Stratton v Simpson

[1970] HCA 45

HIGH COURT OF AUSTRALIA

Barwick C.J., Menzies, Windeyer, Walsh and Gibbs JJ.

STRATTON v. SIMPSON.

(1970) 125 CLR 138

12 November 1970

Charities

Charities—Charitable gifts and trusts—Validity—Indefinite and uncertain objects—Testamentary gift for distribution of income between institutions and bodies exempt from State death duties—Whether gift charitable—Imperfect trust provision—Trustees Act, 1962 (W.A.), s. 102*—Administration Act, 1903-1965 (W.A.), s. 134 (1)*.

Decisions

November 12.
The following written judgments were delivered:-
BARWICK C.J. I have had the advantage of reading the reasons for judgment prepared in this matter by my brother Gibbs. I agree with his reasons and his conclusions and do not desire to add anything to what he has written. In my opinion, the appeal should be dismissed. (at p143)

MENZIES J. I have had the advantage of reading the judgment of Gibbs J., and I agree with it. (at p144)

WINDEYER J. I have had the advantage of reading the judgment of Gibbs J. I am relieved by it of the need to state the facts. I agree in his Honour's conclusion that, if the testator's direction as to the disposition of his residuary estate does not by its terms create a valid charitable trust, then s. 102 of the Trustees Act, 1962 (W.A.) saves it from invalidity. I concur too in his Honour's reasons for that conclusion. But I do not think that this statutory saviour was needed to rescue the trust from invalidity. In this I differ from his Honour and from Lavan J., the learned judge at first instance. I shall explain why I consider that, the Trustees Act apart, the will created a valid charitable trust. It is not necessary to do so as it cannot affect the result of this appeal. Nevertheless I do so as I am not able to accept a construction of the words of the will and of provisions of the Administration Act, 1903-1965 (W.A.) which I consider mistaken and which I think ought not to govern cases that may arise in the future. (at p144)

2. In the first place I cannot without some qualifications accept the view that the trustees of the testator's residuary estate, which he called the "J.P. Stratton Trust", could not distribute any of the trust income for the maintenance of a free ward in a hospital. Certainly they could not lawfully give any money to a "public hospital" for the general purposes of such hospital. That is because the testator has expressly put such hospitals outside the permissible range of his bounty. By cl. 15 of his will the testator directed that the income of his residuary estate be from time to time distributed by his trustees between the institutions and bodies (except any public hospital within the meaning of the Hospital Act, 1927) in respect of which at the date of his death any gift, bequest or legacy was by s. 134(1) of the Administration Act exempt from estate, succession or other duty under that Act. The sense in which the word "institutions" is used in the will in cl. 15 appears from the reference in the prefatory recital (cl. 2) to "charitable Institutions as hereinafter mentioned". It is said that the words of par. (b) of s. 134(1), "the maintenance of a free ward in any hospital", describe a purpose, not an institution. That is of course true. But every charitable trust is a trust for a purpose or purposes that are charitable, not a trust for a person or persons, although persons benefit from the fulfilment of the purpose. A body or organization which holds property upon a charitable trust and carries out the trust purposes is commonly called a charitable institution or a charity. It is really but the instrument for carrying a purpose into effect. Confusion can occur from want of remembering this, as Else-Mitchell J. observed in McGarvie Smith Institute v. Campbelltown Municipal Council (1965) 11 LGRA 321 . The word "institution" is a word of wide denotation. It is not uncommonly used in collocation with other words as here "institutions and bodies": see, for example, Smith v. West Australian Trustee Executor &Agency Co. Ltd. (1950) 81 CLR 320 . In that case Fullagar J. declined to recognize any distinction between a charitable purpose and a charitable institution. It has been said that every charitable trust is not necessarily to be regarded as a charitable institution. My brother Walsh said so in the Supreme Court of New South Wales in Christian Enterprises Ltd. v. Commissioner of Land Tax (1968) 88 WN (Pt 2) (NSW) 112, at p 119 , founding his statement upon a passage in the judgment of the Privy Council in Minister of National Revenue v. Trusts and Guarantee Co. Ltd. (1940) AC 138, at p 149 as follows:

"It is by no means easy to give a definition of the word 'institution' that will cover every use of it. Its meaning must always depend upon the context in which it is found. It seems plain, for instance, from the context in which it is found in the subsection in question that the word is intended to connote something more than a mere trust."

The context there was such that their Lordships said that the charitable institutions in question are "those which are institutions in the sense in which boards of trade and chambers of commerce are institutions, such, for example, as a charity organization society, or a society for the prevention of cruelty to children". The similarity of a society as last mentioned to a chamber of commerce may not be at once apparent, although the distinction there made between such institutions and "mere trusts" is clear enough. But I can see no reason why, unrestrained by context, a fund raised by public contributions and administered by trustees could not be properly called an institution. Whether or not it would be a charitable institution would, of course, depend upon the trusts on which it was held. Funds raised for the relief of distress caused by bushfires or other disasters are well known. If the object to which the fund must be devoted is the continuing advancement of charity in the legal sense, it is a charitable institution. The Gowrie Scholarship Trust Fund and the Winston Churchill Memorial Trust come to my mind as examples. I do not think that the absence of the word "institution" in s. 134(1)(b) means that the objects to which the income of the testator's residuary estate can be devoted do not include a fund established for the maintenance of a free ward in a hospital. I do not suggest that the trustees could themselves set up a trust for that purpose. Their power is to distribute the trust income to existing institutions. (at p146)

3. The next question is whether all the institutions and bodies to which the trustees are authorized to distribute income are charities in the legal sense. The question arises in relation to two matters. One is the reference to schools in par. (f) of s. 134(1). The other is the presence of the words "the main object" in pars. (d) and (e). I shall consider each of these in turn, but first as a general proposition I quote Lord Davey's words in Hunter v. Attorney-General (1), referring to

". . . a . . . class of cases . . . of which Sinnett v. Herbert (2) and In re Douglas; Obert v. Barrow (3) are examples, in which there is a general overriding trust for charitable purposes, but some of the particular purposes to which the fund may be applied are not strictly charitable, or one of two alternative modes of application is invalid in law." "In such cases", his Lordship said, "the trust is good, and the Court will give effect to the general charitable trust, but the trustees are restricted from applying the fund to the purposes or in the manner which are objectionable."

In In re Douglas; Obert v. Barrow (4), Lord Lindley, then Lindley L.J., had approved the proposition that

"when you understand the testatrix to mean by charities, societies, and institutions, nothing but charitable societies and charitable institutions, the mere addition of one or two institutions which are named which may not be charitable does not introduce such an element of uncertainty as to make that part of her will void." (at p146)

4. That is directly apposite here. The testator in the prefatory recital in cl. 2 of his will expressed, as his reason for the dispositions he made, his "desire that charitable Institutions as hereinafter mentioned shall as far as possible receive the benefit of the whole of my residuary estate". Clearly he meant that any of the "institutions and bodies", as he called them, mentioned in s. 134(1) of the Administration Act to which his trustees distributed any income should be a "charitable institution". (at p146)

5. Paragraph (f) of the sub-section reads:

"any school which pursuant to the provisions of the Education Act, 1928, is included in the latest list of schools

published in the Gazette that have been inspected and found efficient or have been certified to be efficient for the purposes of that Act." (1) (1899) A.C. 309, at p. 324. (2) (1872) 7 Ch. App. 232. (3) (1887) 35 Ch. D. 472. (4) (1887) 35 Ch. D. 472, at p. 487.

Speaking generally, a school may or may not be a charitable institution in a legal sense. That depends upon its character and the purpose for which it is conducted. For it to be a charity the pupils must be drawn from the public at large, or from a sufficient class or section of the public; and it must exist for the advancement of education in a broad sense and not for the private profit of individuals. The judgment of Danckwerts J. in The Abbey Malvern Wells Ltd. v. Ministry of Local Government and Planning (1951) Ch 728 is a good pointer to the distinction, which is firmly established in law, between schools which are and those which are not charitable, although, as Lord Denning M.R. observed in Inland Revenue Commissioners v. Educational Grants Association Ltd. (1967) Ch 993, at p 1009 , "when we come down to earth, we run into difficulties" for the distinction in practice becomes illogical. No doubt very many schools that answer the description in s. 134(1)(f) are charitable institutions in the legal sense. But it may be that some are not. Of that we have no evidence one way or the other. It may be that the statute means that to escape duty a gift to a school must be to the school as an educational institution, that is to say that such gifts must be in trust for the purposes of the school and not capable of being used to augment the profits of private persons. However that may be, when the testator's will is read in the light of the principles stated by Lord Lindley and Lord Davey, I consider that, without resort to s. 102 of the Trustees Act, the trustees' power to apply income in favour of schools is restricted to such schools as are in the legal sense charitable institutions. This is not a case where the "general overriding trust for charitable purposes" necessary to produce that result is seen simply as a reflection from particular provisions. It is not implicit in the will. It is plainly expressed there. I differ here from the opinion that my brother Gibbs has expressed. I consider that the testator made it clear that the income of the trust he established must go to "charitable institutions". And then, as Lord Hanworth said in a case where a testator's overriding charitable purpose was made clear by a recital of his wishes and intention, "it is a principle of the law long established, that where there is an intention to devote property to charity, effect must be given to it": In re Hood; Public Trustee v. Hood (1931) 1 Ch 240, at p 249 . The Master of the Rolls there said that the recital was "of dominant force". Bennett J., who had heard the case at first instance, had said it expressed "the dominating purpose" of the will. Lawrence L.J. spoke of it as stating "the main object", Romer L.J. "the dominant object". (at p148)

6. I pass now to pars. (d) and (e) of s. 134(1) of the Act. They are as follows:

"(d) any incorporated public body in the State the main object of which is to dispense or provide voluntary aid to indigent, aged, sick, blind, halt, deaf, dumb, or maimed persons; (e) any publicly subscribed medical service or fund in the State, the main object of which is the relief of the sick, or any public medical service or fund in the State which is assisted by any Government grant or subsidy."

In each case the main object that the institution or body must have is a charitable object. But it was said that the words "main object" by their very presence prevent the body or institution being a charity, because it is said they imply that it has other objects, and that these may not be charitable. For reasons that I shall give, I do not think that is the true meaning of the statutory language. But first I say that even if it be so, then for reasons I have given earlier I consider that, in selecting the recipients of the testator's bounty, the trustees are, by the words of cl. 2 of the will, confined in their choice to charitable bodies and institutions which answer one or other of the descriptions in s. 134(1) (except public hospitals). (at p148)

7. However, I consider that pars. (d) and (e) of the sub-section by their terms describe charities. The phrase "main object" has long been part of the vocabulary of lawyers concerned with charitable trusts; and it has been taken to express a criterion of their validity. Furthermore I cannot escape from misgivings which arise because the contrary view involves an interpretation of the provisions of the Administration Act which might have serious consequences in other cases as it enlarges the exemptions from death duty under paragraphs (d) and (e) of s. 134(1) beyond the scope that, as I read them, they properly have. For these reasons I now go at some length into this aspect of the case. (at p148)

8. In itself the phrase "main object", as used in legal writings, is ambiguous: but in any particular case the context or the topic ordinarily shews in which of two senses it is used. Sometimes it means the principal object of an institution having also secondary objects or activities which, although of less importance, are capable of being lawfully pursued independently of and without their having any essential bearing upon the pursuit of the main object. On the other hand the words can postulate a dominant object, other objects being all incidental, subservient and ancillary, only lawfully to be pursued as conducive to promoting the main object. This latter sense of the words "main object" seems to have first come into currency in company law. It there became a rule for the construction of a company's memorandum of association. It is of little importance in that field today, because it is ordinarily excluded by the sophisticated form of modern memoranda of association: but it still makes an occasional appearance in arguments, as it did for example in Anglo-Overseas Agencies Ltd. v. Green (1961) 1 QB 1 . (at p149)

9. The doctrine, and with it the phrase, has moved from company law into the law of charity. A gift to an institution that has several objects or purposes, some charitable some not, one or more of which it can lawfully pursue independently of others, is not a gift to charity. It does not become charitable simply because one of the objects, being charitable, is called the main object of the institution. That is entirely logical: but unfortunately it seems to have led sometimes to a supposition that the description of a charitable purpose of an institution as its main object suggests that it has other objects which are not ancillary to the main object. I do not see why that should be so. It is not supported by the case that is often cited, Oxford Group v. Inland Revenue Commissioners (1949) 2 All ER 537 . Professor Keeton in his book The Modern Law of Charities (1962), p. 111, in the course of sharp criticisms, has said that the decision in that case, which he calls "unfortunate", was "unexpected". It seems to me that, whether expected or not, it did not depart from well-established principles. What I think is surprising is not the decision itself, but what seems to be sometimes taken to be its effect and what it has been sought to build upon it. The case arose in this way. The Oxford Group was a company limited by guarantee. It claimed an exemption from income tax on the ground that it was "a body of persons established for charitable purposes only" within the meaning of s. 37 of the Income Tax Act 1918 (U.K.). The first of the objects set out in its memorandum of association was a good charitable purpose (the advancement of the Christian religion). The second was held, after argument, not to be charitable, for in the pursuit of it the company could engage in secular activities and expend its funds on matters which were not charitable. Yet, as Tucker L.J. said (1949) 2 All ER, at p 539 , it was common ground that the two objects mentioned were both "main objects". And there were too other objects which it was held were not, upon the true construction of the memorandum, themselves charitable and which were not merely ancillary to the charitable object. The Court of Appeal, having taken that view of the memorandum, naturally held that the company was not established for charitable purposes only. After that case there were in England several others in which the same question was raised under other statutes exempting charitable institutions from taxes and charges: see Crystal Palace Trustees v. Minister of Town and Country Planning (1951) Ch 132 ; Associated Artists Ltd. v. Inland Revenue Commissioners (1956) 2 All ER 583 ; North of England Zoological Society v. Chester Rural District Council (1959) 3 All ER 116 . In each of these the question was whether the non-charitable objects or purposes of a corporate body were independent of or ancillary to its charitable object or objects. That question was resolved upon the construction of its memorandum of association or other incorporating instrument. In none of these did the words "main object" appear. But the last-mentioned case is of significance because the statutory exemption from rates, upon which the plaintiff Zoological Society there relied, was given to bodies "not established or conducted for profit and whose main objects are charitable . . . ". (at p150)

10. The words in the Administration Act are "the main object". This presupposes that the institution has a main object as described, and that it is its only main object. The question is then whether in s. 134(1) these words denote the principal object or purpose of an institution that has also other lesser objects which are independent; or do they denote the dominant object or purpose of an institution, other permissible activities being all ancillary to the accomplishment of that main object. I think the latter is the true meaning. I say that remembering that it has often been said in this Court, as it has in the House of Lords, that, when the question is whether any institution is a charitable institution, the test lies in ascertaining what is its main object: see Royal Australasian College of Surgeons v. Federal Commissioner of Taxation (1943) 68 CLR 436 ; Salvation Army (Victoria) Property Trust v. Fern Tree Gully Corporation (1952) 85 CLR 159, at p 172 ; Congregational Union of New South Wales v. Thistlethwayte (1952) 87 CLR 375, at p 442 ; Royal College of Surgeons of England v. National Provincial Bank Ltd. (1952) AC 631, at pp 655-659, 661 . In Keren Kayemeth Le Jisroel Ltd. v. Inland Revenue Commissioners (1932) AC 650 , Lord Tomlin said (1932) AC, at p 658 :

"I well appreciate the argument which says that if you once find that the main object is charitable you cannot destroy the charitable character of the main object, because the ancillary powers, which are incidental to it, are, some of them, in themselves, not charitable."

And in this Court, Dixon C.J., McTiernan, Williams and Fullagar JJ. said in Thistlethwayte's Case (1952) 87 CLR, at p 442 :

"An institution is a charitable institution if its main purpose is charitable although it may have other purposes which are merely concomitant and incidental to that purpose."

I interpolate here that the word "purpose" is perhaps more appropriate than "object" in relation to trusts for charity, for objects of charity is a term sometimes used to denote the recipient of charitable benefit or bounty. But in the context with which we are here concerned the words "object" and "purpose" are equivalents. An institution that is within par. (d) of s. 134(1) of the Act must be "an incorporated public body". One that is within par. (e) need not. However, in each case the description of the institution by reference to a specific form of charity as its main object means, in my opinion, that the term "main object" is to be read in the sense in which it has been so often used to express the test by which the legal character of an institution, whether it be charitable or not, is determined. (at p151)

11. The decision in In re Harpur's Will Trusts (1962) Ch 78 was relied upon for a different conclusion. That case is not binding upon us. But it carries the high persuasive authority of the opinions of Cross J. at first instance and of Lord Evershed M.R., Harman and Donovan L.JJ. in the Court of Appeal. It therefore must have careful and respectful consideration. It arose in this way: a testatrix directed that her residuary estate should be divided between "institutions and associations having for their main object the assistance and care of soldiers, sailors, airmen and other members of H.M. Forces who have been wounded or incapacitated during the recent world wars". On a summons to determine whether that gift was valid - (1961) Ch 38 -Cross J., relying upon the Oxford Group Case (1949) 2 All ER 537 , said that the fact that the main object of an institution or association is charitable does not mean that it is necessarily established for charitable purposes only, as it might have subsidiary objects which are not charitable and which are not merely ancillary. In the absence of evidence that none of the bodies having the main object specified by the testatrix had any subsidiary non-charitable objects, his Lordship said that he could not hold that the residuary estate must go to exclusively charitable institutions or associations. He also held that the gift was not saved by the Charitable Trusts (Validation) Act, 1954 (U.K.). The Attorney-General appealed, in the interest of charity, to the Court of Appeal. The appeal was however limited to the second point above mentioned. There was no appeal as to the first, counsel for the Attorney-General saying, for some reason that is not to me clear, that it was concluded by the decision in the Oxford Group Case (1949) 2 All ER 537 . The appeal was dismissed. Whether or not it was rightly dismissed may be arguable academically as a moot point: see the view of the Act that had been taken by Buckley J. in In re Wykes, deceased (1961) Ch 229 . However, that question need not trouble us, because, as Gibbs J. has pointed out, s. 102 of the Trustees Act, 1962 (W.A.) differs from the corresponding English provisions: and its validating effect in the present case, if validation be needed, is not I think doubtful. But is validation needed? I do not think so, notwithstanding what was said by Cross J. and in the Court of Appeal. I do not seek to distinguish the present case from Harpur's Case (1962) Ch 78 on purely literal grounds, although perhaps something might be made of the difference between institutions and associations having for their main object charity and a body the main object of which is charity. I say of the decision in Harpur's Case (1962) Ch 78 that I do not think that the words "main object" are a term of art. I certainly do not think that the Oxford Group Case (1949) 2 All ER 537 made them so. I do not think that it can be said that always they must be taken to predicate other and independent objects. Nor on the other hand do I think that in every case they necessarily predicate other objects that are ancillary to the main object. As I have said, they are ambiguous: and the ambiguity must be resolved by the context of the particular topic. It may be that Cross J. was aware that some associations having as their main object the assistance and care of sailors, soldiers and airmen wounded in war were associations of old comrades having also social or other activities which might on occasions be pursued independently of the main object. However that may be, that his Lordship gave a meaning to the words "main object" in the will that was before him does not persuade me that the same meaning must be given to them in the statute that is before us. Mrs. Harpur's use of words in her will ought not I think to govern the use of words by the Parliament of Western Australia. Another meaning is open: and I think it is the natural one. I make two further observations about Harpur's Case (1962) Ch 78 . It was said by Harman L.J. to be "a tragic case"; for, his Lordship said, "I can feel little doubt that the testatrix meant in effect to benefit members of His Majesty's Forces disabled in the wars of 1914 and 1939". And Lord Evershed said that "had the word 'main' been omitted, or the epithet 'charitable' been inserted before the various institutions and associations, all would have been well". His Lordship emphasized that, having regard to the concessions made on behalf of the Attorney-General, the sole question for the Court of Appeal was whether the Act of 1954 was applicable. I am not prepared to base any conclusion in the present case upon the proposition, which passed by concession in that case, that the presence of the word "main" there defeated the charitable intent of the testatrix. On the contrary, I would add the case to what MacKinnon L.J. once spoke of as "a number of authorities in most of which the manifest intentions of various testators seem to me to have been defeated by their artless use of language": Re Ward (1941) Ch 308, at p 310 . In the Administration Act the true effect of the words "the main object" is I think to confine exemptions from death duty to gifts to institutions that are charitable, not to enable gifts to institutions that are not exclusively charitable to escape duty. (at p153)

12. Although I have followed a path different from that taken by Lavan J., I agree in his conclusion and would dismiss this appeal. (at p153)

WALSH J. I have had the advantage of reading the reasons for judgment prepared by Gibbs J. I agree with his conclusion that Lavan J. (1970) WAR 143 was right in dismissing the application made in the Supreme Court of Western Australia for a declaration that the residuary bequest contained in cl. 15 of the will of John Peter Stratton deceased is void and that there is an intestacy as to the residuary estate. Subject to a reservation to be stated presently I agree with reasons of Gibbs J. (at p153)

2. At the hearing of this appeal several questions were mentioned which may perhaps arise for consideration by the trustees in the actual selection by them of beneficiaries to whom the trust income is to be paid. These questions are not before the Court in these proceedings. It may be that upon further investigation of the relevant facts, it will appear that all the "institutions and bodies" which at the time of the testator's death answered the description contained in cl. 15 of the will were charitable in the legal sense. But it may be that some of them had charitable objects and also had non-charitable objects which were not ancillary to the charitable objects, so that a trust in favour of them would not be a valid charitable trust, apart from the operation of s. 102 of the Trustees Act, 1962 (W.A.). If institutions of the latter class should be found to exist and if the trustees should be disposed to distribute some of the income to them it would then have to be decided whether or not the proper application of s. 102 required that those institutions ought to be excluded altogether and the distribution confined to other institutions whose objects were exclusively charitable or ancillary to charitable objects. It may be that this would not be required and that a distribution of income might properly be made to an institution with "mixed" objects, subject to conditions imposed by the trustees for the purpose of confining the use of that income to the charitable objects of the institution. These are questions which must be left to be worked out by the trustees and to be determined, if necessary by means of an appropriate application to the Supreme Court. They do not go to the validity of the disposition of the residuary estate and, therefore, they do not affect the decision of this appeal. (at p154)

3. Another question, which may or may not arise for the consideration of the trustees and possibly for resolution by the Court, is the question whether any part of the income may be applied for "the maintenance of a free ward in any hospital". Gibbs J. has expressed the opinion that cl. 15 of the will should be so construed that the distribution of any of the income specifically for that purpose is excluded, that is to say, he is of opinion that the trust is confined to the "institutions and bodies" described in pars. (c), (d), (e) or (f) of s. 134(1) of the Administration Act, 1903-1965 (W.A.), to the exclusion of par. (b) thereof. I do not think that it is clear beyond dispute that this is so and I prefer to express no opinion on the point. The word "institutions" is flexible in its meaning and has to be considered in its context. (See Minister of National Revenue v. Trusts and Guarantee Co. Ltd. (1).) I think it is a possible view that if a fund had been established for the maintenance of a free ward in a hospital a gift to or in trust for that fund might be described as a gift to an "institution". The question whether or not that would be a proper description might depend upon the manner in which and the terms upon which the fund had been established. In referring in cl. 15 to "institutions and bodies" and also to "the said Institutions" the testator has not been precise in his use of language. I am not sure that it can be asserted confidently that simply as a matter of construction of the will the trustees must necessarily exclude from consideration par. (b) of s. 134 (1). The question may not ever arise. If a part of the income should be devoted to the maintenance of a free ward in a hospital, that would be an application of it for a charitable purpose. Therefore the possibility that it may be open to the trustees so to apply some of the income cannot have the effect of invalidating the gift. I think it is better to leave that possibility open. (at p155)

4. In my opinion the appeal should be dismissed. (at p155)

GIBBS J. John Peter Stratton ("the testator") died in Western Australia on 26th July 1966 having made a will and codicil which have since been admitted to probate in Western Australia. His estate was substantial. He was survived by his widow and five children one of whom applied on originating summons to a judge of the Supreme Court of Western Australia for an order declaring that the residuary bequest contained in cl. 15 of the will of the testator is void and that there is an intestacy as to the residuary estate. This application was heard by Lavan J. and was dismissed. The present appeal is brought from his order dismissing the application. (at p155)

2. By his will the testator, after revoking prior wills (cl. 1), gave (in cl. 2) the following preliminary explanation of his desires and intentions:

"As my children are well provided for and it being my desire that charitable Institutions as hereinafter mentioned shall as far as possible receive the benefit of the whole of my residuary estate I am creating under this my Will a trust to be known as 'J. P. STRATTON TRUST' and I am convinced that the persons hereinafter named as Executors and Trustees of this my Will are public spirited and will at all times have the welfare of charity at heart and I express the wish that any future Trustee shall have similar qualities."

By cl. 3 he appointed George Robert Simpson of 24 Jutland Parade Dalkeith, Chief Manager for Western Australia of the Commonwealth Reserve Bank, and Joseph Francis Ledger of 2 Bishop Road Dalkeith, Engineer, (who are respondents to this appeal) to be the executors and trustees of his will. After making a specific devise and some bequests of annuities and legacies he devised and bequeathed his residuary estate to his trustees (by cl. 14) to sell and convert and after payment of debts, funeral and testamentary expenses, and duties, to hold the same on the trusts thereinafter mentioned. Clause 15 then provided as follows:

"I DIRECT that my residuary estate to be known as 'J. P. STRATTON TRUST' shall be held by my Trustees UPON TRUST from time to time to distribute the net income therefrom between the institutions and bodies (except any public hospital within the meaning of the Hospital Act 1927) in respect of which at the date of my death any gift devise bequest or legacy is exempt from duty under Section 134 of the Administration Act, 1903-1956, or any Act amending or re-enacting the same Act AND I DECLARE that my Trustees shall have power to distribute the net income between such of the said Institutions or some of them in such proportions and in such manner as my Trustees in their absolute discretion shall think fit."

It is unnecessary to refer to the remaining provisions of the will, which confer certain powers on the trustees, or to the codicil, which is quite irrelevant to the present case. (at p156)

3. At the date of death of the testator s. 134 (1) of the Administration Act, 1903-1965 (W.A.) provided as follows:

"No duty shall be payable under this Act in respect of any gift, devise, bequest, legacy, or settlement made or given to or in trust for - (a) any public hospital within the meaning of the Hospitals Act, 1927;

(b) the maintenance of a free ward in any hospital; (c) any public educational institution in the State which is wholly or in part dependent on any State grant, aid, or subsidy;

(d) any incorporated public body in the State the main object of which is to dispense or provide voluntary aid to indigent, aged, sick, blind, halt, deaf, dumb, or maimed persons,

(e) any publicly subscribed medical service or fund in the State, the main object of which is the relief of the sick, or any public medical service or fund in the State which is assisted by any Government grant or subsidy;

(f) any school which pursuant to the provisions of the Education Act, 1928, is included in the latest list of schools published in the Gazette that have been inspected and found efficient or have been certified to be efficient for the purposes of that Act." (at p156)

4. Lavan J. held that the trusts of cl. 15 of the will must fail unless either they are exclusively charitable or s. 102 of the Trustees Act, 1962 (W.A.) operates to give them validity. He reached this conclusion for two reasons. First, he held that the trustees are given by cl. 15 a power to select, as objects of the testator's bounty, institutions and bodies from a class so vague and indefinite that the trustees are afforded no effective guidance as to the ambit of their power of selection and that this amounts to an unauthorized delegation of testamentary power and has the consequence that the clause is void for uncertainty of objects, unless the power of selection is confined to objects that are, or must be treated as being, exclusively charitable: Chichester Diocesan Fund and Board of Finance (Incorporated) v. Simpson (1944) AC 341, at p 349 ; Tatham v. Huxtable (1950) 81 CLR 639, at pp 653-655 ; Attorney-General (N.S.W.) v. Donnelly (1958) 98 CLR 538, at p 578 . Secondly, he held that the clause does not make any provision for the vesting of the corpus of the residuary estate but creates a trust of income of indefinite duration. There is in my opinion room for argument as to whether or not the class of institutions and bodies from which the trustees may make a selection is defined with sufficient certainty but I find it unnecessary to consider that question and would express no view upon it, particularly since there is no evidence to show what institutions and bodies there were at the date of the testator's death which answered or might have answered the description contained in cl. 15. I do, however, agree that cl. 15 upon its proper construction creates a trust of the income of the residuary estate which is of indefinite duration, without making any gift of the capital from which the income is derived, and it follows that unless the purposes to which the income must be applied are exclusively charitable the trust fails because it "tends to a perpetuity" (to use the expression which appears in the cases although it has been criticized by the text writers): Congregational Union of New South Wales v. Thistlethwayte (1952) 87 CLR 375, at pp 443, 450 ; In re Wightwick's Will Trusts (1950) 1 Ch 260, at p 265 ; In re Cain (1950) VLR 382, at p 391 ; Theobald on Wills, 12th ed. (1963), par. 1527; and Morris &Leach: The Rule against Perpetuities, 2nd ed. (1962), pp. 324-327. (at p157)

5. The question whether the trusts of cl. 15 are in favour of institutions and bodies that are exclusively charitable is one that depends upon the proper construction of the will. An initial question that arises is whether the trustees are entitled to apply the income for the purpose mentioned in s. 134 (1)(b). It appears from cl. 15 that the income of the residuary estate may only be applied in favour of something properly described as an "institution" or a "body", although the fact that the introductory words of cl. 2, and the second part of cl. 15, refer only to "institutions" suggests that the two words are used as synonyms. Further, the institution or body must have been such that a gift made in respect of it at the date of the testator's death would be exempt from duty under s. 134. The words "in respect of" in cl. 15 would appear to be equivalent to the words "to or in trust for" in s. 134. The choice by the testator of the words "institutions and bodies" suggests at first sight that he intended to benefit only the institutions and bodies expressly so described in s. 134 (1) (c) and (d), but if this had been the effect of cl. 15 it would have been unnecessary to except public hospitals, which are not described in s. 134 as institutions or bodies. The inclusion in cl. 15 of the words "except any public hospital within the meaning of the Hospital Act 1927" therefore strongly suggests that the words "institutions and bodies" are intended to refer to any establishment mentioned in s. 134 which is an institution or body in the ordinary sense of those words, even though it is not there expressly so described. In its ordinary sense "institution" means "an establishment, organization, or association, instituted for the promotion of some object, especially one of public utility, religious, charitable, educational etc." (The Shorter Oxford English Dictionary). It means, as was said in Mayor etc. of Manchester v. McAdam (1896) AC 500, at p 511 , "an undertaking formed to promote some defined purpose . . ." or "the body (so to speak) called into existence to translate the purpose as conceived in the mind of the founders into a living and active principle". Although its meaning must depend on its context, it would not ordinarily connote a mere trust (cf. Minister of National Revenue v. Trusts and Guarantee Co. Ltd. (1940) AC 138, at p 149 ). A school could appropriately be called an institution within the ordinary meaning of the word. Similarly the words "medical service or fund", if construed to mean the body set up to organize and control the service or administer the fund, could also be regarded as describing an institution. Paragraphs (c) to (f) of s. 134 (1) may therefore all be taken as referring to institutions or bodies which may be selected by the trustees under cl. 15 to share in the distribution of the income. However I find it difficult to regard par. (b) of s. 134 (1) as describing an institution or body; it describes a purpose, and although an institution may be formed to promote that purpose, s. 134 (1) (b) does not exempt a gift to the institution as such. It does not seem to me that s. 134 (1) (b) can properly be regarded as specifying any institution or body in respect of which a gift is exempt from duty. I conclude therefore that under cl. 15 the trustees are not at liberty to distribute income to an institution or body simply because it has as one of its purposes, or its sole purpose, the maintenance of a free ward in a hospital. Of course, such an institution or body might come within par. (d) or par. (e) of s. 134 (1). (at p159)

6. The question then is whether institutions or bodies which at the date of death of the testator answered the description of pars. (c), (d), (e) or (f) of s. 134(1) are charities in the legal sense. It is impossible to give a final answer to this question on the present material, because (as I have mentioned) no evidence was led before the learned primary judge as to what institutions or bodies there were at the date of death which answered this description. Some of such institutions and bodies would certainly have been charitable, but some were not necessarily charitable. Thus a "public educational institution" within par. (c) would be charitable, as being for the advancement of education; the word "public" shows that the institution would not qualify unless it provided a benefit for the public or a sufficiently large class of the public. The same could not however be said of a "school which pursuant to the provisions of the Education Act, 1928, is included in the latest list of schools published in the Gazette that have been inspected and found efficient or have been certified to be efficient for the purposes of that Act" (par. (f)). The list referred to appears to be that kept under s. 32B of the Education Act, 1928-1965 (W.A.) (the statute in force at the date of the testator's death) although a similar list had been kept under an earlier section (s. 32) which had been repealed before the date of the testator's death. It is clear from the references in ss. 32 and 32B to the "proprietor" of the school that those sections extended to private schools. It is, therefore, possible that there could be included in the list mentioned in par. (f) schools which were not for the benefit of the public or an appreciable section of the public and which, therefore, could not be regarded as existing for charitable purposes - for example, such a school as was the subject of the decision in Thompson v. Federal Commissioner of Taxation (1959) 102 CLR 315 . In the present case there is no evidence to show whether at the date of the testator's death a list was kept under the Education Act and, if so, what schools were on it. (at p159)

7. Paragraphs (d) and (e) would include institutions whose purposes were charitable as being for the relief of "impotent" persons within the intendment of the preamble to 43 Eliz. c. 4, but a difficulty is created by the fact that the charitable object mentioned need only be "the main object"; the institution might have other non-charitable objects. It is established that "an institution is a charitable institution if its main purpose is charitable although it may have other purposes which are merely concomitant and incidental to that purpose" or in other words if each of its objects is either charitable in itself or should be construed as ancillary to other objects which themselves are charitable: Congregational Union of New South Wales v. Thistlethwayte (1952) 87 CLR, at pp 442 and 450 . If however the non-charitable purpose is not merely incidental or ancillary to the main charitable purpose, the institution will not be charitable: Oxford Group v. Inland Revenue Commissioners (1949) 2 All ER 537 ; and In re Harpur's Will Trusts (1962) 1 Ch 78, at p 87 . There is no evidence to show whether at the date of the testator's death there was in Western Australia any institution which answered the description contained in par. (d) or (e) of s. 134 (1) and yet was not charitable because it had a non-charitable object which although not its main object was not merely incidental or ancillary to a charitable object. (at p160)

8. However it was submitted on behalf of the respondents that even if cl. 15, if it stood alone, might have permitted the trustees to apply the income in favour of institutions all of whose purposes are not charitable, the clause must be construed in the light afforded by cl. 2 of the will, which, it was said, shows that the testator intended that the trustees should select only such institutions and bodies of the kind mentioned in cl. 15 as are charitable. In other words, cl. 2 should be construed as a declaration of intention that such of the institutions as thereinafter mentioned as are charitable should alone receive the benefit conferred by cl. 15. Clause 2 contains a prefatory explanation by the testator of his reason for making the disposition contained in cl. 15. If the latter clause is ambiguous, the former may be referred to for the purpose of resolving the ambiguity, but if cl. 15 is unambiguous, the prefatory words of cl. 2 do not afford any justification for doing violence to the words of cl. 15 or for supplying words into that clause to restrict it to charitable objects on the basis of speculation as to what the testator would probably have wished or intended if his attention had been drawn to the matter (cf. Hunter v. Attorney-General (1899) AC 309, at pp 320-321 and Attorney-General v. Jesus College, Oxford (1861) 29 Beav 163, at p 168 (54 ER 589, at p 591) ). Clause 15 seems to me to be unambiguous; it authorizes the trustees to select any of the institutions and bodies therein described and it does not impose the restriction that the institution or body chosen must be charitable. Clause 2 shows that the testator believed that the institutions described in cl. 15 were charitable; he may have been right or wrong in his belief, but he was not intending by cl. 2 to limit the power of selection given by cl. 15. Moreover the fact that cl. 2 describes the trustees as persons who are public spirited and have the welfare of charity at heart does not assist in the interpretation of cl. 15 (cf. In re Harpur's Will Trusts (1962) 1 Ch, at p 90 ). In some cases a charitable intention may be discerned from the fact that the donee is described as the holder of a particular charitable office, but that is not the case here. (at p161)

9. I hold therefore that the trusts created by cl. 15 are not necessarily exclusively charitable. However if evidence were taken it might show that at the date of the testator's death the only institutions and bodies that answered the description in cl. 15 were charitable. If it were not for the provisions of s. 102 of the Trustees Act, 1962 (W.A.) it would be necessary to remit the matter back to the Supreme Court to take further evidence. If however s. 102 would operate to save the dispositions if they were otherwise invalid it will not be necessary to remit the matter. (at p161)

10. Section 102 reads as follows:

"(1) In this section the term 'imperfect trust provision' means any trust under which some non-charitable and invalid as well as some charitable purpose or purposes is or are or could be deemed to be included in any of the purposes to or for which an application of the trust property, or any part thereof, is by the trust directed or allowed. (2) A trust shall not be held to be invalid by reason that the trust property is to be held or applied in accordance with an imperfect trust provision. (3) Every trust under which property is to be held or applied in accordance with an imperfect trust provision shall be construed and given effect in the same manner in all respects as if no holding or application of the trust property or any part thereof to or for any non-charitable and invalid purpose had been or could be deemed to have been so directed or allowed. . . ." (at p161)

11. Of course, if in fact the only institutions or bodies in existence at the testator's death which came within the description of cl. 15 of the will were charitable, the section will not apply but the dispositions made by the clause will in any case be valid. I proceed to consider the application of the section on the footing that some of such institutions and bodies were not charitable. (at p161)

12. The appellants submitted that s. 102 can have no application to the present case for two reasons. In the first place, it was said that s. 102 can apply only where there is a trust, and that under cl. 15 no trusts are created or declared; it was said that cl. 15 merely confers on the trustees a discretionary power to distribute the income of the residuary estate, and that they are under no obligation to distribute it. In my opinion such a construction of cl. 15 is quite insupportable. The provisions in question are described as creating trusts, not only in the clause itself, but also in cll. 2 and 14. The appellants relied on the statement in cl. 15 that the distribution is to be made "from time to time" but that only means that the trustees are allowed a discretion to decide when sufficient income has accumulated to permit a distribution to be made. Plainly cl. 15 creates a trust within s. 102. The real question is whether it is an "imperfect trust" within the meaning of that section. (at p162)

13. The principal submission on behalf of the appellants was that if cl. 15 creates a trust, it is a trust to distribute the income of the trust fund between institutions and bodies, and that such a trust deed does not declare the purposes for which the trust property may be applied, or, in other words, there are no purposes to or for which an application of the trust property is by the trust directed or allowed and cl. 15 is not an "imperfect trust provision" within the definition contained in s. 102 (1). This argument was largely based on the decision of the Court of Appeal in In re Harpur's Will Trusts (1962) 1 Ch 78 , that a trust for division amongst institutions, as opposed to a trust for purposes, is not within the scope of the Charitable Trusts (Validation) Act, 1954 (U.K.). On the other hand, the respondents relied on the decision of the Judicial Committee in Leahy v. Attorney-General (N.S.W.) (1959) AC 457 in which it was held, affirming the judgment of Dixon C.J. and McTiernan J. in this Court (Attorney-General (N.S.W.) v. Donnelly (1958) 98 CLR 538 ), that a trust "for such Order of Nuns of the Catholic Church . . . as my said Executors and Trustees shall select", which would have extended to contemplative orders whose objects were not recognized by the law as charitable, was saved from invalidity by the operation of s. 37D of the Conveyancing Act, 1919-1954 (N.S.W.). It is convenient at once to set out the material provisions of s. 37D to enable them to be compared with those of s. 102. They read as follows:

"(1) No trust shall be held to be invalid by reason that some non-charitable and invalid purpose as well as some charitable purpose is or could be deemed to be included in any of the purposes to or for which an application of the trust funds or any part thereof is by such trust directed or allowed. (2) Any such trust shall be construed and given effect to in the same manner in all respects as if no application of the trust funds or of any part thereof to or for any such non-charitable and invalid purpose had been or could be deemed to have been so directed or allowed."

This section (which was inserted in the New South Wales statute in 1938) is substantially the same as s. 2 of the Charitable Trusts Act 1914 (Vict.) which has now become s. 131 of the Property Law Act 1958 (Vict.), although there are some minor textual differences mentioned in Attorney-General (N.S.W.) v. Donnelly (1958) 98 CLR, at p 569 . In Victoria, the Courts found no difficulty in applying the section to validate trusts which were expressed to be in favour of institutions rather than for purposes as such: In re Griffiths; Griffiths v. Griffiths (1926) VLR 212 ; In re Thureau; Mitchell v. Holland (1948) 2 ALR 487 ; and In re Ingram (1951) VLR 424 . Although not all the reasoning in those cases can be accepted, the correctness of the conclusions reached is confirmed by Leahy v. Attorney-General (N.S.W.) (1959) AC 457 , where the effect of the section was authoritatively expounded. It is now clearly established by that decision that s. 37D validates trusts which would otherwise have been invalid either because of uncertainty or because of perpetuity (1959) AC, at p 473 and that the section applies not only where the testator had expressly indicated alternative purposes, the one charitable and the other non-charitable, but also where the gift is for a purpose described in a compendious or composite expression which embraces both charitable and noncharitable purposes (1959) AC, at pp 474-475 . Moreover the decision must be regarded as establishing that the section can apply where there is no express statement of purpose in the disposition creating the trust and the trust is expressed to be in favour of institutions. The trust there was for orders of nuns, which were unincorporated associations, and which their Lordships described (1959) AC, at p 476 as "an object so predominantly charitable that a charitable intention on the part of the testator can fairly be assumed". In other words, a gift for charitable institutions is prima facie a gift for charitable purposes (Hardey v. Tory (1923) 32 CLR 592 ; Smith v. West Australian Trustee Executor &Agency Co. Ltd. (1950) 81 CLR 320, at pp 322, 325 ) and a trust for institutions whose objects are predominantly charitable may come within s. 37D. (at p163)

14. The provisions of the legislation considered in In re Harpur's Will Trusts (1962) 1 Ch 78 , were materially different from s. 37D and the corresponding Victorian sections. Section 1 of the Charitable Trusts (Validation) Act, 1954 (U.K.) is in the following terms:

"(1) In this Act, 'imperfect trust provision' means any provision declaring the objects for which property is to be held or applied, and so describing those objects that, consistently with the terms of the provision, the property could be used exclusively for charitable purposes, but could nevertheless be used for purposes which are not charitable. (2) Subject to the following provisions of this Act, any imperfect trust provision contained in an instrument taking effect before the sixteenth day of December, 1952, shall have, and be deemed to have had, effect in relation to any disposition or covenant to which this Act applies - (a) as respects the period before the commencement of this Act, as if the whole of the declared objects were charitable; and

(b) as respects the period after that commencement as if the provision had required the property to be held or applied for the declared objects in so far only as they authorise use for charitable purposes."

This section has a more restricted operation than the New South Wales and Victorian sections, and the latter sections, unlike that of the United Kingdom statute, do not refer to a trust provision which "declares" or "describes" the objects of the trust and are not made to operate by reference to the "declared objects" of the imperfect trust provision. Moreover, s. 2 of the United Kingdom Act, which had a bearing on the construction of s. 1, has no counterpart in the Australian legislation. (at p164)

15. Section 102 of the Western Australian Act differs in form from the Victorian and the New South Wales provisions, and resembles the United Kingdom statute, in commencing with a definition of the expression "imperfect trust provision". In this respect, the Western Australian section appears to have been influenced by the New Zealand legislation. In New Zealand, legislation in the same terms as the Victorian statute was passed in 1935 (s. 2 of the Trustee Amendment Act 1935 (N.Z.)), but has been replaced by s. 82 of the Trustees Act 1956 (N.Z.) which not only follows the Charitable Trusts (Validation) Act 1954 (U.K.) in point of form but also borrows expressions from that Act although it preserves some of the provisions of its Australian model. However, notwithstanding its form, the Western Australian section does not in other respects follow the more recent New Zealand statute, and in substance is exactly the same as s. 37D of the New South Wales Act. Subsections (1) and (2) of s. 102 in combination achieve the same result as s. 37D(1), and sub-s. (3) of s. 102 clearly has the same effect as s. 37D (2). The Western Australian, like the New South Wales, section is so materially different from the Charitable Trusts (Validation) Act, 1954 (U.K.) as to render the reasoning in In re Harpur's Will Trusts (1962) 1 Ch 78 , inapplicable. On the other hand, everything that was said in Leahy v. Attorney-General (N.S.W.) (1959) AC 457 , in relation to s. 37D applies equally to s. 102. The section therefore will apply if in the trust instrument "there is reference to a distributable class which, while not exclusively charitable, is predominantly charitable in character" (1959) AC, at p 476 , citing Attorney-General (N.S.W.) v. Donnelly (1958) 98 CLR, at p 559 . It is enough that the distributable class should comprise institutions and bodies whose objects are predominantly charitable. (at p165)

16. It follows from what I have already said that the institutions and bodies which constitute the distributable class under cl. 15 have objects which are predominantly charitable. It may be that in fact no institution or body to which the clause applies was non-charitable; if so, the clause created a valid charitable trust. If, however, there did exist non-charitable institutions or bodies which come within the description, s. 102 will apply and will confine the power of the trustees to make a selection to such institutions and bodies as are charitable. By whichever road the conclusion is reached, the dispositions contained in cl. 15 of the will are valid and there is no intestacy as to the residuary estate. (at p165)

17. Lavan J. was right in dismissing the application and the appeal should be dismissed. (at p165)

Orders

Appeal dismissed with costs.