Succession - Proceedings by executors and administrators - Trustees of charities - Application for approval of scheme pursuant to Charitable Trusts Act 1962 (WA) - Principles concerning schemes in respect of charitable trusts - Proposed scheme disposes of funds as nearly as possible in accordance with the intention of the testatrix and in accordance with the charitable purposes of the trust - Order that scheme be approved

Charitable Trusts Act 1962 (WA)

Approval granted for scheme pursuant to Charitable Trusts Act 1962 (WA)

Berry v International Committee of the Red Cross, unreported; SCt of WA; Library No 6530; 24 November 1986

In re J W Laing Trust [1984] Ch 143

Penny v Cancer & Pathological Research Institute of Western Australia (1994) 13 WAR 314

1 The plaintiff in this matter is The Joyce Henderson Trustee (Inc). By an originating summons dated 26 August 2009 the plaintiff seeks orders pursuant to certain provisions of the Charitable Trusts Act (1962) (WA) for the approval of a scheme prepared by the plaintiff. The scheme in question has been approved by the defendant, the Attorney General for the State of Western Australia.

2 The application is supported by the affidavit of James George Clarko sworn 26 August 2009. That affidavit has exhibited to it an earlier affidavit of James George Clarko sworn 9 March 2006 in proceedings CIV 1299 of 2006. The application is supported also by the affidavit of Suzanne Sorina Wicks sworn 17 March 2010.

3 The application is said to be the proper means by which certain unresolved concerns raised by cl 4 of the Will of the late Emily Joyce Brown Brushfield should be settled.

4 It seems that the testatrix wished to establish a charitable trust. In essence, the deceased's charitable intention was directed to the provision of funds to research child eye injuries and the provision of funds for the day to day running of premises at Bassendean called Olive House.

5 However, as appears from the affidavit of Mr Clarko sworn 6 August 2008, certain difficulties have arisen. The deponent says at par 15 of his affidavit that in his former capacity as executor and trustee of the deceased's estate, and now as chairman of the plaintiff trustee, he is not entirely sure what cl 4 of the deceased's Will means and therefore is uncertain as to how it can be complied with.

6 He goes on to say that he is sure that he knows what the deceased intended. Based in part on discussions with Dr Bremner (which are described in his affidavit), he is able to say that Olive House is a very old building in need of significant maintenance and is currently vacant. The body Kidsafe no longer operates from Olive House. Mr Clarko notes in the subject affidavit that as at 6 August 2008 the subject trust fund currently had approximately $4,546,500.00 invested in cash management accounts.

7 It is against this background, in circumstances where it seems that the deceased's purpose cannot be carried out, that the present application is made. More particularly, what is sought by the plaintiff is reflected in a minute of proposed orders dated 17 March 2010. Orders are sought as follows:

(1) The Scheme which is exhibit JGC5 to the affidavit of James George Clarko sworn 26 August 2009 be approved, and

(2) the reasonable costs and expenses of and incidental to

(a) preparing and advertising the Scheme and

(b) obtaining approval for the Scheme be paid out of and be a charge on the trust property.

8 It will be useful now to look briefly at certain provisions of Pt III of the Charitable Trusts Act concerning schemes in respect of charitable trusts.

9 Section 7(1) of the Charitable Trusts Act provides that, subject to the provisions of subs (3), where any property or income is given or held upon trust or is to be applied for any charitable purpose and (a) it is impossible, impracticable or inexpedient to carry out that purpose, or (b) the amount available is inadequate to carry out that purpose, or (c) that purpose has been effected already, or (d) that purpose is illegal or useless or uncertain, then whether or not there is any general charitable intention, the property and income or any part or residue thereof or the proceeds of sale thereof shall be disposed of for some other charitable purpose or a combination of such purposes in accordance with a scheme approved under this part.

10 The provision goes on to state in s 7(2) that, subject to the provisions of subs (3), where any property or income is given or held upon trust or is to be applied for any charitable purpose and the property or income that has accrued or will accrue is more than is necessary for the purpose, then whether or not there is any general charitable intention, any excess property or income or proceeds of sale may be disposed of for some other charitable purpose or a combination of such purposes in accordance with a scheme approved under this part.

11 I refer also, in summary form, to certain other provisions of the Act. It is said in s 9 that where the trustees of any property or income to which the provisions of this part apply wish it to be dealt with in accordance with a scheme approved under this part, the trustees may prepare a scheme for the disposition of the property and income.

12 By s 10 every scheme prepared under this part must be submitted to the Attorney General. Provision is made for the Attorney General to approve such schemes. By s 11 a scheme is to be advertised in a manner described in that provision, including advertisement in the Government Gazette and in a daily newspaper.

13 The jurisdiction of the Supreme Court in respect of schemes is described in s 15 of the Act. It is said that where application for approval of a scheme is made to the court under this part, the court may make an order approving the scheme, with or without modification as it thinks fit.

14 Section 18 of the Act provides that a scheme shall not be approved by the court or the Attorney General under this part unless the court or the Attorney General is satisfied that (a) the scheme is a proper one that should carry out the desired purpose or proposal and that is not contrary to law or public policy or good morals (b) the scheme can be approved under this part (c) every proposed purpose is charitable and can be carried out and (d) subject to s 10A(10) and s 17 the requirements of this part have been complied with in respect of the scheme.

15 It will now be useful to look at certain aspects of the matter in more detail. The points of reference in that regard are the affidavits I referred to earlier and an outline of submissions filed on behalf of the defendant dated 16 March 2010.

16 It emerges from these materials that Emily Joyce Brown Brushfield, late of 31 North Beach Road, North Beach in the state of Western Australia died on 19 December 2001. James George Clarko was appointed executor of her Will and probate was granted on 21 February 2002.

17 A copy of the deceased's Will is exhibited to the affidavit of Mr Clarko sworn 9 March 2006. Clause 4 of the Will is expressed in this way:

I give, devise and bequeath all of my property of whatsoever nature and wheresoever situate and whether real or personal and not hereinbefore otherwise disposed of unto my trustee upon trust to pay thereout my just debts, funeral and testamentary expenses and all duties or taxes (if any) payable by reason of my death and to stand possessed of the balance then remaining, hereinafter called 'my trust estate', for the Child Accident Prevention Foundation of Western Australia Branch, 'Capfa', called Kidsafe, upon trust for Capfa to set up a trust fund to be known as the Joyce Henderson Trust Fund for a period of (thirty) 30 years from the date of my death as a perpetual source of both capital and income for the purpose of research in childhood eye injuries and in particular to assist with the day-to-day running costs of the northern suburbs branch of Capfa at Bassendean called Olive House.

18 It emerges from the materials before me that on 31 August 2006, in Supreme Court proceedings CIV 1299 of 2006, orders were made that substituted the plaintiff, The Joyce Henderson Trustee Inc, as the trustee of the trust created by cl 4 of the Will. It emerges from the materials also that Olive House at Bassendean is closed and the value of the trust is very large, being approximately $4.5 million. The course of action envisaged by cl 4 of the deceased's Will cannot be proceeded with.

19 The plaintiff in these proceedings, The Joyce Henderson Trustee Inc, has prepared a scheme under the Charitable Trusts Act. If approved by the court, the scheme in question would allow for the trust fund to be applied for the following four purposes: research into childhood injury prevention, including eye injuries, in Western Australia; childhood injury prevention education in Western Australia; the promotion of awareness of childhood injury prevention in Western Australia; the provision of financial assistance to Kidsafe Western Australia.

20 As I indicated in earlier discussion, the scheme was approved by the Attorney General.

21 The full particulars of the scheme appear as exhibit JGC5 of the affidavit of Mr Clarko sworn 26 August 2009. The document in question describes the background to the matter in summary form and in its operative part refers to cl 4 of the Will. It provides for the trust to be varied by deleting the central provision of cl 4 and substituting the following:

UPON TRUST to apply the capital and income of my trust estate for a period of at least (thirty) 30 years from 19 December 2001 for the following purposes:

(i) research into childhood injury prevention including eye injuries in Western Australia,

(ii) childhood injury prevention education in Western Australia,

(iii) the promotion of awareness of childhood injury prevention in Western Australia and

(iv) the provision of financial assistance to Kidsafe Western Australia Inc,

and my Trustee shall administer the trust to be known as 'The Joyce Henderson Trust Fund' in accordance with the provisions of a deed substantially in the form of the deed annexed to this Scheme and marked 'A' which deed is to be executed by the Trustee as soon as practicable after the Scheme is approved by the Supreme Court.

22 It is not necessary for present purposes to traverse the full particularity of the deed. Suffice it to say that, in my view, the provisions of the deed allow for the funds to be used in the manner envisaged by the scheme. In essence, the scheme has two limbs, being, first, an application to vary the manner in which the charitable purpose is expressed and, second, an application to vary the mode of administration of the trust.

23 It is perhaps important to note, as I did in the course of discussion with counsel, that cl 4 as originally expressed spoke of setting up a trust fund for a period, '30 years from the date of my death'. However, in my view, that assertion can reasonably be understood to be qualified by the words that follow in which the trust fund is described as a 'perpetual' source of both capital and income. It is for that reason counsel explained that the substitution clause is expressed in terms 'of a trust to apply the capital income of my trust estate for a period of at least 30 years from 19 December 2001'.

24 In other words, the concept of the fund being 'perpetual' has an overriding effect, with the result that the intention is to create a fund for 30 years or more; hence, the phrase 'at least 30 years' and thus the language of the scheme is as I described a moment ago. I pause to say that I am satisfied that the proposed adjustment can be and should be regarded as a reasonable interpretation of the testatrix's intention.

25 In reviewing the circumstances before me, it is important to understand that neither party has received any notice of objection to the scheme. It is important to understand also, having regard to the background I have described, that as Olive House is closed it is now impossible, impracticable or inexpedient, to carry out one of the two charitable purposes specified in cl 4 of the Will. Further, given the size of the trust fund, the scheme may also be authorised by s 7(2) of the Charitable Trusts Act.

26 It will now be useful to look briefly at some of the legal principles bearing upon an application of this kind.

27 The relevant principles are fully reviewed in the defendant's outline of submissions. As to the jurisdiction of the court, which is described in s 15 of the Act, the court may make an order approving the scheme with or without modification. However, in addition to jurisdiction under pt III of the Act, it appears from the decision of this court in Berry v International Committee of the Red Cross, unreported; SCt of WA; Library No 6530; 24 November 1986, that the Supreme Court has retained its inherent jurisdiction to approve schemes for the variation of charitable trusts.

28 A scheme for the variation of the purpose of the trust can be approved under pt III of the Act if the property or income is held upon trust for any charitable purpose and one of par (a), (b), (c) or (d) of s 7(1) or s 7(2) of the Act applies.

29 The expression 'charitable purpose' is defined in s 4 of the Act to mean, 'Every purpose that in accordance with the law of Western Australia is charitable'. A purpose will qualify as a charitable purpose if it falls within the spirit and intendment of the Statute of Elizabeth of 1601. That Act has been interpreted to encompass trusts for the relief of poverty, age or impotence, the advancement of education, the advancement of religion and other purposes beneficial to the community.

30 It appears from Penny v Cancer & Pathological Research Institute of Western Australia (1994) 13 WAR 314 that in Twigger's case Tipping J expressed the view that in deciding whether to approve the scheme the court owes a duty to the testatrix to dispose of the funds as nearly as possible in accordance with the intention of the testatrix. It owes a duty to those proposed to be benefited by the trust and to the public generally to dispose of the fund as nearly as possible in accordance with the charitable purposes of the trust and in such a way as will best serve the interests of those intended to be benefited.

31 In other words, if it is reasonably possible to devise a scheme having a close resemblance to the old trust, the trustee should do so, and the court would not readily approve a scheme which did not have the degree of resemblance even though a cy-pres approach is not mandatory.

32 It is said by the parties in the present case that the scheme appears to accord as nearly as possible with the gift intended by the testatrix and that every proposed purpose is charitable and can be carried out. The scheme envisages, as I have noted, that the trust fund will continue in existence for a minimum period of at least 30 years from the date of the testatrix's death. To the extent that this may constitute a variation of the terms of the original trust this aspect of the scheme would come within the terms of s 8 of the Act.

33 It is said also that the court's inherent jurisdiction in relation to the variation of charitable trusts extends to situations where for any reason it is thought expedient to regulate the administration of a charity. A scheme which varies a stipulation that the trust fund be distributed within a certain number of years of the settlor's death can be approved by the court on this basis, see Picarda_, The Law and Practice Relating to Charities_ (2nd ed, 1995) at 347, see also In re J W Laing Trust [1984] Ch 143.

34 It is submitted that the administration of the trust would also be facilitated by the execution of a deed substantially in the form of the deed annexed to the scheme, being the deed I mentioned earlier.

35 As I draw these matters together, in the course of arriving at a conclusion, I note that the scheme has been advertised in the prescribed manner and no objections have been received, and no objectors have come forward to be heard.

36 Accordingly, having regard to the relevant statutory provisions, and the circumstances of this present case, I am of the view that the proposed orders should be made. This is a case where the scheme is a proper one and disposes of the fund as nearly as possible in accordance with the intention of the testatrix and in accordance with the charitable purposes of the trust.

37 There is power in s 14 of the Charitable Trusts Act to make provision for the reasonable expenses of and incidental to preparing and advertising the scheme and obtaining approval for the scheme. Provision can be made by way of a payment out of or a charge upon the property or income affected. I am of the view that appropriate provision should be made in the manner contemplated by the minute of proposed orders.

38 It is against that background that I return to the minute of proposed orders. I will now make orders as follows:

(1) The scheme which is exhibit JGC5 to the affidavit of James George Clarko sworn 26 August 2009 be approved, and

(2) the reasonable costs and expenses of and incidental to:

(b) obtaining approval for the scheme be paid out of and be a charge on the trust property.