June Shirley Overall v Family Voice Australia Incorporated

Supreme Court of NSW|2014-05-29|Before: Darke J

Introduction 1These proceedings were commenced by Summons filed on 12 November 2013. An Amended Summons was filed on 24 February 2014. The case concerns the will of the late Malcolm Charles Smith, who died on 4 June 2010. The plaintiff, June Overall, is the deceased's sister. She is the administrator of the deceased's estate, having obtained a grant of administration in respect of a will dated 23 January 2003. The executor named in that will renounced probate. The deceased left an estate with a net value of approximately $700,000. 2The plaintiff commenced these proceedings because issues have arisen concerning the construction and effect of clause 3(a) of the will. Clause 3 of the will relevantly provides: "I GIVE DEVISE AND BEQUEATH to my Trustee all my real and personal estate of whatsoever nature and wheresoever situate UPON TRUST after payment thereout all my just debts funeral and testamentary expenses and all death probate and estate succession and other like duties payable in respect of my estate TO HOLD the balance as follows: (a) as to 30% thereof: (i) a 1/3 share for the Australian Festival of Light of 115 Liverpool Road, Enfield; (ii) a 1/3 share for Anglicare of 18 Parkes Street, Parramatta; and (iii) a 1/3 share for the Christian Democratic Party (Fred Nile Group) of Parliament House, Macquarie Street, Sydney, PROVIDED THAT if any of the organisations referred to have ceased to exist as at the date of my death, then such of the said organisations that remain in existence as at my death shall take the share or shares which otherwise would have been held for the organisation or organisations which have ceased to exist as aforesaid and, if more than one, in equal shares as tenants in common." 3The central question is whether the organisation described as the Australian Festival of Light of 115 Liverpool Road, Enfield, had "ceased to exist" within the meaning of the proviso to clause 3(a) as at 4 June 2010, the date of the testator's death. 4There are four defendants to the proceedings. The first defendant, Family Voice Australia Incorporated, and the second defendant, Australian Christian Nation Association Incorporated, were each made parties on the basis that they may be a successor to the beneficiary so described, and thus be entitled to the gift. The third and fourth defendants, Anglicare and Christian Democratic Party (Fred Nile Group) Incorporated, were each made parties on the basis that they may be entitled to share the gift by reason of the operation of the proviso to clause 3(a) of the will. 5Of the defendants, only the first defendant has taken any active role in the proceedings. The other defendants have each filed submitting appearances by which they submit to the making of any of the orders sought, save as to costs. 6The evidence read at the hearing consisted of an affidavit sworn on 10 November 2013 by the plaintiff, an affidavit sworn on 26 February 2014 by the plaintiff's solicitor, Mr Danny Simpson, an affidavit sworn on 1 April 2014 by Dr David Phillips, the National President of the first defendant, and the exhibit to that affidavit. 7In view of the issues raised, it is necessary to set out certain historical facts and circumstances which are relevant background to the will of 23 January 2003, and certain facts which bear upon the question whether the Australian Festival of Light of 115 Liverpool Road, Enfield, had ceased to exist as at 4 June 2010.

Salient Facts 8The Festival of Light movement, which commenced in the United Kingdom, began in Australia in 1972. Dr Phillips has played a prominent role in the movement ever since, in a variety of roles and in various organisations. His evidence concerning the history of the movement was not challenged. What follows is essentially taken from his testimony and various documents which form part of the exhibit to his affidavit. 9The inaugural meeting of a committee of the movement took place in Adelaide in November 1972. In June 1973, the Festival of Light was formally launched in Australia with a media conference in Adelaide. Subsequently, branches were established in the various states of Australia. 10In July 1973, the Reverend Fred Nile accepted leadership of the Festival of Light branch in New South Wales. He became its full time director in January 1974. 11In November 1974, delegates from the various states met in Canberra for the purposes of agreeing upon the aims of the movement and the establishment of a national co-ordinating committee (which became known as the National Council) and a National Executive. In January 1975, the first issue of "Light", the magazine of the Australian Festival of Light, was published. That publication contained a statement of the aims of the Australian Festival of Light as follows: "1. To mobilize Australians in support of purity, love and family life; 2. To proclaim the value of Christian standards of behaviour for family and community life; 3. To persuade national and community leaders to strengthen the family as the basic unit of society; 4. To resist influences that lower moral standards and threaten human dignity; 5. To research the social implications of Biblical ethics and the effects of modern trends on family and community life." 12Dr Phillips deposes that these aims were adopted at the Canberra meeting held in November 1974. 13The Australian Festival of Light commenced to function as an unincorporated association with a branch in each of the six states. However, in 1977 the National Council and the National Executive ceased to operate, due to difficulties in co-ordinating the branches across Australia, and the cost. Some of the state branches became moribund, but the South Australian and the New South Wales branches continued in existence. From at least 1977, the testator was actively involved in the activities of the New South Wales branch. He remained involved until shortly prior to his death. 14In South Australia, the Festival of Light initially operated through an unincorporated association. In 1975, it effectively amalgamated with the South Australian branch of the Community Standards Organisation. In 1976, the body became incorporated under the Associations Incorporation Act 1958 (SA). The constitution of the South Australian incorporated body included objects which were the same as those agreed upon in 1974 and set forth in the first issue of "Light". In 2004, the South Australian incorporated association changed its name to Festival of Light Australia Incorporated and adopted a new constitution. The new constitution made no change to the objects. Those objects have remained the same to the present day. The new constitution did, however, effect a change in the structure of the body. Provision was made for a national structure, with various branches which would comprise members of the body residing in a particular State, Territory, or other designated region of Australia. The governing body of the association was the National Council and the management of the association was vested in a National Executive. 15In New South Wales, the Festival of Light initially operated through an unincorporated association. The unincorporated association does not appear to have adopted any formal constitution, and there is no evidence of any specific adoption of aims or objects. However, Dr Phillips deposes that the New South Wales body was committed to the five aims which had been agreed upon in 1974 and set forth in the first issue of "Light". 16During the period the New South Wales body operated as an unincorporated association, it used various names, all of which included the words "Festival of Light". The words "Australian Festival of Light" were commonly used either as, or as part of, the body's name. In 1979, the unincorporated association joined with the New South Wales branch of an association with similar values and supporters, known as the Community Standards Organisation. From that time, the name of the unincorporated association also included the words "Community Standards Organisation". 17The unincorporated association operated out of various premises over the years. From about 2000, the unincorporated association operated out of premises at 115 Liverpool Road, Burwood. Those premises are very close to the suburb of Enfield. 18In June 2002, there was discussion at a meeting of the Executive Committee of the New South Wales body about the possibility of it becoming incorporated. In November 2003, a constitution for an incorporated body was approved at the Annual General Meeting of the unincorporated association. That constitution specified the same five objects as those which were agreed in 1974 and set forth in the first issue of "Light". I accept that, throughout its existence, the unincorporated association operated pursuant to such objects. 19In November 2004, the unincorporated association made an application to the Office of Fair Trading to become incorporated under the Associations Incorporation Act 1984 (NSW). The application form which was submitted gave 115 Liverpool Road, Enfield as the address of the unincorporated association. 20The application was successful and a body by the name of Australian Festival of Light - Community Standards Organisation Incorporated came into being on 11 November 2004. The constitution of the incorporated body contained the same five objects as were agreed in 1974 and set forth in the first issue of "Light". Dr Phillips deposes that the membership, assets and premises of the unincorporated association continued unchanged upon it becoming incorporated. 21At a meeting of the Executive Committee of the incorporated body held on 21 May 2007, a resolution, in the following terms, was carried unanimously: "MOTION: FOL NSW become a State Branch of National FOL under the chairmanship of Dr D Phillips in Adelaide and that (i) Rev Hon F Nile convey this decision to D Phillips, and that (ii) D Phillips meet our Executive on 25 June at the FOL Office in Burwood, or at a convenient date, to discuss the future arrangements of this NSW Branch of FOL Australia." 22At a further meeting of the Executive Committee, held on 25 June 2007, a motion, in the following terms, was passed: "MOTION: The Executive accept in principle the transfer of FOL to FOLA, subject to proper legal process according to the Constitution of FOL-CSO." 23Two further motions were passed at that meeting. These were: "MOTION: FOL-CSO Inc. cease trading on 30 June 2007. MOTION: Invite FOLA to administer the affairs of FOL-CSO Inc." 24Dr Phillips deposes that Festival of Light Australia Incorporated immediately took over responsibility for mailing "Light" to supporters in New South Wales, and to facilitate that, details of New South Wales membership were given to Festival of Light Australia Incorporated. Dr Phillips further states that from that time, Festival of Light Australia Incorporated took over responsibility for receiving and banking subscriptions and donations in relation to the New South Wales branch, which monies were placed in a separate fund for the New South Wales branch. Moreover, Festival of Light Australia Incorporated body accepted the members of the incorporated association into its own membership. 25In order to facilitate the winding up of the New South Wales incorporated association, Festival of Light Australia Incorporated leased office premises in Bankstown between July 2007 and June 2008. The office was used for occasional meetings, and the storage of records prior to their relocation to the national office in Adelaide. 26On 26 November 2007, a special resolution was passed unanimously at the Annual General Meeting of the New South Wales incorporated association. Relevantly, the special resolution was in the following terms: "1. NOTES that Rev Hon Fred Nile tendered his resignation as NSW director of FOL-CSO at the meeting of the Executive Committee on 21 May 2007, after 34 years of distinguished service; 2. NOTE that at the same meeting the Executive Committee resolved that 'FOL NSW become a State Branch of National FOL under the chairmanship of Dr D Phillips in Adelaide, and that (i) the Rev Hon F Nile convey this decision to D Phillips, and that (ii) D Phillips meet our Executive on 25 June at the FOL Office in Burwood, or at a convenient date, to discuss the future arrangements of this NSW Branch of FOL Australia'; 3. NOTES that the mailing list of FOL-CSO (NSW) has been transferred to Festival of Light Australia (FOLA), which has accepted responsibility for mailing Light magazine to NSW supporters and has mailed the August 2007 issue; 4. ENDORSES the decision made by the Executive Committee at its meeting on 25 June 2007 and confirmed at its meeting on 27 July 2007 that FOL-CSO (NSW) cease trading on 30 June 2007 and invite Festival of Light Australia (FOLA) to administer its affairs; 5. CONFIRMS the transfer to FOLA of the lease of the FOL-CSO (NSW) Post Office Box and its AAPT phone service, and the transfer of significant documents (including financial records and documents with archival value) and some office furniture and equipment from the Burwood office of FOL-CSO (NSW) to the Bankstown office of FOLA; 6. CONFIRMS the termination of the lease of the Burwood office of FOL-CSO (NSW) and the disposal of surplus office furniture and equipment; ... 8. RESOLVES that FOL-CSO (NSW) be wound up and any surplus assets be transferred to FOLA; 9. AUTHORISES the Executive Committee when FOL-CSO (NSW) has no liabilities, to apply to the Registry of Co-operatives and Associations within the Department of Fair Trading in accordance with the Associations Incorporation Act 1984 (NSW) for voluntary cancellation of its incorporation." 27At the same meeting, an Executive Committee was elected which would remain in office until the process of winding up and cancellation of incorporation was complete. 28Dr Phillips, who attended at the Annual General Meeting, reported to those present that "a FOLA NSW Branch Committee was being formed which would take responsibility for the future program of the NSW Branch." The first meeting of that committee was held on 10 March 2008. It was agreed at that meeting to endorse proposed amendments to the constitution of Festival of Light Australia Incorporated to authorise the change of its name from Festival of Light Australia Incorporated to Family Voice Australia Incorporated. That change of name occurred shortly thereafter. 29On 19 December 2008, following the completion of the winding up of its affairs, the registration of the New South Wales incorporated association was cancelled. The assets of the body were wholly expended in the course of the winding up. 30Dr Phillips deposes that the New South Wales branch of Family Voice Australia Incorporated continues to carry on the same activities that had hitherto been carried on by the New South Wales incorporated association before it ceased its activities.

Submissions 31Mr Lawson, who appeared with Mr Moshides for the plaintiff, submitted that two main questions arose for determination. These are: (a)what is the entity described in clause 3(a) of the will as "the Australian Festival of Light of 115 Liverpool Road, Enfield"; and (b)did that entity remain in existence as at the date of the testator's death. 32The plaintiff adopted an essentially neutral position, but made submissions which were of assistance to the Court. As to the first question, the plaintiff submitted that the evidence showed that the New South Wales unincorporated association was the entity the testator had in mind when making the bequest. The plaintiff further submitted that its subsequent incorporation in November 2004 was merely a change in form which did not mean that the former entity had ceased to exist. 33However, the plaintiff submitted that a more difficult question was whether the changes that occurred in 2007 and 2008 in relation to the incorporated body, which culminated in the winding up and cancellation of incorporation of the body, meant that the entity the subject of the bequest then ceased to exist. Mr Lawson submitted that the mere fact that the first defendant effectively took over the work previously performed by the entity the subject of the bequest did not necessarily mean that it should be regarded as the entity entitled to the gift. Mr Lawson fairly conceded that the submissions made on behalf of the first defendant, to the effect that it was truly a successor of the named beneficiary, had some force. 34Mr Blake SC, who appeared for the first defendant, submitted that the body referred to in the gift was the New South Wales unincorporated association, and that, having regard to the objects of the body, the gift was a valid charitable gift. It was then submitted that both the New South Wales incorporated association, and the first defendant, are successor organisations. It was emphasised that both the incorporated association and the first defendant have at all times pursued precisely the same objects as those formerly pursued by the unincorporated association, and they have carried on the same work formerly carried on by the unincorporated association. Mr Blake submitted, relying upon cases such as Re Goodson [1971] VR 801; Re Tyrie (No.1) [1972] VR 168; Re Flynn [1975] VR 633 and Cram Foundation v Corbett-Jones [2006] NSWSC 495, that in these circumstances the lapse rule does not operate to defeat the charitable gift. 35Mr Blake further submitted that the gift over in the proviso to clause 3(a) of the will does not prevent the gift being paid to the first defendant as the ultimate successor of the New South Wales unincorporated association. In this context, reliance was placed upon the decision of Barker J in Public Trustee v Cerebral Palsy Association of Western Australia Limited [2004] WASC 36. 36In that case, the will, which was made on 27 October 1992, relevantly provided: "SUBJECT TO the payment of my just debts funeral and testamentary expenses I DEVISE and BEQUEATH the whole of my real and personal estate to the SPASTIC WELFARE ASSOCIATION OF WESTERN AUSTRALIA INCORPORATED provided however that if the said association does not exist at the date of my death to the SALVATION ARMY (WESTERN AUSTRALIA) PROPERTY TRUST." 37A body meeting the description of the named beneficiary was in existence as at the date of the will, but shortly thereafter it was dissolved pursuant to the provisions of the Associations Incorporation Act 1987 (WA), and the property, rights and liabilities of the body became held by the Cerebral Palsy Association of Western Australia Limited. Notwithstanding the dissolution of the named body, Barker J considered that in circumstances where "in practical and charitable purpose terms" the body had not ceased to exist, the body had not ceased to exist for the purposes of the proviso to the gift (see at [40]-[42]). 38His Honour continued (at [67]-[69]): "Unlike the situation with the Hostel in Re Quesnel, at all material times the Spastic Welfare Association was a well-organised incorporated association, not a "loosely-organised institution" like the Hostel, was not named in the will by reference to a particular address, and the service that it had provided at the date when the deceased made the will continued to be provided. There is, indeed, nothing in the context of the will and the facts and circumstances of the case before me to suggest that the deceased, by the language employed in the will, intended that the gift should be to the named institution and no other. Nor do I consider that, by employing in his will, the words "provided however that if the said association does not exist" the deceased intended to exclude an organisation such as the Cerebral Palsy Association should it become, in every practical sense, the successor to the Spastic Welfare Association. Rather, in the circumstances, I consider that the deceased by employing those words simply intended that, should there be no organisation at the date of his death committed to the objects and undertaking the provision of the services, that the Spastic Welfare Association exhibited and undertook at the time he made his will, then the gift of his estate should go to the Trust." 39In the alternative, Mr Blake submitted that if the Court holds that the gift has lapsed, the Court should find that the gift was one for charitable purposes, the objects of the unincorporated association being charitable in law, and that the testator had a general charitable intention (as to which see s 10(2) of the Charitable Trusts Act 1993 (NSW)) such that the property the subject of the gift could be applied cy-pres. In this respect, Mr Blake submitted that as the first defendant has the very same objects as the New South Wales unincorporated association, the appropriate cy-pres scheme would simply entail an order that the gift be paid to the first defendant. Again, it was put that the gift over in the proviso to clause 3(a) of the will did not stand in the way of that result. Mr Lawson seemed to accept that the objects of the unincorporated association were charitable in law, and that there was a general charitable intention. However, he submitted that the gift over left no room for the cy-pres doctrine to operate in this case.

Determination 40For the reasons which follow, I have reached the conclusion that, on the true construction of the will of the testator, and in the events which have happened, the gift to the Australian Festival of Light of 115 Liverpool Road, Enfield should be paid to the first defendant. 41There does not seem to be any real doubt that the organisation described by the testator as the Australian Festival of Light of 115 Liverpool Road, Enfield was intended to be the New South Wales unincorporated association which had been operating for many years under various names, many of which included "Australian Festival of Light", and since about 2000 had occupied premises at 115 Liverpool Road, Burwood. As noted earlier, the premises in Liverpool Road, Burwood were on occasion referred to as being in Enfield, which is very close by. There is no reason to think that the testator was intending to refer to any premises other than those in Liverpool Road, Burwood. 42In my view, the gift should be construed as a gift for the benefit of the purposes of the unincorporated association (see Re Vernon's Will Trusts [1972] Ch 300 at 303, cited by Kearney J in Sir Moses Montefiore Jewish Home v Howell & Co Pty Ltd (No.7) [1984] 2 NSWLR 406 at 414-5). I also accept the submission made by Mr Blake that the purposes of the unincorporated association, as expressed in its objects (which I have found were those that were agreed upon in 1974 and set forth in the first issue of "Light") are all charitable in law. The third object does involve political activity but (in the absence of full argument on the point) I would not conclude that the necessary element of public benefit is lacking such that it should not be regarded as charitable (see Aid/Watch Incorporated v Commissioner of Taxation [2010] HCA 42; (2010) 241 CLR 539 at [47]-[49]). 43The next, and crucial, question is whether that charitable gift fails because the unincorporated association was no longer in existence at the date of the testator's death. That question must be considered in the light of the events which have happened since the making of the will, and in accordance with the true construction of clause 3(a) of the will. 44The salient facts have been set out above (at [8] to [30]). In my view, it is appropriate to regard the New South Wales incorporated association initially, and the first defendant ultimately, as successors to the unincorporated association which is described in the gift. When the incorporated association was formed, the objects remained the same and the membership, assets, premises and activities continued unchanged. When the resolutions passed by the incorporated association in 2007 were executed, its activities and it seems some of its assets were assumed by the first defendant (then known as Festival of Light Australia Incorporated) and the first defendant accepted the members of the incorporated association into its own membership. Again, there was no change to the objects. 45The purposes and activities of the unincorporated association were for a time carried forward by the incorporated body. Since about 2007 to 2008, those purposes and activities have been carried forward by the first defendant, which is a body with a national structure, with branches which comprise members residing in particular States, including New South Wales. In effect, the incorporated body, in accordance with the resolution passed by its Executive Committee on 21 May 2007, has become a state branch of the national Festival of Light. When the substance of the matter is considered, it is appropriate to regard the objects and activities of the New South Wales incorporated body as having been continued as part of the first defendant. From the point of view of the membership, all that happened in 2007 to 2008 is that they became members of a new organisation which had the same objects as the incorporated body which was to "cease trading". In essence, there have been changes to the organisational structure, but no changes to the stated aims or objectives. The factual position is similar to that found by Barker J in the Cerebral Palsy Association case. 46The unincorporated association (and the incorporated association which came after it) has undoubtedly ceased to exist as a legal entity. In that sense, the beneficiary described in the gift, and "the organisation" so referred to, has ceased to exist. However, it seems to me that, properly construed, clause 3(a) of the will calls for a wider view of that which must cease to exist before there is a lapsing of a gift. 47As noted earlier, the gift (indeed all of the gifts made by clause 3(a) of the will) should be construed as a gift, not to the described body or organisation itself, but as a gift for the benefit of the purposes of the described body or organisation. In those circumstances, I do not think that it would be in accordance with the testator's intention to construe the clause in such a way that a gift would lapse merely because the described body or organisation ceased to exist. That would tend to cause the validity of gifts to depend not so much upon whether the objects to be benefited are being pursued as of the date of the testator's death, as upon the formal organisational structures by which the objects to be benefited are pursued as at the date of death. In my opinion, the clause should be construed in such a way that there will be no lapse if, as at the date of the testator's death, there is a successor organisation in existence which is carrying on activity in pursuit of the same purposes formerly possessed by the described organisation. 48The terms of the gift over in the proviso do not to my mind bespeak an intention that the gifts should only go to the described organisation. The words "the organisation referred to" as found in the proviso to clause 3(a) of the will are in my opinion wide enough to encompass the described organisation itself and a successor organisation carrying on activity in pursuit of the same purposes formerly possessed by the described organisation. 49Accordingly, where, as here, the described organisation has ceased to exist as a legal entity as at the date of the testator's death, but there is a successor organisation carrying on activity in pursuit of the same purposes formerly possessed by the described organisation, the gift does not lapse. In those circumstances, the gift is payable to the successor organisation. In this case, that is the first defendant. A declaration to that effect will be made. 50It is not necessary to deal with the alternative argument that, even if the gift did lapse, the property should be applied cy-pres by paying it to the first defendant. 51The Court will also order that the plaintiff's costs be paid, on the indemnity basis, out of the gift to "the Australian Festival of Light of 115 Liverpool Road, Enfield". In view of the decision that the gift is payable to the first defendant, it is not necessary to make any order as to its costs. As none of the second, third or fourth defendants played any significant role in the proceedings other than to enter submitting appearances, there will be no orders made as to their costs either. 52The orders of the Court are: (1)Declare that upon the true construction of clause 3(a) of the will of the late Malcolm Charles Smith, and in the events which have happened, the gift to "the Australian Festival of Light of 115 Liverpool Road, Enfield" is payable to the first defendant. (2)Order, subject to order 3, that the plaintiff pay the said gift to the first defendant. (3)Order that the plaintiff's costs be paid, on the indemnity basis, out of the said gift.

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: 05 June 2014

Associations Incorporation Act 1958(SA)

Associations Incorporation Act 1984(NSW)

Associations Incorporation Act 1987(WA)

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