The Relief
8In relation to the substitution of the current individual trustees by a company limited by guarantee, the Plaintiffs relied upon s 70(2) Trustee Act 1925, which provides that the Court may make an order for the appointment of a new trustee in substitution for existing trustees "whenever it is expedient to appoint a new trustee ... and it is inexpedient, difficult or impracticable to do so without the assistance of the Court."
9"Expedient" in the context of s 70 means "conducive to, to advantage in general, or to a definite purpose, fit, proper or suitable to the circumstances of the case". Where, as in the present case, the application is to substitute a new trustee for existing trustees, it means conducive to, or fit or proper or suitable, having regard "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": Re John Alfred Roberts (1983) 70 FLR 158 at 162.
10Section 70(4) provides:
"(4) In a case of any trust for a charity the Court may make an order for the appointment of a new trustee on such evidence of the trust as the Court deems sufficient."
11Mr Hanrahan explains in his affidavit that the Plaintiffs seek the appointment of the corporate trustee in substitution for the four current trustees, the company having been incorporated in 2004 for the purpose of conducting the activities carried out on the Trust property. He goes on to provide specific reasons why it is "expedient" to appoint a corporate trustee. In summary, these reasons are:
(a) As a result of the scale of the activities undertaken on the Trust property, involving the necessity for a variety of contractual arrangements and a Commonwealth regulatory requirement that there exist a corporate entity to undertake those activities, the company, Carrington Centennial Care Ltd, was created by the current trustees and has been effectively conducting those business activities for almost 9 years;
(b) There is a concern on the part of the auditors of the Trust, arising from the division between the operation of the aged care facilities (by the company) and the title to the Trust property (which remains with the trustees);
(c) The auditors have recommended that the relationship between the trustees of the Trust and the company be documented by appropriate agreements, or, alternatively, that the structure be simplified by having the company appointed Trustee;
(d) The current arrangements complicate the financial reporting, at least so far as it is necessary to separately report on the financial affairs of the company and also to prepare consolidated reports for the Trust;
(e) The procedures established by the Deed of Gift for the appointment of new individual trustees, when the need arises, involves Government Departments taking various steps and preparing a number of documents and has been described by those involved as "cumbersome"; and
(f) The appointment of new individual trustees also makes it necessary for the trustees to apply to the Land and Property Information Department for alteration of the relevant registers.
12Finally, I note that there is no opposition advanced by the current trustees to being replaced by the corporate trustee.
13I accept the evidence that it is expedient, having regard to the objects of the Trust, and to its efficient and satisfactory execution, to replace the current individual trustees with a corporate trustee. In these circumstances, I propose to make the orders sought substituting the trustee.
14The more difficult aspect of the case involves the variation of orders 4(a)(ii) and 4(b)(ii) of the orders made by Powell J and the further alteration of the original purposes of the charitable trust and permitting the Trust property to be applied cy-près.
15The orders sought by the Plaintiffs would alter the objects of the Trust by:
(a) replacing the category of buildings for which Trust property could be applied (without Attorney General approval), being a "nursing home within the meaning of the National Health Act 1953 (Cth) or similar institution" with "a facility for the provision of residential care within the meaning of the Aged Care Act 1997, or similar institution"; and
(b) replacing the category of buildings for which Trust property could be applied (with the approval of the Attorney General), being a "building for the residence of aged persons within the meaning of the Aged Disabled Persons Act 1954 (Cth)", with "a retirement village within the meaning of the Retirement Villages Act 1999 (NSW), or similar institution".
16The task of determining whether a further variation to the Trust should be allowed is made a little easier by the change that has occurred, since 1978, by the passing of the Charitable Trust Act 1993, which Act, by s 9, applies to the subject Trust.
17Section 4(2) states that, except as otherwise provided by the Charitable Trust Act, the Act applies to a trust created before the commencement of the Act.
18Section 26 of the Charitable Trusts Act, provides that:
"26. Nothing in any provision of the Act affects any proceedings relating to a trust that were commenced in the Court before the commencement of the provision concerned."
19It has been submitted, and I accept, that although the present proceedings were commenced in 1975 (well before the commencement of s 9), it has been held that s 26 is intended to relate to the procedural aspects of the matter and not directed to the substantive provisions of the Act and, in particular, to s 9: Trust Company Ltd (as trustee for the Peter Mitchell British Empire Memorial Forces Trust and the Peter Mitchell British Empire Naval Forces Act (AGNSW) [2011] NSWSC 206, per Tamberlin AJ, at [10] - [11].
20Section 9(1) of the Charitable Trust Act greatly widens the circumstances in which the Court may act. No longer is the Court required to search for a new definition of the charitable purpose, "which in rigorous logic is as nearly as possible the same as the one which failed": Attorney General (NSW) v Fulham [2002] NSWSC 629, per Bryson J at [18].
21In that case, his Honour also pointed out that:
"18... the Court acts administratively makes choices and has regard to practical considerations in a search for an appropriate analogous application of charitable property in a context where it is impossible to achieve the original purpose...".
22Windeyer J has stated that the purpose of s 9 is to allow a scheme to be altered, even if, strictly speaking, the trust purpose can in some way be carried out, albeit not in an economic and effective or beneficial way: Northern Sydney and Central Coast Area Health Service v The Attorney General for New South Wales [2007] NSWSC 881, at [26].
23The submissions of counsel for the Attorney General correctly note that the "spirit" of the Trust identified by Powell J, at 17 and 18 of his reasons for judgement, is, essentially, the provision of medical and general care to those in need of it. His Honour noted, at 17, the principal object of the Donor in making the original gift was:
"... the bringing into being, and maintaining, the "institution"... in which persons who had been, or were, injured, suffering from illness or disease, or in poor health might be provided with continuing medical and general care so as, if possible, to restore them to good health."
24It is clear, also, that Powell J, in the orders that he made, anticipated future variations to the Trust. In order 4(b), his Honour specifically identified certain activities that might occur in the future, with the approval of the Attorney General upon, and subject to, such terms and conditions as the Attorney General, at the time of giving any such approval, prescribed.
25Although his Honour considered that the alteration of the objects of the Trust to allow trust property to be applied for the construction and operation of a "retirement village" would not come sufficiently close to giving effect to the Donor's original intentions, the orders he made allowed for the Trust property to be applied for this purpose provided the Attorney General approved. This order provided an element of flexibility to obviate, or lessen, the need for further applications to the Court.
26In fact, the evidence reveals that the Carrington Complex now includes a substantial amount of retirement village accommodation.
27For reasons highlighted in the submissions by counsel for the Plaintiffs, it is no longer a suitable and effective method of using the Trust property, having regard to the spirit of the Trust, to restrict the application of that property (without the necessity for the Attorney General's approval) to the development and operation of residential accommodation providing "nursing care" alone.
28The second amendment sought arises because "residential care" within the meaning of the Aged Care Act cannot properly be said to be a "similar institution" to "a nursing home" within the meaning of the National Health Act. The definition of "aged person" under relevant State legislation no longer accords with the definition referred to in the relevant order of Powell J as set out in the reasons for judgment.
29In any event, the Plaintiffs, by this amendment, simply seek to widen the grounds upon which the consent of the Attorney General may be sought. The definition of "aged persons", within the current objects of the Trust, would not extend to all persons who would be regarded as eligible for residency in a retirement village pursuant to the Retirement Villages Act. Those persons extend to any person who has reached the age of 55 or who has retired from full time employment.
30The order made by Powell J in relation to retirement villages did not include the words "or similar institution" so as to allow for its terms to take into account developments in the criteria such as those that have occurred since 1978. Accordingly, I accept that it is no longer a suitable and effective method of using the Trust property, having regard to the spirit of the Trust, to restrict its application (without the necessity for Attorney General approval) to the development and operation of residential accommodation providing "nursing care".
31By the amendment, at such time as the new Trustee desires to erect and conduct a retirement village, within the meaning of the Retirement Villages Act 1999, it will need to obtain the approval of the Attorney General and at that time, will be required to comply with such terms and conditions as the Attorney General may then prescribe.
32It is in these circumstances that I propose to make the orders sought by the Plaintiffs in relation to variation of the orders made by Powell J.
33The next order sought by the Plaintiffs relates to providing the NSW Trustee with a power to purchase other land and facilities. The orders made by Powell J conferred on the then Trustees, the power to sell, or lease, the land forming part of the Trust property, as well as the power to mortgage the land for the purpose of enabling the Trustees to raise money for the execution of the Trust, provided they obtained the approval of the Attorney General before taking that step. There was, however, no power in the original Deed of Gift, or in the orders of Powell J, to purchase additional property.
34The order sought widens the powers of the new Trustee to enable the new Trustee to purchase land and any facility situated on the land purchased for purposes authorised by the objects of the Trust and relating to those purposes referred to previously.
35Section 81 of the Trustee Act, upon which the Plaintiffs rely, provides that the Court may, if it considers it expedient to do so in the management or administration of any property vested in the trustees, confer upon trustees, either generally or in any particular instance, powers for the purpose of effecting any "sale, lease, mortgage, surrender, release, or disposition or any purchase, investment, acquisition, expenditure or transaction".
36The evidence of Mr Hanrahan reveals that the current Trustees have been approached by representatives of existing aged care facilities with a view to discussing the possibility of a merger with Carrington. He also says that with the growing demand for aged care, particularly in the Camden region, and the long established reputation of the Carrington Trust in providing quality aged care, the Court should conclude that opportunities for expansion may present themselves to the new Trustee, and that without the power to acquire land, it will be constrained in the way in which it is able to respond to those opportunities.
37The order is being sought in order to remove that constraint so as to allow the new Trustee to take advantage of opportunities that would enable revenue available from the operation of aged care facilities to be increased and will enhance the financial productivity of the operations of the Trust.
38With the imposition of an obligation upon the new Trustee to obtain the approval of the Attorney General, who may prescribe terms and conditions, it seems to me, that it is appropriate to make the order sought.
39The final order sought by the Plaintiffs relates to the management and administration of the property vested in the new Trustee so that the Deed of Gift is treated as being amended in certain respects to omit the references to "Committee of Management" and substitute the word "Trustee". The proposed amendment cannot be effected by reason of the absence of power to amend the Deed.
40The Plaintiffs seek this order because if there is a corporate Trustee, its Board of Directors will effectively carry out the functions of the Committee of Management referred to in the Deed of Gift. To maintain a Committee of Management or, as it is currently referred to, the Board of Management, in addition to a board of directors of the new Trustee, will create confusion and duplication of roles. The removal of references to the Committee of Management from the Deed of Gift will, thereby, advance the management and administration of the Trust and of trust property.
41It seems to me that the amendment proposed is appropriate and I shall make an order giving effect to it.
42Following the delivery of reasons above, the parties discussed the form of orders with the Court and some minor amendments were made to the form of orders. Following these discussions, I received an agreed form of orders which accorded with the discussions and which I now make:
- Orders that:
(a) GRAHAM GORDON PASCOE, MARGARET ELLEN McENTEE, BRUCE VINCENT HANRAHAN and ALEKSANDER KAZIMEREZ JANKOWSKI be joined as plaintiffs in the proceedings, pursuant to rule 6.19(1) of the Uniform Civil Procedure Rules 2005;
(b) BRUCE DAWSON BROWN, COLIN MILBOURNE CLARK, TELFORD GRAHAM GILDER and ALLEN CAMPBELL SMALL be removed as parties pursuant to rule 6.29(b) of the Uniform Civil Procedure Rules 2005; and
(c) GRAHAM GORDON PASCOE, MARGARET ELLEN McENTEE, BRUCE VINCENT HANRAHAN and ALEKSANDER KAZIMEREZ JANKOWSKI be substituted for BRUCE DAWSON BROWN, COLIN MILBOURNE CLARK, TELFORD GRAHAM GILDER and ALLEN CAMPBELL SMALL as Plaintiffs in the proceedings, pursuant to rule 6.32(1)(d) of the Uniform Civil Procedure Rules 2005.
- Orders that, upon condition that Carrington Centennial Care Limited ("CCCL") modifies its constitution to the form of Exhibit "B" in the proceedings:
(a) Pursuant to s 70 of the Trustee Act 1925 (NSW), that Graham Gordon Pascoe, Margaret Ellen McEntee, Bruce Vincent Hanrahan and Aleksander Kazimerez Jankowski be removed as trustees of the Trust settled by the Deed of Gift (the Deed of Gift) dated 18 April 1888 executed by William Henry Paling known as "the Centennial Hospital for Convalescents and Incurables" (the Carrington Centennial Trust).
(b) Pursuant to s 70 of the Trustee Act 1925 (NSW), that CCCL be appointed as sole trustee of the Carrington Centennial Trust in place of the persons referred to in order 2.
(c) Pursuant to section 71 of the Trustee Act 1925 (NSW), that the property now subject to the Carrington Centennial Trust vest in CCCL subject to the terms of the Carrington Centennial Trust and the orders set out below.
- Declares that the objects of the Carrington Centennial Trust, as varied by the scheme cy-pres set out in Order 4 made by Powell J on 28 September 1978 did not, and do not, authorise or permit the Trustees for the time being to use or apply the said lands, or other property, or any part thereof, for the object or purpose of erecting and conducting a facility for the accommodation of aged or disabled persons unless:
(a) the facility is used only for the accommodation treatment and care of convalescents and/or persons suffering from incurable disease or the facility is used in connection with the care of poor lads in delicate health;
(b) the facility is a hospital, including a geriatric hospital and a day hospital and a rehabilitation centre;
(c) the facility is a nursing home within the meaning of the National Health Act 1953 (Cth), prior to its amendment by the Aged Care Amendment Act 2011; or
(d) the facility was a facility or institution of the kind referred to in Order 4(b)(i) or (ii) made by Powell J and the Trustees first obtained the approval of the Attorney-General, and upon and subject to such terms and conditions as the Attorney-General may, at the time of giving any such approval, prescribe.
- Orders, pursuant to section 9 of the Charitable Trusts Act 1993, that the scheme cy-pres set out in Order 4 made by Powell J on 28 September 1978 be varied:
(a) so as to replace Order 4(a)(ii) with the following:
"the erection, maintenance, improvement, expansion and conduct of a facility for the provision of residential care within the meaning of the Aged Care Act 1997, or similar institution".
(b) so as to replace Order 4(b)(ii) with the following:
"the erection, maintenance, improvement, expansion and conduct of a retirement village within the meaning of the Retirement Villages Act 1999 (NSW), or similar institution."