Graeme Philip White as administrator of the Estate of Josephine Agnes Virgona v Attorney General of NSW

The deceased's will

1. The deceased died on 29 October 2015, having made a will on 30 January 1973 (the Will). On 27 March 2017, the plaintiff was granted letters of administration in respect of the Will.
2. Clause 3 of the Will relevantly provides: "3. I GIVE DEVISE AND BEQUEATH the whole of my real and personal estate of whatsoever nature and kind and wheresoever situate over and in relation to which I shall have any power of disposition at the time my death UNTO my Trustees UPON TRUST to pay all my just debts funeral and testamentary expenses and Federal Estate Duty (if any) and to stand possessed of the residue then remaining (hereinafter called "my Residuary Estate") UPON TRUST for such of my Father JOSEPH VIRGONA and my Sister ROMA CATHERINE VIRGONA as shall survive me for one calendar month and if both shall so survive me in equal shares as Tenants in Common PROVIDED FURTHER that if my said Father and my said Sister shall fail to survive me as aforesaid THEN my Trustees shall stand possessed of my residuary estate UPON TRUST to divide the same equally among THE GUIDE DOGS FOR THE BLIND ASSOCIATION OF NEW SOUTH WALES, THE ROYAL ALEXANDRA HOSPITAL FOR CHILDREN AT CAMPERDOWN in the State aforesaid, ROYAL BLIND SOCIETY OF NEW SOUTH WALES and THE SPASTIC CENTRE OF NEW SOUTH WALES and OUR LADY OF LORETO NURSING HOME FOR THE AGED being (A SPECIAL WORK OF THE ST VINCENT DE PAUL SOCIETY IN NEW SOUTH WALES) AND I DECLARE that the receipt of the Treasurer, Secretary or other proper Officer for the time being of such abovementioned bodys shall be a sufficient discharge to my Trustees for all moneys paid by them under this my Will and my Trustees shall not be bound to see to the Application thereof"
3. The gifts to the deceased's father and sister lapsed because her father died on 23 November 1983 and her sister died on 22 August 2005.
4. After funeral and other expenses, the deceased's estate was valued at $2,726,328.09. The administrator has made interim distributions of $400,000 to Guide Dogs NSW/ACT, Vision Australia Limited, the Cerebral Palsy Alliance and the Sydney Children's Hospital Network (Randwick and Westmead) (incorporating the Royal Alexandra Hospital for Children). The gift to the Loreto Nursing Home is now valued at $545,265.62.

St Vincent de Paul Society NSW

1. The Society of St Vincent de Paul (Society) is an international Catholic organisation of laypeople founded in Paris in 1833. One of its basic principles is to seek, in a spirit of justice and charity, to help those who are suffering. Members of the Society form conferences and councils throughout the world, including the St Vincent de Paul Society in Australia.
2. The St Vincent de Paul Society in Australia and the work it does in NSW is governed by a document entitled "The Rule of the St Vincent de Paul Society in Australia" (The Rule). The Rule adopts the basic charitable principles of the Society and includes Articles, which set out the values and objectives of the various conferences and councils throughout Australia.
3. The St Vincent de Paul Society NSW was incorporated under the Corporations Act 2001 (Cth) on 7 November 2012 (the Company). It was established to assist in carrying out the mission of the Society in NSW. Prior to the incorporation of the Company, the Society had been operating in NSW under that part of the unincorporated association known as the Society for St Vincent de Paul in Australia, which had been established under The Rule. In these reasons I refer to the St Vincent de Paul Society in NSW as the NSW Society.
4. Related to the NSW Society is an entity incorporated under the Roman Catholic Church Communities' Lands Act 1942 (NSW) known as "The Trustees of the St Vincent de Paul Society (NSW)" (the Trustees of the NSW Society), which is the registered proprietor of the NSW Society's properties in NSW. The properties owned by the Trustees of the NSW Society previously included the Loreto Nursing Home and now includes Frederic House.
5. As at October 1974, the Articles in the Rule provided that the main conference work of the Society in Australia (which includes the NSW Society) was to visit people who may be found needing aid or comfort (Article 2). It also provided that special works may be established where a need cannot be satisfied within the normal scope of activities, which might include providing homes or hostels for particular classes of deprived persons (Article 32). The Rule as at September 2012 includes objects similar to those in the 1974 Rule and an Article similar to Article 32 for the establishment of special works.
6. Part 4 of the Company's Constitution, as amended on 21 November 2018, relevantly provides that the objects for which the NSW Society and the Trustees of the NSW Society established the Company are: "(a) To assist in carrying out the mission of the Society in New South Wales which is to directly relieve suffering or deprivation of those in need and to promote human dignity and personal integrity; … (c) to support and develop conference work and other Society work as a means to achieving those objects."
7. Based on the above, I accept the parties' submission that the Court can infer that the Rule that applied to the NSW Society, as at the date of the Will, was similarly focused on charitable intentions, undertaking good works and establishing special projects for people in need.

Loreto Nursing Home

1. At the time the deceased made the Will, the Loreto Nursing Home was located at 167 Albert Street, Strathfield on land owned by the Trustees of the NSW Society, having been developed as a special work of the NSW Society.
2. The Loreto Nursing Home was operated by the Central Sydney Area Health Service as a Schedule 3 hospital and its board comprised members of the NSW Society and the Central Sydney Area Health Service, the nursing home CEO, and community resident representatives. It was a 205-bed facility that offered rehabilitation and respite care, accommodation, and medical and nursing care for aged men and women who had received an Aged Care Assessment Team (ACAT) assessment.
3. In 2002, the Trustees of the NSW Society sold the entity known as the Loreto Nursing Home, and the land on which it was situated to the Australian Catholic University, prior to the death of the deceased. Since then, the Loreto Nursing Home has not operated and the building in which it was located is now used as office accommodation by the Australian Catholic University.

Frederic House

1. Frederic House is a special work of the NSW Society and has been operating since 1998. It is located at 182 Young St, Waterloo, Sydney.
2. Frederic House is a fully accredited 61-bed residential aged care facility for men primarily funded by the Australian government under the Aged Care Act 1997 (Cth). It provides care for men with a history of homelessness, who are unable to live independently, and are ACAT assessed. It provides 24-hour nursing care, as well as psychosocial, palliative end-of-life and pastoral care.
3. Other than Frederic House, the NSW Society does not own or operate any aged care or nursing homes in NSW.

Does the Will create a gift on trust for charitable purposes?

1. The first issue to determine is whether the gift to the Loreto Nursing Home is a gift on trust made for charitable purposes under the Charitable Trusts Act. The Charitable Trusts Act extends the circumstances in which schemes cy-près may be implemented and applies to charitable trusts created before or after section 4 of the Charitable Trusts Act commenced.
2. Section 3 of the Charitable Trusts Act defines a charitable trust as any trust established for charitable purposes and subject to the control of the Court in the exercise of the Court's general jurisdiction with respect to a charitable trust.
3. Clause 3 of the Will specifically provides that the residuary estate should, if the deceased's father and sister do not survive her for one calendar month, be held by her trustees "Upon Trust" for the five named charitable institutions. It is clear that the deceased intended that the gift in the Will should have the legal effect of creating a relationship of trust and that a testamentary trust was created.
4. As to whether the gift was for charitable purposes, the starting point is a consideration of the words used in the Will to ascertain the intention of the deceased: Perrin v Morgan [1943] AC 399 at 406 and 420; Hatzantonis v Lawrence Cox [2003] NSWSC 914 at [6] - [8].
5. In this case, the gift is in favour of the Loreto Nursing Home, which is noted in the Will to be a special project of the NSW Society. That gift can be construed as having two objects; first, the object of provision to an aged care facility, and second, the object of a gift to a special project of the NSW Society. Both of those objects are for charitable purposes.
6. Relief for the aged is a recognised head of charity and a gift, the purpose of which, is for the relief of aged persons and purposes beneficial to the community is, prima facie, charitable: Monds v Stackhouse (1948) 77 CLR 232 at 241; Commissioners for Special Purposes of the Income Tax v Pemsel [1891] AC 531; Hilder v Church of England Deaconess' Institute of Sydney Ltd [1973] 1 NSWLR 506 per Street CJ in Eq at 511.
7. As to the NSW Society, the terms of the Rule, the Constitution of the Company and the guiding principle of the Society are directed towards charitable works for the assistance of those who are in need and which are beneficial to the community. The very nature of the Society is as an institution for charitable works.
8. A gift to a charitable institution is, prima facie, a gift for charitable purposes. A gift on trust for an institution whose objects are predominantly charitable should be construed as a trust established for charitable purposes under section 3 of the Charitable Trusts Act: Estate Polykarpou; Re a charity [2016] NSWSC 409 at [64(h)]; Coshott v Royal Society for Prevention of Cruelty to Animals (1996) 40 NSWLR 446.
9. Accordingly, I am satisfied that the gift to the Loreto Nursing Home is a gift on trust for charitable purposes, and a charitable trust within the meaning of section 3 of the Charitable Trusts Act.

Does the Will manifest a general charitable intention to enable the gift to be administered cy-près?

1. Sections 9 and 10 of the Charitable Trusts Act deal with the application of trust property cy-près and relevantly provide: 9 Extension of the occasions for applying trust property cy pres (1) The circumstances in which the original purposes of a charitable trust can be altered to allow the trust property or any part of it to be applied cy pres include circumstances in which the original purposes, wholly or in part, have since they were laid down ceased to provide a suitable and effective method of using the trust property, having regard to the spirit of the trust. (2) References in this section to the original purposes of a charitable trust are to be construed, if the application of the trust property or any part of it has been altered or regulated by a scheme or otherwise, as references to the purposes for which the trust property are for the time being applicable. 10 Requirement for general charitable intention of donor (1) This Part does not affect the requirement that trust property can not be applied cy pres unless it is given with a general charitable intention. (2) However, a general charitable intention is to be presumed unless there is evidence to the contrary in the instrument establishing the charitable trust.
2. The issue to be determined is whether there is evidence, in the Will or otherwise, to displace the statutory presumption of the general charitable intention provided for in section 10(2) of the Charitable Trusts Act.
3. There is no extrinsic evidence in this case which rebuts the statutory presumption that the gift in the Will to the Loreto Nursing Home was given with a general charitable intention. In the absence of any extrinsic evidence, it is not possible to know whether the deceased had some particular connection with the Loreto Nursing Home, which might indicate that she intended to make a specific charitable gift rather than a gift of a general charitable nature.
4. The question is, does the Will itself rebut the statutory presumption of a general charitable intention? In my view, it does not. I also consider that the terms of the Will are consistent with the gift being given with a general charitable intention. This is for the following reasons.
5. The terms of the Will, when read as a whole, manifest the deceased's intention that, in the event both her father and sister predeceased her (which is what occurred), the whole of her residuary estate was to pass to five institutions. She chose not to give the residuary estate to friends or other family but nominated entities that do different works for the public benefit and are, by their nature, all charitable institutions.
6. The nomination of the five different charitable institutions for the whole of her residuary estate suggests a wider philanthropic intention on the part of the deceased. This wider charitable purpose is consistent with, and does not negate, the general charitable intention presumed by section 10(2): Estate Polykarpou; Re a charity [2016] NSWSC 409 at [98].
7. Further, courts are no longer more inclined to find that a testator had a general charitable intention where a gift was made to a named charity which never existed at all, than in the case where the named charity existed when a will was created but ceased to exist before the testator's death: Attorney General (NSW) v Public Trustee (1987) 8 NSWLR 550; G E Dal Pont, Law of Charity (2nd ed, 2017, LexisNexis Butterworths) at [15.68] and [15.69]; cf Re Harwood [1936] Ch 285 at 287. As Hope JA noted in Attorney General (NSW) v Public Trustee (1987) 8 NSWLR 550 at 554, that past approach has no apparent basis in logic, in principle or in justice, and it should be rejected as a rule of general application. Accordingly, the fact that the expression of the gift to the Loreto Nursing Home was in relation to an aged care home in existence at the time the Will was made but ceased to exist before the deceased's death, should not be taken as sufficient to rebut the statutory presumption of general charitable intention.
8. The expression of the gift to the Loreto Nursing Home was also made in terms of it being a special work of the NSW Society. As noted above, that expression evidences an intention on the part of the deceased to provide funds to the NSW Society for the purposes of aged care, in addition to making the other charitable gifts. That intention is reinforced by the words at the end of clause 3 of the Will which refer to "Treasurer, Secretary or other proper officer…of such above mentioned bodies". The relevant body, to the extent it relates to the Loreto Nursing Home gift, is the NSW Society. The NSW Society, with its charitable focus, still exists.

The proposed scheme to Frederic House

1. The issue that remains to be determined is whether the proposed scheme to administer the gift to Frederic House carries out the general paramount intention of the deceased as nearly as possible.
2. If execution of the purposes of a charitable trust under a will has become impossible or impractical, the Court may direct a scheme for the promotion of objects that as close as possible (cy-près) give effect to the original trust purposes that the deceased herself selected: Bishop Irinej Dobrijevic v Free Serbian Orthodox Church, Diocese for Australia & New Zealand Property Trust [2015] NSWSC 637 at [426]; Phillips v Roberts [1975] 2 NSWLR 207.
3. Considerations of proximity to the original purpose, usefulness and practicability are all relevant to the choice of the cy-près scheme: Re Fitzpatrick (1984) 6 DLR (4th) 644.
4. It is clear that the gift to the Loreto Nursing Home can no longer be carried out. The Loreto Nursing Home has ceased to operate and the land on which it was situated is now being used by the Australian Catholic University as an office building.
5. The scheme cy-près proposed is for the gift to the Loreto Nursing Home (currently valued at $545,265.62) to be directed to be held on trust by the administrator and paid to the NSW Society solely for the purposes of Frederic House (Frederic House scheme).
6. Frederic House is both geographically and functionally proximate to the original purpose of the gift to Loreto Nursing Home. It is located in Sydney, is a 61-bed residential aged care facility providing 24-hour nursing care conducted as a special project of the NSW Society, and is housed on land owned by the Trustees of the NSW Society.
7. Frederic House is not open to both men and women, as the Loreto Nursing Home was. But the evidence indicates that the NSW Society does not own or operate any other aged care facilities in NSW. I accept that it would be closer to the deceased's intention to have the gift allocated to an aged care facility associated with the NSW Society (which continues to exist with charitable objects), than have it directed to an aged care facility open to both men and women associated with the Society for St Vincent de Paul Society in another state. Each of the five charitable institutions named in the Will, including the NSW Society, were expressly identified as being located in New South Wales. The scheme should, and does, give effect to that expression of intent.
8. I also do not consider that directing the gift to another aged care facility in New South Wales which is open to men and women but not associated with the Society is a suitable alternative. That would fail to adequately reflect the purposes of the original gift, being an aged care facility associated with the NSW Society.
9. Accordingly, I accept the submissions of the administrator, the Attorney General and the NSW Society, that the Frederic House scheme would carry out, as nearly as possible, the general paramount charitable intention of the deceased, which was to provide a gift for the relief of the aged at an aged care facility associated with the NSW Society, and that a scheme cy-près in those terms should be approved.

Costs

1. As is usual in a case of this nature, I will order that the administrator's costs be paid on an indemnity basis out of the deceased's estate.
2. The Attorney General and the NSW Society should also have their costs paid. The only question is whether they should be paid out of the total of the remainder of the estate or whether they should be paid from the gift which is now the subject of the scheme cy-près.
3. In Morrison-Conway & Anor; Estate of the Late Judith Christine Walsh [2018] NSWSC 685, the Court ordered that the Attorney General's costs be paid out of the assets which comprised the dispositions under the Will in respect of which his intervention was necessary.
4. In Estate Polykarpou; Re a charity [2016] NSWSC 409, Lindsay J noted at [116] that, as the gifts to the charitable institutions were expressed as equal shares of a residuary estate, he was minded to order that the burden of any costs orders fall on the whole of the residue not merely the property the subject of the gift which was in dispute, and later made orders to that effect: at [191].
5. The conclusion which I have reached in this case is that the terms of the Will are consistent with the statutory presumption of a general charitable intention. That conclusion is founded, in large part, on the whole of the residuary of the deceased's estate being held on trust for five charitable institutions. In my view, that finding supports the burden of the costs orders in respect of the Attorney General and the NSW Society being shared amongst the whole of the residue and not merely by the fund which is to be subject to the scheme cy-près.
6. Accordingly, in the exercise of my discretion, I will make orders that their costs be paid on an ordinary basis by the residue of the estate.

Orders

1. For the reasons given, the Court makes the following orders: 1. The residual gift made in the will of Josephine Agnes Virgona, (deceased) dated 30 January 1973 to "Our Lady Of Loreto Nursing Home for the Aged being (a special work of the St Vincent de Paul Society in New South Wales)" be applied cy-près so that one-fifth of the residue of the estate of the deceased be held by the plaintiff on trust to pay the same to the St Vincent de Paul Society NSW solely for and incidental to the purposes of Frederic House for the Aged at 182 Young Street, Waterloo, NSW. 2. The costs of the plaintiff in these proceedings be paid from the estate on an indemnity basis. 3. The costs of the first and sixth defendants be paid on an ordinary basis with the burden of those costs to be borne out of the whole of the residue of the estate.

Amendments 18 July 2019 - Typographical error in [55]. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 18 July 2019