Re Peirson Memorial Trust
[1995] QSC 308
•7 December 1995
IN THE SUPREME COURT
OF QUEENSLAND
O.S No. 798 of 1995
Brisbane
Before the Honourable Justice White
[Re Peirson Memorial Trust]
IN THE MATTER of the Trusts Act 1973
- and -
IN THE MATTER of PEIRSON MEMORIAL TRUST
REASONS FOR JUDGMENT - WHITE J
Judgment delivered 7/12/1995
CATCHWORDS: Trusts Act s. 106 - impracticability of continuance of trusts - cy-près - combination of two trusts - modernisation of old trust deeds.
Counsel:Mr J. Logan for Trustees
Ms. L. Fleming for the Attorney-General
Solicitors:Howard Gill & Brown for Trustees
Crown Solicitor for Attorney-General
Hearing date: 24 November 1995
IN THE SUPREME COURT
OF QUEENSLAND
O.S No. 798 of 1995
IN THE MATTER of the Trusts Act 1973
- and -
IN THE MATTER of PEIRSON MEMORIAL TRUST
REASONS FOR JUDGMENT - WHITE J
Judgment delivered 7/12/1995
The trustees of the Peirson Memorial Trust have applied for an order pursuant to s. 106 of the Trusts Act 1973 to approve a scheme for the management regulation and application of the property and income the subject of the trusts of two indentures dated 25 November 1947 and 11 November 1953 respectively. The order is sought upon the footing that the trusts affecting the property and income have become impracticable and that the property and income ought to be applied cy-près.
In accordance with s. 106(3) of the Trusts Act the Attorney-General of Queensland was given notice of the application and appeared to support the scheme proposed by the trustees.
At the conclusion of the hearing I approved the scheme and indicated that I would deliver reasons subsequently and now publish those reasons.
Brief description of the existing trusts
Mrs Pearl Mohr and her sister Miss Amy Peirson became possessed of certain lands on the death of their sister Miss Lillis Peirson on 1 July 1946. Those lands are at Goodwood in the Wide Bay district. On 25 November 1947 they settled that property on the trustees of the Ann Street Presbyterian Church at Brisbane as a memorial to their late sister to be used as a home and training farm for poor boys together with Commonwealth Stock to the value of £3,000 to run the home.
Miss Amy Peirson died on 27 October 1951 and by her will bequeathed to the trustees of the Ann Street Presbyterian Church her freehold property at Goodwood on trust for the establishment and maintenance of a training farm or farms for orphans or children of poor parents. On 11 November 1953 the trustees of her estate entered into a deed with the then trustees of the Ann Street Presbyterian Church to give effect to the gift in her will.
Both trusts have been carried on since settlement but the trustees now say that it is impracticable to give effect to them because of changing social conditions.
The Trustees
The trustees of the Peirson Memorial Trust are Bruce Harvey McPherson, a Judge of this Court, who is the Chairman of Trustees; Ronald Wilson Pilkington, retired accountant; Bruce McCabe Sharpe, retired insurance representative; Reuben George Shannon, investor and retired builder; and Ian James Laffan, practicing accountant and Graham Stewart Rutherford, administrator of the Trust. They are also the trustees of the Ann Street Presbyterian Church.
The Proposals
The trustees propose:-
that trustees be permitted to pay to the trustees of the Ann Street Presbyterian Church appropriate remuneration for the use of church facilities in the administration of the trust;
that the two Deeds be consolidated and the trusts be merged to give effect to what has occurred informally;
that the formal expression of the trusts be modernised to delete obsolete provisions and to take account of contemporary processes; and
that the trust(s) be altered to allow the property of the trust to be applied cy-près.
In order to examine if it is appropriate to consolidate the two trusts and apply them cy-près as proposed in the scheme it is necessary to say something about the history of the Peirson family and its inclination towards charity.
History of the Peirson family in Queensland
Edward James Peirson (born 1841) and his brother Henry Edward Peirson (born 1846) came from Heytesbury in Wiltshire in England to Australia in 1864. They originally bought five acres of land in Maryborough and built a home on it. At that time they were working in the timber industry on Fraser Island. In due course Edward Peirson bought Crown land at Goodwood near Bundaberg and named it "Heytesbury". His brother Henry bought adjoining land and named it "Redcliff". Edward died in Maryborough in 1875 at the age of 34 while Henry lived until 1920 when he died at the age of 74 years. He had married Sarah who pre-deceased him at the age of 68. They had six children - five daughters and one son. Two of the children died early in somewhat tragic circumstances and four daughters survived. They were the Misses Sarah, Amy and Lillis Peirson who did not marry and Pearl who married August Mohr. Mr and Mrs Mohr bought land near the family holdings at Goodwood where they carried on cane farming. They had no children and are both deceased.
Henry Peirson planted cane at Heytesbury in 1909 and is reputed to have been the first in the district to have done so. On his death in 1920 his daughter Miss Sarah Peirson assumed the management of the cane farm until she died in Brisbane in 1932 at the age of 61. The property was then managed by her sisters Miss Amy and Miss Lillis Peirson. Miss Lillis died at Heytesbury in 1946 at the age of 66. Her share of the property is the subject of the trust created by the indenture dated 25 November 1947 (the First Trust).
In 1946 Miss Amy Peirson wrote to the General Secretary of the Presbyterian Church of Queensland offering the family property at Goodwood as a training farm for boys. After considering the matter the Board of Finance of the Church declined the offer. In 1947 she offered the property together with £3,000 in Commonwealth Government Stock on trust as an orphanage and training farm for boys to the then Minister of the Ann Street Presbyterian Church. The offer was accepted and resulted in the First Trust.
After the death of Lillis, Miss Amy Peirson continued to manage the property until her death in 1951. There were and are no surviving children or descendants of the Peirson family. The family attended Scots Presbyterian Church at Bundaberg but they had a property in Brisbane where they stayed from time to time. When in Brisbane they attended the Ann Street Presbyterian Church. The altar table in the Ann Street Church was a gift from the Peirson family in memory of Sarah Peirson, the sister of Amy, Lillis and Pearl. The daughters also made a gift of £300 to the Church as a memorial for their father Henry Peirson.
In 1951 Miss Amy Peirson died at Heytesbury aged 78. By her will she left her real and personal property to the trustees of the Ann Street Presbyterian Church, to establish an orphanage and training farm for poor boys. It seems clear that her intention was to augment the First Trust. Her trustees executed the Second Trust Deed dated 11 November 1953 in favour of the trustees of the Ann Street Presbyterian Church.
The early working of the trusts
The original plan of the trustees, consistently with the intention of the settlers as expressed in the Trust Deeds, was to house 18 boys of up to 12 years on the property. They were to be educated at the State primary school at Goodwood and at the Childers State High School. It was proposed that they would perform agricultural field work under instructions at the trust property and would receive a Christian upbringing. The original homestead on the property was old and unsuitable for their accommodation and a home was established on the Redcliff portion of the property. The position of house parents was advertised and a Mr and Mrs FC Kane were appointed. Mr JK Murray, a former principal of Gatton College, agreed to give advice on farming operations. Notices were circulated advising of the existence of the home for underprivileged boys. In 1955 the Redcliff facility was opened. That year four boys, two from Brisbane and two from Caboolture, were accepted as residents and came to live on the property. It seems that Redcliff was the first family group home in Queensland where the residents were not housed in large dormitories but in pairs in separate rooms.
By 1960 the Redcliff home was not adequate for the needs of the district and further accommodation was planned. A separate home was built nearby on the property and named "Heytesbury". It was opened in 1968 by the then State Premier at a ceremony attended by some 250 people from surrounding districts and Brisbane. In the period following the opening of the homes the resident boys were taught basic living skills, attended the local schools and were given instruction in farming techniques. They ran a herd of dairy cattle, maintained a piggery and kept chickens. To cater for the boys who were undertaking apprenticeships or further education in Bundaberg the trustees bought a house at Avoca Street in Bundaberg.
The total area of land owned by the trusts is approximately 759.5 hectares and the trustees lease an area of 12.5 hectares from the Crown. They bought an additional parcel of land of 114.6 hectares pursuant to an order of this Court made on 10 January 1989. The assets of the trust apart from the land mentioned include a house property in Bundaberg, chattels associated with the farm properties, furniture and equipment associated with the properties and funds deposited in various bank accounts currently amounting very approximately to $110,000. Cane growing and other farming activities are carried out on the land. The income arising from those activities after payment of expenses is applied towards maintaining the homes conducted on the properties.
The present day working of the trusts
Mr Graham Stewart Rutherford is the administrator of the Peirson Memorial Trust and is a trustee. He is paid by the trustees as the administrator and in that capacity devotes approximately 24 hours a week to the affairs of the trust. He supervises the trust business and the activities of those employed to manage the cane farming operations conducted on the property as well as the activities of those who care for the children accommodated there. Presently two house parents, a married couple, are employed by the trust look after the children. They have been employed in that capacity for the past 13 years. Cane growing has continued on the land since the trust was established. The total area under cane cultivation is approximately 300 hectares and the trustees maintain a small herd of 40 cattle which brings in revenue from sales from time to time. The trust has planted about 1,500 avocado trees with a view to providing additional sources of revenue in the future.
For many years the planting, cultivation and harvesting of the cane were carried out by Bundaberg Sugar Company to which the trustees paid a monthly fee. In 1989 that company decided to limit its activities in the area and ceased working the trust property. The trustees then took over direct management of the cane growing operations. This required a substantial outlay in plant and equipment and involved engaging a manager and employees.
Mr Rutherford was employed in education and public administration after serving in the Australian Army in Vietnam. Until 1983 he was the Queensland head of the Commonwealth Schools Commission. Since becoming involved with the trust he has made himself familiar with many aspects of the sugar cane industry in Queensland. Part of his work as administrator is to maintain overall supervision of the cane farming operations on the trust properties which he visits on average every four weeks. He has also been involved in welfare activities relating to underprivileged children arising out of his administration of the trust and in conjunction with officers of the Queensland Department of Family Services. (It is convenient to refer to this department in that fashion whilst recognising its several name changes.)
Mr Rutherford says that the cane farming operation is being conducted successfully although the return depends upon seasonal factors. He expects a net income from the cane farming operation for 1994 to return about $350,000 to the trust. The recent season has been dry and he expects that the income may be less than half that amount. In order to offset the effects of dry periods the trustees have adopted a policy of installing and extending a system of trickle irrigation for the cane. It is expected that the ultimate effect of this will be to increase productivity and thence profits. All the income arising from cane growing and other activities is applied for the charitable purposes of the trust and is not subject to income tax.
The need for the house in Bundaberg has passed and the trustees lease it to tenants which returns income to the trust. In the early days of the trust applications were received from boys to be accepted as residents at the trust homes but increasing participation by Government in the care and welfare of children has meant that the majority of those now being placed in the trust homes have been wards of the State. Mr Rutherford notes that over the years since the inception of the trust the policy of the Department of Family Services in respect of the residential care of disadvantaged and homeless children has undergone considerable change. The Department attempts wherever possible to keep children of the same family together. As a consequence the trustees obtained an order of the court in 1977 to vary the terms of the First Deed to enable girls to be admitted to the trust homes on equal footing with boys.
Mr Rutherford says that the concept of maintaining children in orphanages is no longer acceptable to the Department. The aim wherever possible is to assist the parents of disadvantaged children with a view to enabling their children to return home or remain home and where this is not possible to arrange the fostering of the children with smaller families rather than have them cared for in hostel type accommodation. Large group homes like those maintained by the trustees now have a very limited place in current Departmental strategies. Such homes are used to cater for the short term placement of children preparatory to fostering or returning them to their families. Mr Rutherford says that other children who are now cared for in the trust homes tend to be those who, through congenital defects of body or intellect or for other reasons, are often not easy to place with foster parents.
From the mid-1980's the number of resident children in the homes has been diminishing. From as high as 21 in 1985 the number of children in residence has decreased to 6 and at times been even lower. Mr Rutherford says that although living at the trust property has the advantages of country life the prospect of a career on the land has few attractions for those children. Agricultural qualifications are now able to be obtained at secondary and tertiary institutions and the trust is unable to compete even if the instruction were confined to disadvantaged children.
Mr Rutherford believes that the settlers of the Peirson Trust may well have been influenced by a scheme resembling the Fairbridge Farm School system. In his affidavit he sets out something of the history of that system named after Kingsley Fairbridge who was born in South Africa in 1885 and formed a society in Britain to raise funds to send British orphans and other disadvantaged children to the Dominions where they would grow up at farm schools. His writings attracted a very wide readership at the time and would likely have provided the inspiration to the Misses Peirson in creating the trusts for the training farm.
Mr Rutherford is of the opinion that a combination of factors has made it impracticable to continue to pursue the aim of the settlers. Social and economic conditions have changed greatly since the trust was first established nearly half a century ago. As well there has been a change in policies and perceptions both in the community and by governments about how disadvantaged children should be cared for. Mr Rutherford identifies the major social problem in the Wide Bay District at the present day as caring for adolescent and younger children from broken homes and from families under stress. Over the past 18 months the trustees have established a Youth Counselling Centre in Bundaberg managed by Mr Spencer Gear who, with two assistants, is providing advice and relief for troubled young people and their families. Mr Gear provided a report of the work being done by his centre to the trustees in March this year. He and his assistants are employed by the trustees but their salaries and most of the expenses incurred in performing the work that they do is met by the Department of Family Services. The rent of the premises from which they operate is met by the trusts. They see people referred to them by the Department and other organisations in Bundaberg. Their ministry is based on the Christian precepts of the Presbyterian Church. The trustees are concerned that they may do no more in this direction whilst the present Deeds continue to govern the Trusts. They propose that they should continue to conduct cane growing and other agricultural operations on the trust property at Goodwood and, as long as practicable, continue to maintain Heytesbury as a home for disadvantaged children such as those presently being referred by the Department of Family Services for residential care. The farming operations are profitable and are expected to remain so. The income generated by the trust presently and for the future exceeds and will exceed what is required for the maintenance of the residential home. Some further outlet is needed to use the funds generated by the initial charitable bequest of the settlers. Mr Rutherford identifies the area of greatest need consistent with the objects of the original trusts and compatible with current Departmental child and family welfare practices as caring for adolescent and younger children from broken homes and from families under stress. This includes counselling and care for those families with a view to ensuring that the young people remain, where practicable, in a stable family environment. It seems that problems arising from child abuse and youth unemployment in the Bundaberg and Wide Bay Districts are extensive. Mr Rutherford points to the work of Mr Gear and his assistants as demonstrating this need. He considers that the distance of Goodwood from Bundaberg and other urban centres in Queensland makes it unrealistic to suppose that these identified new needs can be met on the trust property itself.
The proposals:
Payment to the Church for the use of facilities
The trustees of the Peirson Memorial Trust are self- appointing in the sense that existing trustees agree on the appointment of individuals who are to be new trustees. In practice the trustees of the Ann Street Presbyterian Church and of the Peirson Memorial Trust have always been the same individuals. The Ann Street Presbyterian Church is unique among Presbyterian churches in Queensland in having trustees of its land. Mr Rutherford occupies and uses an office in one of the Church buildings in Ann Street and parks a vehicle belonging to the trust on church land. The other trustees of the Peirson Trust give their services voluntarily. The meetings of the trustees are conducted on Church premises. The Church is also used as the place of address of the trust. Mr Justice McPherson, the chairman of trustees, has deposed that the affairs of the Ann Street Presbyterian Church and the Peirson Memorial Trust are conducted separately with separate meetings and separate books of accounts and minutes being maintained and audited. Separate reports of each trust are prepared and presented to the congregation of the Church at its annual meeting.
The trustees of the Ann Street Presbyterian Church have not in the past received payment for the use of Church facilities by the trustees of the Peirson Memorial Trust and its administrator. Ordinarily it might be expected that a trust such as the Peirson Memorial Trust would have to pay for the use of facilities which are provided freely by the Church. Although the farming activities of the Peirson Memorial Trust return a profit should it be required to pay commercial rates to the trustees for accommodation provided by the Church its activities would be financially constrained. The trustees are of the view that it is not inappropriate to charge the Peirson Memorial Trust a reasonable fee for the use of the Church facilities from which the Trust in the past and presently is receiving a benefit.
The presence of cl. 25 of the First Trust Deed and cl. 23 of the Second Trust Deed, both of which provide that no portion of the funds of the Peirson Memorial Trust "shall be paid or applied to or towards the general funds or purposes of the Church", are thought to inhibit charging for these facilities and services. The proposed new trust deed contains a provision which expressly authorises the payment to the Church of a reasonable fee for the beneficial use of the Church facilities by the Trust and for services provided to the Trust. As I have mentioned, the Trust is audited by independent professional accountants annually. I am of the view that cll. 23 and 25 of the original Trusts do not preclude the payment of appropriate fees for rent and services be paid by the trustees of the Peirson Memorial Trust to the Church. However, cl. 8 in the new trust deed clearly permits what might, at some time in the future, give rise to embarrassing debate. It preserves the prohibition against applying any assets of the Trust towards the general purposes of the Church but permits a reasonable fee to be charged by the Church and paid by the Trust for the use of Church facilities and services. The present trustees propose to continue their services voluntarily.
Merging and Modernising the Deeds
The format, style and contents of the two Trust Deeds are very much of their own era. They take no account of the modern approach to trusts or the provisions of the Trusts Act 1973. I accept that this is an appropriate opportunity to modernise the language of the Deeds and to remove many of the existing provisions which have become obsolete or redundant. It is also appropriate that the two Deeds be merged and effect be given formally to what has hitherto occurred informally.
Ought the trusts be applied cy-près
There is no doubt that both trusts evince a general charitable intention since they are concerned with the education and relief of the effects of poverty amongst young people. Those charitable trusts have continued for at least 40 years. In Queensland the application of the cy-près doctrine has been given statutory effect by s. 105 of the Trusts Act 1973 which follows s.13 of the English Charities Act 1960. It provides:
105.(1) Subject to subsection (2), the circumstances in which the original purposes of a charitable trust can be altered to allow the property given or part of it to be applied cy près shall be as follows -
(a)where the original purposes, in whole or in part -
(i)have been as far as may be fulfilled; or
(ii)can not be carried out; or
(iii)can not be carried out according to the directions given and to the spirit of the trust;
(b)where the original purposes provide a use for part only of the property available by virtue of the trust;
(c)where the property available by virtue of the trust and other property applicable for similar purposes can be more effectively used in conjunction, and to that end can suitably, regard being had to the spirit of the trust, be made applicable to common purposes;
(d)where the original purposes were laid down by reference to an area which then was but has since ceased to be a unit for some other purpose, or by reference to a class of persons or to an area which has for any reason since ceased to be suitable, regard being had to the spirit of the trust, or to be practical in administering the trust;
(e)where the original purposes, in whole or in part, have, since they were laid down -
(i)been adequately provided for by other means; or
(ii)ceased, as being useless or harmful to the community or for other reasons, to be in law charitable; or
(iii)ceased in any other way to provide a suitable and effective method of using the property available by virtue of the trust, regard being had to the spirit of the trust."
It can be said of the Peirson Memorial Trust that:
•the original purposes provide a use for part only of the property - s.105(1)(e);
•the original purposes have in part since they were laid down, ceased to provide a suitable and effective method of using the property, regard being had to the spirit of the trust - s.105(1)(e)(ii); and
•the property available by virtue of the trusts can best be used in conjunction - s.105(1)(c).
It has been suggested that the practical consequence of s.105 and its analogues in other Australian jurisdictions is to make rather insignificant practical changes to the law of charities in Australia, see Bradshaw, The Law of Charitable Trusts in Australia (1982) at pp. 135-6. It is clear that s. 105 preserves the essence of the previous law but in s. 105(1)(e)(iii) allows a certain liberality to a court in seeking to apply trust property cy-près where the original purposes may no longer be effected, which it may not have previously have been confident in applying.
In Re Lepton's Charity [1972] Ch. 276 Sir John Pennyquick observed at p. 285:
"Sub-section (1)(e)(iii) [of s.13] appears to be no more than a final writing out large of paragraph (a)(ii). The expression "spirit of the gift" may be an echo of words used in the Campden Charities case. It must, I think, be equivalent in meaning to the basic intention underlying the gift, that intention being ascertainable from the terms of the relevant instrument read in the light of admissible evidence."
Clause 10 of the First Deed provides that the residents of the training farms shall be poor boys under the age of 21 years "preferably orphans" "whose parents or parent (if only one be living) shall at the date of appointment ... be unable to maintain them by their or his or her own exertions, or who if orphans at the date of such appointment shall be unable to maintain themselves by their own exertions". Clause 7 of the Second Deed provides that the beneficiaries shall be orphans who shall have "insufficient means to provide for their own education maintenance and support and the children of parents who at the date of appointment are ... unable or unwilling to provide adequately for the proper education maintenance and support of their children". The proposed objects of the new trust are:
"To maintain on the Trust Lands and elsewhere in the State of Queensland a home or homes for the use in the manner hereinafter appearing of children ("Residents") appointed in accordance with the terms of this Deed.
To provide for the maintenance, support, education, training and general advancement in life of the Residents and of the Beneficiaries as hereinafter defined.
To provide for the religious, cultural, vocational and physical education of the Residents and of the Beneficiaries and to foster among them the development of Christian ideals of citizenship and personal character.
To provide general assistance, support and counselling for troubled young people and their families on the Trust Lands and elsewhere in accordance with the terms of this Deed."
It is proposed that the residents be children under the age of 18, although at their discretion the trustees may appoint as a resident a young person over that age, who are "financially socially, physically or intellectually disadvantaged". A new class, that of "beneficiaries" is included. It is proposed that the beneficiaries of assistance, support and counselling be children under the age of 18 together with their families and care givers who are in need of such aid. In exercising their discretion as to who may be beneficiaries the trustees may take into account that such children "are from broken homes and/or families under stress whether financial or otherwise provided always that the Trustees may from time to time grant aid ... to young people of eighteen (18) years or over ..." The scheme provides for the establishment of youth counselling and educational centres and providing facilities and expertise as are deemed appropriate. The new deed provides that such assistance may be rendered in conjunction with other charitable or religious organisations or with governmental authorities as to the trustees seem appropriate.
Not only is it increasingly impracticable to give effect to the intention of the settlers of the trusts but to confine the activities of the trust in that way leads to a surplus of income which will accumulate. I am persuaded that the "spirit of the gift" is amply satisfied by the proposed scheme. Whilst the Misses Peirson might be somewhat bewildered were they to revisit the Wide Bay District now with the eyes of the 1940's and 50's, I am persuaded that their impulse to charity would by no means have been stifled by the revelation of social disintegration amongst many of the residents of that area and its effect on young people. That, in a sense, is what they were concerned to address. Their ideals were clearly both lofty and practical and will continue to be implemented by the proposals in the new deed.
The orders are:
1.The scheme contained in the draft proposed deed of trust exhibited and marked "GSR1" to the affidavit of Graham Stewart Rutherford filed herein on 16 November 1995 is a fit and proper scheme for the management, regulation and application of the property and income the subject of the trusts of the two indentures dated 25 November 1947 and 11 November 1953 exhibited and marked "GSR2" and "GSR3" respectively to the said affidavit.
2.The scheme be carried into effect upon the footing that the trusts affecting the property and income have become impractical and that the property and income ought to be applied cy-près in the manner provided for in the scheme.
3.The costs of and incidental to this application be taxed as between solicitor and client and paid from the said property and income.
0
0
0