLICATION pursuant to Order 54 of the Supreme Court (General Civil Procedure) Rules 2015
BETWEEN:
| DANIEL LESLIE MINOGUE (as Executor of the Will and Estate of the said Deceased) | Plaintiff |
| -and- | |
| ATTORNEY-GENERAL OF VICTORIA | First Defendant |
| -and- | |
| DEIRDRE ANN MAGNEY | Second Defendant |
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JUDGE: | McMillan J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 5 March 2019 |
DATE OF JUDGMENT: | 25 June 2019 |
CASE MAY BE CITED AS: | Re Niall |
MEDIUM NEUTRAL CITATION: | [2019] VSC 423 |
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WILLS — Charitable gift — Gift for alleviation of poverty in India — Where no body or organisation matches the described donee — Where testator’s history of donations were to similar causes in India — Whether evidence of testator’s intention admissible — Whether Court may settle an administrative scheme — Differences between administrative scheme and cy-près scheme — Wills Act 1997 (Vic) s 36.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Dr IJ Hardingham QC with Ms U Stanisich | M&K Lawyers Group Pty Ltd |
| For the First Defendant | No appearance | |
| For the Second Defendant | Mr D Ryan SC | Courtenay & Co Solicitors |
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HER HONOUR:
Introduction and summary
Michael Lloyd Niall died on 23 June 2017. Probate of his will dated 11 May 2016 was granted to the plaintiff on 15 September 2017.
Clause 4.2 of the will provides for specific gifts to be paid from the deceased’s estate.
Clause 4.3 then provides:
To give my remaining residuary estate to ORDER OF SELESIANS in India for the purposes of work among the poor in India;
There is no particular entity in India or Australia known as either ‘Order of Selesians’ or ‘Order of Selesians in India’ and no particular organisation that matches this description. ‘Selesians’ is a misspelling of ‘Salesians’. Briefly, the Salesians of Don Bosco (‘the Salesians’) — otherwise known as the Societa Di San Francesco Di Sales — is an international organisation of Catholic priests and brothers founded by St John Bosco in 1859. The Salesians are represented in 132 countries worldwide, including in Australia and India, and operate missionary works with a particular focus on providing for young people. The Salesians also operate in Australia through an association named ‘Salesian Society (Vic) Inc.’ (‘Salesian Missions Australia’).
The plaintiff accepts that the identity of the named residuary beneficiary is ambiguous and unclear and submits that the extrinsic evidence clarifies the identity of the organisation that the deceased meant to benefit. Accordingly, he seeks a declaration that the residuary estate be applied in a manner corresponding with the testator’s donations made to Salesian Missions Australia during his lifetime. These donations were subsequently transferred by Salesian Missions Australia to Salesian organisations in Mumbai in India and, in turn, those organisations subsequently applied the funds to certain charitable projects in India. Alternatively, the plaintiff seeks that an administrative scheme be settled that sets out the means by which the gift is to be applied.
The first defendant is a party on the basis of her obligations regarding charitable trusts. Preliminary orders made by Englefield JR on 19 October 2018 recorded that the solicitor for the Attorney-General expressed that, subject to instructions, it was unlikely that the Attorney-General would file any evidence or make any submissions in this proceeding. That has proven accurate and the Attorney-General did not appear at the trial or file submissions.
The second defendant is the deceased’s sister and next-of-kin on intestacy. She challenges the validity of the residuary disposition on the basis that it is uncertain and submits that the residuary estate should pass on intestacy. In the alternative, she submits that the disposition fails for uncertainty, that an administrative scheme is unavailable because the will evinces a specific, rather than a general, charitable intention, and the residuary estate should pass on intestacy.
Surrounding evidence
The plaintiff’s affidavit included evidence of his own enquiries into the Salesians, as well as evidence from representatives of the Salesians in Australia and India. The second defendant’s affidavit set out her family’s history.
Deceased’s previous wills
The deceased’s last will, executed in 2016, was the third will made by the deceased. His two earlier wills were executed in 1982 (‘the 1982 will’) and 2015 (‘the 2015 will’). The 1982 will did not refer to the Salesians. The 2015 will specified that, after particular gifts of fixed amounts, the residue of the deceased’s estate be divided in two parts and given to ‘ORDER OF SELESIANS In India for the purposes of work among the poor in India’ and to the Cabrini Foundation, a fundraiser on behalf of a Catholic healthcare provider.
The last will and the 2015 will were prepared by Rennick & Gaynor Solicitors. That firm’s records reveal the following details about the deceased’s intentions:
(a) in a letter to the firm providing instructions for the 2015 will, the deceased specified that the balance of his estate was to be divided between ‘Cabrini Hospital and the Selesians under Rev. Fr. De Sousa India for his work amongst the poor’;
(b) in a subsequent meeting with the deceased prior to the execution of the 2015 will, a solicitor at the firm took notes of instructions given by the deceased, specifying that 50 per cent of the residue would go to ‘Fr. Marcio Foundation in Bombay India for general purposes’;
(c) in a file note taken by a solicitor of a telephone conversation with the firm in January 2016, the deceased instructed the firm to amend cl 4.3 such that the result would be ‘$100K to Cabrini and balance of residuary estate to Selesians’; and
(d) in a file note taken by a solicitor in a subsequent telephone conversation prior to the making of the will, the deceased instructed the firm to proceed with the amendment of the 2015 will: ‘$100K to Cabrini and balance of residue to Selesians’.
The reference to ‘Rev. Fr. De Sousa’ in the deceased’s letter to the firm appears to be a reference to Fr Edwin D’Souza, who is the Rector of the Shrine of Don Bosco’s Madonna at Don Bosco, Matunga, Mumbai, India. He administers The Bombay Salesian Society, a registered public trust in India referred to below. He also administers the Fr. Maschio Memorial Foundation, a body established in Mumbai for the purposes of supporting the young and poor, which is ostensibly the body referred to in the solicitor’s notes prior to the making of the 2015 will.
The only material change between the 2015 will and the deceased’s last will, consistent with the instructions above, is that the Cabrini Foundation was to receive a fixed gift of $100,000 rather than sharing the remaining residuary estate with the ‘ORDER OF SELESIANS in India’.
The Salesians
As noted, the Salesians is an international organisation of Catholic priests and brothers. It is represented throughout India by a total of 390 organisations, all of which have as part of their purposes ‘work among the poor in India’. This is achieved in various ways, including, in Mumbai, by assisting school dropouts and providing education to poor children. There is no organisation precisely known as either the ‘Order of Selesians’ or the ‘Order of Selesians in India’, either at the date of the last will or since that date.
In Australia, the Salesians is represented by Salesian Missions Australia, which has offices in Ascot Vale, Melbourne. Those offices were established in the 1960s with the mission of supporting the vocational training of underprivileged people in developing countries. Salesian Missions Australia also owns and operates the Australian Salesian Mission Overseas Aid Fund (‘the Australian Fund’), a fund that acts as a conduit for payments to overseas partners.
The deceased’s links with the Salesians
The deceased had a history of donations to the Salesians. He received a periodical generated by Salesian Missions Australia entitled ‘Salesians Missions Newsletter’. The last page of the newsletter included a coupon that recipients could complete to donate to Salesian Missions Australia, either generally or in respect of particular projects being undertaken by the Salesians around the world.
Br Michael Lynch, a director of Salesian Missions Australia, set out the ordinary process by which a donor in Australia would make donations to Salesian projects in India. Recipients of the Salesians Missions Newsletter would complete the coupon on the last page with their details and the amount of the donation. The donor was also entitled to specify which project he or she wished to benefit. All donations were received into the Australian Fund. If the donor did not specify a mission to benefit, those operating the Australian Fund would determine which project would be benefited based on the needs of the project and any knowledge of the location to which the donor ordinarily requested that their funds be sent.
The accounting system administered by Salesian Missions Australia records that between 2011 and 2016 the deceased made 17 donations to the Australian Fund. According to the records, 16 of the donations, totalling $23,500, were allocated to Mumbai, India, and the remaining donation of $1,000 was allocated to Timor Leste.
No newsletter coupons completed by the deceased were produced to the Court. However, receipts of five donations made by the deceased, totalling $8,000, to the Australian Fund were discovered amongst the deceased’s paperwork. Each of the receipts contains the heading ‘THE AUSTRALIAN SELESIAN MISSION OVERSEAS AID FUND’, includes the details for Salesian Missions Australia and identifies ‘Mumbai/Matunga’ as the relevant recipient account. The details on the receipts match transactions recorded in the accounting system of Salesian Missions Australia.
Mr Peter Carroll, the administrator of the Australia Fund, explained how funds were distributed from the fund to India. Funds designated for use in India would be remitted from the Australian Fund to The Bombay Salesian Society. That society then applied the donations to various appropriate causes within India, including to the Fr Maschio Memorial Foundation.
According to a letter from Fr Edwin D’Souza, the deceased made 16 donations to Salesian work in Mumbai, totalling $27,000, between 2010 to 2016. The dates and amounts of the donations particularised by Fr D’Souza largely correlate with that recorded in the accounting records of Salesian Missions Australia, although there is not a precise reconciliation.
The second defendant’s evidence
The second defendant provided brief evidence of the deceased’s connections with India. She recalls that from time to time her mother, the deceased and her other brother, Donn, would discuss a priest in India with whom they had some contact. She recalls the deceased saying that he and Donn were providing some financial support to an English-born priest who looked after poor children in Mumbai and that the priest had gone to India when he was 19 years old, but was now quite old.
She also recalls that on at least one occasion, the deceased and Donn told her they had travelled to India to meet with the priest. She understood that her brothers provided donations to the priest over the years to assist him in carrying out his work. The second defendant also provided evidence about her family history that was not relevant for the purposes of this proceeding.
Admissibility of extrinsic evidence
The plaintiff accepts that clause 4.3 does not, on its face, clearly describe how the charitable object is to be accomplished with there being no particular entity known as either the ‘Order of Selesians’ or the ‘Order of Selesians in India’. However, the plaintiff relies on the surrounding evidence to clarify the meaning of the gift. He submits that it is a fair inference from that evidence that the deceased intended his gift to be applied in the same manner as his inter vivos donations to the Salesians.
Wills Act 1997
In relying on the surrounding evidence, the plaintiff primarily relies on s 36 of the Wills Act 1997 (Vic) which prescribes the circumstances in which evidence may be adduced to construe a will:
When is evidence admissible to clarify a will?
(1) In any proceedings to construe a will, if the language used in a will renders the will or any part of the will—
(a) meaningless; or
(b) uncertain or ambiguous on the face of the will; or
(c) uncertain or ambiguous in the light of surrounding circumstances—
evidence may be admitted to assist in the interpretation of that language.
(2) Evidence which may be admitted under subsection (1)(c) does not include evidence of the testator's intention.
(3) Nothing in this section prevents the admission of evidence which would otherwise be admissible at law in any proceedings to construe a will.
The plaintiff submits that the identity of the recipient of the gift under the will — the ‘ORDER OF SELESIANS in India’ — is ‘uncertain or ambiguous’ on its face and that it is unclear whether the clause is referring to a recipient named ‘Order of Selesians in India’ or whether it is referring to a recipient named ‘Order of Selesians’ that is geographically situated in India.
The second defendant submits that clause 4.3 of the will is not ‘uncertain or ambiguous’ on its face, rather, it is only ‘uncertain or ambiguous in the light of surrounding circumstances’ and, accordingly, the evidence of the deceased’s intention remains inadmissible.
The issue of whether those words in clause 4.3 are ‘uncertain or ambiguous on the face of the will’ for the purposes of s 36(1)(b) must be answered without resort to the extrinsic evidence.[1] Accordingly, the circumstances surrounding the making of the deceased’s will as set out above are not relevant for the purposes of applying s 36(1)(b).
[1]Marks v Marks [2013] VSC 75, [42] (Habersberger J), citing Re Williams [1985] 1 WLR 905, 908 (Nicholls J); Re Blake (2009) 25 VR 27, 34 [36] (Forrest J).
On this basis, the phrase ‘ORDER OF SELESIANS in India’ in clause 4.3 of the will does not of itself manifest uncertainty or ambiguity in the requisite sense. The phrase may be unfamiliar to an independent reader of the will but subjective unfamiliarity alone does not evidence objective uncertainty or ambiguity.
When construed according to its plain meaning, the phrase ‘ORDER OF SELESIANS in India’ cannot be read compositely as referring to a single entity.[2] Its plain meaning is that there exists an organisation or body named ‘Order of Selesians’ and that it is located in or operates out of India. It is not possible to detect ambiguity in the phrase in clause 4.3 of the will without reference to ‘surrounding circumstances’.[3]
[2]Fell v Fell (1922) 31 CLR 268, 273 (Isaacs J).
[3]Akin to the phrase ‘Brian Claridge Accounting’ as construed in Lubke v Claridge (2016) 25 Tas R 90, 96 [12] (Brett J).
However, as accepted by the second defendant, the circumstances surrounding the will render the description of the recipient under clause 4.3 uncertain and ambiguous. There are 390 Salesian organisations in India and none of them correspond with the name described in clause 4.3. Accordingly, s 36(1)(c) of the Act, read with s 36(2), provides that extrinsic evidence other than evidence of the deceased’s intention may be admitted to assist the interpretation of the identity of the recipient. This includes the history of the deceased’s donations to Salesian Missions Australia and the evidence explaining the ordinary course by which a person in Victoria would donate to the projects of Salesian organisations in Mumbai. However, s 36 of the Act does not permit the admission of evidence of the deceased’s instructions to his solicitors to prove his testamentary intention.
Admissibility at common law
The common law principles regarding the admissibility of extrinsic evidence to aid the interpretation of a will apply in addition to the Wills Act 1997 (Vic),[4] but only to the extent they are applicable to the particular facts of this case. The plaintiff relies on the ‘armchair principle’ to rely on extrinsic evidence, including the evidence of the deceased’s instructions to his solicitors. The second defendant disputes the applicability of the armchair principle on various grounds.
[4]Wills Act 1997 (Vic) s 36(3). See, eg, The Public Trustee of Queensland v Smith [2009] 1 Qd R 26, 32–3 [24] (Atkinson J).
The armchair principle permits a court to consider all of the circumstances actually known to the deceased when he made his will.[5] However, this does not include direct evidence of what the deceased intended unless there is an equivocal description.[6] Such an equivocation will only exist in this proceeding where the words of clause 4.3 are clear on their face, but the surrounding circumstances reveal an ambiguity as to which of two or more persons, each answering the words of that clause, were to receive the gift.[7]
[5]Allgood v Blake (1873) LR 8 Ex 160, 162 (Blackburn J); Boyes v Cook (1880) 14 Ch D 53, 56 (James LJ).
[6]Doe d Hiscocks v John Hiscocks (1839) 151 ER 154, 156–8 (Lord Abinger CB).
[7]Eg, McNamara v Fleming; Re Fleming [1963] VR 17.
The second defendant submits this case is not one of an equivocation as it is not a case where two or more entities or bodies meet the description of the recipient in clause 4.3 of the will. Rather, it is a case where no particular organisation meets that description.
Consequently, any extrinsic evidence of the deceased’s testamentary intention is inadmissible at common law, as it is under s 36 of the Act, to aid the interpretation of clause 4.3 of the will. The result is that the evidence of the deceased’s instructions to his solicitors prior to the making of the 2015 will and his last will is inadmissible for those purposes.
The surrounding circumstances, however, remain admissible under the armchair principle to provide the Court with an understanding of the deceased’s ‘general habits and knowledge’[8] at the time of making the will. This includes the history of the deceased’s donations to Salesian Missions Australia. Resort to these matters under the armchair principle extends beyond the purposes of discovering whether the deceased used a word or phrase in the will in any secondary sense.[9]
[8]GE Dal Pont, Interpretation of Testamentary Documents (LexisNexis Butterworths, 2019) 41 [2.19].
[9]Counsel for Ms Magney submitted that the armchair principle permits resort to extrinsic evidence, but only to find that a word or phrase in the will was used in a secondary sense by the deceased. He cited Public Trustee of New South Wales v Herbert [2009] NSWSC 366, [29] (Macready AsJ) for that proposition. But that passage of Macready AsJ simply provides that ‘the court may find a word or phrase was used in a secondary sense through the application of the armchair principle’ (emphasis added), not that the armchair principle is confined to such usage.
Construction principles
In construing a will, the task of a court is to give effect to the testator’s intention through examination of the words used in the will, having regard to the will as a whole, aided as necessary by any admissible extrinsic evidence.[10] Prima facie, the words of a will must be given their ordinary meaning.[11]
[10]Fell v Fell (n 2) 273–4 (Isaacs J); Perrin v Morgan [1943] AC 399, 420 (Lord Romer); ANZ Executors & Trustee Co Ltd v McNab [1999] 3 VR 666, 667 (Fullagar J). The relevant principles regarding the admissibility of extrinsic evidence to aid the interpretation of a will were outlined above.
[11]Fell v Fell (n 2) 273, quoting Ralph v Carrick (1879) 11 Ch D 873, 878 (Cotton LJ).
As a general rule, after applying the appropriate rules of construction, where the meaning of a disposition in a will is uncertain, the disposition will fail.[12] If the gift fails, the subject of the gift will pass under any residuary clause in the will. If the residuary clause fails for uncertainty, there will be a partial intestacy in respect of that gift.
[12]Although, as will become clear later in these reasons, special rules operate for certain gifts of charity.
For a such a disposition to fail for uncertainty, it must be incapable of any clear meaning.[13] If a court can arrive at the meaning with a reasonable degree of certainty, the disposition will not fail.[14] In essence, for a gift to fail for uncertainty, it must be utterly impossible to put a meaning upon it.[15]
Uncertainty of the gift
[13]Mason v Robinson (1825) 2 Sim & St 295; 57 ER 359, 360 (Leach V-C).
[14]Adams v Jones (1852) 9 Hare 485; 68 ER 602, 602 (Turner V-C).
[15]Re Roberts; Repington v Roberts-Gawen (1881) 19 Ch D 520, 529 (Jessel MR). See, eg, Re Newman, deceased [1967] VR 201, 203 (Starke J).
Upon the process of construction of clause 4.3, the evidence of the deceased’s history of donations does not cure the uncertainty in the description of the recipient of the gift. Although it is clear that the deceased had an affinity with the works of Salesian organisations in Mumbai and the deceased may have indeed subjectively intended to benefit those particular works under his will, that is not what the words of clause 4.3 describe.
The central task in the process of interpreting a will is to identify what the words of the will mean, not what the deceased wanted them to mean as explained by Viscount Simon LC in Perrin v Morgan:[16]
[T]he fundamental rule in construing the language of a will is to put on the words used the meaning which, having regard to the terms of the will, the testator intended. The question is not, of course, what the testator meant to do when he made his will, but what the written words he uses mean in the particular case—what are the “expressed intentions” of the testator.[17]
[16][1943] AC 399.
[17]Perrin v Morgan (n 10) 406 (Viscount Simon LC). See also Nichol v Chant (1909) 7 CLR 569, 588-9 (Isaacs J, albeit dissenting on the facts), quoting Scale v Rawlins [1892] AC 342, 344 (Lord Watson).
If clause 4.3 exhibited a greater level of specificity in the identification of the recipient, it is possible that the surrounding evidence would have warranted a construction linking the disposition to the organisations that had previously received the deceased’s donations. But, in the absence of that detail, to construe the recipient under clause 4.3 as a particular organisation in Mumbai would be to rewrite the deceased’s will, which is impermissible in the circumstances.
Further, the principle of construction known by its Latin maxim, falsa demonstratio non nocet, cum de corpore constat, does not aid the plaintiff.[18] If a particular organisation had met the description of the recipient under clause 4.3 but for the misspelling of ‘Salesians’, that misspelling would be capable of correction by reference to surrounding evidence.[19] In circumstances where no such body or organisation meets the precise description, any ‘misdescription’ is only capable of correction under the falsa demonstratio principle where the Court can identify the recipient by other accurate parts of the will to correct the misdescribed part of the will.[20] In this case, there is no other ‘true’ or ‘accurate’ part of the deceased’s will to inform the meaning of the phrase ‘ORDER OF SELESIANS in India’.
[18]‘[A] false description does not vitiate when there is no doubt as to the thing or person meant’: Encyclopaedic Australian Legal Dictionary (online at 21 June 2019) ‘falsa demonstratio non nocet, cum de corpore constat’.
[19]See, eg, Price v Attorney-General for Western Australia [2014] WASC 430 [29]–[30] (Chaney J).
[20]Morrell v Fisher (1849) 154 ER 1350, 1355 (Alderson B); Diocesan Trustees of Church of England in WA v Solicitor-General (1909) 9 CLR 757, 761–2 (Griffith CJ); Cuthbertson v Hopwood [2000] TASSC 92, [15]–[19] (Blow J), affd Hopwood v Cuthbertson (2001) 10 Tas R 186.
Accordingly, clause 4.3 is uncertain and the plaintiff’s primary submission for a declaration fails.
Plaintiff’s alternative submission for an administrative scheme
The plaintiff submits that, even if the description of the recipient under clause 4.3 of the will is held to be uncertain, the Court should order that the plaintiff bring an administrative scheme into Court detailing the manner in which the deceased’s ‘remaining residuary estate’ is to be applied.
The second defendant submits that the relevant question is whether the deceased expressed a general charitable intention in clause 4.3 in which the gift would be valid, or a particular charitable intention in which case the gift would fail. The second defendant submits that clause 4.3 evidences the latter intention as the participation of the particular recipient of the residuary estate under clause 4.3 of the will is indispensable to that gift. She submits that the deceased had a definite and defined intention by identifying a particular body in a particular country to do a particular type of work.
Applicable principles
The law is ordinarily jealous to facilitate the realisation of the charitable intentions of a testator, and provided the ‘threshold certainty’ of intent and subject-matter are satisfied, the law adopts a particularly flexible attitude to the certainty of object for trusts with general charitable purposes.[21] One way this is achieved is through the Court’s inherent jurisdiction to settle administrative schemes in respect of the implementation of a charitable trust. An administrative scheme is ‘[a] scheme administered by a court of equity to give effect to a charitable trust where a charitable object is intended but the directions are indefinite, ambiguous or insufficient’.[22]
[21]Re Gott; Glazebrook v University of Leeds [1944] Ch 193, 197 (Uthwatt J). See also Rachael P Mulheron, The Modern Cy-près Doctrine: Applications & Implications (UCL Press, 2006) 27.
[22]Encyclopaedic Australian Legal Dictionary (online at 21 June 2019) ‘administrative scheme’, citing Re Robinson; Besant v German Reich [1931] 2 Ch 122 (‘Re Robinson’).
Where a testator expresses a general intention in his or her will to give to charitable purposes, but either fails to specify a particular means by which the gift is to be applied for those purposes, or the means specified are otherwise insufficient for the practical application of those purposes, the Court has jurisdiction to settle an administrative scheme, which is a mechanism detailing the means by which the gift is to be applied for the charitable purposes. Such jurisdiction is well established in Australia,[23] as informed by English authorities.[24]
[23]Somerville v Attorney-General (1921) 21 SR (NSW) 450, 464 (Street CJ in Eq), affd Verge v Somerville [1924] AC 496; Armenian General Benevolent Union v Union Trustee Co of Australia (1952) 87 CLR 597, 604 (Dixon CJ and McTiernan J), 614–15 (Williams, Webb and Kitto JJ); Kytherian Association of Queensland v Sklavos (1958) 101 CLR 56, 66 (McTiernan, Fullagar and Taylor JJ); Phillips v Roberts [1975] 2 NSWLR 207, 222–3 (Mahoney JA); The Will of Meshakov-Korjakin, deceased [2011] VSC 372, [54] (Mukhtar AsJ). See generally Rachael P Mulheron, The Modern Cy-près Doctrine: Applications & Implications (UCL Press, 2006) 26–30, 95–6; GE Dal Pont, Law of Charity (LexisNexis Butterworths, 2nd ed, 2017) 328–9, 332–4.
[24]Moggridge v Thackwell (1803) 6 RR 76, 80–1 (Lord Eldon LC); Mills v Farmer (1815) 35 ER 597, 610–11 (Lord Eldon LC); Re Wilson; Twentyman v Simpson [1913] 1 Ch 314, 320–1 (Parker J); Re Robinson (n 22) 128–9 (Maugham J); Re Gott; Glazebrook v University of Leeds [1944] Ch 193, 197 (Uthwatt J). See generally Peter Luxton, The Law of Charities (Oxford University Press, 2001) 551–3 [15.22]–[15.27]; Tudor on Charities (Sweet & Maxwell, 10th ed, 2015) 10–005, 10–012–10–013, 10–104, 10–110, which refers to ‘managerial schemes’.
An administrative scheme differs from a cy-près scheme, which may be settled by a court where it is impossible or impracticable to carry out the charitable purpose for which a gift is made. In Corish v Attorney-General’s Department of NSW, Campbell J explained the difference between the two schemes:[25]
There is a clear conceptual difference between a cy près scheme and an administrative scheme for a charitable trust. It is the difference between ends and means. A cy près scheme can be directed when it is impossible or impractical to carry out the objects of the trust in all the details the settlor stipulated. An administrative scheme supplements and/or clarifies any provisions the settlor has stipulated concerning the manner in which the objects of the trust are to be pursued, when practical circumstances show that the settlor’s stipulation (if any) of the means is inadequate or impractical.[26]
[25][2006] NSWSC 1219.
[26]Corish v Attorney-General’s Department of NSW [2006] NSWSC 1219, [9] (Campbell J).
Despite this clear distinction, the nomenclature of an ‘administrative scheme’ only appears to have arisen in more modern times. The English and Australian authorities over the past two centuries adopt shifting language to describe these schemes. Because of the substantial overlap between the principles underlying administrative schemes and cy-près schemes, many of the cases do not distinguish between the two and simply refer to the settling of ‘a scheme’, however, it is clear the two forms of schemes are distinct.[27] Where a disposition under a will evidences an otherwise valid charitable intention, but the means by which that intention is to be achieved is impossible or impracticable, it will be open to a court to settle an administrative scheme. This form of scheme is implemented in the course of the administration of the charitable purpose, rather than underpinning the validity of the charitable purpose itself.
[27]Re Robinson (n 22) 128–9 (Maugham J); Re Amelia Bullock-Webster (Deceased) [1936] NZLR 814, 818 (Northcroft J); Phillips v Roberts [1975] 2 NSWLR 207, 222 (Mahoney JA); Hunter Region SLSA Helicopter Rescue Service Ltd v Attorney General (NSW) [2000] NSWSC 456 [3] (Hamilton J). As a recent expression of the distinction, see Public Trustee of Queensland v State of Queensland [2009] 2 Qd R 327, 330 [13] (Byrne SJA), although there is debate as to the appropriate doctrinal classification of that decision: GE Dal Pont, Law of Charity (LexisNexis Butterworths, 2nd ed, 2017) 365 [15.14]–[15.15].
There is no suggestion on the facts in this proceeding that the charitable purpose specified under clause 4.3 of the will—‘work among the poor in India’—cannot be carried out. The deficiency in clause 4.3 is the means by which that purpose is achieved.
The circumstances that may be addressed by the settling of an administrative scheme are varied. Some typical circumstances were described broadly by Mahoney JA in Phillips v Roberts as including:
the case where the deceased has expressed her charitable intention in general terms (e.g., for the relief of poverty) and a scheme is necessary to provide a particular means by which the gift is to be applied for those purposes; the case where the deceased has indicated her purposes and the means by which those purposes are to be achieved, but the means indicated are not sufficient for the practical application of the gift for these purposes, and it is necessary to provide further and detailed machinery; and the case where there is a precisely detailed procedure provided by the deceased for the application of the gift for her general charitable purposes, but that procedure is inapplicable because, for example, the application of it in that way is impracticable.[28]
Administrative schemes — general versus specific charitable intentions
[28][1975] 2 NSWLR 207, 222–3.
The distinction between a general and specific, or particular, charitable intention is central to the availability of the Court’s cy-près jurisdiction.[29] The focus on the generality of the disposition is due to the Court’s desire to effect the essence of a testator’s testamentary intentions. The more specific the means by which the charitable ends is to be achieved, the more likely that it was the means, not the ends, that was the essence of the testator’s intentions. This is consistent with the fundamental precept that ‘[a] charitable trust is a trust for a purpose, not for a person’.[30]
[29]John Norton Pomeroy and Spencer W Symons, Pomeroy’s Equity Jurisprudence (Bancroft-Whitney, 5th ed, 1941) vol 4, 43–4.
[30]Attorney-General (NSW) v Perpetual Trustee Co (Ltd) (1940) 63 CLR 209, 222 (Dixon and Evatt JJ).
The same considerations apply equally to administrative schemes. The Court will not remedy impracticalities in the administration of a charitable purpose if the particular administrative means specified by the testator were integral to his or her testamentary design.
Although not all cases on administrative schemes adopt the shorthand dichotomy between general and specific charitable intentions, the substance of this distinction remains critical. In Kytherian Association of Queensland v Sklavos (‘Kytherian Association’), the High Court set out a helpful illustration for the settlement of an administrative scheme.[31]
[31](1958) 101 CLR 56 (‘Kytherian Association’).
The central issue in Kytherian Association was the validity of a testamentary disposition ‘for the Kytherian Association of Queensland upon trust for the erection and/or benefit of a Sanatorium and/or Hospital in the said Island of Cerigo as the said Association in its discretion may think fit’. The complication was that the association referred to was not incorporated until shortly after the testator’s death. Although the appellants conceded that the association was not competent to take the gift at the time of the testator’s death, it was argued that the Court could settle an administrative scheme. Conversely, the respondent argued that the involvement of the particular association was an integral part of the trust and the disposition should fail. The High Court held that the relevant principles were to be drawn from the earlier judgment of Dixon J in Royal North Shore Hospital of Sydney v Attorney-General (NSW) (‘Royal North Shore’).[32]
[32](1938) 60 CLR 396 (‘Royal North Shore’).
In Royal North Shore, the testator had expressed the intention for part of his estate to be used as an award for a biennial essay competition to promote three particular ‘purposes or principles’ and to be administered by the committee of a particular school. But the committee declined to perform that task. The High Court held that the testator’s disposition could nonetheless be administered under a cy-près scheme.
Dixon J described the relevant question as:
whether the substantial intention of [the disposition] is to advance the ultimate charitable purposes but by the particular means directed or, on the other hand, the intention is confined to giving effect to the particular plan as the main or essential object.[33]
[33]Ibid 428 (Dixon J).
Dixon J continued to expand on that question:
Sometimes the question is stated as a decision between regarding a particular plan as subordinate to the end and regarding it as the end in itself. Sometimes it is stated as an inquiry whether the particular means are essential or a necessary condition. Again, the question has been described as amounting to an inquiry whether the particular means prescribed should be considered as a direction engrafted upon a gift to a main purpose. But, however, it is stated, the matter to be considered is whether the will should be understood as meaning that the fund should be devoted to the attainment of the end, although the precise method directed should prove impracticable.[34]
[34]Ibid 428–9 (Dixon J).
On the facts of Royal North Shore, Dixon J held that the ‘chief, principal, paramount, or substantial purpose’ of the disposition was the advancement of the three purposes, not the particular means of establishing an essay competition to be administered by the particular school in question.[35] The other members of the Court reached similar conclusions.[36] As a result, the matter was referred back to the Master in Equity for the settling of a scheme for the regulation and management of the charitable trust.
[35]Ibid 429 (Dixon J).
[36]Ibid 315 (Latham CJ), 418 (Rich J), 421 (Starke J).
In Kytherian Association, the High Court held that the relevant disposition exhibited a general charitable purpose, rather than a particular charitable purpose, and there was little doubt that ‘the nomination of the Kytherian Association as trustee, with some discretionary power, was indicative of nothing more than a subsidiary intention that the charitable purpose designated by the testator should be advanced through the intervention of the association’.[37]
General charitable intentions
[37]Kytherian Association (n 31) 69 (McTiernan, Fullagar and Taylor JJ) (emphasis added).
It has been frequently remarked that the process of characterising a charitable intention as general or specific is a matter of construction of the instrument.[38] At the same time, Dixon J remarked in Royal North Shore that the inquiry ‘depends less on the construction of language than upon an estimate of the relative importance attached to the particular and to the general by the author of the scheme’.[39]
[38]Re Wilson; Twentyman v Simpson [1913] 1 Ch 314, 321 (Parker J).
[39]Royal North Shore (n 32) 428 (Dixon J).
Although there is no formal presumption in favour of a general charitable intention,[40] the Court ‘leans … in favour of charity and is ready to infer a general intention’.[41] This is particularly so where the disposition is to a non-existent body but it may be inferred that the testator intended the recipient to be carrying on a charitable activity.[42] This is in addition to the ordinary leaning of the Court against intestacy and in favour of a charitable gift.[43]
[40]Cf the position in New South Wales, where a general charitable intention is presumed: Charitable Trusts Act 1993 (NSW) s 10(2).
[41]Attorney-General (NSW) v Perpetual Trustee Co (Ltd) (n 30) 228 (Dixon and Evatt JJ).
[42]Re Davis; Hannen v Hillyer [1902] 1 Ch 876, 881 (Buckley J) (‘Re Davis’); Re Daniels, deceased [1970] VR 72, 76 (Gillard J).
[43]Re Constable [1971] VR 742, 746 (Pape J).
The modern authorities on the distinction between general and specific charitable intentions are considered in detail in both Australian and English texts.[44]
Availability of an administrative scheme
[44]GE Dal Pont, Law of Charity (LexisNexis Butterworths, 2nd ed, 2017) 382–93 [15.44]–[15.69], Tudor on Charities (Sweet & Maxwell, 10th ed, 2015) 9–018–9–035.
Applying these principles, the Court has jurisdiction to settle an administrative scheme in relation to the charitable gift under clause 4.3 of the will. Notwithstanding the targeted donation history of the deceased, the essence of the disposition in clause 4.3 is the alleviation of poverty in India generally, rather than the participation of any particular person or organisation connected with the Salesians.
First, clause 4.3 of the will expressly specifies the purposes for which the gift is to be applied: ‘work among the poor in India’. This observation distinguishes many of the cases in which the relevant dispositions simply describe the name of the recipient without expressly designating the purposes for which the gift should be applied. In those cases, the Court was required to infer charitable intent from the nature of activities undertaken by the named recipient.[45]
[45]Eg, a general charitable intention was inferred in relation to a gift to ‘The Methodist Homes for the Aged at Cheltenham’: Re Constable [1971] VR 742, 744–5 (Pape J).
In this regard, this proceeding is analogous to the decision in Re Annandale.[46] The testatrix in that case devised the remainder interest in a property so as to be held on trust ‘to sell the said land and improvements and to pay the net proceeds of sale to the psychology department of either the University of Queensland or of the University of New South Wales as directed by ... Professor Bernard Fenelon, who shall also have the right to direct and prescribe the research project upon which such moneys are to be expended’. However, Professor Fenelon absolutely renounced and refused to exercise that power.
[46][1986] 1 Qd R 353.
The disposition in Re Annandale specified the purposes for which the gift was to be applied, namely, certain research projects. Derrington J determined that, despite the naming of the particular recipients of the proceeds of sale, the ‘prime purpose’ of the gift was ‘psychological research generally’ and that ‘the nominated universities [were] merely instruments to that result’.[47] The specific mechanism set out in the testatrix’s will was no ‘more than a venture by the testatrix to express an efficient mode of execution’.[48] Consequently, even if the gift was defeated by failure of appointment, the cy-près doctrine would apply to divide the fund equally between the universities.[49] In reaching that conclusion, it was relevant that there was no practical benefit to the nominated universities and they were a mere conduit facilitating the ultimate fruits of charity.[50] The same can be said about the recipient described under clause 4.3 of the will.
[47]Re Annandale [1986] 1 Qd R 353, 360.
[48]Ibid.
[49]Although Derrington J expressed that the cy-près doctrine was applicable, Re Annandale is more accurately described as the implementation of an administrative scheme, rather than a cy-près scheme. It was not the specified charitable purposes that were impossible or impractical. It was rather the mechanism by which those purposes were to be achieved.
[50]Re Annandale (n 47) 360 (Derrington J).
Secondly, the charitable ends expressed by clause 4.3 of the will being ‘work among the poor in India’ is defined broadly and is capable of being achieved independent of the means specified, that is, payment to the ‘ORDER OF SELESIANS in India’. The participation of that latter body is dispensable to the realisation of the charitable purpose.[51]
[51]Cf, eg, Re Goodson [1971] VR 801, 806–7 (Adam J).
Thirdly, the fact that clause 4.3 specifies a non-existent body as the recipient of the disposition is important. This is not a case where the recipient named in the will once existed but ceased to exist by the time of the death of the testator.[52] Instead, the fact that there is no particular organisation named the ‘ORDER OF SELESIANS’ in India or the ‘ORDER OF SELESIANS in India’ suggests that the recipient, that is, the instrument by which the charitable purposes were to be achieved, was of lesser importance to the deceased than the attainment of those purposes. The Court is ready and able to infer a general charitable intention in such circumstances.[53] In this regard, this proceeding is akin to the decision in Re Davis; Hannen v Hillyer (‘Re Davis’), where the testatrix left pecuniary legacies to certain charities, including a £500 gift to ‘the Home for the Homeless, 27, Red Lion Square, London’.[54] At the date of the will there was not, and had never been, any charitable institution in London known as the ‘Home for the Homeless’. The Court nevertheless held that the testatrix had exhibited a general charitable intention to benefit the homeless and that the gift was to be administered cy-près. The analogy holds notwithstanding other features of the will in Re Davis that strengthened the inference of a general charitable intention.[55]
[52]For which, see Re Tyrie, Deceased (No. 1) [1972] VR 168, 177–8 (Newton J).
[53]Re Davis (n 42).
[54]Ibid.
[55]First, the gift to ‘the Home for the Homeless’ was interposed between other charitable gifts. Secondly, the will in Re Davis expressly provided that, should a residue of funds remain after the payment of the specific legacies, that residuary was to be divided ‘among the various charitable institutions’ previously named as beneficiaries.
Fourthly, the deceased’s particular history of donations, while relevant, does not transform the characterisation of the essence of the disposition. It is true that circumstances surrounding the making of the will may be considered to determine whether the disposition evidences a general charitable intention.[56] By considering the deceased’s history of donations, it must be accepted that he displayed a particular affinity to the work of the Salesians in Mumbai. But the peculiarity of that affinity is not evident in clause 4.3 of the will. If the particular participation of Salesian organisations in Mumbai was at the heart of the deceased’s desires for the residuary of his estate, the will could have easily stated so.
[56]Re Woodhams [1981] 1 All ER 202, 210 (Vinelott J).
This analysis correlates with, and largely follows from, the process of construction of clause 4.3 undertaken earlier in these reasons. It was stated there that the central task in the process of interpreting a will is to identify what the words of the will mean, not what the deceased wanted them to mean. The same principle applies to the characterisation of the generality of the deceased’s charitable intentions. The Court’s guiding focus is the intentions as expressed in the will and, for those purposes, any direct evidence of the deceased’s actual testamentary intention, such as may be contained in the deceased’s instructions to his solicitors, is not admissible to aid interpretation of the will.
Fifthly, and contrary to the submission of the second defendant, the existence of a power of advancement under the will is not in itself incongruous with the evincing of a general charitable intention under clause 4.3. In this regard, the second defendant relied on comments by Lindsay J in Estate Polykarpou; Re A Charity (‘Polykarpou’),[57] in which his Honour held that the power of advancement in clause 6.1 of the will considered in that case appeared ‘incongruous with a disposition of substantially the whole of the deceased’s estate to charity’.[58]
[57][2016] NSWSC 409 (‘Polykarpou’).
[58]Ibid [22] (Lindsay J).
The power of advancement referred to in Polykarpou[59] is in similar terms to clause 5.1(d) of the deceased’s will, which provided that the executors of his will were entitled in their discretion to:
apply for the maintenance, education (including travel to broaden the mind), advancement or benefit of a beneficiary the whole or any part of the capital and income of that part of my estate to which that beneficiary is entitled or may in future be entitled;
[59]Ibid [16] (Lindsay J).
It is not clear how this provision has a material influence on the characterisation of the generality of the deceased’s charitable intention as expressed in clause 4.3 of the will. Powers in the form of clause 5.1(d) are a standard feature of many wills. As clause 5.1(d) states, the applicability of the power is limited to that part of the deceased’s estate ‘to which that beneficiary is entitled or may in future be entitled’. The clause does not purport to apply to the entirety of the deceased’s estate. In these circumstances, it is not open to draw the implication from this clause that all dispositions under the will were intended to be gifts to persons rather than general charitable purposes.
Finally, there is no impediment to the settling of an administrative scheme because the charitable purposes are to be carried out overseas in India, rather than in Australia.[60]
[60]Kytherian Association (n 31) 70–1 (McTiernan, Fullagar and Taylor JJ).
Settlement of the scheme
Accordingly, the Court has jurisdiction to settle an administrative scheme so as to achieve the prescribed charitable purpose of ‘work among the poor in India’.
The Court has a discretion whether or not to approve the settlement of an administrative scheme.[61] It also has a discretion as to the terms of such a scheme, and may make modifications to a proposed scheme,[62] but the object of the scheme is to resolve the impossibility or impracticality attending the disposition so as to achieve the designated charitable purpose.[63]
[61]Re Hanbey’s Will Trusts [1956] 1 Ch 264, 274–5 (Danckwerts J).
[62]See, eg, Re W. D. Peacock’s Charity [1956] Tas SR 142, 145–6 (Gibson J).
[63]Re Lowin (deceased) [1967] 2 NSWR 140, 151 (Asprey JA).
Given the information already before the Court,[64] a further hearing to settle the scheme is likely to be unnecessary. The plaintiff is to provide the Court with a copy of the draft scheme to be considered and settled in chambers, as well as written submissions in support of the scheme, if he wishes.[65]
[64]For a discussion on the evidence that a court may consider in settling a scheme, see Phillips v Roberts (n 27) 211–12 (Hutley JA).
[65]An ordinary course for the settlement of schemes: see, eg, Re Pace, deceased (1985) 38 SASR 336, 341 (Cox J).
Settlement of an administrative scheme requires the consent of the Attorney-General to its terms.[66] Accordingly, the plaintiff must obtain the Attorney-General’s consent to the terms of the proposed scheme and provide the Court with a copy of such consent before the scheme is ordered into effect.
[66]See National Anti-Vivisection Society v Inland Revenue Commissioners [1948] AC 31, 62 (Lord Simonds); Re Pieper, deceased [1951] VLR 42, 45 (Smith J); Re Daniels, deceased [1970] VR 72, 79 (Gillard J). Indeed, the Attorney-General may herself suggest a scheme to the Court: Smith v Kerr (No 2) (1905) 74 LJ Ch 763, 766–7 (Farwell J).
As a result of the Court’s decisions, the second defendant has no interest in the residuary of the deceased’s estate under clause 4.3 of the will. Accordingly, the second defendant does not play a role in the settling of the scheme.
Orders and costs
The plaintiff is to file draft terms of a proposed administrative scheme under which the charitable purpose described in clause 4.3 of the deceased’s will is to be achieved.
If the parties are unable to agree on the costs of the proceeding, written submissions should be filed on or before 23 July 2019.
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