Groote Eylandt Aboriginal Trust Inc & Anor v Deloitte, Touche Tohmatsu & Ors... [2017] NTSC 4 | Case summary

Re ComptonGroote Eylandt Aboriginal Trust Inc & Anor v Deloitte, Touche Tohmatsu & Ors... [2017] NTSC 4 | Case summary | Zoe

[38]

[9] It is common ground that the questions are to be answered primarily by reference to the 2008 Trust Deed, namely the deed dated 12 August 2008 as initialled by GEAT's public officer.[10] That is the deed that defined the Trust at the time of the conduct which is the subject of the main litigation. However it will be relevant to consider previous versions of that Trust Deed because the Trust is said to have existed since 25 May 1965.

[10] On page 2 of the Trust Deed the plaintiff, GEAT, is described as being the Association/Trustee and the Church Missionary Society Trust Ltd (CMS) is described as the Settlor. The Settlor did not execute the Deed. Rather it was executed as a deed by the affixing of the common seal of GEAT in the presence of its Public Officer, Rosalie Lalara.

[11] The Trust Deed contains a number of Recitals including the following:

On 25 May 1965, the Settlor became beneficially entitled to the Royalty Payments and these payments were paid to the G.E. Trust.

It is and always has been the desire and intent of the Settlor that all Royalty Payments to which it is or may become entitled be used to establish a permanent Trust for the education, benefit welfare, comfort and general advancement of certain Aboriginal people resident upon Groote Eylandt and Bickerton Island.

On 28 August 1969, the Groote Eylandt Aboriginal Trust Incorporate ('Association/Trustee') was formed for the purpose of acting as trustee of the Trust.

On 7 March 1989, the Settlor and the Trustee entered into a deed of trust ('the Old Trust') to give effect to the charitable trusts originally contemplated with the establishment of the Trustee on 28 August 1969 (with effect from 25 May 1965).

The Settlor, for the purpose of giving effect to such desire, has throughout transferred to the Trust all Settled Property and the Trustee consented to become the trustee thereof subject to the powers and provisions hereinafter expressed.

Following consultation, recommendation and discussion amongst the people of Groote Eylandt and Bickerton Island, certain amendments to the Old Trust were made to better reflect the then present day circumstances of the Trust. During 1995 the Members of the Trustee agreed to amend the terms of the Old Trust to those contained in a new deed of trust dated 25 June 1996 ('the New Trust').

Pursuant to clause 14 of the New Trust, the Trustee may by instrument in writing (for example, by deed or by resolution) revoke, add to or vary all or any of the terms of the New Trust subject to certain restrictions contained within the said clause 14.[11]

On the 13 August 1998, in accordance with the provisions of the New Trust and in accordance with the Association's rules, the Trustee held a special community meeting (SCM) at Angurugu to consult with the Aboriginal people of Groote Eylandt and Bickerton Island and to discuss the financial viability of the Trust for future generations of Beneficiaries.

At the SCM, the Beneficiaries of the Trust agreed with the Trustee that the recent financial decline of the Mothership Fund posed a significant threat to the future of the Trust.

A majority (in excess of two-thirds) of the beneficiaries present at the SCM voted in favour of the Trustee amending the provisions of the New Trust (and rules of the Association) so as to effectively and lawfully conserve the then present value of the Trust Fund with a view to achieving long-term growth of the Mother ship fund.

The Beneficiaries approved the Trustee's recommendations:

(i) to ensure that the Mothership Fund is not used to pay any costs associated with the administration of the Expenditure Fund;

(ii) to ensure that the distribution of Grant Money is made from the Expenditure Fund and is not made from the Mothership Fund;

(iii) to use the Mothership Fund to pay costs and expenses which are necessary for:

(a) the preservation and maintenance of Trust assets; and

(b) the operation and administration of the Trustee and the Trust;

[74]

[24] In its Statement of Facts, Issues and Contentions the plaintiff makes three main contentions:

(a) The plain and obvious intention of the Trust Deed, including in its various earlier forms, was to create a charitable trust. The governing principle is in clause 2 and in particular the express words: "exclusively for such charitable purposes (in the strict legal sense)".

(b) The Trust is a trust for the relief of poverty and thus a charitable trust of the kind permitted under Dingle v Turner.[17] It is presumed to be for the public benefit.

(c) Alternatively, the potential objects of benefaction (loosely referred to as the class of beneficiaries) constitute a section of the public for the purposes of the law of charitable trusts. Accordingly the Trust is still a charitable trust if some of its purposes are not for the relief of poverty but all fall within one or other of the four Pemsel[18] categories (or are ancillary to such a purpose).

[25] The third defendant advances two main reasons why it says the Trust is not a valid charitable trust:

(a) the purposes of the Trust include purposes which are non-charitable such as the promotion of sport and social facilities;[19]

(b) the class of beneficiaries who are entitled to benefit from the Trust are of a closed class because the members are defined by reference to their relationship with a single propositus or several propositi such that the Trust does not satisfy the public benefit test.[20]

[26] As to the second point, the third defendant contends that the beneficial objects of the Trust are persons who are identified by reference to their relationship with a propositus or propositi: that is, they need to be members of the traditional clans of Groote Eylandt and Bickerton Island, the membership of which is via a patrilineal connection.

[27] Unless the Trust is limited to the relief of poverty it is and always has been invalid because it does not comply with the principles set out in Compton,[21] and Oppenheim.[22] Here the Trust is not solely for the relief of poverty. The Trust Deed permits the funds to be used for non-charitable purposes and it is therefore void. In the result, the Trust is not a valid charitable trust.

[77]

[33] At the time of European settlement it is likely that Groote Eylandt, Bickerton Island and nearby waters were occupied by a group of people more recently known as Anindilyakwa people under laws and customs pursuant to which they and their successors held rights of possession in the land to the exclusion of all others.[23]

[34] The indigenous language of the islands is Anindilyakwa. The traditional owners of the islands identify themselves, and are identified by their neighbours on the mainland, as Anindilyakwa people.

[35] At all material times:

(a) the Aboriginal people of the islands have belonged to various "clans";

(b) membership of a clan is primarily by patrilineal descent, although matrilineal descent may also attract traditional responsibilities, and there are other ways to become a member of a clan in unusual circumstances, such as where a person's father is European;

(c) upon marriage, a woman does not cease to be a member of her original clan but both husband and wife acquire some rights and responsibilities in connection with each other's clan estates, which are contingent on the maintenance of the relationship;

(d) identification of clans is by ancestral connection too remote in time to be historically or objectively verifiable, in the sense that the Aboriginal people believe that the clans have existed from time immemorial and are believed to be descended from spiritual ancestors.

[36] The earliest remembered ancestors may be a set of classificatory siblings, who are themselves believed to be descended from an unnamed common ancestor of the past who had interactions with a mythological ancestral being.[24]

[37] Each clan is associated with totems, tracts of country focussed on important mythological sites, and the travels of ancestral heroes (linked by dreaming tracks).[25] The Anindilyakwa people believe that they are connected with mythological beings who interacted with a clan's ancestors and are manifested as features of the landscape.[26] These interactions are believed to have happened beyond living memory.[27] "Clans are totemic groups and each clan has a totemic story."[28]

[38] Each clan is associated with a particular area of land and sea referred to as "country" or by anthropologists as an "estate".[29] A clan is a "land owning entity".[30] I take this to mean that the clan holds the primary rights and responsibilities in its "country" or "estate".

[39] According to Turner, "an individual is born with a spirit from another realm of existence in a particular stretch of country - always the country from which the father's spirit came." Individuals of the same generation in the same clan group are spiritually equivalent and refer to members of other groups and members of their own group by the same terms.[31]

[40] Each clan of the islands has one or more names. Additionally, in more recent times, there has been a formalisation of surnames based upon clans, chosen partly for their ease of pronunciation by non-indigenous administrators, which have become common in the way clans are referred to. The clan names all relate to a feature of their mythology and spiritual ancestry, or the physical characteristics or a location in their country. There are approximately 14 traditional clans of Groote Eylandt and Bickerton Island.

[41] There has been a degree of interaction (ceremonial, mythological, marriage and kinship) between the Anindilyakwa peoples and mainland groups (for example, the Warnungwamadada (Lalara) clan has country on Groote Eylandt as well as on the mainland and Bickerton Island).

[42] It is common ground that the Anindilyakwa people of Groote Eylandt attempt to live, as much as is possible, a traditional lifestyle, and the maintenance of cultural and traditional practices form an important part of their lifestyle.[32]

[43] Census statistics indicate that the Aboriginal population of the two islands was over 800 in 1969, almost 1000 in 1986, almost 1200 in 1991, about 1500 in 2001, over 1400 in 2006, over 1500 in 2011 and more than that now.

[44] The plaintiff and the third defendant both tendered a lot of evidence about housing, education, employment, wages and earnings for Aboriginal people on the islands. In short that material shows that there has been, and remains to be considerable over-crowding in houses, only about one third of the relevant population having been educated to year 10 or higher, a very low level of employment, and the majority earning less than $21,000 per annum.

[78]

[45] On 15 May 1920, Groote Eylandt was gazetted as a reserve for Aboriginals under the Aboriginals Ordinance 1918.

[46] The first recorded European settlement on the islands was by members of the Church Missionary Society Trust Ltd (CMS) which established a mission at Emerald River on Groote Eylandt in 1921. A flying boat base was established near present day Umbakumba in 1935. BHP established a mine and built a township at Alyangula in 1963.

[47] No non-indigenous settlement has occurred on Bickerton Island.

[48] In 1961, CMS obtained Permits to Enter on behalf of the Aboriginal community on Groote Eylandt, entitling it to prospect and apply for Mining Titles in the area of the permit.

[49] By agreement dated 7 June 1963, between CMS and BHP, CMS transferred its rights to BHP in consideration of terms that included the payment of an annuity and royalties (payable to the Anindilyakwa people) for the lifetime of any leases, enabling BHP to mine manganese or other minerals in the area of the permits.

[50] On 25 May 1965, mineral leases on Groote Eylandt were granted to BHP and thereafter transferred to GEMCO, a wholly owned subsidiary of BHP.

[51] The islands were part of a larger number of islands which were described as the Arnhem Land (Islands) in Schedule 1 of the Aboriginal Land Rights (Northern Territory) Act 1976 (Cth) (ALRA). Accordingly they became Aboriginal land and were vested in an Aboriginal Land Trust "for the benefit of Aboriginals entitled by Aboriginal tradition to the use or occupation of the land ... whether or not the traditional entitlement is qualified as to place, time, circumstance, purpose or permission."[33]

[52] One effect of that vesting was to restrict access to the islands by non-Aboriginal persons to those issued with a permit under the ALRA or the Aboriginal Land Act 1979 (NT).

[53] In 1991 the Anindiliyakwa Land Trust (ALT) was established as the relevant land title holder for the islands pursuant to s 4(2A) of the ALRA. The ALT's functions are undertaken at the direction of the Anindiliyakwa Land Council (ALC) in accordance with the ALRA.

[110]

[74] I agree with the submissions made on behalf of the plaintiff that this deed continued the trust that had been documented in the 1989 Trust Deed.

[75] In particular the clause which identified the purpose of the Trust(clause 2) was in substance the same as its 1989 predecessor (clause 4).

[76] There were two relevant differences however:

(a) clause 2 of the 1996 Trust Deed (and its successors) described the potential objects of benefaction as "the Beneficiaries" (the definition of that term referring to the clan criterion before referring to the residency criterion) rather than as "the objects of the Trust" (which referred to the residency criterion before identifying the clans); and

(b) clause 2 of the 1996 Trust Deed (and its successors) omitted the additional provisions identifying particular "purposes" of the trust, more properly being powers and uses, and dealt with these separately in clause 4.

[77] Another difference between the two deeds was to describe the potential objects of benefaction, "the Beneficiaries", by reference to their membership of "the traditional clans" of the islands and "their successor generations" rather than their membership of one or other particular named clan.

[78] I agree with counsel for the plaintiff that the different order of the two criteria as between the two definitions, and the addition of the temporal clause "and their successor generations" in the New Trust Deed, are of no relevant consequence. The changes were plainly effected out of an abundance of caution but not so as to change the intended meaning, that the essential purpose of the Trust is to provide financial assistance (directly or indirectly) to the indigenous residents of the islands at any time and from time to time for so long as the Trust endures. Further, the reference to "successor generations" more clearly reflected the intention to allow for a change in the composition or identity of the clans on the island.

[79] The other main difference between the deeds of 1989 and 1996 was to introduce, by clause 4, a provision that provided for the allocation of a percentage of the income of the Trust Fund and to expressly state how the money could be used. This had the effect of more clearly distinguishing between the purpose of the Trust on the one hand (previously reflected in the first sentence of clause 4 of the 1989 Trust Deed), and the uses to which the trust fund could be put (previously reflected in the remainder of clause 4 of the 1989 Trust Deed).

[80] The opening words of clause 4.2 of the 1996 Trust Deed, capitalised and underlined, emphasised the desire of the drafter of the deed to ensure that despite the various descriptions of potential uses, the Expenditure Fund could only be used for charitable purposes. The intent that the Trust remains a charitable trust is also manifest in clauses 14.3 and 14.4 of the 1996 Trust Deed.

[150]

[108] The plaintiff contends that the predominant and governing provision in the Trust Deed is clause 2, that being the clause which identifies the purpose of the Trust. Counsel stresses the words "exclusively for such charitable purposes (in the strict legal sense) ...". The clear purport of clause 2 is to create a charitable trust within the limits of what the law permits to constitute a charitable trust. That is conclusive of the character and status of the Trust in law and does not require reference to any background facts or surrounding circumstances existing at the time of execution of the Trust Deed.[75]

[109] Counsel submitted that clause 2 is, in effect, a self-validating provision: that is to say, it declares the Trust to be a charitable trust to the extent permitted at law. Accordingly the purpose or purposes of the Trust will be read down into validity to the extent necessary, and any specific object such as any of those in clause 4.2 of the 1996 Trust Deed or in clause 6.3 of the 2008 Trust Deed is expressly made subject thereby to a valid charitable purpose.[76]

[110] Counsel also pointed to the clear words of intention expressed at the start of clause 4.2 of the 1996 Trust Deed: "subject to the requirement of charitable purpose".[77] See also, similar express wording in clauses 4.2 and 4.3 of the 1998 Trust Deed.

[111] From 1 January 2005, when the four separate funds were established, in particular the Charitable Grant Fund, the relevant part of the deed commenced with the words: "Without limiting the generality thereof, the Charitable Grant Fund may be applied towards the following charitable purposes: ...". See clause 4.4.2 of the 2004 Trust Deed[78] and the 2005 Trust Deed,[79] and clause 6.3.2 of the 2008 Trust Deed.

[112] Counsel for the Attorney-General also referred to clause 14 of the 2008 Trust Deed, which confers very broad discretions upon the Trustee in the exercise of its powers, pointing out that those discretions are confined by the opening words: "Subject always to any express provisions to the contrary herein contained".

[113] I agree that the clear intent of the trust deeds is that the Trust is a trust for charitable purposes and that the trust funds can only be used for such purposes. This is particularly clear not only from the wording in clause 2 but also from the various other provisions that have been included in the trust deeds at various times.

[197]

(1) This section applies to a purpose that an entity has if:

(a) the purpose is directed to the benefit of Indigenous individuals only; and

(b) the purpose is not for the public benefit under this Division (disregarding this section) only because of the relationships between the Indigenous individuals to whose benefit the purpose is directed.

(2) The purpose is treated as being for the public benefit if the entity receives, holds or manages an amount, or non-cash benefit (within the meaning of the Income Tax Assessment Act 1997), that relates to:

(a) native title (within the meaning of the Native Title Act 1993) or traditional Indigenous rights of ownership, occupation, use or enjoyment of land.

[150] Counsel submitted that this is an acknowledgment that, in equity, such trusts lack the necessary characteristic of meeting the public benefit test. Without that legislative widening of the definition of "charity" in the Commonwealth legislation, such trusts in respect of native title interests would not obtain the generous taxation benefits granted to charities. Such a provision would not have been necessary if a trust of the kind, the subject of this matter, did have the necessary characteristic of meeting the public benefit test. I reject those submissions.

[151] Apart from the fact that s 9 only relates to a purpose that is not otherwise for the public benefit only because of the relationships between the Indigenous individuals to whose benefit the purpose is directed, the deeming applies to a wide range of entities, many of which would not normally satisfy the public benefit requirement because their membership is comprised of a group of individuals who constitute a group solely because of their quasi-contractual relationship with each other.

[152] A common example would be where an applicant has been authorised under s 251B(b) of the Native Title Act 1993 (NTA) to make a claimant application in the Federal Court under s 61 of the NTA on behalf of a "native title claim group". The status of such an applicant is no different in effect to that of an applicant in other litigation, such as in a class action, authorised to bring and maintain a court proceeding on behalf of a group of individuals who would not be a relevant "section of the public". Once a claim is registered the applicant acquires certain statutory rights such as the right to negotiate, the exercise of which may well result in the applicant or some other entity holding money in trust, on some occasions on behalf of those individuals who called and attended the original authorisation meeting and constituted themselves as the native title claim group. The purpose of such a trust would appear to be an obvious example of a purpose "that relates to" native title that might not normally be a purpose for the public benefit. Such a group or entity would be unlikely to constitute a relevant section of the public for the purposes of charitable trust law.

[153] The situation would be different where the entity comprises all of the native title holders (that is, those who actually hold the native title) or a registered native title body corporate.[97] I consider that the group, comprising all of the native title holders, would constitute a section of the public because its membership comprises those who possess communal rights and interests in the land under their traditional laws and customs and by those laws and customs have a connection with that land.[98]

[154] The same would apply in relation to the members of the traditional clans of Groote Eylandt and Bickerton Island. As a consequence of that status they hold rights in the land pursuant to their traditional laws and customs. They hold those rights irrespective of their relationships with any particular individual or individuals. Moreover those rights are of a communal nature, not personal.

[155] That the members of the traditional clans have traditional and communal rights in the land is also recognised by statute, namely ALRA. As noted previously, the title held by the Anindilyakwa Land Trust is for the benefit of Aboriginals entitled by Aboriginal tradition to the use or occupation of the land.

[199]

[157] Counsel for the third defendant submitted that this exception (conveniently described for present purposes as a nationality exception) arises in some cases because of the reference in Lowe J's decision in In re Income Tax Acts (No. 1) to groups into which the community is divided by necessary organisation or by convention seems to countenance and accommodate a class of cases which have allowed charitable trusts to operate for the benefit of people with a particular nationality, provided the requisite charitable purpose is otherwise shown.

[158] For example, charitable bequests limited to persons connected with Ukraine were approved in Kostka v The Ukrainian Council of NSW Inc,[99] as was a trust for the benefit of ex-servicemen who were Protestants of Scottish or British descent in Re Gillespie.[100] In other words the trusts were defined by nationality. In Kostka, at [38], Young AJ adopted the statement in the 9th edition of Tudor on Charities that "a trust to relieve the need of members of a particular ethnic group in a geographical area is charitable even if the number of members of that group is small".

[159] Counsel for the third defendant submitted that the nationality exception is not relevant in this case. The trusts in this case were not for persons of any nationality, nor even for "Aboriginals" as a group.

[160] I disagree. Just as persons of a particular nationality, for example Ukrainian, Scottish or British, may be regarded as a relevant section of the public, presumably because their status is more than a purely personal relationship with a particular propositus or propositi, so too should be a group of Aboriginal people who reside in a particular place, and more so a group of Aboriginal people who not only reside in a particular area but also have communal rights in that area based on their traditional laws and customs. There is nothing arbitrary or capricious about the membership of the traditional clans. Indeed they are akin to the "groups into which the community is divided by necessary organisation or by convention" referred to by Lowe J in the passage adopted by Dixon CJ in Thompson quoted in [146] above.

[204]

[163] In Aboriginal Hostels Ltd the plaintiff company operated a number of hostels for Aboriginal people. It claimed exemption from the payment of rates on the basis that the land was occupied for the purposes of a public benevolent institution or a public charity. It is not clear from the report whether or not the company owned the land in question although it was agreed that it used and occupied the land for the purposes of providing Aboriginal hostels. The purpose of the company, as identified in its constitution, was to provide benefits to Aboriginal persons generally.

[164] In relation to the question of whether or not the company (which appeared to own its assets both legally and beneficially) was a public charity, Nader J referred to the orthodox principles concerning the requirements of a valid charitable trust including that, "[t]he potential beneficiaries must not, however, be negligible numerically. The character that marks the potential beneficiary must not be a relationship to a particular person or persons such as one of blood or employment."[103] In support of that statement Nader J cited Lord Greene MR in Compton. His Honour also accepted the proposition that the question of validity did not turn on how the trust actually operated but on what were the terms of the enforceable obligations in the trust deed.[104] In determining that the trust was valid his, Honour observed that the persons for whose benefit the trust was established were persons of "Aboriginal" descent. Nader J considered that the provision of places of rest for Aboriginal persons was a charitable purpose which was analogous to the provision of relief against poverty. It is accepted that his Honour also concluded that the class of persons of Aboriginal descent was sufficiently wide so as not to be an invalidly small class.[105] Counsel submitted that that is an orthodox application of the accepted principles where a trust for a charitable purpose is identified to benefit a particular race of persons. I agree.

[221]

[175] Counsel for the third defendant also relied on the decision of Mildren J in the Court of Appeal in Alice Springs Town Council v Mpweteyerre Aboriginal Corporation and others.[113] Counsel submitted that the Court applied the orthodox principles concerning the requirements for a valid charitable trust. In particular, the Court applied the Compton - Oppenheim principles so as to ensure that the trust in question was for a sufficiently wide group of persons and not confined to the members of the association in question.

[176] The case concerned town camps in Alice Springs for Aborigines which were held by a number of associations and corporations under leases from the Crown. Although the lands in question were entered into the rate book the appellants asserted that the land was exempt from rates on the basis that the land fell within the exception of "land used or occupied for the purposes of a public hospital, benevolent institution, or charity". The question before the Northern Territory Court of Appeal was, inter alia, whether or not the land was being used for the purposes of a charity.

[177] The expressed objects of the associations include the relief of "poverty, sickness, distress, suffering, misfortune and helplessness of Aboriginal people in Central Australia". After referring to what Nader J had said in Aboriginal Hostels about Aboriginal persons living in poverty and a dictionary definition of "poverty" Mildren J (with whom Martin CJ agreed) said that it is a notorious fact that most camp residents of Alice Springs are, if not destitute, in a condition of poverty.[114] His Honour also considered that the terms of the relevant "trusts" (or purposes of the Aboriginal corporations) which provided benefits to the members of the associations or other needy Aboriginal people, lead to the conclusion that the trusts were for the relief of poverty.[115]

[178] However, his Honour also concluded that the trusts were established for other charitable purposes such as education and that any other uses were not merely ancillary to the main charitable objects. Given that the trust was not solely for the relief of poverty the Court was required to consider whether the trusts were for the public benefit. His Honour said:

[225]

[180] The Court, therefore, found that the associations and corporations were charities and that the relevant land was being used for charitable purposes.

[181] Counsel for the third defendant contended that the essential importance of the above decision is that the Court of Appeal recognised the need to satisfy the Compton-Oppenheim principles, and that the class of persons benefited cannot be limited to persons having a relationship with a particular individual or individuals.

[182] By way of footnote to this contention counsel submitted that "this seems to have been accepted in Shire of Ashburton v BindiBindi Community Aboriginal Corporation[118] where it was said that whilst a trust for the benefit of Aboriginal persons generally might be valid (assuming that it was for charitable purposes) but that, 'It would be consistent with those cases to find that a purpose of advancing some particular group of Aboriginal persons might fall outside the scope of a charity'."[119] The rest of that sentence (in [24] of Wheeler J's reasons) stated: "as I understand it, the defendant conceded this proposition and suggested, for example, that the purpose of advancing well-paid Aboriginal football players would at least require close scrutiny. However no such exception arises here."

[183] I consider that the third defendant's contentions that the above cases "consistently apply Compton - Oppenheim principles" and that the Court of Appeal "recognised the need to satisfy the Oppenheim - Compton principles" place too much emphasis on the relevance of those "principles" to the cases at hand. For example, all that Mildren J was saying in the Alice Springs case was that there was nothing in the relevant constitutions which limited the class in a way that would infringe those principles.

[184] Nor have I been able to find any reference in those cases to "tribes" or "clans". Those cases provide no support for the contention that a class comprising the members of one or more tribes or clans would conflict with the Compton - Oppenheim principles.

[185] I was also referred to the following authorities.

[226]

[186] Latimer v Commissioner of Inland Revenue[120] concerned a trust established to administer payments made by third-party commercial purchasers for the sale by the Crown of tree crops on Crown forestry land and by way of rental for the use of the land. The interest earned on the investment of the rental proceeds was to be made available to assist Maori people in the preparation, presentation and negotiation of claims before the Waitangi Tribunal, which involved lands covered by the agreement. If the Tribunal recommended that any such land be returned to Maori ownership, the relevant Maori owners became "confirmed beneficiaries" and the trust was required to pay all of the rental proceeds in respect of the land affected to the successful Maori claimants. If the Tribunal recommended that any particular land not be returned to Maori ownership, the Crown became the "confirmed beneficiary" and entitled to the rental proceeds in respect of that particular land.

[187] The trial judge, O'Regan J, held that assisting the particular class of Maori claimants was a charitable purpose, and that the beneficiaries were a section of the public. His Honour found that the case was broadly analogous to cases concerning trusts for Australian Aborigines citing _Re Mathew, deceased[121]_and Flynn v Mamarika. However, as the Crown was entitled to some of the monies, the applicant was not successful in obtaining the tax exemption sought because the relevant legislation required that the trust be exclusively charitable.

[188] The applicant appealed against this construction of the legislation and the respondent cross appealed against the finding that the purpose of assisting the defined class of Maori claimants was a charitable purpose.

[189] The judgment of the Court of Appeal was delivered by Blanchard J. The Court agreed that the purpose of assisting Maori in the preparation, presentation and negotiation of claims before the Waitangi Tribunal involving the relevant land was a charitable purpose, falling within the 4th of the Pemsel categories. At [31] Blanchard J quoted what Lord Macnaghten said in Pemsel at 593:

[232]

[191] The Court of Appeal concluded however that the payments of monies to the Crown were not for a charitable purpose. Consequently the trust monies were not exclusively for charitable purposes and thus not exempt from income tax.

[192] Counsel for the third defendant sought to distinguish these conclusions on a number of bases.

(a) The Court of Appeal's decision was overturned by the Privy Council and thus is no authority for what is said in [38] of the reasons.

(b) The only issue resolved by the Court of Appeal was the question of public purpose and what the Court said in [38] was therefore purely obiter.

(c) Blanchard J misstated the test in Oppenheim in that he apparently considered that the limitation was upon trusts where the beneficiaries were identified by reference to a common individual or employer. In fact, the limitation is on trusts defined by reference to a common person or persons.

(d) The distinguishing of Oppenheim is unsatisfactory and appears to have been tainted by policy considerations, as the mere fact that the Law Lords in Oppenheim may not have had tribal or clan groups of ancient origin in mind says nothing of whether those groups should be considered a sufficient section of the public for the purposes of the law of charity. It is difficult to differentiate between the large clans of Scotland or Ireland on the one hand and large clans of Maori on the other. Trusts for either would be invalid under the Compton - Oppenheim principles.

(e) Even if the comments of the New Zealand Court of Appeal had some greater authoritative value, the Compton - Oppenheim principles have consistently been applied when dealing with "tribal or clan groups of ancient origin" in Australia.

(f) The conclusions of the Court of Appeal presume a commonality of cultural practices amongst the Maori community in New Zealand which cannot necessarily be applied to indigenous communities in Australia. It is only necessary to support this proposition to refer to the fact that there is vast variation in native title rights and practices across different clans in Australia, including, for instance, whether rights are held entirely communally or individually.[122]

(g) In any event, the Court of Appeal found that the trust in question was not a charitable trust (because of the gift over to the Crown) with the result that its comments on whether or not the groups of Maori would constitute a section of the public were obiter for that reason as well.

[193] I do not agree that these are relevant distinctions between Latimer and the present matter.

[194] The issue before the Privy Council[123] was whether the Court of Appeal was correct to conclude that the existence of the ultimate trust in favour of the Crown deprived the trust of charitable status. The Privy Council decided that the monies held by or repayable to the Crown could not be regarded as gifts for some limited purpose. Rather the monies remained tax exempt income of the Crown. At [42]:

[234]

[195] Consequently the only income that was potentially taxable was the income needed for the purpose of assisting Maori to prosecute their claims and income payable to successful claimant groups. It having been accepted that the relevant trust was for charitable purposes the income was tax-exempt.[124]

[196] Accordingly, although the decision of the Court of Appeal was overturned by the Privy Council, this had nothing to do with the Court of Appeal's conclusions that the trust in favour of the Maori met the requirements of a valid charitable trust, both as to public purpose and benefit to a section of the public. There is nothing in the statements of principle by the Judicial Committee which would suggest any disagreement with what the Court of Appeal had said about those matters, and the conclusions that assisting Maori claimants to pursue their claims was a charitable purpose.

[197] To the extent that the views expressed by the New Zealand Court of Appeal might be obiter and not binding in this Court, I find them extremely persuasive and relevant to the present issue.

[198] Nor can I find any proper basis for the contention that the Compton - Oppenheim principles have consistently been applied when dealing with "tribal or clan groups of ancient origin" in Australia. As authority for that contention counsel referred to the Northern Territory decisions in Aboriginal Hostels Ltd v Darwin City Council and Alice Springs Town Council v Mpweteyerre Aboriginal Corporation. But neither of those matters involved tribal or clan groups of the kind the subject of this matter. Rather, they concerned the status of Aboriginal people irrespective of any particular tribal or clan affiliation.

[199] Further, I consider that the submissions regarding the clans of Scotland and Ireland, presumptions of common cultural practices amongst the Maori community in New Zealand and variations "in native title rights and practices across different clans in Australia" are unnecessarily distracting.

[200] Although anthropologists and others use the word "clan" to conveniently describe particular groups of Aboriginal people who hold, inter-alia, rights and interests in land, there is no reason to equate such clans with groups of people in Scotland and Ireland also described as "clans", apparently by reason of their occupation of particular lands previously occupied by a particular known ancestor.

[201] Further, there is no basis for inferring that the fundamental rights held by members of the traditional clans are other than communal. Not only is this clear as a matter of fact[125] but also as reflected in the common law as understood following Mabo [No 2] and under ALRA. Like the iwi or hapū groupings within the Maori, it is the traditional clans which hold and have held the rights and interests in their own lands according to the laws and customs which apply to them. Moreover, in both cases, it is their land which has been used to generate the monies which have been put in trust for their benefit.

[202] Individual members of the Beneficiaries are potentially entitled to receive benefits from the Trust not on the basis of their personal relationship with a particular person or persons, but on the basis of their membership of a section of the public which holds the communal rights in the land, and in particular in the land associated with the generation of the royalties.

[203] As I have said, I find the relevant passages in Latimer compelling and particularly relevant to the section of the public issue in this matter.

[238]

[209] Counsel for the third defendant contended[129] that unlike those charitable trusts which have been held to be valid for the benefit of certain Aboriginal people, this Trust adds the additional qualifier that the beneficiaries be those permanently resident on the islands, who are members of the traditional clans, and their successor generations. This expression has the consequence that the Compton-Oppenheim principles will apply to invalidate the trust regardless of whether the beneficiaries are identified as either:

(a) members of the traditional clans of, and permanently resident on, Groote Eylandt or Bickerton Island, at the time of the settlement of the trust, and the descendants of those individuals; or

(b) members of the traditional clans of Groote Eylandt or Bickerton Island, and their descendants, who permanently live on Groote Eylandt or Bickerton Island.

[210] Although a charitable trust for the benefit of persons in a particular locality and similar to the first interpretation (although, critically, not limited to a clan or family) was held to be valid by Evershed J in In Re Tree,[130] that decision was soundly criticised by the House of Lords in Davies v Perpetual Trustee Co Ltd (supra) as being only sustainable on the basis that it was a trust for the relief of poverty. Davies is instead authority for the proposition that where the beneficiaries are descendants of ascertainable particular persons known at a particular time, the trust lacks the necessary public purpose.

[211] Regardless of which interpretation is correct the class is undoubtedly limited by the objects' relationship to a propositus or propositi and is therefore, invalid.

[212] Here the anthropologists are agreed as to the nature and existence of clans on Groote and Bickerton Islands and that membership is personal to each individual. They are closed groups to which entry is restricted by one's relationship with apical members whether directly or through marriage. It follows that in order to be a beneficiary of the trust a person is required to have a relationship with the apical members of the clans and the requirement of that relationship invalidates the trust as a charitable trust. That would be so even were it the case that all that was required was a "substantial degree of ancestral connection"[131] as that implies that those who claim membership of the clan descend from named or ascertainable apical ancestors.[132] This is because a connection with apical ancestors (which the clan groups presumably identify by) implies a personal connection of the beneficiaries to "a single propositus or several propositi". That is, membership was restricted on the basis of traditional law and customs permitting certain persons entry because of some connection with the other members (c.f. an impermissible charitable donation to very extended families),[133] and is a substantially smaller class than all persons of a particular nationality or all Aboriginal people living in a particular area.

[213] It follows that the GEAT is not a valid charitable trust because it fails the Oppenheim test and it lacks the necessary public benefit.

[214] Later in their written submissions counsel for the third defendant referred to the Original Trust Deed as providing additional support for their contentions.[134] Counsel submitted that the preferable interpretation of the Trust Deed may be influenced by the Original Trust Deed, as it was amended in 1996 in a relevant respect. That amendment replaced the definition in the Original Trust Deed of the objects with the definition of Beneficiaries set out in clause 1.1 of the 1996 Trust Deed, by removing clause 3, which had provided that:

[244]

[220] The submissions of the third defendant such as those set out in [210]and [212] above, fail to recognise the significant difference between descent from one or more "ascertainable particular persons known at a pa[136]cular time"136 (or propositi) and descent of the kind involved in classifying people into definable and practical groups under traditional law and custom.

[221] This distinction is well demonstrated by reference to the discussion by the Full Court of the Federal Court in Ngadju in and following the passages to which the third defendant referred in the submissions noted in [[212]
[222] Whilst one would normally identify one or more particular "ascertainable" persons as ancestors through whom one belongs to the relevant group, whether it be described as a "native title holding group" (under the NTA), a "local descent group" (under ALRA) or a "clan", it is not one's descent from that particular person or persons that permits and defines one's membership of the group.

[223] In the case of the traditional clans the members of which comprise the Beneficiaries under the Trust, the "rules" that define them and their membership are much more complicated than descent from one or more particular ascertainable persons. Not only are the "rules" based upon descent from one or more persons who have belonged to and owned a particular area of land on a communal basis (sometimes referred to as an "estate") from time immemorial (and could never be "ascertainable"), they are also based upon mythical ancestors some of whom are believed to have created the land and its features and bestowed the rights in the land and features to others who are now described as clans.

[224] Unlike the circumstances such as those in many of the cases relied upon by the third defendant, including Compton, Oppenheim, Davies, Thompson and In re Income Tax Act (No 1), the description of the class or the rules for membership of the class cannot be altered arbitrarily, for example by a testator changing his will or by an association altering its membership rules or having the ability to include or exclude particular people from the class.

[245]

[225] It is clear that the primary aim of the Trust was to provide benefits to those Aboriginal people most likely to suffer as a result of the mining operations and most likely to obtain meaningful benefit from the royalties payable as a result of those mining activities. Of fundamental importance would have been those Aboriginal people who would have been thought to have traditional rights and interests in the land and whose ability to continue to exercise those rights may be affected by the mining activities. A convenient way of describing those Aboriginal people with traditional rights and interests in the land was to use the terms "clan" and "traditional clans". A convenient way to exclude those whose rights may not be affected by mining activities because they were not living on or using the land, was to confine the potential beneficiaries to those permanently resident on the islands. It also made much more sense to expressly refer to "successor generations" to ensure that the benefits would continue to flow for so long as the mining activities continued and beyond then funds permitting.

[226] The fact that those Aboriginal people with traditional rights and interests in the land affected are conveniently described as clans and their members, and that membership of the clans is described by reference, inter alia, to the ancestors of their members, is relatively incidental. In substance, the Trust was designed to benefit the particular section of the public which was thought to have traditional rights and interests in the land affected by the mining operations. It just so happens that those people are the members of groups, described as clans, which have held those interests from time immemorial. The existence and characteristics of those groups predate the time when any particular person or event can be identified as a "propositus" or "propositi".

[227] Further, contrary to the submissions noted in [214] - [215] above, I consider that the fact that the Original Trust Deed specifically named the clans said to have relevant traditional rights and interests in the islands and that the subsequent deeds simply referred to the "traditional clans" makes no difference to the conclusion that the intention was to advance the interests of a relevant section of the public, not those of a private group of people.

[248]

[234] I reject any contention that the class of objects of benefaction is too small to comprise a section of the public. It is well established that a particular group may constitute a section of the public notwithstanding that the number of members of that group is small. The only requirement is that the membership is "not numerically negligible".[140] Even the class in Compton comprising 26 members was not held to be too small.

[235] In any event, there is no factual basis for the third defendant's contention that the class that was identified in any of the trust deeds was or "is a substantially smaller class than ... all aboriginal people living in a particular area", namely Groote Eylandt and Bickerton Island.

[236] Rather, the evidence suggests that a substantial number of the Aboriginal inhabitants of those islands either belonged to or were associated with one or more of the clans. No doubt, over the 50 years or so since 1965, with the assistance of funds provided by the Trust and other sources and with the progress of modern transport, more and more Aboriginal people who have been members of one or other of the clans have been able to leave the islands and reside elsewhere. On the other hand the population records indicate that the indigenous population has increased substantially since 1965.

[237] Further, Dr Sansom's conclusions about marriages of the men within the Warnindilyakawa (Mamarika) clan, the largest of the Groote Eylandt clans, and his opinion that "the marriage community made up of Groote Eylandt and Numbulwar clans is one of the most endogenous populations in the world", suggests that a large number of the female members of Groote Eylandt clans are married to men from other Groote Eylandt clans. Accordingly it is likely that most of the Aboriginal men, women and children residing on Groote Eylandt at any given time fall within the definition of Beneficiaries.

[238] Whatever the size of the clan populations at any relevant time, I infer that the persons constituting the clans represent a significant section of the community for the purpose of any public benefit test.

[253]

[245] No authority was advanced in support of this contention. Rather the contention appears to ignore the fact that it is not necessary for every potential object of benefaction to be eligible for a grant at every point in time, or for that matter ever. It is uncontroversial that there may well be individuals within the relevant section of the public who would never be eligible to receive a grant.[143] There may be others who are entitled to a grant of a particular point in time, for example if they are destitute or in need of medical care, but not at other times, for example if they have acquired a windfall of money or resume good health.

[246] I agree with the following submissions made by counsel on behalf of the plaintiff. If the third defendant's contention were valid, there could never be a charitable trust for the relief of poverty, or at least where the potential objects of benefaction are in any way identified, because it is an inevitable possibility that there will be people within that class who may not be in need of relief from poverty at any particular point in time (including, perhaps, by reason of their receipt of benefaction). The same is true of any trust for other of the recognised charitable purposes. The result would be, on the third defendant's contention, that any charitable trust which extended to the possible benefaction of a person who came into wealth, for instance, at the Darwin casino, would be rendered invalid in toto.

[247] Accordingly, any evidence as to the financial position of any particular object of the Trust at any particular time is irrelevant, including evidence which might be sought to be adduced to show that Trust Funds have been paid to a particular person or persons in the past, apparently for the relief of their impecuniosity, in circumstances where such payment was not justified having regard to the charitable nature of the Trust. Any such evidence can have no bearing upon the interpretation of the Trust Deed and the character of the Trust and could only be relevant, if at all, to a subsequent question of breach.[144]

[248] I reject that part of the Defence.

[254]

[249] In the event that I am wrong in my conclusion that the Trust is for the benefit of the public or some section of the public, I need to consider the plaintiff's contention that the Trust is a trust for the relief of poverty and thus a charitable trust of the kind permitted under the exception to the Compton - Oppenheim requirements acknowledged in Dingle v Turner.[145]

[250] The exception, as stated by the House of Lords, is limited to cases where the gift is "for the relief of poverty amongst a particular description of poor people", but not "a gift to particular poor persons, the relief of poverty among them being the motive of the gift."[146]

[251] A trust which has as its purpose the relief of poverty is presumed to be for the public benefit. This principle has been followed in Australia by the Full Court of South Australia in In Re Hilditch.[147] See too Davies v Perpetual Trustee Co Ltd [1959] AC 439.

[252] The justification of the exception, from a policy perspective, is that "the relief of poverty is of so altruistic a character that the public benefit may necessarily be inferred",[148] although other decisions have treated the exception merely as one too ingrained, albeit inconsistent, to be overruled.[149]

[253] In order for a trust to be for the relief of poverty the court needs to reach a conclusion, after considering all of the terms of the trust, that there is a connotation in the trust that its sole object is for the relief of poverty.[150]

[254] As the third defendant points out, in this matter there are no words in the Trust Deed which characterise all of the purposes to which the money may be put as being for the relief of poverty. The objects are not defined by reference to any impoverished state such as "poor members of the clans" or "persons in necessitous circumstances" or "deserving" or otherwise. In Re Gillespie[151] Little J was concerned with a gift which was to a certain defined class of persons who were identified as being "in genuine need of financial assistance and in particular shall or may require such assistance in order to pay a balance of purchase price owing on his or their home or family property or to repay a mortgage on such home or family property". His Honour found that the description "in genuine need of financial assistance" gave rise to a dominant intention to relieve poverty. The third defendant points out that no such description, or anything like it, exists in the present case.

[255] Counsel for the plaintiff advanced a number of reasons why all of the purposes are for the relief of poverty. These include:

(a) the fact that the trust deeds, in their various forms, have contemplated that the funds be used for the education, benefit, welfare, comfort and general advancement of Aboriginal persons resident upon the islands; and

(b) to the extent relevant, the circumstances of many of those people including their impoverishment and disadvantage relative to other Australian citizens in a number of respects including education and literacy standards, employment, personal income levels and housing standards.

[256] Counsel acknowledged that the public benefit is to be assessed by the Court having regard to the terms of the trust and the legal effect of the language used, and not by evidence of the settlor's subjective intention. If there is any doubt as to the charitable purposes of the trust, regard may also be had to the circumstances pertaining at the formation of the trust.

[257] As counsel points out, it is not necessary to find an expression of a purpose for the relief of poverty in the trust deed in so many words. The Court will look at the whole of the trust and if it concludes that the relief of poverty was intended, it will give effect to such intent although the word "poverty" is not to be found in the relevant deed.[152]

[258] "Poverty" does not mean destitution. Poverty is a concept of wide and somewhat indefinite import and has been paraphrased as embracing persons who have to "go short" in the ordinary acceptation of that term.[153] In Alice Springs Town Council v Mpweteyerre Aboriginal Corporation[154] Mildren J said, at p 39:

[256]

[259] Provided that the purpose of the trust is to relieve poverty, the method directed under the instrument to that end is immaterial. Jacobs provides a number of examples, including the purchase of a soup kitchen and cottage hospital, a nursing home for persons of moderate means, religious communities having as their object the relief of poverty, the provision of accommodation for transient Aborigines and the support of psychiatric hospitals.[155] Counsel submits that, for example, the method adopted might be that ordained by clause 4.2.3 of the 1996 Trust Deed in the form of the provision of houses or health centres for the needy.

[260] Counsel also points out that public benefit can reside not just in particular benefits which may be conferred upon eligible individuals, but also in the wider benefit such conferral may create for the community at large. In other words, attention is not confined to the immediate recipient of any benefit advanced pursuant to the trust.

[261] Counsel contended that it can be seen from the foregoing, therefore, that clause 2 of the Trust Deed operates to create a valid charitable trust based upon a purpose of the relief of poverty, even should it be the case that, on some abstract basis, it might be said to embody other purposes not satisfying the test of charitable purposes.

[262] In its written submissions the third defendant identifies a number of reasons why the Trust cannot be construed as a trust solely for the relief of poverty:[156]

(a) The express words of the trust deed authorise the use of funds for purposes other than the relief of poverty. The authorised uses extend to the provision of education and medical assistance, the maintenance of ceremonies, sporting and social facilities as well as poverty.

(b) The circumstances surrounding the creation of the Trust (or the 2008 amendments) indicate that the Trust was never intended to be limited to the relief of poverty. In particular, the major trust asset is the continuing right to receive substantial royalties from commercial mining operations which, as at 2008, amounted to more than $10m per annum. Those continuous funds are to be provided for the benefit of a relatively small number of persons. It could never have been in the contemplation of the trust instrument that such funds were only to be used for relieving poverty. They were intended, as the trust deed provides, for the education, benefit welfare and comfort and general advancement of the clans.

(c) Whilst it is accepted that there are members of the various clans who are living in poor conditions and who may be relieved from the impacts of poverty by the operation of the trust, there are many who have, at least, a modest standard of living. They are employed (some on substantial incomes), have housing (many families in single family accommodation), own or operate businesses and regularly engage in recreational and ceremonial activities. In addition they are supported by governments by way of the provision of education and health care. They are also supported by the Anindilyakwa Land Council which, as at 2008 had been dispensing in excess of $10m to advance the interests of the clan members of Groote Eylandt and Bickerton Island.

(d) Even to the extent to which it might have been contemplated at some point in time that a major purpose of the use the royalty funds would be to relieve against poverty, it must have also been contemplated that the continuous flow of funds would be used for the other authorised purposes as well. Necessarily, it would have been contemplated that the dominant purposes for which funds would be used would change in the future as additional funds flowed into the trust.

(e) Although significant amounts have been paid out of the Fund for the relief of poverty, the trustee has also paid out money for a variety of other purposes authorised under the Trust Deed. These include payments for ceremonies, church grants, educational grants, funeral expenses, medical grants, electricity and sports and recreation. This reflects a belief on the part of the trustee that the Trust is not just for the relief of poverty.

[263] I agree with the submission summarised at [262](a) above .

[264] Counsel for the the third defendant point out that Recital B of the Trust Deed shows that the Trust has always been "for the education, benefit welfare, comfort and general advancement of certain Aboriginal people resident upon Groote Eylandt and Bickerton Island." Given the potential size of the fund and the small number of beneficiaries, it is not surprising that the trust was not limited to relief from poverty.

[265] Counsel also point out that clause 2 of the Trust Deed is drafted in very general terms. It authorises the use of the funds "for such charitable purposes (in the strict legal sense) as may be served by the provision of money, property or other advantages for the benefit, welfare and advancement of the Beneficiaries." There is nothing in this clause which would limit the use of the funds to the relief of poverty.

[266] Clause 6.3 of the Trust Deed permits the Charitable Purpose Fund to be used to promote religious and funeral activities, to assist in the maintenance of ceremonial activity, to assist in the maintenance of cultural activities, to provide educational, sporting and social facilities and to relieve against poverty by the provision of essential goods and services. Whilst the trust property is stated to be held for charitable purposes, those purposes are not, on their face, limited to the relief of poverty. They expressly extend to other charitable purposes.

[267] This conclusion is supported by the observations of Martin CJ in Flynn v Mamarika where his Honour considered proposed expenditure in relation to the 1996 Trust Deed. In that trust deed the trustee was similarly authorised to make distributions to advance a range of charitable purposes. His Honour considered proposed expenditures and ascertained whether or not they would be valid. In doing so, his Honour identified the charitable purposes under which the payment might be validly made. In particular, he concluded that many of the proposed grants were for valid charitable purposes which did not involve the relief of poverty, namely, medical grants, funeral grants, church grants, old age pensions and handicap pensions, homeland grants, education grants, and festival grants.[157] Others were supported on the basis that they were for the relief of poverty.

[268] It is clear that his Honour was of the view that the purpose of the trust was to advance a variety of charitable purposes and not merely the relief of poverty, and he made the directions on that basis. I am of the same view.

[269] I also accept in part, but do not place much weight on, the other points made by the third defendant and summarised in [262](b), (c) and (d) above. First, I do not consider it necessary to speculate about the intentions of those who were involved in establishing the Trust and amending the various trust deeds from time to time. For the reasons just stated, I do not consider that the trust deeds in any of their emanations can be construed as limiting the purpose as for the relief of poverty.

[270] Secondly, to the extent that context and circumstances are relevant, I would have thought that it is the circumstances in 1965 when the trust was established that are important, not circumstances some 40 years later. Much of the factual material which the third defendant has referred to relates to significant changes that occurred much later, such as the opportunities, assistance and benefits provided to some local indigenous inhabitants by the Anindilyakwa Land Council and other bodies such as Groote Eylandt and Bickerton Island Enterprises Pty Ltd.

[271] Thirdly, even if circumstances as at 2008 were relevant, with the result that some of the potential objects of benefaction would not now be regarded as "poor", this would not mean that the trust is no longer one for the relief of poverty. Indeed the third defendant properly acknowledges that there are members of the various clans who are living in poor conditions and who may be relieved from the impacts of poverty by the operation of the trust.

[272] Fourthly, the fact that the Trust does now have significant assets, presumably as a consequence of the continued and successful mining operations being carried out on Groote Eylandt, is irrelevant to this question of construction of the Trust. That fact really shows that the Trust has operated successfully, possibly even more so than the original settlor might have expected. Even if the mining operations had shut down at an early time and or minimal royalties been paid into and retained in the Fund, the legal character of the Trust would be no different.

[273] I am not persuaded by the contention summarised in [262](e) above that I can look at the way in which the trustee has actually used the Trust monies as a means to construing the trust purposes. Whether any particular payment was made a particular reason cannot assist me in determining the meaning and legal effect of the trust deeds. That question may well be relevant in the main proceeding if it is alleged that some payments were not authorised at all, but not for present purposes.

[274] I conclude, primarily for the reasons at [264] - [268] above, that the Trust was and is not a trust solely for the relief of poverty. The Dingle exception does not apply.

[257]

[275] The next question to consider is whether all of the trust purposes are charitable purposes (or purposes ancillary thereto), that is purposes that fall within one or other of the Pemsel categories.

[276] Most if not all of the purposes set out in clause 6.3.2 of the Trust Deed and its predecessors were considered and held to be charitable purposes by Martin CJ in Flynn v Mamarika in the course of providing directions to the interim trustee.

[277] Those which his Honour held to be charitable purposes included "medical grants" (to provide patients and their escorts with transport to and from appropriate medical establishments including amounts for sundry expenses and accommodation of both the escort and the patient), "funeral grants" (to enable the coffin, elders, and relatives to be flown to Groote Eylandt including for related ceremonies), "church grants" (to assist church elders in organising church activities), "old aged / pensioner and handicapped grants" (provided they were used for the relief of the disabilities of age and handicap), "homeland grants" (to assist people on outstations), "education grants" (including to assist children travelling to and from school on the mainland), "sport and recreation grants" (in particular for "physical education or the enhancement of physical proficiency and efficiency" and the "enhancement of physical well-being"), "Power and Water Authority grants" (to pay for charges for electricity to households occupied by members of the community), "festival grants" (to support activities necessary to meet Aboriginal traditional obligations) and "ceremony grants" (to enable elders to perform ceremonies which are culturally necessary).[158]

[278] His Honour explained how each of these fell within one or other of the Pemsel categories. During that explanation his Honour warned that such grants could only be made if made for a charitable purpose. For example:

(a) In relation to church grants, after saying that "such a grant would be unconditional, to be used at the discretion of the elders of the church" his Honour said: "These may be charitable if falling within the considerations relating to the advancement of religion. A grant to church elders to dispose of as they see fit would not."[159]

(b) In relation to education grants his Honour said that "these grants would not be made where the courses are supported by government or the educational institution."[160]

(c) In relation to the Power and Water Authority grants his Honour said they "may be charitable if for the relief of poverty".[161]

[279] This warning reflected what his Honour had earlier emphasised, including in the passage quoted in [66] above that the references to purposes of the Trust in paragraph 4 of the 1989 Trust Deed were "subject to the requirement that the trust funds be applied for charitable purposes" and that "those particular enumerated purposes do not extend or override the primary and only purposes of the Trust, that is, charitable purposes."

[280] This point was further emphasised by the addition of the words, in capitals, "Subject to the requirement of charitable purpose", at the beginning of clause 4.2 of the 1996 Trust Deed and the 1998 Trust Deed.

[281] With the exception of the provision of "sport and social facilities" no party has seriously contended that the other purposes set out in clause 6.3 are not charitable purposes.

[262]

[287] The third defendant contends that there is nothing in the trust deed which limits the power of the trustee in relation to the provision of facilities for sport to associate that with some other relevant charitable purpose such as for a school or church.

[288] Similarly, the courts have rejected the suggestion that trusts for the provision of social activities fall within the spirit and intent of the Preamble. A trust for the promotion of moral, social, spiritual and educational welfare of Welsh people in London by the provision of a social centre was held not to be valid in Williams' Trustees v Inland Revenue Commissioners[169] as was a trust for the promotion of the religious, social and physical well-being of Methodists in certain counties in England in Inland Revenue Commissioners v Baddeley.[170] The Courts have noted that no matter how beneficial the encouragement of social activity may be seen to be it is not within the scope of the Preamble because it does not satisfy the necessary requirement of general public utility.

[289] The principles in these cases have been followed in Australia where trusts have been held to be not charitable and invalid where they were for a girls' friendly society,[171] and where they were for a "Catholic Boys Club.[172] In the latter case it was expressly stated that the expenditure of funds for social intercourse or sporting activities cannot be regarded as being within the Preamble.[173]

[290] In their written submissions counsel for the plaintiff responded to paragraph 13(a) of the Defence in the following way.

[291] In the first place, by reason of the express terms of the Trust Deed, the Trustee was empowered to provide benefits from the Expenditure Fund to provide education sporting and social facilities "[s]ubject to the requirement of charitable purpose". Even if, which is not conceded, the use of the fund to provide such benefits was not inherently charitable, the express requirement of charitable purpose is cumulative. That is, the Trust Deed contemplates expenditure upon education sporting and social facilities insofar as that involves a charitable purpose.[174]

[292] In the second place, if the object of a trust is to relieve poverty, the method to achieve that result is immaterial: Jacobs at [10-19]. The opening words of clause 4.2 of the 1996 Trust Deed ("Subject to the requirement of charitable purpose") make it abundantly clear that clause 4.2 and the objects specified in it are subject to clause 2 and the purposes it legitimately attracts. Hence, it is intrinsically open under the Trust Deed to apply the trust fund to provide those specific benefits in the interests of relief of poverty without there being any suggestion of any invalidity. Accordingly, if relief of poverty were found to be the only valid charitable purpose embodied in clause 2, nonetheless clause 4.2 and the more specific objects in it, being subordinate to clause 2, such as the provision of sporting and social facilities (clause 4.2.4), could be used to relieve poverty.

[293] I interrupt here to reject this point in so far as it assumes that the Trust is solely for the relief of poverty, a proposition which I have rejected. However I think the point is valid where the provision of sporting and social facilities are ancillary to that or another charitable purpose set out in the Deed.

[294] Thirdly, and in any event, it is recognised in authority that expenditure of trust funds on the promotion of sporting and recreational activities is itself a legitimate charitable purpose essentially on two grounds.

[295] First, the provision of the means of public recreation such as playing fields, parks and gymnasiums, is an accepted charitable object within the fourth Pemsel category.[175] This is so, even though the purpose of the trust is to provide such facilities for the benefit of inhabitants of a defined area.[176] Further, in Flynn v Mamarika, Martin CJ in his directions held that the promotion of sport and recreation for the benefit of the community may be a charitable purpose.

[296] Secondly, and in any event, if provision for sporting or social facilities is associated with the advancement of educational work (even if not of a particular educational institution) it may be a valid charitable purpose under the second Pemsel category.[177]

[297] In McMullen, the House of Lords held that, while the mere playing of games or enjoyment or amusement or competition was not charitable by itself, nor necessarily educational, the totality of the process of education consisted in a balance between spiritual, moral, mental and physical elements and was not limited to formal instruction and did not exclude pleasure and the exercise of skill.[178] In that matter the gift was specifically for the provision of facilities for the benefit of pupils at schools and universities in any part of the United Kingdom. While the stipulation of schools and universities was a consideration in the reasoning in the relevant speeches that gave the gift a character of advancing education, Lord Hailsham (with whom Lords Diplock and Salmond agreed and Lord Keith relevantly agreed) did not discount adult education as an aspect of the advancement of education more generally.

[298] Further, in Flynn v Mamarika, Martin CJ accepted both that the promotion of adult education was within the charitable purpose of the advancement of education, and that the promotion of sport and recreation may be regarded as for the advancement of education, particularly physical education or the enhancement of physical proficiency and efficiency.

[299] In the present case, although the specific object of the expenditure on sporting and social facilities was not limited to facilities within an educational institution, in the obvious context of the communities on Groote Eylandt and Bickerton Island, the provision of such facilities will entail the advancement of education in the broader sense. If that were not self-evidently the case, then it would result from the opening words of clause 4.2 (and as well the reference to "education" in clause 4.2.4).

[300] Whilst, for reasons already expressed, I do not accept that all of the purposes are for relief of poverty, I do accept that the provision of sport and social facilities may be a charitable purpose, as contemplated by the authorities referred to including Re Haddin, Re Morgan, McMullen and, in particular, Flynn v Mamarika. Accordingly the purpose in clause 6.3.2(xv) of the Trust Deed is a valid charitable purpose, notwithstanding that the Charitable Grant Fund can only be used for sporting and social facilities that fall within the scope of one or other of the Pemsel categories.

[301] Unlike the situation in Chester the trustee is not permitted to apply funds to a purpose that is not charitable. This is clear from the Trust Deed, in particular the clear wording in clause 2. Also, as counsel for the Attorney-General points out, the Trustee's broad powers are "subject always to any express provisions to the contrary herein contained". These include, as stressed by Martin CJ in Flynn v Mamarika, the fundamental requirement that the funds only be applied for charitable purposes.

Groote Eylandt Aboriginal Trust Inc & Anor v Deloitte, Touche Tohmatsu & Ors [No 2] [2017] NTSC 4

At a glance

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Decision date

Before

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Judgment (391 paragraphs)

Parties

Legislation Cited (6)

Cases Cited (24)