Wesley Community Services Limited trading as Wesley Mission v Smith

Case •

[2025] NSWSC 154

•

21 February 2025

No judgment structure available for this case.

Supreme Court


New South Wales

Medium Neutral Citation: Wesley Community Services Limited trading as Wesley Mission v Smith [2025] NSWSC 154
Hearing dates: 21 February 2025
Date of orders: 21 February 2025
Decision date: 21 February 2025
Jurisdiction:Equity
Before: Meek J
Decision:

Orders made applying trust property cy-près.

Catchwords:

CHARITABLE TRUSTS — Whether a charitable trust was created — Clause 2 of the deceased’s Will disclosed an initial purpose of “providing respite care for Wesley Mission and staff and those in need under the care of Wesley Mission” and a subsequent purpose of “maintaining and providing for homeless people under the care of Wesley Mission” — Declaration made that the clause created a “charitable trust” within the meaning of the Charitable Trusts Act 1993 (NSW) — Spirit of the trust — Held the spirit of the trust as a whole was to provide for those in need, including homeless people under the care of Wesley Mission

WILL CONSTRUCTION — Approach to Will construction — Discussion of identification of the party appointed by the deceased to be trustee of a trust — Finding, contrary to assumption of executor, that the plaintiff was intended by the deceased to be trustee of the trust

TRUSTEES — Removal of trustee — To the extent that there is any doubt that a person holds trust property as trustee, an order for removal may be made, for more abundant caution, and another party be appointed as sole trustee of the same in his stead — Order made for removal of first defendant as trustee — Not for any untoward reason but to give effect to the Will as construed, and to facilitate the trust purposes and the proper execution of the administration of the trust

CHARITABLE TRUSTS — Whether the original purposes of the trust have, wholly or in part, ceased to provide a suitable and effective method of using the property, having regard to the spirit of the trust — Declaration made pursuant to section 9 of the Charitable Trusts Act 1993 (NSW) that the original purposes of the trust have wholly or in part ceased to provide a suitable and effective method of using the trust property having regard to the spirit of the trust

CHARITABLE TRUSTS — Whether the Court should establish a cy-près scheme in terms of a proposed scheme — Held cy-près scheme should be ordered

WILL CONSTRUCTION — Sole arbiter provision — Discussion regarding provision that (my trustees) “shall be the sole arbiters in ensuring that the spirit of this bequest is honoured and maintained throughout” (the trust period)

WORDS AND PHRASES — “respite care”

EXECUTORS — Completion of executorial duties —Whether named executor holding property as an express trustee or trustee de son tort/constructive trustee

COSTS — Whether it is appropriate to make an award for costs in favour of the Attorney General — Further issues as to the basis of costs and the fund out of which costs is to be paid — Held the Court was assisted by the submissions on behalf of the Attorney General and in the circumstances of the case costs of all parties should be paid on an indemnity basis out of the subject matter of the dispute being, consequent upon the other orders made, the proceeds of sale of the property in question rather than out of residue

Legislation Cited:

Charitable Trusts Act 1993 (NSW)

Civil Procedure Act 2005 (NSW)

Probate and Administration Act 1898 (NSW)

Trustee Act 1925 (NSW)

Uniform Civil Procedure Rules 2005 (NSW)

Cases Cited:

Attorney-General (NSW) v Perpetual Trustee Co (Ltd) (1940) 63 CLR 209; [1940] HCA 12

Catholic Metropolitan Cemeteries Trust v Attorney General of New south Wales [2024] NSWCA 30

Countess of Bective v Federal Commissioner of Taxation (1932) 47 CLR 417; [1932] HCA 22

Crowle Foundation v NSW Trustee and Guardian [2010] NSWSC 647; (2010) 5 ASTLR 556

De Lorenzo v De Lorenzo (2020) 104 NSWLR 155; [2020] NSWCA 351

Fell v Fell (1922) 31 CLR 268; [1922] HCA 55

Giurina v Giurina [2018] VSC 599

Green v Attorney General (NSW) [2023] NSWSC 1229; (2023) 413 ALR 575

In re Scarisbrick; Cockshott v Public Trustee [1951] Ch 622

Letterstedt v Broers (1884) 9 App Cas 371

Life Insurance Co of Australia Ltd v Phillips (1925) 36 CLR 60; [1925] HCA 18

Minister for Immigration and Border Protection v SZVFW (2018) 264 CLR 541; [2018] HCA 30

Monds v Stackhouse (1948) 77 CLR 232; [1948] HCA 47

Perpetual Trustee Company Ltd v Attorney-General (NSW) [2018] NSWSC 1456

Perrin v Morgan [1943] AC 399

Reeves v Reeves (No 2) [2024] NSWSC 386

Registrar of the Accident Compensation Tribunal v Federal Commissioner of Taxation (1993) 178 CLR 145; [1993] HCA 1

YWCA Australia v Chief Commissioner of State Revenue [2020] NSWSC 1798

Texts Cited:

Burns, Robert, Poems, Chiefly in the Scottish Dialect (1786, John Wilson)

Henderson, William and Jonathon Fowles, Tudor on Charities (10th ed, 2015, Sweet & Maxwell)

Hungerford, Margaret Wolff, Molly Bawn (1878, JB Lippincott & Co)

Wesley Community House, “About Us” (WebPage) (see endnotes for accessible link)

Category:Principal judgment
Parties: Wesley Community Services Limited (Plaintiff)
Stephen Smith (First Defendant)
Attorney General of NSW (Second Defendant)
Representation: Counsel:
D M Flaherty (Plaintiff)
D Farinha (Second Defendant)
Solicitors:
Arnotts Lawyers (Plaintiff)
Stephen Smith (First Defendant) - submitting appearance and previously excused from attendance
Crown Solicitor’s Office (Second Defendant)
File Number(s): 2024/349549

EX TEMPORE JUDGMENT (revised)

Introduction

  1. HIS HONOUR: The literary world is full of notable quotes regarding good intentions and their outcomes. One of the more famous quotes by Robert Burns “The best laid schemes o' Mice an' Men, Gang aft agley. An' lea'e us nought but grief an' pain, For promis'd joy!” [1] highlights the truth that good intentions often miscarry.

    1. Essentially “The best laid schemes of mice and men go aft astray, and leave us naught but pain and sorrow for promised joy.” Robert Burns, Poems, Chiefly in the Scottish Dialect (1786, John Wilson) at 140.

  2. The late Daphne Bunn (deceased), a widow, passed away on 11 June 2022, leaving a Will dated 22 January 2018, the probate of which was granted to Stephen Anthony Smith (first defendant or Mr Smith) and Allison Frances Paten (who is now also deceased) (together the executors) on 18 January 2023. The deceased’s estate was, according to the inventory of property, valued at approximately $6.458 million, the substantial assets of which included three properties and considerable funds in financial institutions. One of the properties was located in Newport (the property).

  3. By some measures, the deceased left a relatively simple will. Nonetheless, the Will and the administration of the deceased’s estate has given rise to some complexities.

  4. As will be seen below, essentially, the first gift which the deceased made by her Will after appointing her executors was to create a form of trust in respect of the property, more particularly set out in Parts (a) and (b) of cl 2 of her Will (the specific gift).

  5. There is no dispute that the deceased intended, by use of the property and its contents, to benefit the Wesley Mission. The plaintiff, the formal legal entity which trades as Wesley Mission (plaintiff or Wesley), by summons filed on 20 September 2024 sought relief in relation to the nature and meaning of the specific gift in cl 2 and other questions regarding the purpose and administration of the property.

  6. Mr Smith is the first defendant, and the Attorney General of New South Wales is named as the second defendant.

  7. The summons was amended on 13 November 2024, partly to delete a reference to a provision of the Charitable Trusts Act 1993 (NSW) (CTA), and in part to make a request for the costs of the parties to be paid out of a specific fund being the subject of the proceedings, namely the proceeds of an anticipated sale of the property as distinct from coming out of the deceased’s estate generally. Mr Smith initially filed a notice of appearance in October 2024 and subsequently on 17 January 2025 filed a notice of submitting appearance, save as to costs.

Hearing and evidence

  1. On the hearing of the proceedings, Wesley appeared by Mr Flaherty of counsel; Mr Smith, consistent with the submitting appearance, and having been excused by the Court from attendance, did not appear; and Mr Farinha of counsel appeared on behalf of the Attorney General. The Court has been assisted by the provision of written submissions from each of Mr Flaherty and Mr Farinha, and they have supplemented those submissions orally.

  2. Wesley has filed and served four affidavits being: two affidavits of David Cannings, its Chief Financial Officer, affirmed on 20 September 2024 and 1 October 2024; an affidavit of David Kenneth Allen, Wesley’s Manager of Community and Family Care, affirmed on 24 January 2025; and an affidavit of Andrew Tyndale, Wesley’s Manager of Property Management and Development affirmed on 10 February 2025. A valuation report and assessment has been provided. No objection has been taken to any of that evidence. Mr Farinha tendered some additional materials marked as exhibit AG1. Subject to that, the defendants have not filed and served any evidence.

  3. The first prayer for relief in the amended summons has been overtaken by events. It sought leave to bring the proceedings pursuant to s 6 of the CTA. However, the Attorney General has since authorised the continuation of the proceedings pursuant to s 6(2A) of the CTA. The balance of the prayers for relief in the amended summons broadly reflect issues arising from the construction of the Will and the administration of the property, and more particularly, the trust said to be created pursuant to cl 2 of the Will.

  4. The relief sought in prayers 2, 4, and 5 of the amended summons is not seriously contested. Prior to the hearing, as between the parties, there was no real dispute that:

  1. Clauses 2(a) and (b) of the Will on their proper construction created a charitable trust within the meaning of the CTA (trust);

  2. Mr Smith should be removed as trustee of the trust and Wesley appointed in his stead either under the Court’s inherent jurisdiction or pursuant to some other statutory provision; and

  3. an appropriate order (whether a vesting order or some other order) ought to be made to facilitate the transfer of the property to Wesley to hold as trustee pursuant to ss 71 and 80 of the Trustee Act 1925 (NSW).

  1. The reader should understand that the absence of any real dispute between the parties in respect of the above-mentioned matters does not per se justify the Court in finding that a charitable trust exists and the removal of Mr Smith as trustee is appropriate. Thus, it is important to record that I am independently satisfied, as will be seen below, that the terms of cl 2 of the Will were intended by the deceased to create a trust and that the trust is for a charitable purpose.

  2. On the hearing, I raised with the parties and sought to test the proposition of whether the named executors had been appointed as trustees of the trust property as distinct from Wesley. Counsel addressed this issue, and I have, in particular, been assisted by Mr Farinha. I will address these matters further below.

  3. The questions which the parties have presented to the Court as agreed real issues are:

  1. Whether the original purposes of the trust have, wholly or in part, ceased to provide a suitable and effective method of using the property, having regard to the spirit of the trust (Issue 1 - The trust purposes and their suitability)?

  2. Whether the Court should establish a cy-près scheme and (if so) what should be the terms of the scheme (Issue 2 - Scheme and administrative matters)?

  1. The first issue raises questions regarding the application of ss 9 and 10 of the CTA to the facts of the case. The second issue is essentially consequential upon that. There are three issues regarding costs being: (a) which, if any, party should receive an order for costs; (b) the basis on which any such costs are to be paid; and (c) the fund source of payment of any such costs.

  2. It is convenient to proceed by setting out the relevant terms of the specific gift clause before addressing the issues. The salient facts will relevantly appear below in my dealing with the issues.

Clause 2 of the Will

  1. Clause 2 of the Will is as follows: [2]

2. I APPOINT STEPHEN ANTHONY SMITH of [XXX] Newport, Solicitor and ALLISON FRANCES PATEN of 41 [XXX] Avalon, Solicitor (or the survivor thereof) to be Executor, Executrix and Trustees of this my Will PROVIDED THAT in the event of both STEPHEN ANTHONY SMITH & ALLISON FRANCIS PATEN or either one thereof predeceasing me or being unable or unwilling to act as Trustees then I APPOINT PERMANENT TRUSTEE COMPANY LIMITED of 35 Clarence Street Sydney to be my Trustee in lieu of either or both of the said STEPHEN ANTHONY SMITH AND ALLISON FRANCES PATEN AND I GIVE DEVISE AND BEQUEATH the whole of my estate both real and personal of whatsoever nature and kind and wheresoever situate of or to which I shall be seized possessed or entitled at the time of my death to my Trustees UPON TRUST after payment of all my just debts funeral and testamentary expenses TO DIVIDE the same as follows:

(a) SUBJECT to the condition imposed by sub-clause (b) of this clause I GIVE DEVISE AND BEQUEATH my freehold property and real estate known as number [XXX] Newport, New South Wales together with the total contents (excluding any jewellery, candelabras & Tantulis [3] ) of such residence to WESLEY MISSION of 220 Pitt Street Sydney;

(b) THE BEQUEST in paragraph (a) hereof is conditional upon Wesley Mission using such real estate, dwelling and contents thereof for a period of thirty (30) years following my demise for the purpose of providing respite care for Wesley Mission staff and those in need under the care of Wesley Mission and for the purposes of this bequest Wesley Mission must at its own expense maintain such real estate, dwelling and contents thereof in a good state of repair and condition for such period of thirty (30) years and during such period must pay all rates and outgoings payable in connection with the property including but not limited to council rates, water rates, regular pest inspections, insurance premiums and gardening expenses. Upon the expiration of such thirty (30) year period such real estate, dwelling and contents shall be sold and the net proceeds of such sale shall be used by the Wesley Mission exclusively for the purposes of maintaining and providing for homeless people under the care of the Wesley Mission. MY TRUSTEES shall be the sole arbiters in ensuring that the spirit of this bequest is honoured and maintained throughout such thirty year period aforesaid.

2. Readers should be aware that the underlining in the extract can only be seen when viewing this judgment on the NSW Caselaw website.

3. This reference is unclear and may possibly be a reference to a “tantalus”, being a wooden cabinet for glass decanters, characterised by a lock and key.

The state of the property

  1. Mr Cannings, the Chief Financial Officer of the plaintiff, deposes that the property is in very poor condition, is not habitable, and “is not suitable for any of the activities conducted by the [p]laintiff”. [4]  Upon becoming aware of the bequest in the deceased’s Will, Mr Cannings arranged for an inspection of the property by the Wesley Mission Property Team. [5] Following an inspection on 17 August 2022, a report was prepared dated 16 September 2022. It concluded as follows: [6]

The layout of the house and the difficulty of access severely limit its potential for use as a residential location for Wesley Mission staff or clients.

Renovation of the existing house would require substantial structural work and would not overcome the difficult access from the street.

Planning constraints and the difficult site will limit redevelopment opportunities for a residence with access provisions consistent with Wesley Mission requirements. Recent new residences on adjacent blocks are multi-level to take advantage of the site slope and views.

4. Affidavit of David Cannings affirmed 20 September 2024 (Cannings) at [12].

5. Cannings at [10].

6. Court Book (CB) 69.

  1. Mr Tyndale, the Manager of the Property Department at Wesley Mission, inspected the property in or about December 2022 and later on 8 February 2025. [7] The contents of the report have been confirmed by him insofar as they bear upon the property. He indicates that the property had further deteriorated since his earlier inspection. He deposes that the property continues to be unfit for occupation and would require a complete demolition and reconstruction in order to meet the standard to permit habitation. [8]

Issue 1 - The trust purposes and their suitability

7. Affidavit of Andrew Tyndale affirmed 10 February 2025 (Tyndale) at [2],[7],[8].

8. Tyndale at [9].

Approach

  1. There is only one true construction of any legal instrument, including a Will: see Minister for Immigration and Border Protection v SZVFW (2018) 264 CLR 541; [2018] HCA 30 at [154] per Edelman J; Life Insurance Co of Australia Ltd v Phillips (1925) 36 CLR 60 at 78-79 per Isaacs J; [1925] HCA 18.

  2. The object of construction of a Will is to give effect to what the Will-maker intended by the words he or she used, having regard to admissible extrinsic evidence: see e.g. De Lorenzo v De Lorenzo (2020) 104 NSWLR 155; [2020] NSWCA 351 at [50] per White JA (Gleeson JA agreeing at [1]), citing Fell v Fell (1922) 31 CLR 268 at 273-274 per Isaacs J; [1922] HCA 55, and Perrin v Morgan [1943] AC 399 at 406 per Viscount Simon LC, 416 per Lord Thankerton.

Intention to create a trust with charitable purposes

  1. Mr Flaherty submitted that the deceased intended to create a trust, being a charitable trust, as follows: [9]

1.5 The conditions imposed on the Plaintiff by clauses 2 (a) and (b) are for particular charitable purposes and show a clear general charitable intention by the Deceased. See Att.- Gen. NSW v Perpetual Trustee Co Ltd 63 CLR 209 at 222 – 228; Catholic Metropolitan Cemetries Trust v AG of NSW [2024] NSWCA 30 at [140] – [160]; Perpetual Trustee Company Ltd. v AG of NSW 2018 NSWSC 1456 at [42] - [81] Jacob’s Law of Trusts in Australia 7th edition at [1001] to [1021] and the authorities discussed therein.

9. Plaintiff’s Outline of Submissions [1.5]. Readers should be aware that the underlining in the extract can only be seen when viewing this judgment on the NSW Caselaw website.

  1. Mr Farinha separated out the questions of whether there was an intention to create a trust and whether it was for charitable purposes. He submitted that subcl (a) and (b) provide for a gift of property subject to a direction as to how the property is to be used. [10]

    10. Outline of Submissions for Attorney General [15].

  2. He made reference to possible construction issues being: (a) whether the direction is merely precatory; (b) whether the direction imposes a condition precedent or a condition subsequent; (c) whether the direction gives rise to some form of equitable charge securing the fulfilment of a purpose; and (d) whether the direction creates a trust for specified purposes. In so doing, he made reference to the decision of Dixon J in Countess of Bective v Federal Commissioner of Taxation (1932) 47 CLR 417 at 418-420; [1932] HCA 22 and other authorities. Mr Farinha’s submissions distinguish between an initial purpose and a subsequent purpose.

  3. Precise definition of a trust has been said to be elusive if not impossible: J D Heydon and M J Leeming, Jacobs’ Law of Trusts in Australia (8th ed, 2016, LexisNexis) (Jacobs’) at [1-01]. A trust is an institution developed by equity and cognisable by a court of equity. [11] Basically, a “trust” may be described as a relation between trustee and beneficiary in respect of certain property. Specifically, a trust exists when the owner of legal or equitable interest in property is bound by an obligation recognised by or enforced in equity to hold the interest for the benefit of others, or relevantly in this case, not a trust for beneficiaries but a trust for purposes, being some object or purpose permitted by law. [12]

    11. Jacobs’ at [1-01] citing Registrar of the Accident Compensation Tribunal v Federal Commissioner of Taxation (1993) 178 CLR 145 at 175; [1993] HCA 1.

    12. Jacobs’ at [1-01].

  1. There are various ways of creating charitable trusts. A charitable trust of land may be created at private law by the unilateral act of its owner, by Will or deed which either transfers the land to a trustee for a charitable purpose, or declares that the owner holds the land as trustee for a charitable purpose: e.g. Catholic Metropolitan Cemeteries Trust v Attorney General of New South Wales [2024] NSWCA 30 (CMCT) per Leeming JA at [148]. His Honour notes that transfer and declaration of trust are the two principal ways of creating express trusts, including charitable trusts. [13] Charitable trusts may also be created pursuant to statute and recognised in equity, and “statutory trusts” might be created for a public purpose which is not charitable. [14] It is not necessary to explore that further here as the relevant wording creating a trust appears from the deceased’s Will.

    13. CMCT at [148]

    14. CMCT at [147]-[151].

  2. I am persuaded that the deceased intended to create a trust, being a trust for charitable purposes. A general charitable intention is presumed, there being no evidence to the contrary in the trust instrument: s 10 CTA.

  3. The terminology in cl 2(b), to my mind, is far more consistent with a trust rather than some other legal institution or relation. [15] The deceased has used the word purpose at least on three occasions throughout subcl (b), those purposes being an initial purpose “providing respite care for Wesley Mission and staff and those in need under the care of Wesley Mission”, and a subsequent purpose of “maintaining and providing for homeless people under the care of Wesley Mission”.

    15. See Jacobs’ Chapter 2.

  4. The Macquarie Dictionary online edition contains a definition of respite as “care provided for the permanently disabled, to give respite to their normal carers”. Whilst that is one choice of meaning for respite care, I am not satisfied that there is any sense of requirement in subcl (b) for the care to be for the permanently disabled. The wording in cl 2(b) focuses upon two categories of people, one being Wesley Mission staff, and the other being those in need under the care of Wesley Mission.

  5. Other definitions of “respite care” seem more apt. The Macquarie Dictionary online edition defines the noun “respite” as “a delay or cessation for a time, especially of anything distressing or trying; an interval of relief”. It defines the verb “respite” as being, “to relieve temporarily, especially from anything distressing or trying; give an interval of relief from”. Mr Farinha helpfully provided other definitions in relation to the meaning of respite care at [23] of his written submissions:

The initial purpose is to provide “respite care for Wesley Mission staff and those in need under the care of Wesley Mission” for a period of 30 years after the testator’s death. In this context, “respite care” is naturally read as meaning “[t]emporary rest or relief from an unpleasant, undesirable, or tiring situation” or “[t]emporary relief from the responsibility of caring for a sick, elderly, or disabled person, provided as a service for the usual caregiver”: Oxford English Dictionary (online), “respite”, senses I.2.a, I.2.b. Consistently with that reading, the subclause contemplates such care being provided either to “Wesley Mission staff” or to “those in need under the care of Wesley Mission”.

  1. I accept the submission of both counsel that a purpose is expressed for persons “in need” or the like. Using the terminology of Mr Farinha, it is relevantly a trust for the relief of poverty and thus charitable: see e.g. In re Scarisbrick; Cockshott v Public Trustee [1951] Ch 622 at 634 per Evershed MR, and at 650 per Jenkins LJ.

  2. Specifically, Mr Farinha submitted that:

24. This purpose is readily characterised as charitable in law. Provision for persons “in need” or the like has been considered to be for the relief of poverty and thus charitable in many cases: eg In re Scarisbrick; Cockshott v Public Trustee [1951] 1 Ch 622 at 634 per Evershed MR (“The phrase ‘in needy circumstances’ is to my mind merely periphrastic for ‘poor’”), 650 per Jenkins LJ (“If language means anything, a person in needy circumstances is a person who is poor and as such a proper object of charity”); Vucicevic v Aleksic [2017] EWHC 2335 (Ch) at [25] per HHJ Paul Matthews (“A gift to or for the benefit of ‘the people in need, especially children’ is plainly a gift for the relief of poverty, and so charitable according to English law”); In the Matter of the Estate of Stratford: Wilson v McFarlane [2021] NI Ch 3 at [45] per (“The word necessitous has a long history as a synonym for poor”). And it has been recognised that trusts may serve a charitable purpose by conferring benefits on staff of the charity: eg Catholic Care (Diocese of Leeds) v Charity Commission for England and Wales [2010] 1 PTSR 1074 at [87] per Briggs J (“For example, a charity for the relief of sickness may serve that purpose by providing benefits to nurses or to the hospital employing those nurses”).

  1. As Mr Farinha observed, the subsequent purpose is also charitable on the same ground, citing as an example, YWCA Australia v Chief Commissioner of State Revenue [2020] NSWSC 1798 per Payne JA at [56].

Constitution of the trust and appointment of trustee

  1. The plaintiff’s submissions proceeded on the basis that the executors were trustees of the trust property. Clause 2(a) is a direction to the executors and trustees after payment of all just debts, funeral, and testamentary expenses to give, devise, and bequeath the property and its contents to Wesley, subject to conditions set out in cl 2(b).

  2. I posited that there is a distinct argument that, properly construed, the deceased intended Wesley to be trustee of the property, subject to a type of supervisory role by the executors. Mr Farinha, at least for his part, accepted that possibility.

  3. I find that the construction that I have posited is the appropriate construction of the Will. However, subject to the question of removal of a trustee about which I say more below, practically speaking, there is no issue about this. Mr Smith is content for Wesley to be the trustee, and the Attorney General does not oppose that. Mr Farinha submits that the trust is otherwise properly constituted. I agree.

  4. I will later make reference to completion of executorial duties. However, it suffices to signal at this point that there is no suggestion that the property the subject of the trust is required to be sold for administration purposes. Essentially, all that remains is for the property to be transferred to Wesley to hold on the trust terms in cl 2, subject to any cy-près relief granted in these proceedings.

Sole arbiter provision

  1. The concluding lines of subcl (b) relevantly state:

MY TRUSTEES shall be the sole arbiters in ensuring that the spirit of this bequest is honoured and maintained throughout such thirty year period aforesaid.

  1. As Mr Farinha observed, the intent and effect of this provision is unclear. However, wording to that effect is not unknown in law, and Mr Farinha drew attention to a similar phrase considered by the High Court in Monds v Stackhouse (1948) 77 CLR 232; [1948] HCA 47. In that case, the wording was that the corporation “in disposing of the said money shall be the sole judge as to whether the objects to which they are applying this bequest are within the terms of a gift.”

  2. Mr Farinha’s submissions addressed the differing positions taken by Latham CJ and Dixon J as follows.

28. A similar provision was considered by the High Court in Monds v Stackhouse (1948) 77 CLR 232. A testator bequeathed his residuary estate to the Corporation of the City of Launceston to be the nucleus of a fund to provide a suitable hall or theatre for concerts, drama and cultural or educational meetings. The will further directed that the Corporation “in disposing of the said moneys shall be the sole judge as to whether the objects to which they are applying this bequest are within the terms of the gift”. Latham CJ held (at 240) that “such a provision is invalid on the ground of repugnancy to the words of the gift and also as ousting the jurisdiction of the court and so being contrary to public policy”. But Dixon J reasoned as follows (at 245):

The clause making the corporation the sole judge as to whether the objects to which they are applying the bequest are within the terms of the will, may enlarge its discretion in deciding whether a building will be or is adapted to the designated purposes but if it is pressed to the full extent of excluding an examination of the manner in which the money is spent the clause is repugnant and void.

  1. My first and provisional impression is that the terms were intended by the deceased to create some form of supervisory role. However, I accept the submission of Mr Farinha that it is ultimately not necessary to form a concluded view regarding the provision.

Issue 2 - Scheme and administrative matters

Principles

  1. The history and principles with respect to trust purposes and CTA relief were summarised by me in Green v Attorney General (NSW) [2023] NSWSC 1229; (2023) 413 ALR 575 at [75]-[108].

Impracticability

  1. I return to my initial observations regarding good intentions. It is not uncommon for well-meaning people, including those of the deceased’s generation, to have a philanthropic intent regarding the use of their assets, especially a family home. The sentiment is entirely understandable. The family home might well have been entirely suited to the deceased’s recreational activities with her husband and, at times, a place of refuge or respite from the rigours of their work environment, or more generally from the other travails of life.

  2. The exact saying “Beauty is in the eye of the beholder” is said to have been coined in 1878 by Margaret Wolff Hungerford. [16] However, the same concept in different words was expressed earlier than in 1878, for example in Shakespeare’s 1597 play Love’s Labour Lost: [17]

Good Lord Boyet, my beauty, though but mean, Needs not the painted flourish of your praise: Beauty is bought by judgement of the eye, Not utter'd by base sale of chapmen's tongues

16. Margaret Wolff Hungerford, Molly Bawn (1878, JB Lippincott & Co) at 148.

17. William Shakespeare, Love’s Labour Lost (1889, Cassell Limited) at 35.

  1. What the deceased found to be a charming or pleasant environment entirely amenable for the purpose of living or respite is not necessarily suited to others in their different circumstances. I accept, based on the opinions in the inspection report and Mr Tyndale’s affidavit, the original and initial purpose of the trust of providing “respite care for Wesley Mission staff and those in need under the care of Wesley Mission” for 30 years has thus become impracticable to carry out. I will not go into the issue of whether there was an initial impossibility. I accept that the original purpose of the trust has in any event become impracticable to carry out, and the Court would have power to direct a cy-près scheme under the general law.

Unsuitability

  1. Given the initial and subsequent purposes identified above, the spirit of the trust as a whole was to provide for those in need, including homeless people under the care of Wesley Mission. On the evidence outlined above and tendered in the case, use of the property to provide respite care would require a diversion of resources away from other works of Wesley to renovate the property and, even then, the difficulty of access would severely limit the potential use of the land. That being so, I accept the submission of Mr Farinha that s 9 of the CTA is engaged. Mr Flaherty submitted likewise.

Cy-près scheme

  1. Mr Flaherty addressed the cy-près scheme in his submissions as follows:

3.8   Here, the four (4) programs proposed in prayer 7 of the Amended Summons are all programs currently conducted by the Plaintiff and (it is submitted) are aimed to benefit those that the Deceased herself intended to benefit (except the staff of Wesley Mission).

3.9   Each of those programs are “as near to the original purposes of the original purposes” as set out in the Deceased’s will. Expenditure by the Plaintiff of the nett proceeds of sale of the Newport property on those programs (excluding the staff), “would be effective and suitable, having regard to the spirit of the trust.”

  1. Mr Farinha’s submissions regarding the cy-près were as follows:

48. In substance, the Company seeks a cy-près scheme enabling it to sell the Newport property, invest the net proceeds, apply the income to any of four programs for 30 years, and then apply the capital to any of those programs. The net proceeds are likely to be substantial: the property has been valued at $1,250,000 in a report dated 13 October 2023 and amended to 7 February 2024 to acknowledge compliance with the expert code of conduct. [18] The programs to which the proceeds would be applied may be considered in turn:

(a)   The Escaping Violence Payment Program (EVP) provides financial aid and brief case management to support those seeking to leave a violent intimate relationship. [19] The funding can be used in any way that the individual finds meaningful to assist them to sustainabl[y] leave the violence, including for temporary accommodation, residential tenancy bonds, furniture and other basic needs. [20] The program is in high demand, receiving approximately 1,000 enquiries per week and with 11,807 applicants deemed eligible for support in 2024. [21]

(b)   Wesley Mission Short Term Emergency Placement (STEP) is a 12-week foster care program supporting teenagers aged 12–18 years through one-on-one care. [22]

(c)   Wesley Mission Homeless Services provide accommodation and assistance for people living with homelessness or at risk of homelessness in defined areas across New South Wales. [23] It works with families and individuals to identify support, barriers to housing, pathways to sustainable accommodation and goal setting away from homelessness. [24] Some services operate refuges for individual adults in need of crisis accommodation. [25]

(d)   Wesley Community Housing seeks to provide “suitable, sustainable and secure accommodation, so people can live independent, happy and fulfilled lives”. [26]

18. Valuation Report dated 13 October 2023.

19. Affidavit of David Kenneth Allen affirmed on 24 January 2025 (Allen) at [2]-[4].

20. Allen at [5].

21. Allen at [6].

22. Wesley Mission 2022 Annual Report at 18.

23. Allen at [10].

24. Allen at [11].

25. Allen at [11].

26. Wesley Community House, “About Us”, accessible at: .

  1. The Escaping Violence Program (EVP) is not a crisis service. Mr Allen explained how the EVP program operates. The service is mainly in the form of financial aid. It includes providing money for temporary accommodation, residential tenancy bonds, and for other basic needs up to $5,000. I am satisfied that the EVP program provides for necessities for people and that, whilst it is not necessarily tied to accommodation of a particular dwelling, it is nonetheless a type of respite care which provides temporary accommodation and respite for those who meet the eligibility criteria, and that it is within the spirit of the trust.

  2. Mr Allen also detailed the nature of Wesley’s homeless services. There are nine specialist types of contracts that Wesley has with the Department of Community and Justice which provide funding to Wesley so that it can provide accommodation assistance to people who are living with homelessness or at the risk of homelessness. I am satisfied that those services are relatively close to the deceased’s intent for the provision of services to those in need and within the spirit of the trust.

  3. More generally I accept that use of the funds in one or more of the four types of programs appears to be a suitable means of providing respite and other benefits to those in need under the care of Wesley, being sufficiently close to the original purpose of the trust.

  4. There was some contention in the written submissions regarding the precise wording of orders, in particular the orders for the cy-près scheme. That contention has been resolved during the course of the hearing, and the orders that I will make below are orders that have had the considered input of both Mr Farinha and Mr Flaherty.

Replacement of trustee

  1. I have indicated above that I am not entirely convinced that the executors were intended by the deceased to be the trustees of the trust property for the 30-year period, as distinct from performing some form of supervisory role.

  2. I find that the better view is that, on the proper construction of the Will, Wesley was intended to be the trustee of the trust. However, to the extent that there is some doubt about the position, if it be the case that Mr Smith is currently holding the property as trustee, there is no real dispute that it is appropriate for him to be replaced as trustee. In particular, Mr Farinha drew my attention to the decision of McMillan J in Giurina v Giurina [2018] VSC 599.

  3. Specifically, Mr Farinha submitted:

36. In this case, an order appointing the Company as trustee may not be strictly necessary because cl 2(a) and (b) of the will provides that the Company is to hold and administer the trust. Nevertheless, it is not clear on the evidence what other executorial duties remain to be performed by Mr Smith. In those circumstances, the order for appointment of the Company may be expedient to avoid any uncertainty related to whether Mr Smith currently holds the property as trustee on the basis that his executorial duties have been performed: see Giurina v Giurina [2018] VSC 599 at [20] per McMillan J. In any event, an order for transfer of the property is appropriate in circumstances where Mr Smith has submitted to the order and no vesting order is sought.

  1. The Court has power to remove or replace a trustee as part of its inherent power to see that trusts are properly executed: see Letterstedt v Broers (1884) 9 App Cas 371 at 386. The power to remove or replace a trustee is also conferred by statute, relevantly here, s 70 of the Trustee Act 1925 (NSW) (rather than ss 7 and 8 of the CTA, which are not engaged on the facts). In Crowle Foundation v NSW Trustee and Guardian [2010] NSWSC 647; (2010) 5 ASTLR 556, Ball J observed:

33 The legislative test and the test the court applies in exercising its inherent jurisdiction are expressed in different terms. Section 70 applies wherever it is expedient to appoint a new trustee or new trustees and it is inexpedient, difficult or impracticable to do so without the assistance of the court: subs 70(2). On the other hand, the question that must be asked when the court exercises its inherent jurisdiction is what is in the best interests of the beneficiaries and the administration of the trust. As Dixon J (with whom Evatt and McTiernan JJ agreed) explained in Miller v Cameron (1936) 54 CLR 572 at 580-1:

“The jurisdiction to remove a trustee is exercised with a view to the interests of the beneficiaries, to the security of the trust property and to an efficient and satisfactory execution of the trusts and a faithful and sound exercise of the powers conferred upon the trustee. In decision to remove a trustee the Court forms a judgment based upon considerations, possibly large in number and varied in character, which combine to show that the welfare of the beneficiaries is opposed to his continued occupation of the office. Such a judgment must be largely discretionary.”

In the case of a charitable trust, the focus, of course, must be on whether the objectives of the trust are opposed to the continuation of the trustee, since a charitable trust has no beneficiaries.

  1. In my view, Wesley was intended by the deceased to be trustee of the trust. In saying that, I do not propose to venture any opinion as to whether Mr Smith has acted per se in any untoward way by assuming that he is trustee. If it be the case that executorial duties are complete and Mr Smith has transferred the property into his own name apparently as trustee, then on one view he holds the property as constructive trustee, or as Mr Farinha mentioned, as trustee de son tort.

  1. The question of when executorial duties are complete is not always easy to determine. Bergin CJ in Eq in Ford v Simes [2009] NSWCA 351 at [38]-[51] (Tobias JA and Handley AJA agreeing at [1] and [76] respectively) discussed the question regarding completion of executorial duties and referred to some authorities bearing on that issue. It can be the case that an executor has not completed all executorial duties but is, nonetheless, prepared to acknowledge that a certain asset is no longer required for administration purposes. On any view of the matter, practically speaking, that is the situation here.

  2. To the extent that there is any doubt regarding Mr Smith holding the property in some trustee capacity, I am satisfied that there should be an order made for more abundant caution that Mr Smith should be removed as trustee. As I have mentioned, that is not for any untoward reason but essentially because it will give effect to the Will as I have construed it and facilitate the trust purposes and the proper execution of the administration of the trust.

Costs

  1. I mentioned there were three issues regarding costs.

  2. On the first issue, there is essentially no dispute as between the parties that there should be an order for costs of all the parties in respect of the proceedings. However, the issue is an important one and for that reason alone, bears some consideration by me.

  3. Mr Farinha submitted as follows:

53. As indicated above, the Attorney General has sought to assist the Court by inviting the Company to amend the relief sought and supplement its evidence and by making these submissions on the law and the facts. In the circumstances, it is respectfully submitted that the Attorney General’s costs should be paid on an indemnity basis out of the trust fund, rather than borne by taxpayers generally: see Perpetual Trustee Co Ltd v Attorney General (NSW) (2018) 17 ASTLR 126 at [130]–[135] per Leeming JA. The Attorney General otherwise consents to an order of that kind being made in favour of the other parties in accordance with the usual practice reflected in r 4.25(a) of the Uniform Civil Procedure Rules 2005 (NSW).

  1. The discussion by Leeming JA in PerpetualTrustee Co Ltd v Attorney General (NSW) [2018] NSWSC 1456; (2018) 17 ASTLR 126 is illuminating. As his Honour observes, the position of the Attorney General is entirely different from that of a trustee. The Attorney General, generally speaking, has no entitlement to costs being paid from trust assets. The survey of authorities by Leeming JA reveals a pattern of inconsistent costs orders with no clear principles emerging as to the basis of making an award for costs in favour of the Attorney General. Nonetheless, his Honour cited treatment of the issue in William Henderson and Jonathon Fowles, Tudor on Charities (10th ed, 2015, Sweet & Maxwell) as follows:

130 The position of the Attorney is entirely different from that of the trustee. Only if an order is made is he entitled to any costs from the trust assets. Picarda states that in administration actions where the Attorney General is joined to represent the interests of charity he is usually given his costs on a standard basis out of the estate: p 715. Hurst states that “the trustee is entitled to his costs out of the fund on the indemnity basis provided that he has not acted unreasonably or ‘in substance for his own benefit rather than that of the fund’”: P Hurst, Civil Costs (6th ed, 2018, Sweet & Maxwell) 580. On the other hand, the treatment in W Henderson and J Fowles, Tudor on Charities (10th ed, 2015, Sweet & Maxwell) at 742-743 is accompanied by reasons:

“In applications by charity trustees to the Court for directions in respect of the administration of a charity or where a scheme is sought and made the Court will usually order the Attorney General's costs to be paid out of the charity's assets; more often than not on the indemnity basis. The Attorney General is a necessary party to such proceedings and assuming that he has not acted unreasonably, his costs should be provided for, otherwise they will be borne by the taxpayer generally, rather than by the charity whose problems have caused them to be incurred.”

  1. His Honour regarded those reasons as being persuasive for the making of an order in favour of the Attorney General. For my part, I consider that I have been considerably assisted by the Attorney General’s submissions, and I am satisfied that the costs of all parties should be paid out of the proceeds of the sale of the property.

  2. On the second costs issue, in relation to the basis for costs, the parties submitted that costs should be on an indemnity basis. To my mind, the Attorney General was effectively performing a like role to the role that would be performed by the executor of the deceased’s estate who, as noted, late in the piece, filed a submitting appearance except as to costs. In those circumstances, there has been no real duplication of work and in the circumstances of this particular case, I consider that costs on the indemnity basis are appropriate.

  3. The third and final costs issue is in relation to the fund from which the costs should be paid. In estate litigation there is a question as to whether the costs should be borne by the property that, in the opinion of the Court, is the real subject matter of the proceedings, as opposed to costs being borne in accordance with the statutory order provisions of s 46C(2) of the Probate and Administration Act 1898 (NSW).

  4. In Reeves v Reeves (No 2) [2024] NSWSC 386, I stated at [46]-[56]:

46.   Costs are in the discretion of the Court, subject to the Civil Procedure Act 2005 (NSW) (CPA), rules of Court and any other Act: s 98(1)(a) CPA.

47.   The Court has full power to determine by whom, to whom and to what extent costs are to be paid (s 98(1)(b) CPA), and may order that costs are to be awarded on the ordinary basis or on an indemnity basis (s 98(1)(c) CPA).

48. Subject to Part 42 of the UCPR, if the Court makes any order as to costs, the Court is to order that the costs follow the event unless it appears to the Court that some other order should be made as to the whole or any part of the costs: r 42.1 UCPR.

49. Unless the Court orders otherwise or the UCPR otherwise provide, costs payable to a party under an order of the Court are to be assessed on the ordinary basis: r 42.2 UCPR.

50. Further, in cases involving Will construction, relevantly s 93(3) of the Trustee Act 1925 (NSW) (Trustee Act) provides:

In any proceedings with respect to the management or administration of any property subject to a trust or forming part of the estate of a testator or intestate, or with respect to the interpretation of the trust instrument, the Court may, if it thinks fit, order any costs to be paid out of such part of the property as in the opinion of the Court is the real subject matter of the proceedings.

51.   An award of costs, of its nature, is compensatory in the sense of being awarded to indemnify the successful party against the expense to which he or she has been put by reason of the legal proceedings. Costs are not awarded by way of punishment of the unsuccessful party: Latoudis v Casey (1990) 170 CLR 534 at 543 per Mason CJ; [1990] HCA 59.

52.   Ms Fendekian referred to the decision of Ward CJ in Eq (as her Honour then was) in Bale v Kimberley Developments Pty Ltd (No 2) [2022] NSWSC 1009 (Bale) at [98]-[99], where her Honour stated as follows:

98. The applicable principles were not in dispute. The power to award costs (contained in s 98 of the Civil Procedure Act 2005 (NSW) (Civil Procedure Act)) is a broad discretion, although it must be exercised judicially (see Oshlack; and more recently, Yu v Cao (2015) 91 NSWLR 190; [2015] NSWCA 276 at [136] per McColl JA (with whom Sackville AJA and Adamson J agreed)) and with regard to the overriding statutory mandate under the Civil Procedure Act (see s 56).

99. The usual order is that costs follow the event (r 42.1 of the UCPR); unless it is considered that some other order ought to be made (see Gretton at [38] per Beazley JA, as her Excellency then was (with whom Mason P agreed)). Further, it is not disputed that costs orders in civil litigation are well recognised as being compensatory, not punitive, in nature (see Sze Tu v Lowe (No 2) [2015] NSWCA 91 at [37] per Gleeson JA, with whom Meagher and Barrett JJA concurred, in turn citing Latoudis v Casey (1990) 170 CLR 534; [1990] HCA 59 at 543 per Mason CJ; see further Ohn at 84 per Cole JA).

53.   A number of observations may be made.

54. First, s 98 of the CPA confers a very wide discretion. It enables the Court to decide who should bear the costs of litigation before it quite independently of whether those costs do, or do not, amount to testamentary expenses: Murdocca (No 2) at [70] (remarks concerning the provisions of s 76 of the Supreme Court Act 1970 (NSW), which for present purposes are not materially different to the relevant provisions of s 98 of the CPA).

55. Secondly, s 93(3) of the Trustee Act enables the Court to order the costs of construing a particular clause of a Will out of the property which is the subject of that clause: Murdocca (No 2) at [68].

56. Thirdly, the Court’s discretion under s 93(3) of the Trustee Act (to order any costs to be paid out of such part of the property as in the opinion of the Court is the real subject matter of the proceedings) and s 98 of the CPA (to order the costs of the proceedings to be borne in such way as the Court thinks just), if exercised, displaces (to the extent described in the costs order) the statutory order provisions of s 46C(2) of the PAA concerning how testamentary expenses are to be borne: Murdocca (No 2) at [76].

  1. In the present matter, I am satisfied that the costs should be borne by the net proceeds of sale of the Newport property, which was the real subject matter of the proceedings.

Orders

  1. The orders of the Court are as follows.

  1. Declare that clause 2(a) and 2(b) of the will dated 22 January 2018 of the late Daphne Bunn deceased (“the Deceased”) created a “charitable trust” within the meaning of the Charitable Trusts Act 1993 (NSW) (“the CTA”).

  2. Declare pursuant to section 9 of the CTA that the original purposes of the trust have wholly or in part ceased to provide a suitable and effective method of using the trust property (comprised in Lot 145 in Deposited Plan 13457 and known as [XXX] Newport (“the Newport property”)) having regard to the spirit of the trust.

  3. Order, for more abundant caution, to the extent the First Defendant holds the Newport property as trustee, that the First Defendant be removed as trustee and the Plaintiff be appointed as sole trustee of the same in his stead.

  4. Order that the interest of the Deceased in the Newport property vest in the Plaintiff forthwith.

  5. Order that the First Defendant forthwith do all things reasonably necessary to facilitate the vesting of the Newport property in the Plaintiff to hold as trustee.

  6. Order that the trust be administered cy-pres as follows:

  1. the Plaintiff is to sell the Newport property for the best reasonably obtainable price and after the payment of the reasonable costs, expenses or commission of any real estate agent engaged to affect such sale;

  2. the Plaintiff is to invest the proceeds of sale (“the invested capital”) in a range of asset classes including domestic and international equities as well as fixed interest securities;

  3. the Plaintiff is to apply the income from such invested capital to any one of the following programs currently administered by the plaintiff as the board of directors of the plaintiff from time to time thinks fit for a period of 30 years from the date of Ms Bunn’s death, being 11 June 2022:

  1. Escaping Violence Payment Program;

  2. Wesley Mission Short Term Emergency Placement (STEP);

  3. Wesley Mission Homeless Services;

  4. Wesley Community Housing;

  1. after the expiry of 30 years from the date of Ms Bunn’s death, the plaintiff is to apply the capital then existing and any surplus income to any one or all of the programs (or its successors) referred to in order 6(c) above as the board determines.

  1. Order that the costs of all parties be paid out of the net proceeds of sale of the Newport property on an indemnity basis.

  2. Order that there be liberty to the parties to apply for any consequential orders, including to facilitate vesting of the Newport property in the Plaintiff.

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Endnotes

Decision last updated: 07 March 2025

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