Roger Price as Executor of the Estate of Beryl Sheila Price v Attorney General for Western Australia - [2014] WASC 430

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL

CITATION: ROGER PRICE As Executor of the Estate of Beryl Sheila Price -v- ATTORNEY GENERAL FOR WESTERN AUSTRALIA [2014] WASC 430

CORAM: CHANEY J

HEARD: 15 OCTOBER 2014

DELIVERED : 18 NOVEMBER 2014

FILE NO/S: CIV 2742 of 2013

BETWEEN: ROGER PRICE As Executor of the Estate of Beryl Sheila Price
Plaintiff
AND
ATTORNEY GENERAL FOR WESTERN AUSTRALIA
First Defendant
AUSTRALIAN CONSERVATION FOUNDATION INC
Second Defendant

Catchwords:

Wills - Construction - Charitable purpose - Scheme of distribution - Doctrine of cy-près - Whether gift would lapse

Legislation:

Charitable Trusts Act 1962 (WA)
Charitable Trusts Act 1957 (NZ)
Charitable Uses Act 1601 (Imp)
Wills Act 1970 (WA)

Result:

Scheme of distribution approved
Declaration granted in terms sought

Category: B

Representation:

Counsel:

Plaintiff:     Mr A M Prime
First Defendant             :     Ms M J Elliott
Second Defendant         :     No appearance

Solicitors:

Plaintiff:     MDS Legal
First Defendant             :     State Solicitor for Western Australia
Second Defendant         :     No appearance

Cases referred to in judgment:

Commissioners for Special Purposes of Income Tax v Pemsel [1891] AC 531
McCormack v Stevens [1978] 2 NSWLR 517
Public Trustee v Attorney‑General (NSW) [2005] NSWSC 1267
Re Pettit [1988] 2 NZLR 513
Shire of Derby‑East Kimberley v Yungngora Association Inc [2007] WASCA 233
Taylor v Princess Margaret Hospital for Children Foundation Inc [2012] WASC 83; (2012) 42 WAR 259
The Joyce Henderson Trustee (Inc) v Attorney General (WA) [2010] WASC 60

CHANEY J: Beryl Sheila Price died on 21 December 1999. She left a will in respect of which the grant of probate was made on 20 December 2012. Under the will, she appointed her son, Roger Ian Price, as executor.
Clause 3 of Ms Price's will provides:
I give the sum of two hundred and fifty thousand dollars ($250,000) to the ABORIGINAL WOMEN'S TERTIARY INSTITUTE.
Clause 5 of the will leaves the residue of the estate to the 'AUSTRALIA CONSERVATION FOUNDATION to be directed to rectification of the Murray Darling River System'.
Clause 2 of the will gives an interest in a farming property to 'ROGER PRICE for his life and then to the AUSTRALIAN CONSERVATION FOUNDATION'.
The executor has been unable to locate any organisation or body either presently or previously known as the 'Aboriginal Women's Tertiary Institute'. Nor have searches revealed a body known as 'Australia Conservation Foundation'. Searches of the organisations in the business names database maintained by the Australian Securities and Investments Commission have, however, revealed a body holding a name 'Australian Conservation Foundation Inc', which holds Australian Registered Body Number (ARBN) 007498482 and a body holding a name 'Australian Conservation Foundation Inc' holding Association Number 00107. Inquiries by the plaintiff's solicitors have determined that it is the same body which holds both the ARBN and Association Number referred to above, namely the second defendant.
By these proceedings, the plaintiff seeks an order pursuant to pt III of the Charitable Trusts Act 1962 (WA) approving a scheme of distribution or such other scheme as the court may determine.
In addition, the plaintiff seeks a declaration that the references to the 'AUSTRALIA CONSERVATION FOUNDATION' in cl 5, and the reference to 'AUSTRALIAN CONSERVATION FOUNDATION' in cl 2, of the will of the deceased are references to the second defendant.

The proposed scheme of distribution

A scheme for variation of the trust under the Charitable Trusts Act has been approved by the Attorney General in the following terms:
SCHEME FOR VARIATION OF TRUST UNDER THE CHARITABLE TRUSTS ACT 1962 (WA) ('Scheme')
1.The terms of the charitable trust established by the will of Beryl Sheila Price dated 4 February 1997 be varied as follows:
(a)by deleting clause 3 of the will and by substituting the following paragraph:
'I GIVE the sum of Two Hundred and Fifty Thousand Dollars ($250,000.00) to:
(1)The Roberta Sykes Indigenous Education Foundation; and
(2)The Batchelor Institute of Indigenous Tertiary Education,
as tenants in common in equal shares on condition that the monies from the bequest be used and applied for the tertiary education of Aboriginal women.'
2.The trustee's and the Attorney General's reasonable costs and expenses of and incidental to:
(a)preparing and advertising the Scheme; and
(b)obtaining approval for the Scheme,
be paid out of, and be a charge on, the Trust property.
At the hearing of the application, I raised with the parties a question as to whether the establishment of a single fund with the two proposed bodies holding that fund 'as tenants in common' created any difficulties in administration. I suggested that it may be preferable if the reference to tenancy in common were deleted so that, in effect, each of the nominated parties would receive a fund of $125,000 designated for the particular purpose identified. Both counsel who appeared at the hearing agreed that that would be a preferable course.
Pursuant to s 15(c) of the Charitable Trusts Act, the court has jurisdiction, on an application for approval of a scheme, to make an order approving the scheme with or without modification, as it thinks fit. Accordingly, if a scheme is to be approved, it should be on the basis that the words 'as tenants in common' are deleted from the scheme as approved by the Attorney General.

Should the scheme be approved?

Section 7(1) of the Charitable Trusts Act provides:
7.Property may be disposed of for other charitable purposes
(1)Subject to the provisions of subsection (3), where any property or income is given or held upon trust, or is to be applied, for any charitable purpose, and ‑
(a)it is impossible, impracticable or inexpedient to carry out that purpose; or
(b)the amount available is inadequate to carry out that purpose; or
(c)that purpose has been effected already; or
(d)that purpose is illegal or useless or uncertain,
then (whether or not there is any general charitable intention) the property and income, or any part or residue thereof, or the proceeds of sale thereof, shall be disposed of for some other charitable purpose, or a combination of such purposes, in accordance with a scheme approved under this Part.
Section 7(3) provides:
(3)This section shall not operate to cause any property or income to be disposed of as provided in subsection (1) or (2) ‑
(a)if, in accordance with any rule of law, the intended gift thereof would otherwise lapse or fail and the property or income would not be applicable for any other charitable purpose; or
(b)if, and so far as, the property or income can be disposed of under section 16 of the Charitable Collections Act 1946.
The gift in cl 3 of the will is to an organisation which, so far as inquiries by the executor and his solicitors have revealed, has never existed. Putting aside s 7(1), at general law a gift to a non‑existent institution must lapse unless it can be inferred from the description of the proposed beneficiary that the testator had a general charitable intention that enables the gift to be applied (the doctrine of cy‑près).[1] In Taylor v Princess Margaret Hospital for Children Foundation Inc,[2] Edelman J concluded that the doctrine of cy‑près has been replaced in this jurisdiction by the statutory regime introduced by pt III of the Charitable Trusts Act.
[1] Public Trustee v Attorney‑General (NSW) [2005] NSWSC 1267 [15] ‑ [19] (Gzell J); McCormack v Stevens [1978] 2 NSWLR 517, 519 (Kearney J).
[2] Taylor v Princess Margaret Hospital for Children Foundation Inc [2012] WASC 83; (2012) 42 WAR 259.
The parties' submissions in this case proceeded on the basis that the gift to the 'Aboriginal Women's Tertiary Institute' was a gift for the purpose of education of Aboriginal women. That construction of the will is supported by the evidence of Mr Price, who said that the deceased had expressed to him words to the effect that she had a passionately positive view about the value of education of Aboriginal women. Extrinsic evidence is admissible to construe the language of a will which is ambiguous.[3] I accept, on the basis of the evidence of Mr Price, and an implication from the name of the proposed beneficiary, that Mrs Price's intention was that the gift would be used for the purpose of education of Aboriginal women.
[3] Wills Act 1970 (WA) s 28A(1); Taylor v Princess Margaret Hospital for Children Foundation Inc [2012] WASC 83; (2012) 42 WAR 259 [9].
The parties also proceeded on the agreed basis that achievement of that purpose was impossible, for the purposes of s 7(1)(a) of the Charitable Trusts Act, because of the non‑existence of the named beneficiary.
It follows, if those matters are accepted, that, subject to s 7(3), s 7(1) of the Charitable Trusts Act requires that the gift should be disposed of for some other charitable purpose in accordance with the scheme approved under the Act.
The question, therefore, becomes whether s 7(3) excludes the operation of s 7(1), because a gift to a non‑existent body would lapse in accordance with any rule of law, and the property or income would not be applicable for any other charitable purpose. In my view, s 7(3) does not operate in this case to exclude the operation of s 7(1). There are two reasons for that.
The first is that s 7(1) is only excluded by s 7(3) if two requirements are met. The first requirement is that the intended gift would otherwise lapse by reason of a rule of law. The second is that the property would not be applicable for any charitable purpose.
In this case, the second of those requirements is clearly not met. That is because, if the gift for the purpose of the education of Aboriginal women were to lapse, the funds would fall into residue which (subject to making of the declaration as to proper identity of the beneficiary which I deal with below) is directed to the rectification of the Murray Darling River System. A purpose is charitable purpose if it falls within the spirit and the intendment of the preamble to the Charitable Uses Act 1601 (Imp) (Statute of Elizabeth). The Statute of Elizabeth has been interpreted to encompass trusts for the relief of poverty, the advancement of education, the advancement of religion and other purposes beneficial to the community.[4] In my view, a gift to the 'Australian Conservation Foundation' for the purpose of rectification of the Murray Darling River System comes within the fourth of Lord Macnaughten's categories in Commissioners for Special Purposes of Income Tax vPemsel,[5] namely a purpose beneficial to the community not otherwise within the earlier categories. For that reason, the second requirement of the exclusionary provision in s 7(3) is not met.
[4] Commissioners for Special Purposes of Income Tax v Pemsel [1891] AC 531, 583; The Joyce Henderson Trustee (Inc) v Attorney General (WA) [2010] WASC 60 [29] (Hasluck J); Shire of Derby‑East Kimberley v Yungngora Association Inc [2007] WASCA 233 [44] (Newnes AJA; Miller & Buss JJA agreeing).
[5] Commissioners for Special Purposes of Income Tax v Pemsel [1891] AC 531.
Nor do I consider that s 7(3) would operate because of a rule of law which would result in the intended gift otherwise lapsing. Section 7 of the Charitable Trusts Act was based upon, and is in relevantly the same terms as, s 32 of the Charitable Trusts Act 1957 (NZ). It has been held in New Zealand that s 32 of the New Zealand Act enables a scheme to be approved where there is a gift to a non‑existent institution provided that there is a general charitable intention.[6] In Re Pettit,[7] Chilwell J discussed the application of s 32 of the New Zealand Act by reference to the principles applicable to the lapsing of the bequest in the context of the operation of the cy-près doctrine. Thus, he considered whether there was a general charitable intention which would preserve a gift notwithstanding the non‑existence of the nominated beneficiary. In Re Pettit, the issue was whether a gift to a non‑existent body, namely the 'doctor's widows fund' was a gift for a charitable purpose for the purposes of s 32 of the Charitable Trusts Act 1957 (NZ). His Honour concluded that a general charitable intention was revealed by the will and directed that distribution should proceed in accordance with a scheme under the Act.
[6] Re Pettit [1988] 2 NZLR 513, 546 ‑ 522.
[7] Re Pettit [1988] 2 NZLR 513, 546 ‑ 522.
Whilst I accept that the doctrine of cy-près has been replaced in this State by the provisions of the Charitable Trusts Act, consistently with the approach which has been taken in New Zealand, I consider that where a charitable purpose underlies a gift which would otherwise lapse by reason of the non‑existence of the nominated beneficiary, the former rule of law that such gifts would not fail because of the existence of a general charitable purpose continues to apply so that s 7(3) of the Charitable Trusts Act does not exclude the operation of s 7(1). Accordingly, it is open in this case to approve the proposed scheme.

Merits of the proposed scheme

The proposed scheme has been advertised as required by s 11 of the Charitable Trusts Act. No person has sought to oppose the scheme.
Section 18 provides that a scheme shall not be approved unless the Court is satisfied that:
(a)the scheme is a proper one, that should carry out the desired purpose or proposal, and that is not contrary to law or public policy or good morals; and
(b)the scheme can be approved under this Part; and
(c)every proposed purpose is charitable and can be carried out; and
(d)subject to sections 10A(10) and 17, the requirements of this Part have been complied with in respect of the scheme.
I am satisfied of all those matters.
The Roberta Sykes Indigenous Education Foundation is the successor of a series of organisations directed to the education of Aboriginal women which have operated since the 1970s. The foundation supports indigenous students to undertake post‑graduate study in the Unites States and the United Kingdom each year.
The Batchelor Institute of Indigenous Tertiary Education is a tertiary education provider that services the education, training and research needs of Aboriginal and Torres Strait Islander people. It has a special focus on remote communities in the Northern Territory and also attracts higher education students from across Australia.
I am satisfied that both organisations have the capacity to apply the funds the subject of the scheme for the education of Aboriginal women. Both organisations have indicated a willingness to apply funds for the stated purpose.
It is appropriate that the scheme be approved.

Australian Conservation Foundation Inc

Given that there is no organisation known as 'Australia Conservation Foundation', the reference in cl 2 of the will to 'Australian Conservation Foundation' and the reference in cl 5 to rectification of the Murray Darling River System, it is quite apparent that the references in both cl 2 and cl 5 of the will were intended by the testator to be references to the Australian Conservation Foundation Inc, but were simply inaccurately described. The evidence shows that the second defendant is engaged in activities designed to conserve and improve the Murray Darling River System.
It is safe to conclude that, despite the infelicity of language, the testator intended that the residual gifts referred to in cl 2 and cl 5 of the will were intended to be given to the second defendant. There should be a declaration in the terms sought.