Roman Catholic Trusts Corporation for the Diocese of Melbourne v Attorney-General (Vic)
[2000] VSC 360
•15 September 2000
| SUPREME COURT OF VICTORIA | |
| COMMERCIAL & EQUITY DIVISION | Not Restricted |
No. 4109 of 2000
| ROMAN CATHOLIC TRUSTS CORPORATION FOR THE DIOCESE OF MELBOURNE (which sues as trustee of certain trusts created by MICHAEL JOSEPH CALLANAN deceased pursuant to Deed of Indenture) | Plaintiff |
| v | |
| THE ATTORNEY-GENERAL FOR THE STATE OF VICTORIA and ST VINCENT’S HOSPITAL MELBOURNE LIMITED (which is sued as representing the residuary beneficiaries named in the last Will of MICHAEL JOSEPH CALLANAN deceased) | Defendants |
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JUDGE: | Byrne J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 7 and 15 September 2000 | |
DATE OF JUDGMENT: | 15 September 2000 | |
CASE MAY BE CITED AS: | Roman Catholic Trusts Corporation v A-G (Vic) | |
MEDIUM NEUTRAL CITATION: | [2000] VSC 360 | |
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Charity and Charitable Gifts – trusts – failure of trust – trust for training of orphan boys – Cy-près scheme.
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APPEARANCES: | Counsel | Solicitors |
For the Plaintiff | Dr I.J. Hardingham QC | Corrs Chambers Westgarth |
| For the first Defendant | Mrs C. Kenny | Victorian Government Solicitor |
| For the second Defendant | Mr R.E. Cook | Middletons Moore and Bevins |
HIS HONOUR:
The application before the court, brought by originating motion filed on 21 January 2000, is for declarations and orders with respect to a charitable trust created in May 1908. As will appear, the trust is not capable of implementation and the plaintiff, the Roman Catholic Trusts Corporation for the Diocese Melbourne (“the Corporation”), as trustee of the trust, seeks orders in effect approving a cy-près scheme. The firstnamed defendant, the Attorney-General for the State of Victoria, on behalf of charities, supports the application that the trust be administered cy-près and supported the scheme initially proposed by the Corporation. The Corporation has today submitted a scheme which is not identical in a minor respect with that originally proposed and I am told by his counsel that the Attorney-General’s attitude to this is that he does not oppose it. The secondnamed defendant, St Vincent’s Hospital Melbourne Ltd, representing itself and 18 other residuary beneficiaries under the will of the settlor, argued that, upon the failure of the trust, the trust property should pass under the residue clause of the settlor’s will dated 26 June 1946.
By indenture dated 14 May 1908 made between Michael Callanan as settlor and the Corporation as trustee, the settlor created the trust in respect of the land comprising 89.84 hectares at Shoreham in the State of Victoria and being the land more particularly described in Certificate of Title Vol. 3277 Folio 282. On the same day the settlor transferred the land to the Corporation.
By the indenture, the Corporation acknowledged “that it is not the beneficial owner of the said land but holds the same with the powers upon the trusts and with the objects and intentions herein before set forth and with no other powers and upon no other trusts whatsoever”. The powers, trusts, objects and intentions referred to are those set out in the six recitals to the indenture. They are the following. I have inserted paragraph numbers for ease of reference.
“1.Whereas the said Michael Callanan has by a transfer of even date herewith transferred to the Corporation the land more particularly described in the Schedule hereto and situated in the said Diocese of Melbourne with the intent that the same may be invested in the Corporation in trust for the Roman Catholic Church in the Diocese of Melbourne so that the said land may be held used applied and appropriated for the benefit of Orphan boys belonging to the said Church.
2.And Whereas it is the wish of the said Michael Callanan as testified by his execution hereto that the said piece of land shall as soon as conveniently can be arranged be used as a farm where Orphans from St. Vincent de Paul’s Boys Orphanage at South Melbourne or the St Augustine’s Boys Orphanage at Geelong or Orphan boys of the Roman Catholic faith from any part of the Diocese of Melbourne whether in any public Institution or not may be trained as cultivators of the soil under the direction and control of the Roman Catholic Religious Order known as ‘The Christian Brothers’ or under such other direction and control as the Diocesan Council of the Diocese of Melbourne shall from time to time by resolution prescribe.
3.And Whereas it is the wish of the said Michael Callanan that until such farm for the training of Orphans as aforesaid can conveniently be established the said land shall be let on the best rent obtainable and such rent invested and accumulated by the Corporation and used from time to time at its absolute and uncontrolled discretion subject nevertheless to any scheme formulated by the said Diocesan Council for the establishment improvement maintenance and carrying on of the said farm.
4.And Whereas it is the wish of the said Michael Callanan that the said Diocesan Council shall from time to time as may be necessary agree with the said Christian Brothers or any other Order or any person and formulate alter and repeal a scheme or schemes for the establishment management and carrying on of the said farm under the direction of the said Christian Brothers or otherwise as may be agreed and as the said Council shall prescribe.
5.And Whereas it is the intent of the said Michael Callanan that the said land may be improved and managed by the Corporation in all respects as if it were the absolute property of the Corporation subject to any scheme formulated as aforesaid except that it shall not be mortgaged put in pledge or sold or let for any term exceeding one year to take effect in possession.
6.And Whereas the Corporation as testified by its execution hereof has consented to hold the said land on the said trusts and has undertaken to carry out the wishes of the said Michael Callanan as herein before expressed.
In the 92 years which have since passed, the land has not been used for the establishment of the educational farm contemplated in the trust. In 1937 the Christian Brothers erected a dormitory on a small portion of the land and used this portion as a holiday site. The dormitory has now fallen into disrepair.
The evidence shows that it is not now practicable to use the land for the purposes contemplated in the trust document. The Corporation advanced the following reasons, among others, for this. First, that funding is not available to allow the land to be developed in accordance with the purposes set out in the Deed of Indenture; second, that the land is not sufficiently large to permit an appropriate mix of different forms of agricultural development and training; third, that, apart from size, the land is simply not suitable for a facility such as that intended; and fourth, that there is presently insufficient demand for an agricultural training facility at the secondary level to make such a facility viable. This conclusion was not challenged by any party before me and I am satisfied that it is correct. It was put on behalf of the Corporation that the trust was never practicable so that, notwithstanding the passage of so many years, this is a case of initial impracticability rather than a supervening impracticability.[1] Again, no party contended otherwise. Although the evidence is sparse, I am content to proceed on that basis.
[1]See In re Lysaght, deceased; Hill v The Royal College of Surgeons [1966] Ch 191 at 208, per Buckley J
The point at issue between the residuary beneficiaries and the Corporation, then, was whether the Deed of Indenture disclosed that the gift was for a general charitable purpose so that the failure of the trust can be cured by the application of the doctrine of cy-près.
The applicable principles were not in dispute. The parties all contended that I should apply the law as stated by Dixon and Evatt JJ in Attorney-General for New South Wales v Perpetual Trustee Company (Limited)[2] and I shall do so. The principles as there formulated is contained in the following passage from their Honours joint judgment:
“A distinction in trusts declared for charitable purposes has thus come to exist which, however clear in conception, has proved anything but easy of application. It is the distinction between, one the one hand, cases in which every element in the description of the trust is indispensable to the validity and operation of the disposition and, on the other hand, cases where a further and more general purpose is disclosed as the true and substantial object of the trust, which may therefore be carried into effect at the expense of some part of the particular directions given by the trust instrument.
If there are insuperable objections, either of the fact or of law, to a literal execution of a charitable trust it at once becomes a question whether the desires or directions of the author of the trust, with which it is found impracticable to comply, are essential to his purpose. If a wider purpose forms his substantial object and the directions or desires which cannot be fulfilled are but a means chosen by him for the attainment of that object, the court will execute the trust by decreeing some other application of the trust property to the furtherance of the substantial purpose, some application which departs from the original plan in particulars held not essential and, otherwise, keeps as near thereto as may be. The question is often stated to be whether the trust instrument discloses a general intention of charity or a particular intention only. But, in its application to cases where some particular direction or directions have proved impracticable, the doctrine requires no more than a purpose wider than the execution of a specific plan involving the particular direction that has failed. In other words ‘general intention of charity’ means only an intention which, while not going beyond the bounds of the legal conception of charity, is more general than a bare intention that the impracticable direction be carried into execution as an indispensable part of the trust declared.”[3]
[2](1940) 63 CLR 209
[3]Attorney-General for New South Wales v Perpetual Trustee Company (Limited) (1940) 63 CLR 209 at 225
I turn now to the indenture to discern the true intention of the settlor as it is there expressed. To my mind, a number of matters point to the existence of a general charitable intention:
1.The first recital is expressed in terms which show that it sets out the fundamental and underlying intention of the settlor. He states that he has transferred the land to the trustee “with the intention” that the same be “held, used, applied and appropriated for the benefit of Orphan boys belonging to the said Church”. Two things should be noted about these words. First, is the use of the word “intent”, which is to be contrasted with the less prescriptive word “wish” in all but the fifth recital. Second, is the lack of any direction as to how the orphan boys are to benefit from the gift. I read the remaining recitals as ancillary to this fundamental objective.
2.While it is clear that the settlor had in mind that the benefit should take the form of a farm for training boys as “cultivators of the soil”, he clearly contemplates that this may not occur for some time. This may have been because the land was, in 1909, remote and undeveloped. The third recital dictates what is to happen in the interim.
3.The actual scheme for the establishment and implementation of the training farm is left to the Diocesan Council of the Diocese of Melbourne. In the fourth recital the settlor gives very wide powers in this regard to the Council. These powers include the alteration, and even the repeal, of the scheme for the establishment, management and carrying on of the farm. This lends support for the inference which I draw, that the literal implementation of the training farm scheme was not of essential importance.
4.The Corporation is given by the fifth recital wide powers for the management of the land. The indenture, however, expressly forbids the Corporation from mortgaging, pledging, selling or letting the land “for a term exceeding one year to take effect in possession”. Counsel for the residuary beneficiaries pointed out, with some force, that this showed that the land was to be preserved as the vehicle for the settlor’s munificence so that its use for the trust purposes was an essential feature of the trust. He observed that this recital is expressed, not as a statement of the mere wish of the settlor, but as his intention. It was, to adopt the words of Starke J in his dissenting judgment in Attorney-General for New South Wales v Perpetual Trustee Company (Limited),[4] “a particular gift”. After some consideration I do not think this is correct. What is intended in this recital is to set out the powers of the Corporation and the limits to those powers with respect to the land in a context where the land is to be used as a training farm.
5.Finally, I am mindful of the statement of Dixon and Evatt JJ[5] that, although there is no presumption in favour of a general charitable intention, the court leans in favour of such an interpretation where the Deed provides a basis for this conclusion.
[4](1940) 63 CLR 209 at 221
[5]Attorney-General for New South Wales v Perpetual Trustee Company (Limited) (1940) 63 CLR 209 at 228
The paramount charitable intention of the settlor may, therefore, be given effect to now that it is clear that the particular means which he had in mind cannot be implemented.
The Corporation proposes a scheme whereby the land, except for Lot 3 on a proposed plan of subdivision, shall be sold and the proceeds applied in a particular way for the benefit of disadvantaged children, male and female. I accept that this will give effect to the settlor’s abiding objective. The word “orphan” at the time of the settlement bore a meaning wide enough to encompass disadvantaged children, notwithstanding that they be not parentless. The settlement is directed to male children only. I accept that the settlor’s intention should reflect moral attitudes which are not repugnant in the present day. The Corporation says that discrimination among needy children on the ground of sex is contrary to the policy and practice of the Social Welfare Apostolate of the Archdiocese. In addition, it may well be contrary to law. To my mind, the settlor, viewing the position today would not have restricted his gift to male children. I accept that his charitable intention is accomplished by extending it to female children.
In other respects, I am satisfied that the scheme proposed by the Corporation gives effect to the general charitable intention of the settlor and I will give effect to it. I will, therefore, declare that the trust created by the Deed of Indenture dated 14 May 1908 is a charitable trust. I will answer the questions asked in the originating motion as follows:
“(a) In the events that have happened:-
(i) are the original purposes of the trust no longer capable of being carried out in accordance with the directions given and the spirit of the trust?
(ii) have the original purposes of the trust ceased to provide a suitable and effective method of using the land having regard to the spirit of the gift?
(b) If yes to (a)(i) or (ii), ought the land, the subject of the trust, to be applied cy-près?
(c) If yes to (b), ought the land to be applied in accordance with the proposed cy-près scheme annexed to the originating motion?
Yes
Not necessary to answer
Yes
The land ought to be applied in accordance with the cy-près scheme annexed to this order
I will make the ancillary procedural orders sought by the parties to give effect to these conclusions.
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