Re Sir Colin and Lady MacKenzie Trust
[2019] VSC 834
•17 December 2019
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
TRUSTS, EQUITY & PROBATE LIST
S ECI 2019 03602
| EQUITY TRUSTEES LIMITED (as sole trustee of the Sir Colin and Lady MacKenzie Trust Fund) | Plaintiff |
| v | |
| ATTORNEY-GENERAL FOR THE STATE OF VICTORIA | First Defendant |
| - and - | |
| THE ZOOLOGICAL PARKS AND GARDENS BOARD | Second Defendant |
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JUDGE: | McMillan J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | On the papers |
DATE OF JUDGMENT: | 17 December 2019 |
CASE MAY BE CITED AS: | Re Sir Colin and Lady MacKenzie Trust |
MEDIUM NEUTRAL CITATION: | [2019] VSC 834 |
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TRUSTS – testamentary trust – gift to named institution – condition subsequent prohibiting change of name of institution – where name of institution changed – whether contrary to condition subsequent – whether gift lapsed – Fell v Fell (1922) 31 CLR 268; Equity Trustees Ltd v Jewish Care (Victoria) Inc & Anor [2015] VSC 73.
TRUSTS – testamentary trust – gift for research prizes and grants – committee for the distribution of prizes and grants – where one committee member unwilling to participate – whether gift unable to be carried out in accordance with the directions of the will – whether gift to be carried out cy près.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr T Mah | Piper Alderman |
| For the First Defendant | No appearance | Victorian Government Solicitor |
| For the Second Defendant | Mr SF McNab | DLA Piper Australia |
HER HONOUR:
Introduction
Lady Winifred Iris Evelyn MacKenzie (‘the deceased’) died on 21 February 1972. The deceased left a will dated 4 April 1966 and codicil dated 14 February 1969 (collectively, ‘the will’).
The will established a charitable trust known as the Sir Colin and Lady MacKenzie Trust Fund (‘the trust’). The plaintiff is the sole remaining trustee of the trust (‘the trustee’), which has a present value of approximately $2.4 million.
Pursuant to clause 3(ii) of the will, the income of the trust is to be applied one third in favour of the committee administering the Sir Colin MacKenzie Sanctuary (‘the gift to the sanctuary’)[1] and two thirds for the provision of prizes and grants for studies in comparative anatomy (‘the gift for anatomical studies’). The gift to the sanctuary is made upon the condition that its name never be altered from the ‘Sir Colin MacKenzie Sanctuary’.
[1]The Sir Colin MacKenzie Sanctuary is more commonly known by its colloquial name, the Healesville Sanctuary.
Trustee’s application
By originating motion filed 12 August 2019, the trustee seeks answers to three questions in relation to the administration of the trust:
(a) whether the name of the Sir Colin MacKenzie Sanctuary has been altered from the ‘Sir Colin MacKenzie Sanctuary’;
(b) whether the result of any such alteration is that the gift has lapsed; and
(c) if so, how funds gifted to the sanctuary ought to be applied.
The trustee also seeks declarations, and the adoption of a proposed cy près scheme, to facilitate the replacement of a member of the committee convened pursuant to the will for the distribution and allocation of funds to prizes and grants (‘the committee’).
The application is supported by affidavits of Ms Helen Elizabeth Rowe, the relationship manager of the trustee, and Dr Graham Mitchell of Foursight Associates Pty Ltd. Ms Rowe’s affidavit deposes to the history of the management of the trust. Dr Mitchell’s affidavit details his opinion that a representative of the Murdoch Children’s Research Institute is an appropriate replacement member of the committee.
The second defendant, the Zoological Parks and Gardens Board (the ‘Board’), opposes the trustee’s application insofar as it relates to the gift to the sanctuary. The Board relies upon an affidavit of Ms Jenny Gray, Chief Executive Officer, who deposes to the history of the sanctuary.
The first defendant, the Attorney-General for the State of Victoria, informed the trustee by letter dated 19 April 2018 that it does not oppose the appointment of a representative of the Murdoch Children’s Research Institute to the committee, and does not otherwise propose to make submissions in the proceeding.
Background
The deceased married Sir William Colin MacKenzie (known as Sir Colin MacKenzie) in 1928. Sir Colin MacKenzie was a medical doctor specialised in the field of orthopaedics. He was also a student of comparative anatomy and possessed a large collection comprising specimens and anatomical drawings of native Australian fauna.
In 1920, Sir Colin MacKenzie established the Institute of Anatomical Research in Healesville, where he conducted studies of local fauna. The land passed to the Healesville Council in 1927 and was opened to the public in 1934. Upon being opened to the public, the land became known as the Sir Colin MacKenzie Sanctuary.
Sir Colin MacKenzie died in 1938, leaving the deceased a widow.
At the outbreak of the Second World War, the deceased, also a medical doctor, enlisted in the Australian Army Medical Corps as a staff officer. She was promoted to the rank of Lieutenant Colonel, before reverting to the rank of Major following the War. She remained in service and was discharged in 1947. After her discharge, the deceased served in the Royal District Nursing Society for many years.
The will
Probate of the deceased’s will was granted to the trustee and Kingsley Percival Rees on 31 May 1972.
Pursuant to clause 3 of the will, the residuary estate was split into four equal portions. Clause 3(i) directed that one of those portions was to be held upon trust, the income of which was to be paid to six named individuals until they attained the age of 21. All of the named beneficiaries have now reached the age of 21 and, pursuant to a direction in the will, the funds held for their benefit have been joined with the funds gifted by clause 3(ii).
Clause 3(ii) established the trust, to which the remaining three quarters of the residuary estate was to be applied, as follows:[2]
[2]Capitalisation and underlining as they appear in the original will.
As to the remaining three equal fourth parts on shares UPON TRUST to establish a Trust Fund to be known as the SIR COLIN AND LADY MACKENZIE TRUST FUND. AND I DIRECT that the income therefrom shall be utilized and applied in perpetuity for the following purposes :-
(A)One-third of the income from such Fund shall be paid annually to the Committee administering the SIR COLIN MACKENZIE SANCTUARY at Badger Creek Healesville in the State of Victoria to be spent as far as possible in the furthering of Scientific Knowledge of the Native Fauna maintained in the Sanctuary.
AND I DIRECT that if the name of the Sanctuary should ever be altered from the SIR COLIN MACKENZIE SANCTUARY such sum shall no longer be paid to the said Committee but shall be applied in accordance with the provisions for the application of the remaining two-thirds of such income as hereinafter set out.
(B)As to the remainder of the income from such Fund for the provision of Prizes or Grants for Theses or Lectures Scholarships or Bursaries for special work or studies in Comparative Anatomy and the like in accordance with the aims and objects of the Australian Institute of Anatomy in Canberra PROVIDED THAT such work shall not be in the nature of routine duties such as those for which the Commonwealth Government should provide the necessary Funds and PROVIDED THAT the work or studies shall have a medical significance and bearing and further the understanding of human health and disease.
AND I DIRECT that the income shall be administered in accordance with the following scheme :-
(a)The distribution and allocation thereof shall be decided by a Committee consisting of the following :-
(i) The Director for the time being of the Australian Institute of Anatomy in Canberra
(ii)The Vice Chancellor for the time being of the National University Canberra
(iii)A representative of the Commonwealth Health Department but only if the said Institute remains an instrumentality of that Department
(iv)One other person of experience in the particular branch or science with which the Committee may be dealing from time to time such person to be co-opted by the committee
and
(v)A representative of my Trustees
(b)Each distribution or allocation shall be known as “SIR COLIN AND LADY MACKENZIE TRUST DISTRIBUTION FOR “
(c)Each distribution may be awarded to one or more persons at the discretion of the Committee
(d)Any Scholarship or Bursary may be awarded for one or more years at the discretion of the Committee.
The gift to the sanctuary
Clause 3(ii)(A) of the will directs that the gift to the sanctuary will lapse if the name of the sanctuary ‘should ever be altered from the SIR COLIN MACKENZIE SANCTUARY’.
History of the name of the sanctuary
The affidavit of Jenny Gray deposes to the history of the formal name of the sanctuary. Since sometime in the early 1980’s the sanctuary has been more commonly known by its colloquial name, ‘Healesville Sanctuary’. Ms Gray deposes to her view that the use of a colloquial name arose ‘presumably because people do not like to use long formal names and presumably because geographic locations tend to identify public places of interest more easily than other identifiers.’ Although the colloquial name ‘Healesville Sanctuary’ is used for advertising and promotional purposes, the Court is satisfied that the sanctuary has always been formally known by a different name.
When it was opened to the public in 1934 the sanctuary was known only by the name ‘Sir Colin MacKenzie Sanctuary’. The condition in the will indicates that the sanctuary continued to be identified by that name at the time the will was written in 1966. The evidence before the Court, referred to immediately below, also indicates that the sanctuary retained the name ‘Sir Colin MacKenzie Sanctuary’ as at the date of the deceased’s death.
On 6 July 1973, a newly constructed building at the entrance to the sanctuary was opened. A plaque affixed to the building on that date is headed ‘SIR COLIN MACKENZIE SANCTUARY’.
On 5 July 1977, by order of the Governor in Council, a committee of management for the sanctuary was created pursuant to s 221 of the Land Act 1958. The notice of that order in the Government Gazette referred to the sanctuary as the ‘Sir Colin MacKenzie Sanctuary’.
On 27 June 1978, by further order of the Governor in Council, the site of the sanctuary came under the control of the Zoological Board of Victoria (a predecessor of the Board) under the Zoological Gardens Act 1967. The notice of that order in the Government Gazette displayed a map of the relevant land but gave no indication as to the name of the sanctuary.
Although Ms Gray deposes that, on 27 June 1984, the Board registered the business name ‘Sir Colin MacKenzie Sanctuary’ and that the registration remained in place until June 2002, these dates are not substantiated in the exhibits to her affidavit.
Ms Gray deposes that the name of the sanctuary was changed to the ‘Sir Colin MacKenzie Zoological Park’ sometime in 1984. However, Ms Gray does not provide a specific date, reason for, or documentary evidence of the change. That evidence also conflicts with Ms Gray’s evidence that on 27 June 1984 the Zoological Board registered the business name ‘Sir Colin MacKenzie Sanctuary’, suggesting that name was still in use at the time. Ms Gray’s evidence can only be reconciled if the name ‘Sir Colin MacKenzie Zoological Park’ came into use sometime after 27 June 1984, or if the sanctuary was known by more than one name.
The earliest occurrence in the documentary evidence before the Court of the name ‘Sir Colin MacKenzie Zoological Park’ is in the provisions of the Zoological Parks and Gardens (Administration) (Charges) Regulations 1996, which came into operation on 1 July 1996.[3] The regulations inserted references to the ‘Sir Colin MacKenzie Zoological Park’ into the pre-existing Zoological Parks and Gardens (Administration) Regulations 1992 (the ‘1992 regulations’). Regulation 5 inserted the following definition of ‘Sir Colin MacKenzie Zoological Park’ to the 1992 regulations: ‘the zoological park at Healesville existing on the lands shown on the plan in Part 3 in Schedule 1 of the Zoological Parks and Gardens Act 1995’. That definition remained in the 1992 regulations until they were replaced by the Zoological Parks and Gardens Regulations 2003 (the ‘2003 regulations).
[3]Zoological Parks and Gardens (Administration) (Charges) Regulations 1996 (Vic) reg 3.
On 1 July 2000, the Board registered the name ‘Sir Colin MacKenzie Zoological Park’ as a deductible gift recipient under its ABN. According to a record of the Board’s ABN extracted as at 18 March 2019, that deductible gift recipient registration remains current.
On 27 June 2002, the business name registration for the ‘Sir Colin MacKenzie Sanctuary’ lapsed. The registration was not renewed and was cancelled. The name appears to have fallen into disuse at that time.
The 2003 regulations commenced operation on 1 May 2003, entirely replacing the 1992 regulations.[4] The 2003 regulations adopted the name ‘Healesville Sanctuary’ when referring to the sanctuary, which was defined as: ‘the zoological park at Healesville existing on the lands shown on the plan in Part 3 of Schedule 1 of the [Zoological Parks and Gardens Act 1995] and known as the Sir Colin MacKenzie Zoological Park’.[5] The 2003 regulations have since been revoked by operation of the sunset provision contained in s 5 of the Subordinate Legislation Act 1994. The regulations have not been replaced.
[4]Zoological Parks and Gardens Regulations 2003 (Vic) reg 3.
[5]Ibid, reg 5.
By letter dated 6 January 2010, a representative of Zoos Victoria informed the trustee that the official name of the sanctuary was the ‘Sir Colin MacKenzie Zoological Park’. The letter also noted that several brass plaques were located in public areas which recognise Sir Colin MacKenzie’s role in founding the sanctuary.
The name ‘Sir Colin MacKenzie Sanctuary’ re-appeared in 2014. On 21 February 2014 the second defendant applied for a trade mark of that name, which was entered on the register on 25 September 2014. On 25 February 2014 the second defendant re-registered the business name ‘Sir Colin MacKenzie Zoological Park’ with ASIC. That registration remains current.
Has the name of the sanctuary been altered?
It is apparent on the evidence before the Court that, between June 2002 and February 2014, the sanctuary ceased to be known in any capacity as the ‘Sir Colin MacKenzie Sanctuary’. Throughout that period the sanctuary adopted ‘Sir Colin MacKenzie Zoological Park’ as its formal name. The alteration is reflected in the terms of the regulations which applied from time to time, as well as the representation made in 2010 by an employee of Zoos Victoria that ‘Sir Colin MacKenzie Zoological Park’ was the official name of the sanctuary.
The name of the sanctuary may in fact have been altered sometime earlier. Ms Gray’s evidence is that the name ‘Sir Colin MacKenzie Zoological Park’ was first used sometime in 1984. It is notable that the Board registered the name ‘Sir Colin MacKenzie Zoological Park’ as a deductible gift recipient under its ABN in July 2000, but no such registration was made for the name ‘Sir Colin MacKenzie Sanctuary’. However, the Court must allow for the possibility that the sanctuary was known by more than one name. Until 27 June 2002 the name ‘Sir Colin MacKenzie Sanctuary’ remained attached to the sanctuary by virtue of its registration. It was not until the registration lapsed that the use of that name fell away entirely.
The only other name by which the sanctuary was known between 2002 and 2014 was its colloquial name, ‘Healesville Sanctuary’. Ms Gray deposes that the sanctuary has also traded under the name ‘Sir Colin MacKenzie Fauna Park’, however it is not clear when, or in what capacity, that name was used.
There is no evidence before the Court that the sanctuary continued to be named ‘Sir Colin MacKenzie Sanctuary’ after the registration of that name lapsed in June 2002 and before it was re-registered in February 2014. The only finding open to the Court on the evidence is that between June 2002 and February 2014 the name of the sanctuary was altered from the ‘Sir Colin MacKenzie Sanctuary’ to the ‘Sir Colin MacKenzie Zoological Park’.
Has the gift to the sanctuary lapsed?
The second issue for determination is whether the alteration of the name of the sanctuary was contrary to the condition imposed by clause 3(ii)(A) of the will. If so, the gift will be said to have lapsed.
The principal concern of the Court in the construction of a will is to ascertain the intention of the testator as expressed in the terms of the document.[6] Regard should be given only to the text of the will, the Court ought not speculate as to the testator’s broader intentions by reference to extrinsic evidence.
[6]Roddy v Fitzgerald (1858) 6 HL 823; 10 ER 1518, 1539 (Lord Wensleydale); Perrin v Morgan [1943] AC 399, 406 (Viscount Simon LC).
In Fell v Fell, Isaacs J of the High Court of Australia identified ten generally accepted principles which aid in the construction of wills.[7] Those principles may be summarised as follows:
[7](1922) 31 CLR 268, 273–6.
(a) As a consequence of the requirement that every will must be in writing, the meaning must be discovered from the writing itself. Extrinsic evidence is relevant only in order to enable the Court to understand the words used by the testator.
(b) The terms of the will must be construed according to their plain meaning in the context of the document as a whole. In the event that there is inaccuracy or inconsistency the Court must ascertain the meaning of the will, taken as a whole, in order to give effect to the testator’s intentions.
(c) If the will evidences an intention that some interest be given, but no words in the will expressly do so, the Court may remedy the defect by implication. In so doing the Court moulds the words of the testator so as to carry into effect their intention evidenced by the document as a whole.
(d) Inferences can only be drawn from reading the will as an entire document. Such inferences must be of such strong a probability that a contrary intention cannot reasonably be attributed to the testator.
(e) The Court cannot give effect to any intention which is not expressed or necessarily implied in the language of the will.
(f) In the event that a word is incorrectly omitted from or inserted into the will, the Court may insert or omit the term in order to fulfil the intention of the testator.
(g) If the will is incapable of bearing any meaning in the absence of additional words, the Court may supply those words only if it sees clearly and precisely on the face of the will what those omitted words are. Such terms may be supplied by the Court in order to prevent an intestacy.
(h) Where faced with two modes of reading a will, one which destroys and the other preserves it, the Court ought favour that which preserves the will and continues to give effect to the testator’s intention.
(i) Finally, the Court should adopt a construction of the will which will not lead to intestacy. If there is, on a fair construction, a reason not to conclude that the testator intended to die intestate, that construction should be adopted.
It is not uncommon for a testator to attach a condition to the entitlement to take, or continue to take, the benefit of a gift. A similar, but not identical, condition subsequent which attached to a charitable gift was considered by Hargrave J in Equity Trustees Ltd v Jewish Care (Victoria) Inc & Anor.[8] In that case the testator’s will contained a gift for the establishment and operation of a hospital ‘to be known as the Melbourne Hebrew Memorial Hospital’. Following its construction, the hospital was re-named as the ‘Melbourne Hebrew Memorial Nursing Home’. That alteration was a result of changed regulation limiting the use of the term ‘hospital’ when naming medical institutions. The hospital subsequently relocated to a new site where it was incorporated into ‘Gary Smorgon House’, named for another benefactor. Following the relocation, recognition was given to the ‘Melbourne Memorial Nursing Home’ in internal signage within Gary Smorgon House.
[8][2015] VSC 73.
Hargrave J held that the gift had lapsed upon the relocation to Gary Smorgon House. His Honour considered that the naming requirement was ‘objectively a central aspect of the deceased’s intention when establishing the trust.’[9] By reference to the objective meaning of the words ‘to be known as’ (defined by his Honour as meaning ‘commonly, generally, usually or ordinarily called, or referred to as’) his Honour concluded that the new facility was known as Gary Smorgon House, not the Melbourne Hebrew Memorial Nursing Home.[10] The existence of signage referring to the Melbourne Hebrew Memorial Nursing Home did not alter that conclusion.[11]
[9]Ibid, [15].
[10]Ibid, [40].
[11]Ibid, [42].
There are several features which distinguish Equity Trustees Ltd v Jewish Care (Victoria) from this case. Not least of those features is the different language used in the will. However, it is nonetheless notable that Hargrave J agreed with an opinion by senior counsel that the change in name from ‘Melbourne Hebrew Memorial Hospital’ to ‘Melbourne Hebrew Memorial Home’ did not affect the gift so long as the nature of services provided at the facility meant that it remained a ‘hospital’ in the ordinary usage of that term.[12]
[12]Ibid, [4].
Another form of condition is the inclusion of a ‘name and arms’ clause, which requires the beneficiary of a gift to adopt or continue to use a particular name. Such clauses typically attach a condition to a gift requiring an individual to adopt or maintain a family name.[13] The Court of Appeal has considered name and arms clauses to be an anachronistic infringement on the right of an individual to use any name of their choosing.[14] Different considerations no doubt apply where a condition is attached to the name of a business or charity.
[13]See, eg, Re Neeld [1962] 1 Ch 643.
[14]Littras v Littras (1995) 2 VR 283, 286–7 (Beach J).
The terms of clause 3(ii)(A) of the deceased’s will are clear and unambiguous. The second paragraph of that clause imposes a condition subsequent upon the gift, which requires that the name of the sanctuary never be altered from the ‘Sir Colin MacKenzie Sanctuary’. No weight should be placed upon the capitalisation and underlining of those words. The deceased used capitalisation and underlining throughout the will, particularly when naming beneficiaries of her estate. In that context, the use of capitalisation in clause (3)(ii)(A) is not significant.
The Court is not of the view that the use of the colloquial name ‘Healesville Sanctuary’ is contrary to the condition attached to the gift. In contrast to the condition imposed in Equity Trustees Ltd v Jewish Care (Victoria), which required the hospital to be ‘known as’ the Melbourne Hebrew Memorial Hospital, the condition in the will limits alteration of the name of the sanctuary. The formal name of the sanctuary is determined at the behest of its administrators, the Board, and may differ from the name used by the public. The Court accepts the view of Ms Gray that the public may prefer to use shorter names with geographic identifiers over longer names which recognise a benefactor. The mere fact that a colloquial name has emerged and has been capitalised upon by the sanctuary is not fatal to the gift, provided that the Board has not altered the sanctuary’s actual name.
At the time of writing of the will, ‘Sir Colin MacKenzie Sanctuary’ was the only name attributed to the park. The intention of the deceased, as reflected in the terms of the will, was to preserve the memory of her late husband and his association with the sanctuary at Healesville. The preservation of that name was central to the deceased’s testamentary intentions.
When determining whether a condition attached to a gift has been met, the Court is limited to the terms of the will. The terms of clause 3(ii)(A) leave no room for any alteration of the name of the sanctuary. The stipulation that ‘if the name… should ever be altered from’, followed by the prescription of a single name from which there must be no alteration is capable of only one meaning. Although the Court is entitled to remedy a defect within a will by implication, in order to give effect to the testator’s intention, such a course is not necessary or appropriate in these circumstances. This is not a case in which the terms of the will fail to give effect to the testator’s intention by error or omission.
The alteration of the name of the sanctuary from the ‘Sir Colin MacKenzie Sanctuary’ was a breach of the condition imposed by clause 3(ii)(A) of the will. Accordingly, the condition attached to the gift to the sanctuary has not been met and the gift has lapsed. On the evidence, the gift lapsed when the name ‘Sir Colin MacKenzie Sanctuary’ ceased to be registered on 27 June 2002.
How should the gift be applied?
Clause 3(ii)(A) of the will directs that, in the event that the name of the sanctuary is altered, the funds which comprise the gift to the sanctuary be ‘applied in accordance with the provisions for the application of the remaining two-thirds of such income’. The presence of a gift over provision in the will precludes the possibility of applying the gift to the sanctuary cy près under the Charities Act 1978.
Accordingly, the consequence of the lapse of the gift to the sanctuary is that those funds become a part of the gift for anatomical studies.
Relief under s 67 of the Trustee Act
The trustee has raised a concern that, in the event that the gift to the sanctuary has lapsed, it may have made distributions to the sanctuary in breach of the terms of the trust. The trustee seeks a declaration from the Court, pursuant to s 67 of the Trustee Act 1958, that it ought fairly be excused from the potential breach, and that it be relieved from any personal liability for such distributions. The trustee has requested that, if the gift is held to have lapsed prior to May 2012, it be given the opportunity to make further submissions on the issue of relief under s 67 of the Trustee Act.
Ms Rowe deposes that the trustee last made a payment to the sanctuary on 2 May 2012. It is not clear on the evidence whether the trustee made any other payment to the sanctuary between June 2002 and May 2012. Pursuant to the will, payments are to be made annually. In the absence of evidence concerning distributions prior to 2 May 2012, the Court is not in a position to make a determination on this issue and the trustee is required to file further evidence and submissions.
The gift for anatomical studies
Clause 3(ii)(B)(a) of the deceased’s will provides that the allocation of prizes and grants shall be decided by a committee comprising five representatives: the director of the Australian Institute of Anatomy, the Vice Chancellor of the National University Canberra, a representative of the Commonwealth Health Department, an individual with relevant experience, and a representative of the trustee.
The terms of clause 3(ii)(B) were varied on 8 September 2010 by orders of the Honourable Justice Cavanough, which annexed a cy près scheme. Cavanough J’s orders declared that the gift in clause 3(ii)(B) could no longer be carried out according to the direction in the will and authorised the trustee to administer the gift for anatomical studies cy près. The annexed scheme directed that the terms of the will provide for research prizes or grants for the following purpose:
[F]or the provision of Prizes or Grants for Theses or Lectures Scholarships or Bursaries for special work or studies in Comparative Anatomy, including but not limited to, comparative analysis of structure and associated function in living things, and differential gene expression and regulation in living things, and the like, PROVIDED THAT such work shall not be in the nature of routine duties such as those for which the Commonwealth Government should provide the necessary Funds and PROVIDED FURTHER THAT the work or studies shall have a medical significance and bearing and further this understanding of human health and disease…
The cy près scheme also altered the composition of the committee for the allocation of prizes and grants, as follows:
The distribution and allocation [of prizes and grants] shall be decided by a Committee consisting of the following:
(i) The Vice Chancellor for the time being of the University of Melbourne or his/her delegate;
(ii) The Vice Chancellor for the time being of Australian National University or his/her delegate;
(iii) A representative of the National Health and Medical Research Council or any successor to that organisation;
(iv)One other person of experience in the particular branch of science with which the Committee may be dealing from time to time such person to be co-opted by the Committee; and
(v) A representative of my Trustees.
By letter dated 5 July 2011, the National Health and Medical Research Council (‘NHMRC’) informed the trustee that they did not intend to provide a representative to sit on the committee due to a perceived conflict of interest. The letter stated in pertinent part:
As the Australian Government’s lead agency for the provision of grants for health and medical research, it would be inappropriate for NHMRC to nominate a representative of NHMRC to sit on the committee convened to oversee and award funding for the Trust. A representative of NHMRC could be publicly perceived to have a conflict of interest which would taint any decisions made by the Trust committee.
The trustee seeks orders for the administration of the gift for anatomical studies pursuant to a further cy près scheme. The proposed scheme replaces NHMRC as a member of the committee and introduces a mechanism for the substitution of committee members without the need for further judicial intervention. The trustee’s application is brought on the basis that, in the absence of a committee member, the original specified purposes of the gift can no longer be carried out or be carried out according to the directions given and the spirit of the gift.[15]
[15]See Charities Act 1978 (Vic) s 2(1)(a)(ii).
Neither the Attorney-General nor the Board are opposed to the trustee’s proposed scheme.
Proposed replacement of NHMRC
Dr Mitchell deposes that in correspondence with the trustee he recommended three organisations which may be suitable candidates to replace the NHMRC:
(a) the Murdoch Children’s Research Institute;
(b) the Menzies Research Institute Tasmania; and
(c) the Royal Society of Victoria.
Ms Rowe deposes that the trustee has received expressions of interest from each of those organisations to provide a representative to the committee. Following a review of those expressions of interest, the trustee identified the Murdoch Children’s Research Institute as its preferred candidate and obtained consent to appoint a representative as a member of the committee.
Dr Mitchell’s affidavit affirms his opinion that a representative of the Murdoch Children’s Research Institute is an appropriate candidate to replace the NHMRC on the committee. Dr Mitchell considers that the Murdoch Institute has relevant scientific research experience in cellular biology and genetics as well as broad experience in biomedical research generally.
The Court is satisfied on the evidence before it that paragraph 2(a) of the proposed cy près scheme is appropriate in the circumstances. In the absence of participation from the NHMRC, the gift for anatomical studies cannot be carried out in accordance with the directions of the will as varied by the orders of Cavanough J dated 8 September 2010. The Court accepts that the Murdoch Institute conducts research in areas of study relevant to the gift’s purpose and is well placed to advise other committee members and the trustee in the awarding of prizes and grants.
Discretion to amend the constitution of the committee
The balance of the trustee’s proposed further cy près scheme comprises the following mechanism which allows the trustee to appoint new members of the committee on its own motion:
lf a representative listed in subparagraphs (i) to (iii) above is unable or unwilling to be, or to appoint a delegate to be, a member of the Committee, then my Trustees may appoint a substitute for that delegate or representative, having regard to the necessary scientific research expertise and independence required for the role to be performed.
It is submitted that the proposed clause provides a cost effective mode of replacing committee members without the need for intervention from the Court. Ms Rowe deposes that the trustee’s legal costs associated with the 2010 cy près application, including counsel’s fees, were approximately $60,000. Further, as at 7 March 2018, the costs of the present application were approximately $41,000. The proposed substitution clause would avoid further costs and potential erosion of trust capital in the event that another committee member is unwilling or unable to provide a representative in the future.
The Court is satisfied that the proposed substitution clause is an appropriate inclusion in the further cy près scheme. The legal costs incurred in both this application and the previous cy près application represent a significant proportion of the trust’s value. The proposed mechanism for the replacement of a committee member by the trustee is a sensible one, which avoids the need for further legal costs and allows for those funds to be applied to the purpose for which the gift for anatomical studies was made.
Declarations and orders
The Court will make the following declarations:
(a) The gift to the sanctuary pursuant to clause 3(ii)(A) of the will lapsed on 27 June 2002.
(b) The funds gifted to the sanctuary pursuant to clause 3(ii)(A) of the will are to be applied as part of the gift for anatomical studies pursuant to clause 3(ii)(B).
(c) The gift for anatomical studies pursuant to clause 3(ii)(B) of the will can no longer be carried out in accordance with the directions of the will as varied by the orders of Cavanough J dated 8 September 2010.
(d) The proposed cy près scheme attached to the trustee’s originating motion filed 12 August 2019 be approved.
The parties are to forward in minutes of proposed declarations and orders reflecting these reasons. Further, the minutes should address the orders for the filing of further affidavits and submissions concerning any relief sought under s 67 of the Trustee Act 1958 and as to the question of costs.
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