Green v Attorney General of the State of New South Wales

Supreme Court of NSW|2023-10-03|Before: Meek J, Young J

Hunter Region SLSA Helicopter Rescue Service Ltd v Attorney-General (NSW) (2013) 9 ASTLR 308; [2013] NSWSC 1749 In re Watt; Hicks v Hill [1932] 2 Ch 243 In re Williams, deceased; Bendigo and Northern District Base Hospital of Bendigo v Attorney-General [1955] VLR 65 In re Withall; Withall v Cobb [1932] 2 Ch 236 Northern NSW Helicopter Rescue Service Limited v Attorney General of New South Wales [2023] NSWSC 515 Northern Sydney and Central Coast Area Health Service v The Attorney General for New South Wales [2007] NSWSC 881 Permanent Trustee Company Ltd v Attorney General (Supreme Court (NSW), Young J, 12 December 1994, unrep) Perpetual Trustee Company Ltd v Attorney General for the State of New South Wales (The Will of the Hon George Nesbitt) [2018] NSWSC 1456 Re Permanent Trustee Company Ltd v Attorney General; Burns Estate (No 2) (Supreme Court (NSW), Young J, 1 March 1995, unrep) RSL Veterans' Retirement Villages Ltd v NSW Minister for Lands [2006] NSWSC 1161 Ubiparipovic v Vucicevic [2018] NSWSC 1583 Varsani v Jesani; Jesani v Varsani [1999] Ch 219 Texts Cited: Dal Pont, GE, Law of Charity (3rd ed, 2021, LexisNexis) Henderson, William, Jonathon Fowles and Julian Smith, Tudor on Charities (10th ed, 2015, Sweet & Maxwell) Heydon, JD and MJ Leeming, Jacobs' Law of Trusts in Australia (8th ed, 2016, LexisNexis) Parliamentary Debates (Hansard) Picarda KC, Hubert, The Law and Practice Relating to Charities (4th ed, 2010, Bloomsbury Professional) Category: Principal judgment Parties: Mark Francis Green (First Plaintiff) Kim Probert (Second Plaintiff) Attorney General for the State of New South Wales (Defendant) Representation: Counsel: P Russell (Plaintiffs) A Hochroth (Defendant)

Solicitors: Pikes & Verekers Lawyers (Plaintiffs) Crown Solicitor's Office (Defendant) File Number(s): 2021/123993

EX TEMPORE JUDGMENT (REVISED)

HIS HONOUR: These proceedings concern a cy-près application of property held subject to a charitable trust. Charitable ventures generally of their essence have an enduring nature. However, the longevity of their existence coupled with the changing needs and purposes of an evolving society and the vicissitudes of life often lead to circumstances in which: (a) the original purposes of the charity are no longer capable of being implemented or fulfilled; (b) the framework for managing the trust requires refinement or (c) the financial resources of the trust whether in the form of capital or income deplete.
In each case, these matters act to stymie the operation of the charitable venture. Nevertheless, the law has developed various provisions and principles both under the general law and statute, in the form of schemes, for dealing with the effects of the above-mentioned changes and vicissitudes on the trust.
Issues affecting the purpose of the charity are addressed in the law by means of a cy-près ("as near as practicable" or "as near as possible") scheme which allow changes in purpose. Issues affecting the execution of the charitable purpose are addressed in law by means of an administrative scheme which allows for changes as to how the original purpose is to be implemented: see Northern NSW Helicopter Rescue Service Limited v Attorney General of New South Wales [2023] NSWSC 515 at [5] per Robb J. Accordingly, "[t]here is a clear conceptual difference between a cy-près scheme and an administrative scheme", which, put simply, is the difference between means and ends: Corish v Attorney General's Department of NSW [2006] NSWSC 1219 at [9] per Campbell J (as his Honour then was).

Our Lady of Snows Society

In 1981, a charitable unincorporated association known as the Our Lady of Snows Society (OLOSS) was formed by two now-deceased siblings, George Mezher (George) and Marie Louise (known as Nola) Mezher (Nola) (together, the "founders"). The founders had migrated to Australia from Lebanon in the 1960s and became well-known in the inner-west of Sydney and broader communities for their various charitable endeavours.
The founders had in the decade prior to 1981 initiated another charitable venture, The Underprivileged Peoples' Association (UPA).
Like various charitable ventures before it, and no doubt some others that will follow it, OLOSS was affected by challenging issues regarding its finances, administration, and purpose.

Initial hearing

In June 2021, Ward CJ in Eq (as her Honour then was) dealt with an initial tranche of relief relating to OLOSS addressing identification of purpose and also financial and administrative issues (initial hearing). Her Honour delivered a judgment and made orders which I will refer to below: see Hickey v Attorney General of the State of New South Wales [2021] NSWSC 772 (Hickey). The proceedings were commenced on 4 May 2021 by Peter Hickey (Peter), the son and sole executor of the estate of the late Elizabeth Hickey (Betty) who was the last known trustee or holder of the trust property of OLOSS. Ordinarily in litigation, in particular, contested litigation, all relief is dealt with in the one hearing and not in a piecemeal way. However, the nature of the jurisdiction exercised by the Court is varied and there are certain types of jurisdictions exercised by the Court in which the ordinary procedures that apply to "civil litigation" generally are either not applicable or have a form of varied application.
Charitable trust litigation is a type of litigation in which, by dint of the subject matter, the relief in the summons is often sought progressively or in stages. That is a matter that is well known or customary within the legal fraternity and for that reason it is rarely, if ever, the case that the Court makes formalised orders pursuant to r 28.2 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) for the separate determination of questions in charitable trust proceedings.
In these proceedings, the orders made at the first stage of the hearing included an order expressly adjourning the proceedings with liberty to restore on three days' notice in a context in which it was understood that some or all of the balance of the relief or the matters reserved might or would be sought at a later stage: Hickey at [77], [85(order 15)]. The summons as filed contains 14 heads of relief and as is customary an additional generalised head of relief for such further or other orders as the Court sees fit to make.
The Attorney General of New South Wales (Attorney General) in his role as the protector of charities was joined as a defendant in the proceedings. Part of the relief sought involved the appointment of replacement trustees. The proposed replacement trustees, Ms Kim Probert (Ms Probert) and Mr Mark Green (Mr Green), are solicitors at Pikes & Verekers Lawyers.

Initial relief granted

The first tranche of relief in these proceedings (addressing paras 1 to 11 of the relief sought in the summons) involved relief which, in light of the outcomes ordered by Ward CJ in Eq on the initial hearing, may be summarised as follows: 1. a notation that the proceedings were authorised by the Attorney General: Order 1; 2. a declaration that on or by 1 January 2016, the unincorporated association known as OLOSS dissolved: Order 2; 3. a declaration inclusively addressing what property belonged to OLOSS: Order 3; 4. a declaration that until her death in October 2019, Betty was the last trustee of OLOSS and held its property on trust for specified charitable purposes: Order 4; 5. a notation regarding the contention of the substitute trustees that the purposes of OLOSS may include another purpose as referred to by her Honour: Order 5; 6. orders regularising matters regarding the trustees of the trust including, specifically, orders joining Ms Probert and Mr Green as plaintiffs to the proceedings in substitution for Mr Hickey (Order 9), a declaration that there were no existing trustees of the trust (Order 6), orders for the appointment of Ms Probert and Mr Green as trustees of the trust (Order 7) (I will refer to them hereafter as being "the trustees") and for the vesting of the trust property of OLOSS in the trustees, subject to the terms of the trust: Order 8; 7. orders conferring on the trustees various powers which, for want of better description, may be described as administrative powers with respect to dealing with the debts, liabilities, and expenses of the trust pursuant to s 81 of the Trustee Act 1925 (NSW) (Trustee Act) and notwithstanding any terms of the trust: Order 10; 8. a notation regarding the undertaking given by the trustees to the Attorney General in relation to certain debts, liabilities, and expenses that they would not make payments until providing the Attorney General with a written account or summary and a period for the Attorney General to review such account or summary had expired: Order 11; 9. a notation preserving the position of the trustees to seek relief regarding the sale of properties in Enmore and Tempe: Order 12; 10. orders for the costs of the proceedings: Orders 11 and 14; and 11. orders adjourning the proceedings with liberty to restore on three days' notice: Order 15.

History of administrative issues

On 30 June 1990, UPA amalgamated with OLOSS and UPA's assets were transferred to OLOSS: Hickey at [13].
The administrative issues regarding the trust were both prolonged and significant. Funding issues seemingly arose within a year of the formation of OLOSS, and other issues became manifest consequent upon Nola's death in February 2009 and George's death in late-March 2016.
The following may be noted: 1. after March 1982, there is no record of funds for membership being received: Hickey at [19]; 2. post 30 June 1990, notwithstanding the amalgamation of UPA with OLOSS, there were no record changes with the Registrar General noting changes in the status of holding real property: Hickey at [13]; 3. in the 1980s and 1990s, membership applications were received, however, thereafter, with one exception in 2013, there is no evidence of membership subscriptions and there are no documents that currently identify any current or present members of OLOSS: Hickey at [19]; 4. by October 2004, clarification of officeholders of OLOSS became problematic with the latest documents recording election of any officeholders dating to that time: Hickey at [14]; 5. at some stage prior to 31 July 2006, OLOSS appears to have ceased providing meals for the homeless at Central Station or accommodation: Hickey at [16]; 6. on 2 February 2011, the last meeting of OLOSS occurred: Hickey at [18]; and 7. 30 June 2013 marks the last known financial accounts or financial reports for OLOSS: Hickey at [20].
Further, Ward CJ in Eq commented that various versions of the constitution of OLOSS were found amongst George's papers after his death giving rise to uncertainty regarding which were the operative terms of the constitution: Hickey at [10]. A term of the constitution provided that the membership of the association ceased if annual subscriptions were unpaid: Hickey at [12].
In August 2016, following George's death, the plaintiff's solicitors commenced receiving instructions from Betty in relation to OLOSS and the trust. Various steps were taken to address issues that arose, however, consequent upon Betty's death in October 2019, and, sadly, Peter's diagnosis with serious illness in February 2020, it became obvious that new trustees would need to be appointed, and issues afflicting the trust formally addressed by court proceedings.
The property of OLOSS was identified by Ward CJ in Eq and included moneys in a Commonwealth Bank of Australia account and in a term deposit and land at Enmore and Tempe: Hickey at [85(3)]. At the time of the initial hearing, the two properties were unoccupied, and their upkeep neglected, leaving them in a parlous condition: Hickey at [84].

Identification of charitable purposes

Some sense of the nature of the work undertaken by OLOSS is described by Ward CJ in Eq in Hickey in the following terms: 9. For some time, OLOSS provided and operated 14 suburban refuges, a day centre and a soup kitchen for underprivileged people. The soup kitchen was operated from premises at Central Station in Sydney. The main undertaking of the refuges was to provide halfway houses for men recently released from prison. OLOSS provided short-term accommodation to former prisoners for minimal rent. The Department of Community Services assisted in funding the refuges (see Ms Probert's affidavit affirmed 18 April 2021 at [21]).
The identification of the charitable purposes of OLOSS was the subject of submissions by the plaintiff and the Attorney General in the initial hearing. It is evident that the identification was complicated by the matters I have referred to above, namely, that there was a lack of clarity regarding which version of the constitutions that had been found amongst George's papers and adduced in evidence was the prevailing document.
It is unnecessary to rehearse in any detailed way the submissions that were previously made regarding identification of charitable purposes. It suffices to note that the plaintiff submitted that the objects of OLOSS were those as set out in sub-cll (3)(a) and (c) of what was described as the "Longer Version of the Constitution" and the Attorney General disputed that sub-cl (c) was a purpose as distinct from being a power.
Her Honour helpfully set out how an examination as to purposes is undertaken and determined, noting at [81]: 81. In that regard, I note that a determination as to whether an entity such as OLOSS is a charitable organisation involves an examination of the objects of its Constitution and the manner in which those objects were, or are, effected by its activities (see Grain Growers Ltd v Chief Commissioner of State Revenue [2015] NSWSC 925 (Grain Growers) at [37] per Black J; Federal Commissioner of Taxation v Word Investments Ltd (2008) 236 CLR 204; [2008] HCA 55 (Word Investments) at [17] per Gummow, Hayne, Heydon and Crennan JJ). Such an examination requires a holistic enquiry to discern the organisation's purpose, not a separate analysis of each specific activity undertaken by the organisation (see Word Investments at [26]); the focus being on whether the main object is charitable. It is permissible for a charitable organisation to have objects that are incidental or ancillary to the main object (see Tasmanian Electronic Commerce Centre Pty Ltd v Commissioner of Taxation (2005) 142 FCR 371; [2005] FCA 439 at [41] per Heerey J). It is well known that the four categories of charitable purposes identified in Pemsel reflect those in the Preamble to the Charitable Uses Act 1601 (43 Eliz I, c. 4): trusts for the relief of poverty; trusts for the advancement of education; trusts for the advancement of religion; and trusts for other purposes beneficial to the community not falling under any of the preceding heads. Nevertheless, the concept of charity, as understood by reference to those four categories, evolves over time to accommodate new social needs and values (see Aid/Watch Inc v Commissioner of Taxation (2010) 241 CLR 539; [2010] HCA 42 at [18], [23]-[24] per French CJ, Gummow, Hayne, Crennan and Bell JJ; Scottish Burial Reform and Cremation Society Ltd v Glasgow Corporation [1968] AC 138 (Scottish Burial) at 154 per Lord Wilberforce); and what is charitable in the legal sense should be considered in light of contemporary community values and beliefs and social infrastructure of contemporary society (see Scottish Burial at 154).
Ultimately, her Honour was satisfied on the evidence that OLOSS (the association) had come to an end and had spontaneously dissolved (or, alternatively, had dissolved pursuant to the terms of the constitution by force of a currency of membership falling under a threshold) no later than August 2016: Hickey at [82].
It is clear the findings regarding OLOSS' purpose were sourced from objects clauses found in all versions or parts of the versions of the constitution.
Her Honour refined the proposed order regarding a declaration of purposes, deleting the words "or benevolent" on the basis that a purpose that is for a "benevolent" nature is not a charitable purpose and would in any event be read down: Hickey at [83].
In the above circumstances, her Honour declared the charitable purposes of OLOSS to be (at [85(4)(a)]: "to undertake works of a charitable or educational nature unrestrained by sectarian belief or political ideology for the betterment of the quality of life of the people in the community who are less privileged than others because of illness, old age, poverty, mental retardation or otherwise (OLOSS trust)" (trust).
Her Honour noted (at [85(5)]) that the substitute trustees may, in due course, contend that the charitable purposes of OLOSS may also include: "to purchase, or otherwise acquire, homes, hostels or other appropriate accommodation for people who could not otherwise accommodate themselves, particular emphasis being placed on the provision of accommodation for persons of pensionable age".
Her Honour expressly noted that whether the purposes of OLOSS include such a purpose if raised by the substitute trustees remains to be determined.

Current relief sought

The possibility that the trustees may, in due course, contend for a finding of a further charitable purpose that I have referred to above has not eventuated.
Thus, the sole remaining substantive order for relief in the summons is the application presently before the Court being the order that the property of the trust be applied and dealt with cy-prés in accordance with such a scheme as may be determined and approved by the Court.
Mr Russell of counsel appeared on the hearing for the plaintiffs and addressed the relief sought. Mr Hochroth of counsel appeared on behalf of the Attorney General. Mr Streeter, a solicitor, attended in the interests of Rev. Bill Crews Foundation Ltd (the Foundation). I have been considerably assisted by their submissions in relation to the matter.
The plaintiffs relied upon an affidavit of Ms Probert (the second plaintiff) affirmed 20 September 2023 and an Exhibit KP-2 to that affidavit (Exhibit KP-2). The plaintiffs provided a form of consent orders which has been consented to by the Foundation. The Attorney General has not signed the consent orders but has given indication of its support for the orders.

Update regarding new property of the trust

The trustees, since their appointment, have undertaken the day-to-day administration of the trust. Title to the Enmore and Tempe properties has been recorded in the name of the trustees. The Enmore property was a former post office and the Tempe property was a freestanding residential house comprising two bedrooms, albeit that it had no kitchen or functional bathroom. I have been informed that the Enmore property was used for various administrative purposes and the Tempe property was possibly used as a halfway house or a refuge. The Enmore property, as at February 2022, had an appraised value of between $2.4 million and $3.15 million and the Tempe property had a value in the order of $1.05 million dollars and $1.2 million dollars: Exhibit KP-2 at page 27.
As at the initial hearing, the funds standing to the credit of the trust totalled approximately $1,441,084. As at 15 September 2023, the trustees held a sum of approximately $76,781 in a trust account and approximately $991,539 in a controlled monies account ($1,068,320).
It can be readily seen that a sum of almost $373,000 has been expended in administrative and other expenses of the trust.
The trustees have attended to payments of rates and insurances in respect of the Enmore and Tempe properties and arranged for general maintenance and security of the properties.
The trustees appointed PKF Advisory to investigate and undertake the taxation affairs and liabilities of the unincorporated association and the trust.
PKF Advisory has, at the direction of the trustees, liaised with Revenue NSW in respect of land tax assessments. In this regard, the trustees had been issued with an assessment or notification that there is no land tax liability for either property from 1989.
PKF Advisory has been appointed as tax agent for the trust and has investigated certain potential income tax liabilities.
Unhappily, the position regarding income taxation liabilities is not as positive. On 18 August 2023, the ATO issued a determination that the trust no longer qualifies and is not eligible for a self-assessment exemption on the basis that its registration status as a charity was revoked in July 2014. As a result of that determination, the trustees will be required to lodge income tax returns and business activity statements from July 2014. I have been informed the draft returns have been prepared at least for 2014. No figures have been provided in relation to the taxation liabilities, but the belief of all counsel is that the tax per se may not be a large amount. There is some concern, however, regarding penalties.

Shortlisted candidates

For the purposes of the initial hearing, Ms Probert prepared an affidavit affirmed on 18 April 2021 which listed charities with similar charitable objects to the trust. From the organisations listed in that original list, the trustees shortlisted three charitable organisations (shortlisted charities) on the basis that their charitable purposes and operations were, in the trustees' view, most like those of the trust; being, relevantly: 1. Mission Australia (MA); 2. the Foundation; and 3. St Vincent de Paul Society NSW (SVDP).
The considerations which inform the trustees' reasoning in this regard included the size, model and structure of the charities and the ability of the charities to manage the trust property.
Specific matters regarding charitable purposes noted by the trustees in respect of the shortlisted charities were as follows: 18. In respect of Mission Australia, the Trustees noted Mission Australia: (a) makes provision for the direct relief of poverty, sickness, suffering, distress, misfortune, disability or helplessness of persons in Australia; (b) provides immediate on-street support to those requiring access to food, shelter and medical care; and (c) is a large, national organisation with experience in administering both real estate and other assets. The national profile facilitates recognition and appears trusted in the public's perception and is likely to have longevity to support the ongoing management of the OLOSS Trust property. 19. In respect of Rev Bill Crews Foundation Ltd, the Trustees noted Rev Bill Crews Foundation Ltd: (a) is located in the inner west area of Sydney; (b) acts for the relief of homelessness, intergenerational poverty and unemployability; (c) provides meals (via mobile food services) as well as other means of social welfare and educational support; and (d) is an organisation with experience in administering both real estate and other assets. The charity is recognisable within the Sydney area and appears trusted in the public's perception. It is likely to have longevity to support the ongoing management of the OLOSS Trust property. 20. In respect of St Vincent de Paul Society NSW, the Trustees noted St Vincent de Paul Society NSW: (a) acts for the relief of suffering or deprivation of those in need and promotes dignity and personal integrity; (b) provides meals and accommodation as well as services relating to disaster relief, disability services, employment and drug rehabilitation services; (c) is a large, state-based organisation with experience in administering both real estate and other assets. The charity is recognisable nationally under the "St Vincent de Paul Society" banner and appears trusted in the public's perception. It is likely to have longevity to support the ongoing management of the OLOSS Trust property.
On 14 February 2022, the trustees instructed the plaintiffs' solicitors to prepare a letter inviting the shortlisted charities to submit a proposal to be included in the cy-prés scheme prepared by the trustees for the Court's consideration.
The letters forwarded to the shortlisted charities gave some history of the background of OLOSS and its dissolution, details of the charitable purpose as found and details of its property. The documentation enclosed with the letters was significant, in excess of 200 pages providing in respect of each of the properties a planning certificate, building report, pest report, appraisals of value and photographs.
The services provided by OLOSS were outlined as including: 1. the operation of 14 suburban refuges, the principal undertaking of which refuges was as halfway houses for men recently released from prison which provided short-term accommodation for minimal rent; 2. a day centre and soup kitchen for underprivileged people; and 3. the collecting and gifting of second-hand clothes and food with a view to distributing the goods to person in need.
The soup kitchen operated from Central Station.
I will comment later regarding the other geographic aspects.
Each of the shortlisted charities provided detailed responses which have been included in the evidence: see Exhibit KP-2 at pages 250 to 582.
On 4 March 2022, MA responded (Exhibit KP-2 at pages 250-268) proposing: 1. sale of the Enmore and Tempe properties with the proceeds to be combined with the available cash to be utilised by MA in keeping with the charitable purposes of the trust; 2. application of the funds over for existing and long-established MA programs in Sydney's inner city with work to support homeless people; 3. having a dedicated project code for the life of the funding to enable MA to track all income and expenditure for the programs; and 4. the funds be carefully invested, and income reinvested to further support the four programs.
Significantly, the proposed budget reflected costs of delivering services over a period of five years: Exhibit KP-2 at pages 264-265.
On 7 March 2022, the Foundation responded (Exhibit KP-2 at pages 269-273) proposing: 1. addressing the agreed purpose by provision of services involving food, social welfare and educational support; and 2. keeping the Enmore property and developing it into a meal preparation and distribution centre incorporating a social enterprise cafe.
The Foundation made reference to the alignment of the vision and mission of OLOSS and the Foundation itself and provided various constitutional and financial statements and other brochure documents.
On 7 March 2022, SVDP also responded (Exhibit KP-2 at pages 422-435): 1. identifying what were said to be areas of close alignment between the objects and purposes of OLOSS and SVDP; 2. indicating the undertaking of a feasibility study regarding whether both properties or one property would be retained, or both sold; and 3. identifying three existing SVDP services providing shelter and support for homeless men operating in Central Sydney, night patrol vans providing meals and companionship operating in the inner-city and short-term crisis accommodation in Nowra for men aged 21 and over who experience homelessness or are at risk of homelessness including for referrals from those recently released from prison.
SVDP also provided its constitution and a detailed document setting out its vision, mission and aspiration statements, Governance Rules and financial statements.
Consequent upon the provision of those responses, the trustees engaged in further correspondence with the Foundation seeking additional information in relation to the charitable purpose of the "Bill Crews (Charitable) Trust" and the structure of the Foundation. Responses in this regard were provided by Mr Streeter of Streeterlaw.
An updated organisational structure was provided: Exhibit KP-2 at page 591. It appears that the Foundation was established with the idea that it would ultimately be the successor of "The Bill Crews Charitable Trust": Exhibit KP-2 at 585.
On 17 August 2020, the trustees instructed their lawyers to write to each of the shortlisted candidates seeking further information in relation to the proposals to do with the property and the assets of the trust and their availability to attend an inspection of the properties.
On 8, 15 and 27 September 2022, responses were received respectively from each of the Foundation, MA and SVDP, after they had been given an opportunity to attend the Enmore and Tempe properties.
The Foundation's response in summary (Exhibit KP-2 at pages 603-607): 1. proposed sale of the Tempe property with the proceeds to be used for the renovation, refurbishment and repurposing of the Enmore property; 2. proposed the conducting of services from the Enmore property being specifically: 1. commercial production kitchen for food service (including a social enterprise café); and 2. social welfare services (including medical care via mobile medics, community engagement activities and mental health support services); 1. identified a close alignment between the objectives of OLOSS and the Foundation; 2. indicated that its current use of funds is such that: 1. the Exodus Foundation, which runs food, medical and social support, mental and homelessness operations, spend 70% of the Foundation's resources, and; 2. The Bill Crews Charitable Trust, which delivers transition to work programs for people experiencing difficulties in getting a job and keeping a job, and trauma therapy, spends 30% of the organisation's funds; 1. addressed an issue as to whether other The Bill Crews Charitable Trust or Exodus Foundation programs would be conducted from the Enmore property; 2. proposed, if possible, to keep the Enmore property and develop it into a meal production and distribution centre, incorporating a social enterprise café; and 3. proposed an acknowledgement to the founders of OLOSS.
MA's response (Exhibit KP-2 at pages 608-617) in summary: 1. provided a five-year funding forecast model with line-item costs; 2. reaffirmed its original assessment that the expenditure needed to invest and renovate the properties would be very costly, and reinforced its position, being a sale of the properties and ultimate utilisation of the funds for provision of the four services it had foreshadowed; and 3. proposed forms of permanent acknowledgement of the founders of OLOSS by having acknowledgment on Missionbeat vans and erecting a permanent plaque.
SVDP's response, in summary, indicated (Exhibit KP-2 at pages 618-641), having visited and assessed the condition of each property, its proposal was to sell both properties and to use the funds to support the three previously identified nominated services. Further detail of each of the services was provided by SVDP.
Following receipt of the responses, the trustees reviewed the information supplied by the shortlisted charities against the charitable purposes.

Selection of the Foundation

The Enmore property is in need of repair and expenditure, and a myriad of maintenance issues have arisen since George's death.
It appears that the Attorney General favoured an application for the Enmore property to be used in specie as opposed to being sold with its proceeds of sale being used in a scheme.
The Foundation proposed use of the Enmore property as an in specie asset in an enduring way, but this will require significant expenditure involving the balance of the proceeds of the sale of the Tempe property and at least part of the cash reserves. I have been told, however, that there are no precise funding estimates as yet.
The trustees took the view that all of the shortlisted charities' proposals had merit and considered whether they ought to propose a scheme which divided the property of the trust amongst the shortlisted charities in equal or other shares.
However, the trustees have opted against proposing such a scheme for the following reasons: 1. the Foundation's proposal had particular unique merits (which I address below); and 2. in light of the considerations regarding the use of the Enmore property and expenditure required on it, the trustees ultimately formed the view that the most constructive use of the property would be in the hands of one recipient for use on particular and individual projects such as that proposed by the Foundation.
The trustees have identified the Foundation as being the entity most suited to carrying out cy‑près the charitable purposes of the trust and, accordingly, to be the recipient of the OLOSS property to be transferred on the conditions set out in the scheme.
The trustees' reasons for proposing the Foundation are essentially as follows.
The Foundation: 1. has operations focussed in the inner west area of Sydney and provides meals, support and accommodation services to the homeless in that geographic area and is the only one of the shortlisted charities having a geographical focus in the area in which the trust operated and the community of which the founders of the trust were a part; 2. intends to redevelop the Enmore property and expand its existing welfare services to a site to include services which meet the charitable purposes but also accord with the specific activities carried out by OLOSS (which included mobile food service and soup kitchens), the proposed services being: 1. a commercial production kitchen for food service including a social enterprise café; and 2. social welfare services, including community engagement activities and mental health support services; 1. proposes a use of the Enmore property which will allow an in specie transfer thus: 1. avoiding the trustees incurring sale-related costs and diminution of the value of the Enmore property; and 2. enabling the Enmore property to continue to be used for charitable purposes in a public and visible way; 1. proposes an essentially enduring use of the property of the trust which may allow: 1. projected expenditure and use over a greater period than that proposed by the other shortlisted charities; 2. anticipated use of the Enmore property in perpetuity; and 3. a social enterprise café which may be self-sustaining; 1. proposes a lasting acknowledgement of the benevolence of the founders of OLOSS by naming a part of their service "The Mezher Kitchen"; and 2. has expressed willingness to ensure that the property of the trust is not used towards administrative expenses not otherwise in line with the charitable purposes.
In contradistinction to the proposal of the Foundation, the trustees note in particular that each of the proposals of MA and SVDP involve sale of the Enmore and Tempe properties and expenditure of the trust funds which will be exhausted over a period of, respectively, five years and two years.
On 7 July 2023, the trustees corresponded with Streeterlaw, enclosing a draft of a scheme and inviting in principle comments. On 27 July 2023, Streeterlaw responded providing information in respect of property development but at that stage not providing any in principle comments in respect of the scheme.
Between 11 August 2023 and 4 September 2023, there was correspondence between the plaintiffs' solicitors and Streeterlaw on a number of issues, including noting that due to the impracticability and cost burden, the Foundation would not be able to undertake steps to establish the costs and feasibility of works to the Enmore property prior to the ordering of a scheme.
On 13 September 2023, the plaintiffs' solicitors corresponded with MA and SVDP and advised that a draft cy‑près scheme proposed the appointment of a charity other than those charities.

Legal principles

As indicated above, the Court has both a general law and statutory jurisdiction to apply property the subject of charitable trusts, cy‑près.
The general law power applied in circumstances where the original purposes of a trust have become impossible or impracticable to carry out.

The Charitable Trusts Bill

A statutory widening of the cy‑près jurisdiction in New South Wales was brought about by the enactment of the Charitable Trusts Act 1993 (NSW) (CTA), which was assented to on 4 May 1993 and commenced on 15 April 1994.
Reading Speeches and debate in the Legislative Council (11 March 1993, 20 April 1993) and Legislative Assembly (21 April 1993, 27 April 1993) reveal broadly that the Charitable Trusts Bill (Bill) was envisaged to have two principal objects, first, to codify and, to some extent, extend the jurisdiction of the Supreme Court with respect to the management of charitable trusts, and, secondly, to enable the Attorney General to establish schemes for the cy‑près administration of charitable trusts which have failed: New South Wales Legislative Council, Parliamentary Debates (Hansard), 11 March 1993 at 623 (RJ Webster, Minister for Planning and Minister for Housing).
However, it is evident that on an examination of the terms of the CTA, broader objects are revealed than those the Honourable Minister described as being the principal objects of the Bill.
The Minister noted that, to a large extent, the Bill's objects had their origin in the Charities Act 1960 (UK), noting that similar provisions to that legislation have been enacted in Victoria, Queensland, South Australia and Western Australia, and that the drafters of the legislation in New South Wales have had the opportunity of learning from the experience of those other jurisdictions.
In comments that appear to pick up the provisions of what became s 9, the Minister noted that the Bill "will expand the test of when a charitable trust fails, to provide that a trust also fails when it ceases to be a suitable and effective method of using trust property": New South Wales Legislative Council, Parliamentary Debates (Hansard), 11 March 1993 at 624 (RJ Webster, Minister for Planning and Minister for Housing).

Statutory provisions

The provisions of ss 9 and 10 CTA are in the following terms: 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.

General observations

Seemingly, the first case that mentions the provisions of s 9 is the decision of Young J (as his Honour then was) in Re Permanent Trustee Company Ltd v Attorney General; Burns Estate (No 2) (Supreme Court (NSW), Young J, 1 March 1995, unrep) (Re Burns Estate (No 2)) referring, in part, to an earlier decision in Permanent Trustee Company Ltd v Attorney General (Supreme Court (NSW), Young J, 12 December 1994, unrep). However, neither of those decisions contain detailed discussions of the provisions of s 9 other than an obiter comment of Young J in Re Burns Estate (No 2), clearly intended to be a reference to s 9(2).
Whilst there are a number of cases, including reported decisions of this Court, dealing with various provisions of the CTA, it appears that the first decision in which the statutory power under s 9 was considered was published about eight years after the Act commenced, being the decision of Bryson J (as his Honour then was) in Attorney General for New South Wales v Fulham [2002] NSWSC 629 (Fulham). I will deal more specifically with the approach to be taken to the provisions of s 9 below. However, some general observations may be made regarding the provisions of ss 9 and 10 and their application. A number of these are evident from the other provisions of the CTA and several are addressed by Professor Dal Pont in Law of Charity (3rd ed, 2021, LexisNexis) (Dal Pont).
First, s 9 will have application in respect of a charitable trust irrespective of whether that trust was established in New South Wales, the trust property is situated in New South Wales, and the domicile or residence of the trustees: s 4(1) CTA.
Secondly, it applies to charitable trusts created before or after the commencement of s 4 (except as otherwise provided by the CTA): s 4(2) CTA.
Thirdly, the Act does not provide a code in the sense that the provisions do not apply to the exclusion of the provisions of any other Act relating to charitable trusts: s 4(3) CTA.
Fourthly, the legislation is regarded as being remedial and beneficial and thus not to be narrowly construed: Dal Pont at 411 [16.3]. The breadth of the beneficial provisions in s 9 was emphasised by White J (as his Honour then was) in Hunter Region SLSA Helicopter Rescue Service Ltd v Attorney-General (NSW) (2013) 9 ASTLR 308; [2013] NSWSC 1749 (Hunter Region) at [37]: 37. In my view, s 9 can be applied proleptically. Section 9 is remedial and beneficial legislation and not to be narrowly construed. A construction of s 9 that the court could not make an order altering the original purposes of a charitable trust until those purposes have ceased to provide a suitable and effective method of using the trust property, even though it will then be too late to do anything about it, should not be adopted if an alternative construction is reasonably available. Section 9(1) does not purport to state exhaustively the circumstances in which the court can alter the original purposes of the charitable trust. The section says that the circumstances in which those original purposes can be altered "include" circumstances in which the original purposes have ceased to provide a suitable and effective method of using the trust property having regard to the spirit of the trust. As the power can be exercised in those circumstances, it is only logical that it can also be exercised if it is shown that the original purposes will cease to provide a suitable and effective method of using the trust property having regard to the spirit of the trust.
Fifthly, one consequence of the remedial nature of the provisions is that s 9 can be applied proleptically: Hunter Region at [37]. Thus, there is no need for trustees or any other appropriate applicant to delay in applying to the Court to apply charitable trust property cy‑près and to purposes in question that have actually become (as opposed to will become) unsuitable or ineffective: Dal Pont at 411. In some cases, there may be an imperative to act to avoid the consequence that it is too late for any scheme to be ordered to achieve a suitable and effective method of using trust property by dint of change of circumstances: see Dal Pont at 411; Northern at [92] per Robb J.
Sixthly, the general law requirement that trust property cannot be applied cy‑près unless it is given with a general charitable intention is unaffected: s 10(1) CTA. However, a general charitable intention is to be presumed unless there is evidence to the contrary in the instrument establishing the charitable trust: s 10(2) CTA.
Seventhly, if the charity when created was valid and property has become vested in a trustee for charitable purposes and it later becomes impossible to apply the property for charitable purposes, the Court is, subject to the following qualification, not concerned to enquire into the existence of a general charitable intention when asked to apply the property cy‑près: Fulham at [20]-[21] per Bryson J.
Eighthly, the effect of s 9(2) CTA is that where the purposes of the charitable trust have been altered by a prior cy-près scheme, the original purposes (for the purpose of applying s 9(1)) will be the purposes of the charitable trust that are inherent in the most recent cy-près scheme: Northern at [96] per Robb J and Helicopter Rescue at [39] per White J cf the comments of Young J, albeit in obiter, in Re Burns Estate (No 2) at 2.

General law and statutory provisions contrasted

In Fulham, Bryson J summarised the power of the Court at general law to make cy-près orders by reference to English, High Court and New South Wales Court of Appeal decisions in the following terms (at [12]-[15]): 12. The power which the Court has under the general law to order a cy pres scheme appears from a passage in the judgment of Romilly M R in Attorney-General v Sherborne Grammar School (1854) 18 Beavan 256, 52 ER 101. At 280 - 281 110-111 his Lordship said: "….what is the power which this Court possesses, in this state of circumstances, with reference to this charity? The duties and authority of this Court in dealing with matters of charity, is not, I think, on this point, open to much doubt or question. This Court has authority to redress a breach of trust, where the objects of a founder have been prevented or neglected. It also has authority to direct a scheme, in order to enforce the more complete attainment of those objects. This Court has a further power and authority when the objects contemplated by the founder cannot be carried into effect, to direct the application of the revenues of the charity to promote objects in accordance with the spirit of the original foundation, the actual compliance with which has become impossible. But it has no authority to vary the original foundation, and to apply the charity estates in a manner which it conceives to be more beneficial to the public, or even such as the Court may surmise that the founder would himself have contemplated, could he have foreseen the changes which had taken place by the lapse of time." 13. In Attorney-General for New South Wales v Adams (1908) 7 CLR 100 Isaacs J 124 - 125 cited with approval a passage from the judgment of Kay J in Re Taylor; Martin v Freeman 58 LT 538 at 543 which included the following expressions explaining execution of a charitable trust cy pres: " '…that is, carry out the general paramount intention in some way as nearly as possible the same as that which the testator has particularly indicated without which his intention itself cannot be effectuated.' " 14. In Attorney General (NSW) v Perpetual Trustee Co (Ltd) (1940) 63 CLR 209 at 225 Dixon and Evatt JJ gave the following account of the act of the Court when ordering a cy pres scheme: "…the court will execute the trust by decreeing some other application of the trust property to the furtherance of the substantial purpose, some application which departs from the original plan in particulars held not essential and, otherwise, keeps as near thereto as may be." 15. Hutley JA said, in Phillips v Roberts [1975] 2 NSWLR 207 at 211 to 212: "The fundamental responsibility of a court administering charitable trusts is to give effect to the trusts as laid down by the testator or settlor. In Re Weir Hospital [1910] 2 Ch. 124, at p. 131., Cozens-Hardy M.R. said: 'The first duty of the court is to construe the will, and to give effect to the charitable directions of the founder, assuming they not be open to objection on the ground of public policy. The Court does not consider whether those directions are wise or whether a more generally beneficial application of the testator's property might not be found.' "
His Honour then addressed the provisions of s 9 as follows (at [17]-[18]): 17. The Court may alter the purposes of a charitable trust where the original purposes have ceased to provide a suitable and effective method of using the trust property; this is well short of a test requiring impossibility. Subsection 9 (1) greatly widens the circumstances in which the Court may act and the influence which it may allow considerations of practicality to have. 18. The special position in which the Court acts when dealing with cy pres schemes was referred to in Phillips v Roberts in the judgment of Hutley JA at 211, where his Honour stated reasons why: "…it has been recognized by distinguished lawyers that the administrative task of re-organizing charitable trusts requires freedom from restrictions associated with the judicial process…" It is not in my opinion required that the Court 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. 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, no existing charity can exactly qualify and no existing charity has any rights. If existing charities had any actual entitlement there would be no need for a scheme. The Court is not bound by all ordinary judicial processes including adherence to evidence law and need not extend procedural justice to all charities which may conceivably have some expectations. To take expressions from the judgment of Hutley JA in Phillips v Roberts [1975] 2 NSWLR 207 at pp 211 - 212, contests as to the form of cy pres schemes are rare, they are free from technicality and the Court is in uncharted territory.

Context and construction of s 9 CTA

Section 9 pre-supposes the existence of a power to alter the purposes of a charitable trust in certain circumstances and modifies that power by expanding the class of circumstances in which it is available: Perpetual Trustee Company Ltd v Attorney General for the State of New South Wales (The Will of the Hon George Nesbitt) [2018] NSWSC 1456 (Nesbitt) at [46] per Leeming JA. The cy-près power is ancient. It reflected one incident of the precept that charity is always favoured by equity (Nesbitt at [46] citing In re Watt; Hicks v Hill [1932] 2 Ch 243 at 246 per Lord Hanworth MR) and it also reflects the basal nature of a charitable trust being a trust for a purpose (as distinct from a trust for beneficiaries): Nesbitt at [46] citing Attorney-General (NSW) v Perpetual Trustee Co (Ltd) (1940) 63 CLR 209; [1940] HCA 12 (Milly Milly case) at 222 per Dixon and Evatt JJ.
In New South Wales, the construction of s 9 has been authoritatively commented upon by the Court of Appeal in Free Serbian Orthodox Church Diocese for Australia and New Zealand Property Trust v Bishop Irinej Dobrijevic (2017) 94 NSWLR 340; [2017] NSWCA 28 (the Free Serbian Orthodox Church case).
Payne JA (Ward JA - as her Honour then was - at [1] and Gleeson JA at [2] and [15] agreeing) noted at [192]-[210]: 192. The appellants suggested that the issues raised by s 9 of the Charitable Trusts Act identified four separate but related questions: 1. What is the purpose of the trust? 2. What is the spirit of the trust, which refers to the basic intention underlying the gift? 3. Have the original trust purposes, wholly or in part, 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? 4. If so, what application of the trust property is cy-près, that is, most nearly approximates the intentions of the founders having regard to the spirit of the trust? 193. Despite the appellants' tendency to break up the components of s 9 into four separate parts, s 9 must be read as a whole in the statutory context in which it appears and by reference to the objects that the legislation is intended to secure. In Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (Northern Territory) (2009) 239 CLR 27; [2009] HCA 41 at [47], the plurality emphasised that construction must begin with a consideration of the text itself and while the language employed is the surest guide, its meaning may require consideration of the context, which includes the general purpose and policy of the provision, in particular the mischief it is seeking to remedy: see also Board of Bendigo Regional Institute of Technical and Further Education v Barclay (2012) 248 CLR 500; [2012] HCA 32 at [41]; Federal Commissioner of Taxation v Consolidated Media Holding Ltd (2012) 250 CLR 503; [2012] HCA 55 at [39]. 194. In addressing the way the appellants put their arguments, segmented into the various component parts of s 9, it should not be thought that this exercise of construction is to be set aside or left behind. 195. Ultimately, the question posed by s 9 must be considered as a whole, and not examined artificially by reference to each of its separate components. Text 196. Section 9 is engaged by three interacting criteria through which to consider the continuing utility of the original trust purposes: 1. First, the notion of "wholly or in part"; 2. Secondly, a "suitable and effective method"; 3. Thirdly, the requirement to have "regard to the spirit of the trust". 197. It is textually clear that the requirements of s 9 involve a threshold lower than the general law cy-près requirement of impossibility or impracticality. The test is whether the original purposes of the trust have ceased to provide a suitable and effective method of using the property, in whole or in part, having regard to the "spirit of the trust". The spirit of the trust is thus a broader conception than the original purposes of the trust. It is clear that the general law requirement for impossibility or impracticability of achievement of the trust purposes is no longer a condition precedent to the making of an order. Context 198. Originally, the general law jurisdiction to apply charitable trust property cy-près was restricted to circumstances where the original purposes of the trust had become impossible or impractical to carry out: see Varsani v Jesani [1999] Ch 219 at 229 and the authorities cited in Attorney General for NSW v Fulham [2002] NSWSC 629 at [12] - [15] per Bryson J. 199. In Taylor v Princess Margaret Hospital for Children Foundation Inc (2012) 42 WAR 259; [2012] WASC 83 Edelman J said of the cy-près doctrine: [51] In Attorney General v Andrew (1798) 3 Ves Jun 633, 649; [1798] Eng R 110; (1798) 30 ER 1194, 1202, the Lord Chancellor referred to older cases which had suggested that the doctrine 'ought never again to be mentioned in this court'. But the doctrine of cyprès had deep roots and could not be abolished. [52] As the Lord Chief Justice noted in Attorney General v Lady Downing, quoting the great Roman jurist Modestinus, something similar existed in Roman law. Cyprès is also discussed in the works by Littleton and Fitzherbert. It was too deeply established even by the 18th century to be judicially abolished. [53] With this history, it is unsurprising that it has been observed by commentators that courts have struggled with the operation and limits of this doctrine for at least 350 years: R Mulheron, The Modern Cyprès Doctrine (2006). In the Report of the Committee on the Law and Practice relating to Charitable Trusts (1952) (the Nathan Report), Lord Nathan described the law of charitable trusts as an 'impenetrable jungle'. 200. In 1952, the English Committee on the Law and Practice relating to Charitable Trusts, chaired by Lord Nathan, (referred to by Edelman J above) reported to the government of Sir Winston Churchill on the need and near unanimous desire to relax the cy-près doctrine. The Nathan Report recommended that the cy-près doctrine be "so relaxed as to admit of trust instruments being altered, even though the carrying out of their objects has not become impracticable": at [699]. The authors drew upon long established Scottish law in proposing that the formulation of any cy-près scheme should have "special regard to the spirit of the intention of the founders": at [700]. 201. The leader in legislative amendments in this area was New Zealand. The Charitable Trusts Act 1957 (NZ) was enacted on 4 October 1957 and came into force on 1 January 1958. 202. The Nathan Committee Recommendations were implemented by s 13 of the Charities Act 1960 (UK), which provided: (1) Subject to subsection (2) below, the circumstances in which the original purposes of a charitable gift can be altered to allow the property given or part of it to be applied cy-pres shall be as follows: - (a) where the original purposes, in whole or in part, - (i) have been as far as may be fulfilled; or (ii) cannot be carried out, or not according to the directions given and to the spirit of the gift; or (b) where the original purposes provide a use for part only of the property available by virtue of the gift; or (c) where the property available by virtue of the gift and other property applicable for similar purposes can be more effectively used in conjunction, and to that end can suitably, regard being had to the spirit of the gift, be made applicable to common purposes; or (d) where the original purposes were laid down by reference to an area which then was but has since ceased to be a unit for some other purpose, or by reference to a class of persons or to an area which has for any reason since ceased to be suitable, regard being had to the spirit of the gift, or to be practical in administering the gift; or (e) where the original purposes, in whole or in part, have, since they were laid down, - (i) been adequately provided for by other means; or (ii) ceased, as being useless or harmful to the community or for other reasons, to be in law charitable; or (iii) ceased in any other way to provide a suitable and effective method of using the property available by virtue of the gift, regard being had to the spirit of the gift. (2) Subsection (1) above shall not affect the conditions which must be satisfied in order that property given for charitable purposes may be applied cy-pres, except in so far as those conditions require a failure of the original purposes. … (5) It is hereby declared that a trust for charitable purposes places a trustee under a duty, where the case permits and requires the property or some part of it to be applied cy-pres, to secure its effective use for charity by taking steps to enable it to be so applied. 203. These provisions were re-enacted in the Charities Act 1993 (UK). 204. In 2006, references to the "spirit of the gift" in s 13(1)(c), (d) and (e) of the Charities Act 1993 (UK) were replaced by the expression "appropriate considerations" which was defined to include the spirit of the gift on one hand, and the social and economic circumstances at the time of altering the original purposes on the other hand. This section now appears as s 62 of the Charities Act 2011 (UK). 205. In 1962, a subcommittee of the Victorian Chief Justice's Law Reform Committee was appointed to consider possible reforms to Australian charitable trust law. In 1965, the Report on Charitable Trusts was published. It considered the meaning and effect of s 13 of the Charities Act (1960) (UK) and noted that "possibility or practicability is no longer the test [for invoking the cy-pres jurisdiction], but that it is sufficient that the original purpose is no longer suitable and effective": at 22. 206. The Report also observed at 23 that: The limitation imposed by the words "regard being had to the spirit of the gift" should be sufficient to prevent the gift being devoted to new purposes simply because the new use is thought to be more beneficial to the public than the original purpose. 207. Between 1962 and 1993, each Australian state enacted legislation in similar terms to s 13 of the Charities Act 1960 (UK), including, relevantly, s 9 of the Charitable Trusts Act. 208. The Explanatory Notes to the enacting bill, the Charitable Trusts Bill 1993 (NSW), explained that s 9: extends the circumstances in which the original purposes of a charitable trust fail and the trust property can be applied cypres i.e. for a similar purpose. The circumstances are to extend to trusts whose original purposes have ceased to provide a suitable and effective method of using the trust property having regard to the spirit of the trust. A similar extension has been made in other States. 209. The second reading speech for the bill also acknowledges that the bill expands the test for when a charitable trust fails. The legal test to be applied to the issues on this appeal 210. The four stages proposed by the appellants are appropriate as a shorthand way of analysing the requirements of s 9, however, they do not replace the statutory task of considering s 9 as a whole and in its statutory context.
His Honour also stated at [315]: 315. Further, the appellants' complaint that the primary judge erred in finding that under s 9 property must be applied for purposes that are as near as possible to the original purposes, having regard to the spirit of the trust, should be rejected. This is because s 9 expands the grounds on which property may be applied "cy-près". The legislature, in its decision to use the language of "cy-près", specifically provided that s 9 would apply in additional, and expanded, circumstances to those at general law. The use of the term "cy-près" indicates the continued relationship between the statutory jurisdiction and the general law concept. Section 9 does not remove the requirement that, where the jurisdiction is engaged, the property be applied as near to the original purposes of the trust as would be effective and suitable, having regard to the spirit of the trust.
Thus, ultimately, the question posed by s 9 must be considered as a whole, and not examined artificially by reference to each of its separate components.
The words "suitable and effective" dilute the traditional strict test and may be contrasted with "impossible or impracticable": Nesbitt at [57]. In some cases, this will allow intervention in circumstances in which purposes are being frustrated as distinct from being impossible or impracticable to implement: Dal Pont at 418-419 referring, inter alia, to Forrest v Attorney-General [1986] VR 187 at 190 per Nathan J.
The history of the notion of the "spirit of the trust" is commented upon by Leeming JA in Nesbitt at [58]-[67].
The Court, in having regard to the "spirit of the trust", is essentially required to focus on "the basic intention underlying the gift or the substance of the gift rather than the form of words used to express it or conditions imposed to effect it": Nesbitt at [63] quoting Varsani v Jesani; Jesani v Varsani [1999] Ch 219 (Varsani) at 234 [24] per Morritt LJ (Chadwick LJ and Sir Stephen Brown P agreeing). Further, it has been said that the Court is to look beyond the original purposes as defined by the object specified in the declaration of trust and to seek to identify the spirit in which the donor gave property on trust for those purposes. It is done by reference to the document as a whole and any relevant evidence as to the circumstances in which the gift was made: Nesbitt at [64] citing Varsani at 238 per Chadwick LJ.
In so describing the "spirit of the trust", the process is somewhat similar to the approach taken in ascertaining whether there is a general or any particular charitable intention as described by Dixon and Evatt JJ in their seminal judgment in the Milly Milly case. In such a case, their Honours noted that the language in which the trust is expressed seldom contributes much towards a solution and more is to be gained by an examination of the nature of the charitable trust itself and what is involved in the author's plan or project: at 227.
In the Milly Milly case, Dixon and Evatt JJ at 227 described this in terms of distinguishing between ends and means, between the dominant and the subsidiary, between the substance and the form, and understanding the relevant importance of the component parts of the plan or purpose expressed in the trust (see also Nesbitt at [76]-[78] per Leeming JA).
The Court on cy-près hearings does not usually receive detailed evidence as it ordinarily would on a contested claim inter partes. Often, the Court relies upon untested affidavit evidence or, as in Northern, a broad statement of agreed facts and limited testimonial and documentary evidence. Those circumstances force the Court to determine the application on the basis of relatively broad evaluative considerations: Northern at [79] per Robb J.
In Northern, Robb J commented that in determining the spirit of the charitable trust, the Court need not look only to the terms of the instrument that created the trust and any variations resulting from subsequent cy-près schemes but that the Court may also have regard to the circumstances in which the charitable trust was initially established and the history of the administration of the trust in so far as that administration may be assumed to have implemented its spirit: at [80]-[81] citing RSL Veterans' Retirement Villages Ltd v NSW Minister for Lands [2006] NSWSC 1161 at [57] per Palmer J.
The original purposes may cease to provide a suitable and effective method of using trust property when it is reliably anticipated that strict conformance with the existing purposes will lead to the charitable trust becoming uneconomical by reason of changed circumstances concerning how the charitable trust is required to be administered in relation to its original purposes: Northern at [84]-[85] per Robb J citing Northern Sydney and Central Coast Area Health Service v The Attorney General for New South Wales [2007] NSWSC 881 at [25]-[27] per Windeyer J.
At times, the Court is also able to act upon the basis of the agreement between the parties. Mr Russell drew the Court's attention to Ubiparipovic v Vucicevic [2018] NSWSC 1583, where Slattery J stated at [4], [6]-[9]: 4. It is well established that charitable trust proceedings may be settled by compromise. The Court has inherent jurisdiction to approve the terms of such a compromise: Permanent Trustee Co Ltd v State of New South Wales & Ors (Supreme Court (NSW), Santow J, 23 November 1995, unreported) ("Permanent Trustee"). The consent of the Attorney General is a necessary condition to the Court's approval. The Attorney General consents here. … 6. The Court has read Exhibit A (the Court book) and the detailed joint written submissions of the parties in which the parties advanced several reasons why the Court should be satisfied that the terms of the compromise are suitable for its approval. 7. Those reasons, with which the Court agrees, may be briefly restated. First, these proceedings arise out of complex disputes between the parties. Secondly, these disputes concern whether valuable property should be applied to one of two charitable entities. Thirdly, if the proceedings were to continue as a contested trial, the Court would be required to determine a substantial number of factual issues. Fourthly, the settlement will avoid significant expenditure on legal costs by all parties. Fifthly, the settlement provides for the application of the trust funds or trust property not only for the advancement of the purposes of the Serbian Orthodox Church and School Community "St George" of Cabramatta, but a fund is also set aside for the Free Serbian Orthodox Church Diocese for Australia and New Zealand through a new entity, in a way that appears to be rational and proportionate, looking at the matter objectively. Sixthly, the settlement appears to the Court to be consistent with the principles in White J's judgment. Seventhly, and this is a matter in itself of very considerable importance, it is self-evident from the detail of this settlement that it has been negotiated closely and over some time by the parties with the assistance of solicitors and counsel to produce a compromise which has then been consented to by the Attorney General. That consensus is itself an important factor favouring the Court's approval. 8. As Santow J said in Permanent Trustee - the Court is not to be regarded as a "mere cypher" in these cases. Rather, the Court has an independent obligation to satisfy itself generally that the proposed compromise is a proper one for the Court to sanction. The Court is so satisfied and is fortified in that satisfaction by the Attorney General's consent. 9. The Court's approach to the exercise of this jurisdiction to approve a negotiated settlement with the assistance of counsel and solicitors is perhaps no better expressed than in the words Santow J in Permanent Trustee about the process: "What it does however allow is for the Court to assess the evidence in the body relying upon counsel to give a fair summation of that evidence in a fair manner without descending to microscopic detail in order for the Court to be so satisfied".

Duration of trusts and expenditure of permanent endowment capital

Charitable trusts are almost invariably intended to be perpetual and, accordingly, the rule forbidding the perpetual duration of trusts has no application to them: JD Heydon and MJ Leeming, Jacobs' Law of Trusts in Australia (8th ed, 2016, LexisNexis) at 167 [10-60]. However, that is a different notion to the question as to whether general law rules against perpetuities or statutory provisions in respect of perpetuities apply to charities: Hubert Picarda KC, The Law and Practice Relating to Charities (4th ed, 2010, Bloomsbury Professional) at 398.
It has been said that as the purpose of a charitable trust need not, and, indeed, most usually does not, involve the expenditure or consumption of corpus, continuity and indefiniteness of duration form a common characteristic of charitable trusts: the Milly Milly case at 223-224 per Dixon and Evatt JJ.
That is the position at general law.
It may be affected by statutory provisions.
There seems to be very little discussion in caselaw or texts generally and, in particular, in relation to cy-près schemes regarding considerations as to whether a charitable trust ought to be of perpetual duration and, in particular, whether there should be or may be expenditure of the corpus of the charity.
It is likely the case that in New South Wales that is partly because there are statutory provisions which enable charitable trustees to approach the Court to be empowered to engage in expeditious dealings with trust property: see, e.g., s 81 of the Trustee Act.
However, in relation to particular charitable legislation, some insight regarding expenditure of corpus may be gleaned from the approach in the UK, where there is statutory reform in this regard.
A permanent endowment may have been created by a property gifted by founders or donors who wish a charity to be provided with a lasting gift that will endure into the future.
The permanent endowment of charitable institutions is a recognised method of providing for their maintenance: see In re Williams, deceased; Bendigo and Northern District Base Hospital of Bendigo v Attorney-General [1955] VLR 65 at 67 per Dean J. In the UK, for example, charities legislation has operated to impact the permanency of such endowments. A degree of flexibility regarding the use of endowments was introduced by the Charities Act 2006 (UK).
On 14 June 2023, the law regarding expenditure of capital of permanent endowments in the UK changed by amendments to the prevailing legislation being the Charities Act 2011 (UK) (CTA (UK)).
A "permanent endowment" means, in relation to any charity, property held subject to a restriction on it being expended for the purpose of the charity: s 353(3) CTA (UK). Thus, the CTA (UK) distinguishes between a charity with a permanent endowment and a charity which has power to expend both income and capital: William Henderson, Jonathon Fowles and Julian Smith, Tudor on Charities (10th ed, 2015, Sweet & Maxwell) (Tudor on Charities) at 976 [21-014], 984 [21-025].
Guidance from the UK Charity Commission distinguishes between two types of permanent endowment. First, money or other assets given to the charity for investment where only the investment income can be spent. Secondly, property given to a charity (such as land or buildings) which must be used only for a particular purpose: https://www.gov.uk/guidance/permanent-endowment-rules-for-charities
Thus, there is a difference between "investment permanent endowment", i.e., permanent endowment in the form of cash or shares or securities which produce an income, and property directly being used by a charity to pursue its purposes (e.g., building or recreational grounds) - the latter being described as "functional permanent endowment".
Prior to the reforms effected by the Charities Act 2022 (UK), there were limited powers to enable expenditure of permanent endowment. These powers only applied to a charity which was not a company or a body corporate.
The powers in the UK relate to charitable entities which have a permanent endowment of, in the general scheme of things, a relatively low threshold. Nonetheless, the legislation provides some indication as to considerations that might bear upon expenditure of capital.
I pause to note that, in the circumstances of this case, the level of moneys involved are considerably beyond the thresholds that apply in the UK charities legislation under the CTA (UK).
In summary, under s 281 CTA (UK), prior to the 2022 reforms, the trustees of smaller charities with a small permanent endowment (annual income up to £1,000 or endowment up to £10,000 or funds not given entirely by a single person) could easily arrange to spend such funds by passing a resolution without the need to approach the Charity Commission. Other provisions (s 282) applied if charities were unable to invoke the simplified procedure and required a trustee resolution along with consent from the Charity Commission for expenditure by larger charities with larger amounts of permanent endowment.
Broadly speaking, the effect of the 2022 amendments (which became operative from 2023) was to simplify and widen the availability of powers to spend permanent endowment and to alter the threshold at which consent from the Charity Commission is necessary and to reduce the time for the Charity Commission to respond to requests for consent.
Currently, pursuant to s 281 CTA (UK), if the charity trustees are satisfied that the purposes set out in trusts to which the fund is subject could be carried out more effectively if the capital of the fund, or the relevant portion of the capital, could be expended as well as the income accruing to it, rather than just the income, the trustees may make a resolution to that effect and the capital of the fund may be so spent.
Without intending to be exhaustive, it may be noted that the s 281 CTA (UK) power to release permanent endowment (without the need for approval or non-objection from the Charity Commission) now depends solely on the value of the permanent endowment, albeit at a low threshold, regardless of the charity's income and whether or not the endowment is "entirely given" and applies to a permanent endowment up to funds of £25,000.
The time limit for the Charity Commission to object to s 282 CTA (UK) resolutions has been reduced with a more generous time allowed for trustees where the Charity Commission requests that they give public notice of the resolution and/or ask for further information.
In the case of a charity with the power to spend both income and capital, the charity trustees can terminate the charity by applying all of its funds for the purposes set out in the governing instrument: Tudor on Charities at [21-025].
A charity will terminate if it no longer has funds: Tudor on Charities at 984 [21-025] citing In re Withall; Withall v Cobb [1932] 2 Ch 236 at 241 per Clauson J.
It is said that the termination of a charity may arise from lack of funds in a voluntary sense in that the charity trustees decide to distribute all the funds for the purposes of the charity - but only if there is no permanent endowment or the restrictions on the permanent endowment can be released (e.g. by statute): Tudor on Charities at 986 [21-027].
Where charity trustees are permitted, and intend, to terminate a charitable trust voluntarily by distributing or transferring the assets of the trust, they should only do so after all the debts and liabilities of the charity have been paid or settled: Tudor on Charities at 986 [21-028].

The spirit of the trust

In this case, the charitable purposes as found have several aspects, namely: 1. provision of services unrestrained by political or religious considerations, i.e. with a non-sectarian and non-political emphasis; and 2. the purposes are described in relatively broad and simple terms with a focus on relief of "illness, old age, poverty and mental retardation".
Whilst the language of "mental retardation" is not currently prevalent, it is language that was used in ages past and at the time, obviously depending on context, had well-accepted social and legal meanings: see Eurella Community Services Inc v Attorney General for the State of NSW [2010] NSWSC 566 (Eurella) at [68] per Slattery J.
In Eurella, Slattery J commented upon the use of language in generations past which to modern ears might sound offensive. His Honour stated at [7]: 7. No further step can be taken in these reasons without a note on the use of language. This judgment considers the organisation and work of many individuals over a sixty-year period in the field of the education and advancement of people with often quite severe intellectual or physical disabilities. During that period the language used to describe people receiving care in relation to such disabilities has changed almost beyond recognition. A choice must be made in the use of descriptive language in these reasons. These reasons use language of the actual period during which each document speaks over the whole sixty-year period. This case also involves inferences about events and people over fifty years ago. Investigation of that subject requires the use of then contemporary language. Some of the language from the first half of that sixty-year period now sounds quite foreign to modern ears but it must be used to assist in discovering the purposes of those who used it.
In some cases, the facts allow judges to identify particular elements of the "spirit of the trust" (see e.g., the Free Serbian Orthodox Church case in which the primary judge found five elements). In other cases, a more generalised finding is made. Thus, in Northern, Robb J stated at [101]: 101. Perhaps unsurprisingly, the appropriate way to conceive of the spirit of the Trust in this case is to embrace the reality that its spirit is necessarily nebulous, and involves the idea of Northern providing services for the benefit of persons in need by means of helicopter operations over defined areas linked to the provision of charitable donations by residents of those areas, augmented by formal government contracts, in circumstances where the Trust has experienced a history of expansion to meet new needs and to respond to the commercial circumstances that affect its viability. In that way, the spirit of the Trust in this case is not and has not been static.
I wondered in this case whether the geographic element was an important element of the spirit of the trust. Based on some materials, particularly statutory declarations admitted on the initial hearing, I was informed that the refuges were all in or about Ashfield and the inner west. Distribution of food and clothing took place at or from the Enmore property.
Thus, it does seem that, practically, some geographic focus is relevant to the spirit of the trust.
The nature of the services as actually provided seem to have a particular focus in relation to the provision of accommodation and food to those who are homeless or in straitened circumstances or in the case of newly released prisoners, to those who by dint of their circumstances are seeking a fresh start.
No actual services in respect of what is described as the betterment of the quality of life of those with mental retardation appeared to have been implemented or operated in the life of the trust.
There is a tension in the material provided which bears upon the identification of purpose on the one hand and enduring charitable provision on the other. My sense of the material is that some of the programs suggested by SVDP come close to the concept of the spirit of the trust when regard is had to the programs described in the judgment of Ward CJ in Eq. However, clearly the programs proposed by the Foundation cover the uses that were in place and, in particular, use of the Enmore property.
By reason of the nature of the property, the subject of the trust and the proposals elicited from the shortlisted candidates, it is necessary to reflect upon the duration of the trust and the expenditure of capital.
In the choice made by the trustees here, now put before the Court for approval, the trustees have placed significant emphasis on a form of enduring charitable provision.
The reasons for that are understandable. At least at general law, charitable trusts are, as I have noted above, almost invariably intended to be perpetual.
There is nothing in the materials here which particularly suggests to me that the position is otherwise.
OLOSS provided services for the best part of 35 years. There is no indication that the founders intended that the property of the trust would be completely expended so as to lead to termination of the trust. Whilst the general law position may be changed by the application of legislative provisions, for example in New South Wales under s 81 of the Trustee Act and in the UK the CTA (UK), there is no particular suggestion here that, absent statutory provisions, any part of the trust terms necessarily gave imprimatur to complete exhaustion of the capital.
The trustees on this application have considered their position carefully. In the circumstances of this case, I do not propose to second-guess the trustees' thought that retention of the property was an appropriate consideration in their reasons for proposing the scheme before the Court.

Decision

In light of the description of the trust and matters that I have commented upon above regarding the spirit of the trust, I consider that the trustees' reasons to favour the Foundation's proposals are soundly based. It is evident that there has been some refinement on what is proposed through correspondence between the trustees' solicitors and the Foundation's lawyers with a view to arriving at the scheme that is proposed to the Court.
I am ultimately satisfied that the scheme is appropriate.

Orders

I note that Ward CJ in Eq previously made orders empowering the new trustees to pay and transfer the balance of the trust property in accordance with any scheme that may be ordered in these proceedings: Hickey at [85(10)(e)].
The orders of the Court are as follows: 1. NOTES the orders of the Court made 21 June 2021 (previous orders) and that, unless the contrary is indicated, these orders will adopt the same terminology as the terminology used in the previous orders. 2. DECLARES that in the circumstances, including the dissolution of OLOSS, the charitable purposes of the OLOSS trust set out in order 4 of the previous orders, namely "to undertake works of a charitable or educational nature unrestrained by sectarian belief or political ideology for the betterment of the quality of life of the people in the community who are less privileged than others because of illness, old age, poverty, mental retardation or otherwise",: 1. have become impossible or impractical to be carried out; and/or 2. have ceased wholly to provide a suitable and effective method of using the trust property, having regard to the spirit of the trust, 1. ORDERS that the property of the OLOSS trust be applied cy-près and administered in accordance with the Scheme set out in the attached Schedule ("the Scheme"). 2. NOTES the undertaking of Rev. Bill Crews Foundation Ltd given to the Court, by its solicitor, MARK STREETER, of STREETER LAW, LEVEL 2, 50 PARK STREET, SYDNEY, that it will hold the property of OLOSS on trust to be applied for the charitable purposes set out in the Scheme. 3. ORDERS that the plaintiffs' costs of these proceedings be paid from the trust property on the indemnity basis. 4. ORDERS that the defendant's costs of these proceedings be paid from the trust property on the ordinary basis. SCHEDULE Cy-près Scheme for the Property of OLOSS WHEREAS 1. On 21 June 2021, Ward CJ in Eq, as her Honour then was, in Supreme Court of New South Wales, Equity Division, proceedings 2021/00123993, made inter alia the following orders: 1. a declaration that on or by 1 January 2016 the unincorporated association known as Our Lady Of Snow Society (OLOSS) dissolved; 2. a declaration that the property belonging to OLOSS previously held by the then deceased trustees of OLOSS (the property of OLOSS) in accordance with its constitution includes: 1. the money standing in credit in Commonwealth Bank of Australia (CBA) account, BSB number XXX-XXX, account number XXXX 9745; 2. the money standing in credit in the CBA term deposit, BSB number XXX-XXX, account number XXXX 6248; 3. the land and its improvement situated at XXX Enmore Road, NSW, Folio Identifier XXX/XXXXXX (Enmore property); 4. the land and its improvements situated at XX Smith Street, Tempe, NSW, Folio Identifier XX/XXXXXXX (Tempe property); 1. a declaration that until her death on 4 October 2019, the late Elizabeth Ellen Hickey, formerly of X/X Woodcourt Street, Marrickville, and probate of whose will dated 13 June 2018 was granted by this Honourable Court to Peter John Hickey on 14 January 2020 in proceedings 2019/00337606, was the last trustee of OLOSS and held the property of OLOSS on trust for the following charitable purposes of OLOSS, namely: "to undertake works of a charitable or educational nature unrestrained by sectarian belief or political ideology for the betterment of the quality of life of the people in the community who are less privileged than others because of illness, old-age, poverty, mental retardation or otherwise" (OLOSS trust); 1. a declaration that there were no existing trustees of the OLOSS trust; 2. an order that Mark Francis Green and Kim Probert of Pikes and Verekers Lawyers, 2/50 King Street, Sydney, (Trustees) be appointed trustees of the OLOSS trust; and 3. an order that the property of OLOSS now subject to the OLOSS trust vest in the Trustees jointly subject to the terms of the OLOSS trust. 1. By reason of the dissolution of OLOSS and other circumstances, the charitable purposes of the OLOSS trust: 1. have become impossible or impractical to be carried out; and/or 2. have ceased wholly to provide a suitable and effective method of using the trust property, having regard to the spirit of the trust. 1. Rev. Bill Crews Foundation Ltd (the Foundation) is a charity that has similar charitable purposes to those of OLOSS set out in paragraph 1(c) above. 2. The Foundation will hold the property of OLOSS on trust to be applied for the following charitable purposes and in accordance with this Scheme: 1. for the provision of food services and/or social welfare services (which may include community engagement activities and mental health support services) and/or educational or employment services to homeless, impoverished and/or disadvantaged people and communities from the Enmore property if feasible, or otherwise from another suitable location in the inner west of Sydney; and 2. if the provision of the above services is no longer feasible or reasonably necessary having regard to the needs of the community, otherwise for the purposes specified in cl.6 of the Constitution of the Foundation (as presently in force), which states: "Object The company's object is to pursue the following charitable purpose(s): The objects of the company is to be a Charity that provides real and direct assistance to address the cause and effect of: • Homelessness and • Intergenerational poverty and • Unemployability The company will address these needs by a combination of education and direct provision of services supporting concerned individuals by the provision of food, social welfare, and educational support. It will use resources and functions only for charitable purposes and these will include: • For the purpose of advancing education and employment opportunities • For the purpose of relieving the poverty, homelessness, distress or disadvantage of individuals or families • For the purpose of relieving the necessitous circumstances of individuals in Australia who are subject to the above conditions. The company will advocate for disenfranchised, disempowered impoverished people as a necessary related function to the above objects and be a voice for the 'voiceless' members of society." 1. The trustees are hereby empowered and directed to hold the property of OLOSS upon the following trusts: 1. as soon as practical after the payment or resolution of all remaining known debts and liabilities of the OLOSS trust, OLOSS or the Trustees, incurred in their capacity as trustees of the OLOSS trust, including any potential taxation liabilities, to transfer or pay, as the case may be, the property of OLOSS to the Foundation on trust for the charitable purpose set out in paragraph 4 above, in accordance with this Scheme. 2. the receipt of the Foundation for the property of OLOSS shall be sufficient discharge to the Trustees without them being bound to see to the application of the property of the OLOSS; 3. the Foundation upon receipt of the property of OLOSS: 1. shall keep the same separate from its general funds (though it may mix the said proceeds with other funds held on trust similar to those on which the property of OLOSS are held) and apply the same, both as to capital and income, for the charitable purposes referred to in paragraph 4 above; 2. subject to paragraph 5(c)(i) above, shall have the same powers of investment of the capital and income of the property of OLOSS as those powers it holds under and otherwise in accordance with its own Constitution; 3. shall maintain accounts of its dealings, income and expenditure of the said capital and income of the property of OLOSS and, until the year after such accounts show the capital and income have been exhausted, publish such accounts annually in its annual reports or in some other suitable manner; and 4. from and out of the property of OLOSS, including any capital, income or investment thereof, shall indemnify the Trustees and otherwise hold them harmless from, for or in respect of all claims, debts and liabilities, of whatsoever kind or nature, arising out of or in respect of OLOSS, the OLOSS trust, the property of OLOSS or acting as trustees of the OLOSS trust.

Amendments 17 October 2023 - Redactions made to schedule 10 April 2024 - [128] - change "$25,000" to "£25,000" 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: 10 April 2024

(UK) Trustee Act 1925(NSW)

At a glance

Court

Decision date

Before

Catchwords

Source

Catchwords

Judgment (23 paragraphs)

Parties

Legislation Cited (4)

Cases Cited (30)

Cited By (2)