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[2003] SASC 173
plaintiff. The court answered question 1(a) yes, question 1(c) no, and found question 1(b) unnecessary to answer. It answered question 2(a) no and question 2(b) yes. The clause 4(b) gift failed, and the...
The will did not say what charitable purposes would receive the Nailsworth property. Instead, it left those purposes to be supplied through the husband’s last will, whenever made. The court held that the proposed trust’s name did not make the gift charitable, and that the statutory provision for mixed charitable and non-charitable trusts could not cure a trust with no designated purposes. The gift therefore failed, and the property became part of the testatrix’s residuary estate.
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In Lines v Lines & Ors [2003] SASC 173, Besanko J was asked to determine whether a gift in Peggy Lines’ will created a valid trust over a commercial property at 163 Main North Road, Nailsworth, South Australia. The proceeding was a summons for determination of questions without administration of the estate [1], [13].
No linked legislation citations have been extracted yet.
The critical provision was clause 4. It gave the Nailsworth property to the trustees on trust to sell it, with power to postpone sale, and to hold the property or its proceeds as the “Nailsworth property investment” [3]. During the joint lives of Peggy Lines’ husband, Raydon, and her daughter, and during the life of the survivor, the trustees could apply or set aside income for their benefit and for charitable purposes selected by the trustees [3(a)]. The ultimate gift, after the survivor’s death, was to Permanent Trustee Company Ltd, as trustee for the “Raydon Ayers Lines Charitable Trust”, for purposes set out in Raydon Lines’ last will “whenever executed” [3(b)].
Raydon Lines’ evidence was that his will of 1 July 1994 contained provisions establishing that charitable trust. He later revoked that will and made another, which did not establish the trust. His stated reason included the birth of granddaughters after Peggy Lines’ death [5], [8]. The judge accepted his evidence but considered it of limited significance to the issues [11]. In particular, the validity question was approached as a matter of construction of Peggy Lines’ will, not by treating the husband’s earlier will as supplying the missing purposes [40]-[43].
The plaintiff argued that the ultimate gift was invalid as a non-charitable purpose trust with uncertain objects, that it delegated testamentary power, and that it failed because the proposed trust did not exist or was not established [18]. The Attorney-General argued that it was valid or, alternatively, that its validity could not be determined until Raydon Lines died [16]. The court concluded that the central issue was construction: whether clause 4(b) created a trust for charitable purposes [43].
Besanko J answered that the gift was void ab initio, not valid in any event. The question whether it would fail if Raydon Lines did not establish the trust was unnecessary to answer. The property was not distributed on intestacy. It fell into the testatrix’s residuary estate [54].
The starting point was the distinction between a trust for identifiable beneficiaries and a trust for purposes. The judgment states that, generally, a trust must identify beneficiaries, or, if it is a purpose trust, its purposes must be charitable. It also recognises limited exceptions for certain non-charitable purpose trusts, but finds none applicable here [21].
The court then considered whether the missing objects could be supplied by Raydon Lines’ future will. Clause 4(b) did not state a class of beneficiaries or a category of purposes [29]. Besanko J applied the rule against delegation of testamentary power: a testator must make the testamentary disposition rather than leave another person to decide what persons or objects will receive the estate. The judgment discusses the High Court’s reasoning in Tatham v Huxtable and the summary in Gregory v Hudson [30]-[39]. It accepts that an exception exists for a genuine trust for charitable purposes, under which a trustee may select the charities [37]-[39]. The question was whether clause 4(b) fell within that exception.
In deciding that question, the court did not treat Raydon Lines’ 1 July 1994 will as incorporated into Peggy Lines’ will. Clause 4(b) referred to his last will “whenever executed”, rather than specifically to the earlier will. The judge agreed that a future document could not be incorporated by reference into a prior testamentary instrument, and that the armchair principle did not justify reading the reference as confined to the 1994 will [40]-[41]. The judgment therefore assessed what Peggy Lines’ own will said, rather than using her husband’s earlier testamentary provisions to supply the purposes.
The word “Charitable” in the proposed trust’s name was not enough. The judge reasoned that the name did not impose an obligation on Raydon Lines to select only charitable purposes. The will otherwise left the purposes entirely to his discretion [43]-[44]. The court also explained that the case was not one in which a particular charitable gift had failed and the court needed to decide whether the testatrix had a general charitable intention [42]. The issue was instead whether the terms actually used made the trust charitable or brought it within the statutory saving provision.
Section 69A(1) of the Trustee Act 1936 (SA) applies, as set out in the judgment, where purposes are partly charitable and partly non-charitable and invalid. The court examined decisions concerning comparable provisions, including In re Hollole, Attorney-General (NSW) v Donnelly and Leahy v Attorney-General (NSW) [45]-[50]. It concluded that some designation of purposes was required. Clause 4(b) designated none: referring to purposes that another person might later select did not identify those purposes, and the proposed trust’s title did not do so either [51]. Section 69A(1) therefore did not save the gift [52].
Finally, because the gift failed, the property went into the residuary estate. The judgment cites Williams on Wills for that consequence and answers the destination question in favour of the residuary estate rather than intestacy [53]-[54].
The judgment presents the applicable principles as established before 2003. First, it describes the beneficiary principle: non-charitable trusts ordinarily require identifiable beneficiaries capable of enforcing the trust. Purpose trusts are generally valid only if they are charitable, subject to limited and exceptional categories [21]-[25]. The court notes debate about the beneficiary principle but says it is well established in Australia [25].
Second, the judgment treats the rule against delegation of testamentary power as an established constraint. A will must itself identify or make ascertainable the persons or objects that are to benefit. The court recognises exceptions, including the selection of charitable purposes, and refers to powers of appointment and defined classes as other possible exceptions [31]-[39].
Third, the court addresses the statutory saving rule for mixed charitable and non-charitable purposes. The authorities discussed permit a liberal approach to some descriptions that encompass both charitable and non-charitable objects. But the judgment also stresses a boundary: the provision does not simply validate an entirely undefined direction that leaves the trustee free to choose anything. The court relies on the approval of In re Hollole and the reasoning in Donnelly and Leahy to require at least a designation of purposes or an adequate indication of charitable intention [45]-[51].
As to the state of the law after the decision, the provided judgment establishes only what Besanko J decided in 2003. It does not report subsequent decisions considering or applying Lines. It would therefore be unsupported to claim that later courts adopted, limited or rejected its reasoning. The judgment itself notes that Gregory v Hudson had been affirmed on appeal, but that is a pre-existing authority relied on by Besanko J, not subsequent treatment of Lines [36].
At [21], the judgment says: “A non-charitable trust is void.” In context, this is a general proposition, not a statement that every trust lacking named individual beneficiaries is invalid. The judge immediately recognises exceptions and explains that a purpose trust may be valid if charitable or within an established exception.
At [32], Kitto J’s statement in Tatham v Huxtable is quoted for the proposition that a testator cannot generally empower executors to decide who or what is to benefit. Besanko J uses that authority as part of the explanation of the delegation rule. In plain English, a will normally has to make the essential choice about the destination of the estate itself. A narrow exception exists where the will creates a charitable gift and permits selection among charitable objects.
At [43], Besanko J states the statutory and construction question directly: if the trust is expressed to be charitable, it may be valid even though specific purposes are not identified, but if it is non-charitable, it is invalid. The issue was whether the language of clause 4(b) expressed a charitable trust, not whether Raydon Lines might in fact have made a charitable trust in a previous will.
The central passage is at [51]: “To say that the purposes are such purposes as may be selected by another is not a designation of purposes as the objects of the trust. To refer to the name of the proposed trust is not to designate the purposes of the trust.” In plain English, the will could not rely on the husband to define the trust’s purposes later, and calling the trust “Charitable” did not fill that gap.
At [53], the judge states the consequence: “The gift fails and the Nailsworth property falls into the testatrix’s residuary estate.” That conclusion explains why the court answered the intestacy question no and the residuary-estate question yes [54].
The decision is relevant to will provisions that leave the core objects or purposes of a gift to be supplied later by another person. The most pertinent pattern is a testamentary gift to a proposed trust where the will does not identify beneficiaries or purposes, but refers to a separate instrument, a future will, or a later decision by another person. In Lines, the reference was to the husband’s last will “whenever executed” [3(b)], and the court held that this did not make the purposes sufficiently ascertainable from the testatrix’s will [40]-[41], [51].
It is also relevant where a will uses a charitable-sounding name but does not impose a clear restriction to charitable purposes. The decision treats the trust’s title as insufficient where the operative terms leave the purposes at large [43]-[44], [51]. The point is not that a charitable trust must always identify each eventual charity. Rather, the court’s reasoning was that the will needed to indicate that the permitted purposes were charitable, or at least designate purposes in a way capable of engaging the statutory provision.
The statutory issue may arise where a trust authorises a mix of charitable and non-charitable applications. The judgment discusses circumstances in which broad or composite language may still be saved if it includes designated charitable purposes and the non-charitable element can be excluded [46]-[50]. It contrasts that kind of clause with language so indefinite that it does not identify any purpose at all [45], [48]-[51].
The decision should not be read from the supplied text as resolving every question about charitable intention, incorporation by reference, or testamentary powers. Besanko J expressly confined the decision to the wording of clause 4(b) and the applicable statutory provision. The judgment also notes that questions of lapse and failure of a condition did not arise on the court’s analysis [19], [43].
The supplied judgment contains no account of later courts considering Lines v Lines. It therefore does not establish whether later decisions have followed, distinguished, limited or otherwise treated this decision. Any statement about its subsequent precedential history would need sources beyond the judgment provided.
The judgment does refer to appellate treatment of an earlier authority. Besanko J records that Gregory v Hudson was affirmed on appeal, citing (1998) 45 NSWLR 300 [36]. That reference supports the judge’s view of the delegation principle as part of the applicable law, but it is not later treatment of Lines.
The judgment also discusses earlier treatment of section 37D of the Conveyancing Act 1919 (NSW), and the Privy Council’s approval of the approach taken in Donnelly [46]-[50]. Those authorities inform the 2003 court’s interpretation of the South Australian section. They should not be confused with later judicial consideration of this particular case.
For research or professional use, a current assessment of the decision’s precedential status would require checking later judgments and any subsequent statutory amendments. That history is not contained in the supplied text, so no conclusion about it is made here.
The judgment expressly says that it did not need to decide whether the gift would fail if Raydon Lines did not establish the charitable trust by his last will, because the court held the gift void ab initio [19], [54]. That conditional question was therefore left unanswered.
The court also left the precise boundary of section 69A(1) open beyond the facts before it. It said there was no single clear test in the earlier authorities and acknowledged that the answer was “by no means obvious” [50]-[51]. The decision’s operative reasoning was that some purposes must be designated. It did not catalogue every form of wording that would or would not satisfy the section.
A further question not resolved was the destination of the property on intestacy. The Attorney-General did not submit on that issue [16], and the court found that the property passed under the residuary clause, so it answered the intestacy question no [53]-[54]. The judgment does not decide who would take under an intestacy in a different case where a failed gift did not fall into a residuary estate.
Finally, the decision does not determine the consequences of a will that expressly identifies a charitable class but also permits non-charitable applications, or the circumstances in which a statutory scheme might be imposed where a charitable trust is established but its purposes are not fully prescribed. It states that a scheme would be imposed if the trust were charitable and Mr Lines did not prescribe charitable purposes, but the court’s finding that clause 4(b) was not saved meant that it did not need to work through that possibility in detail [43].
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1 BESANKO J: This is a summons for the determination without administration of certain questions relating to the will of Mrs Peggy Lines ("the testatrix") who died on 19 August 1994.
2 The testatrix was married to Mr Raydon Ayers Lines. In 1994 the testatrix owned the land and buildings at 163 Main North Road, Nailsworth in the State of South Australia ("the Nailsworth property"). There is a showroom, office, warehouse complex and facilities for carparking on the Nailsworth property.
3 The testatrix made a will on 1 July 1994. By clause 2 of her will the testatrix appointed Mr Lines and her daughter, Ms Virginia Lines (a daughter by a previous marriage), to be the executors and trustees of her will. By clause 3, she disposed of certain items of personal use and adornment. By clause 4, she purported to dispose of the Nailsworth property. Clause 4 is of central importance to the issues in this action. It provides as follows:
"4. I GIVE AND DEVISE my real property situate at 163 Main North Road Nailsworth and being the whole of the land comprised in Certificates of Title Register Book Volume 3066 Folio 197 and Volume 4167 Folios 891, 892 and 893 and being allotments 473, 476 and portion of allotment 474 and 475 of part Section 346 in the Hundred of Yatala County of Adelaide to my Trustees UPON TRUST to sell the same with full power to postpone the sale for such period or periods as my Trustees in the absolute discretion of my Trustees shall think fit and to hold the same or the proceeds thereof as the case may be (hereinafter called "my Nailsworth property investment") upon the following trusts namely:
(a) During the joint lives of my said husband and my said daughter and during the life of the survivor of them to pay or apply the income of my Nailsworth property investment to or for the benefit of or set aside and appropriate the same as and to a separate fund for the benefit of the following namely:- my said husband, my said daughter and such charitable purposes as my Trustees shall in the absolute discretion of my Trustees (without being liable to account for the exercise of that discretion) think fit.
(b) From and after the death of the survivor of my said husband and my said daughter to stand possessed of the capital and income of my Nailsworth property investment or the balance then remaining upon trust for PERMANENT TRUSTEE COMPANY LTD ACN 000 000 993 of 23/254 O'Connell Street Sydney in the State of New South Wales to be held by it as trustee for the Raydon Ayers Lines Charitable Trust and applied by it for the purposes set out in the instrument establishing the same namely the last Will and testament of my said husband whenever executed."
4 By clause 5, the testatrix disposed of her residuary estate. In the events which have occurred (ie Mr Lines survived the testatrix for 30 days) it is sufficient to note that Mr Lines is entitled to the residuary estate. It is unnecessary for me to refer to the other clauses in the will.
5 Mr Lines also made a will on 1 July 1994. He no longer has a copy of that will. However, in an affidavit tendered on the hearing of the action, he said that there were clauses in that will which purported to establish the Raydon Ayers Lines Charitable Trust. The most important clause identified by Mr Lines is as follows:
"1. MY TRUSTEES shall if and when each and every aforesaid trust shall determine by reason of no person attaining a vested interest therein hold the assets comprised in the same UPON TRUST to pay transfer and vest the same to and in PERMANENT TRUSTEE COMPANY LTD ACN 000 000 993 of 23/25 O'Connell Street Sydney in the State of New South Wales ("the said Company") to be held by it as a perpetual charitable trust to be called the RAYDON AYERS LINES CHARITABLE TRUST UPON TRUST to pay or apply the income derived therefrom or so much thereof as the said company in its absolute discretion from time to time determines to or for the benefit of such authorised charities as are hereinafter defined as authorised charities and in such shares as the said Company shall determine namely:-
Authorised Charities means any purpose, hospital, institution, society, organisation, body or fund as the case may be which:
6 The evidence put before the Court consists of two affidavits of Mr Lines. Mr Lines was not cross-examined.
7 Mr Lines states that the testatrix's will was in fact prepared entirely on his instructions to Mr Brian Magarey, solicitor. Mr Lines states that the testatrix was happy to accede to his suggestions in relation to their respective wills. Mr Lines states that there was never any agreement between himself and the testatrix to make mutual wills, nor was there any agreement that either of them would not revoke, amend or in any other way change the terms of their respective wills. Mr Lines states that his concern at the time of making his will on 1 July 1994 was where his estate may devolve if both his sons predeceased him.
8 Since the death of his wife, Mr Lines has remarried. Mr Lines states that he has revoked the will he made on 1 July 1994 and has made another will. In his current will, Mr Lines has not made any provision for the establishment of a trust known as "The Raydon Ayers Lines Charitable Trust". Mr Lines states that a number of important events occurred after the death of the testatrix which caused him to delete any reference in his will to the Raydon Ayers Lines Charitable Trust. One of his sons had two daughters after the death of the testatrix. His granddaughters are now aged five years and two and a half years respectively. He states that as a result of the birth of his grandchildren, he felt the creation of a charitable trust in his own will was no longer appropriate.
9 Mr Lines states that if the gift in clause 4(b) of the testatrix's will fails, he is entitled to the Nailsworth property because he is the beneficiary of the residuary estate under the will. If, on the other hand, the Nailsworth property passes on an intestacy, then Mr Lines and the testatrix's daughter, Ms Virginia Lines, are entitled to the Nailsworth property.
10 Mr Lines states that he seeks a ruling on this matter "as it affects the way in which I would wish to deal with my own estate in my will".
11 I accept the evidence of Mr Lines, although, as will become clear, it is not of great significance in the resolution of the issues before me.
12 Probate of the testatrix's will was granted on 10 August 1994 and Mr Lines was granted administration of the estate.
The Questions and the Course of the Proceedings
13 Mr Lines issued the summons in this action on 26 June 2001. The questions for determination with respect to the testatrix's will are as follows:
"1. Is the ultimate gift ("the said gift") contained in clause 4(b) of the said will of the deceased whereby the capital and income of the Nailsworth property or the balance then remaining to be held by Permanent Trustee Company Ltd as trustee for the Raydon Ayers Lines Charitable Trust and applied by it for the purposes set out in the instrument establishing the same namely the last will and testament of her husband Raydon Ayers Lines whenever executed:-
(a) void ab initio?
(b) void in the event that Raydon Ayers Lines fails by his last will to establish the Raydon Ayers Lines Charitable Trust? Or
(c) valid in any event?
2. If yes to either 1 (a) or 1 (b) hereof does the said gift fall to be distributed:-
(a) as on intestacy? Or
(b) as part of the residuary estate of the deceased and dealt with in accordance with clause 5(1) of the said will of the deceased?"
14 The first defendant, Ms Virginia Lines, reached a compromise with Mr Lines and she did not appear at the hearing of the action. The second defendant, Permanent Trustee Company Ltd, indicated that it would abide the order of the Court and, on 24 June 2002, Mr Lines discontinued his action against it. In December 2001, the Attorney-General for the State of South Australia was joined as a defendant to the action. At the hearing of the action, the Attorney-General appeared by counsel and made submissions.
15 The hearing took place before another Judge of this Court. Unfortunately that Judge became ill and was unable to complete the matter. I was assigned to complete the matter. I read the pleadings, affidavits and submissions of counsel. I raised certain questions with the parties and then heard oral submissions on those questions and other matters which can be identified by reference to the transcript.
16 The plaintiff's counsel submitted that the gift in clause 4(b) is void ab initio. Alternatively, it is void in the event that Mr Lines does not establish by his last will the Raydon Ayers Lines Charitable Trust. The failure of the gift means that the Nailsworth property falls into the residuary estate of the testatrix. Counsel for the Attorney-General submitted that the gift is valid. Alternatively, the Court could not determine the validity of the gift until Mr Lines died. Counsel for the Attorney-General did not seek to make a submission on the destination of the Nailsworth property should the gift in clause 4(b) fail.
17 It could not be suggested that there was a gift of the beneficial interest in the Nailsworth property to Perpetual Trustee Company Ltd. The question is whether clause 4(b) establishes a valid trust.
18 The plaintiff submitted that the trust fails on a number of grounds. First, the trust is a non-charitable purpose trust and as such is invalid. Furthermore, the objects of the trust are uncertain and indefinite and therefore the trust is invalid. Secondly, the plaintiff submitted that the trust infringes the rule against the delegation of testamentary power, since Mr Lines is given the power to determine the purposes of the trust. Thirdly, the plaintiff submitted that the purported gift fails or has lapsed because there was no Raydon Ayers Lines Charitable Trust at the date of the testatrix's death. Fourthly, the plaintiff submitted that the trust is conditional upon the establishment of the Raydon Ayers Lines Charitable Trust. That trust has not been established and therefore the condition has not been met. In those circumstances the gift fails, or at least would fail if Mr Lines fails to establish the Raydon Ayers Lines Charitable Trust by his last will.
19 For reasons I will give, I do not think questions of lapse or the failure of a condition upon which a gift depends arise in the circumstances of this case. Therefore, it is unnecessary to consider the plaintiff's third and fourth submissions.
20 If the trust is a trust for charitable purposes, or is partly for charitable and partly for non-charitable purposes and is saved by the operation of s 69A of the Trustee Act 1936, then the trust is valid. I will need to address this issue, however for the moment, I will consider the validity of the trust on the assumption that the purposes of the trust do not include charitable purposes.
21 Generally speaking, in order to be valid, a trust must have identifiable beneficiaries, or if it is a trust for purposes, those purposes must be charitable. A non-charitable trust is void. There are some exceptions to the principle that a non-charitable purpose trust is void. The exceptions are discussed in the standard texts on the subject (Meagher & Gummow, Jacobs' Law of Trusts in Australia (6th ed, 1997), ch 11; Ford & Lee, Principles of the Law of Trusts (3rd ed, 1996) par 5240). Some of these exceptions have been described as "anomalous and exceptional" (In re Astor's Settlement Trusts [1952] Ch 534 per Roxburgh J at 547). None of the exceptions are relevant in this case.
22 The seminal case in relation to the validity of non-charitable purpose trusts is Morice v The Bishop of Durham [1804] EngR 177; (1804) 9 Ves 399; (1804) 32 ER 656. In that case, the testatrix bequeathed the residue of her personal estate to:
"Such objects of benevolence and liberality as The Bishop of Durham in his own discretion shall most approve of;"
23 Sir William Grant MR held that the trust was not of a charitable nature. As to a non-charitable purpose trust, the Master of the Rolls said (at ER 658):
"There can be no trust, over the exercise of which this Court will not assume a control; for an uncontrollable power of disposition would be ownership, and not trust. If there be a clear trust, but for uncertain objects, the property, that is the subject of the trust, is undisposed of, and the benefit of such trust must result to those, to whom the law gives the ownership in default of disposition by the former owner. But this doctrine does not hold good with regard to trusts for charity. Every other trust must have a definite object. There must be somebody, in whose favour the court can decree performance."
24 The decision of the Master of the Rolls was affirmed on appeal by Lord Eldon LC [1805] EWHC Ch J80; (1805) 10 Ves 522; (1805) 32 ER 947.
25 The principle that in the case of a non-charitable trust, the trust must be in favour of identifiable beneficiaries (also known as the "beneficiary principle") has been the subject of a good deal of debate (Re Denley's Trust Deed [1969] 1 Ch 373 per Goff J, at 382 - 384; Ford & Lee, par 5250 - 5260; Ong, Trusts Law in Australia (1999), pp 84 - 86). Nevertheless, it is well established in this country. In Attorney-General (NSW) v Donnelly [1958] HCA 1; (1958) 98 CLR 538, Dixon CJ and McTiernan J cited with approval (at 557) the words of Lord Parker of Waddington in Bowman v Secular Society Ltd [1917] AC 406. Lord Parker said (at 441):
"A trust to be valid must be for the benefit of individuals, which this is certainly not, or must be in that class of gifts for the benefit of the public which the courts in this country recognise as charitable in the legal as opposed to the popular sense of that term. Moreover, if a trustee is given a discretion to apply trust property for purposes some of which are and some are not charitable, the trust is void for uncertainty."
26 Even if some modification to the beneficiary principle is appropriate, it would not save the trust in this case. Not only does the purported gift in clause 4(b) not identify any beneficiaries of the trust, it does not identify any purposes of the trust. In In Re Pugh's Will Trusts [1967] 1 WLR 1262, a testator left his residuary estate to his trustee directing him:
"To dispose of the same in accordance with any letters or memoranda I may leave with this my will and otherwise in such manner as he may in his absolute discretion think fit."
27 The testator died without leaving any letters or memoranda. Pennycuick J held that the residuary estate was held by the trustee on trust and had not been given to the trustee absolutely. However, the trust was void for uncertainty because the objects of the trust were not defined. Pennycuick J said (at 1269):
"I conclude, therefore, that I am bound by authority to come to the conclusion that in this case the residue is given to Mr Marten upon a trust which, being for undefined objects, is incapable of being executed, and is therefore, void, with the consequence that the residue goes to the next of kin on the footing of an intestacy."
28 It follows that the trust in this case (on the assumption that it does not include charitable purposes) fails unless the ability of Mr Lines to identify the purposes in his last will saves the trust. I do not think that it does because of the principle against the delegation of testamentary power.
The Rule Against the Delegation of Testamentary Power
29 The purported gift in this case does not attempt to identify a class of beneficiaries or a category of purposes.
30 In Tatham v Huxtable [1950] HCA 56; (1950) 81 CLR 639, the High Court considered the validity of a clause purporting to dispose of a testator's residuary estate. The clause was in the following terms:
"I hereby authorise and empower in law my executor the said Edgar Ernest Huxtable, to distribute any balance of my real and personal estate which may at the time of my decease be possessed wholly or in part by me, to the beneficiaries of this my Will and Testament, in addition to amounts already specified, and to others not otherwise provided for who, in my opinion, have rendered service meriting consideration by the testator."
31 Fullagar and Kitto JJ each discussed the rule against the delegation of testamentary power. Fullagar J said (at 649):
"With great respect to the learned judges who decided those cases, I would think that the real question was not whether the power which was given was a valid power as such, but whether it amounted to a true testamentary disposition of property, or, in other words, whether it complied with the well-established rule stated by Lord Haldane in Houston v. Burns (3) and by Lord Simonds in the Diplock Case (Chichester Diocesan Fund v. Simpson (4). It is to be remembered that the ultimate basis of the rule lies in the Wills Act, which provides that every person may dispose of all his property by will but that no will shall be valid unless it is in writing and executed by the testator in a particular manner. It is inherent in the very nature of the power so given that it cannot be delegated or exercised by an agent for the testator, and it seems to me necessarily to follow that some powers of appointment, which would be perfectly good in any instrument other than a will, are ineffective in a will for the simple reason that they do not amount to a testamentary "disposition" of property, or indeed to any "disposition" of property at all."
"It is a 'cardinal rule', to which a power of selection among charitable objects is the sole exception, that a 'man may not delegate his testamentary power. To him the law gives the right to dispose of his estate in favour of ascertained or ascertainable persons. He does not exercise that right if in effect he empowers his executors to say what persons or objects are to be his beneficiaries': Chichester Diocesan Fund v. Simpson (2). It is therefore necessary in all cases (other than charity cases) that the persons or objects to benefit under the will shall be, by the will itself, ascertained or made ascertainable. They may be made ascertainable by reference to a specified future event, including an act to be done by another person provided that that act does not amount to the making by one man of another man's will: Stubbs v. Sargon (3)."
33 In Lutheran Church of Australia South Australia District Inc v Farmers' Co-operative Executors and Trustees Ltd [1970] HCA 12; (1970) 121 CLR 628 the High Court considered the rule against the delegation of testamentary power in the context of a purported gift to a charitable institution. The clause under consideration in that case read as follows:
"My Trustees have discretionary power to transfer any mortgages, and property, and shares in companies invested in my name to the Lutheran Mission [at a stated address] for building homes for aged blind pensioners after all expenses paid ..."
34 The Court was evenly divided, and in those circumstances, the decision of the Court below in Re Stapleton (dec'd) [1969] SASR 115 per Bray CJ was affirmed.
35 McTiernan and Menzies JJ, who would have dismissed the appeal, said (at 643 and 645):
"Unfortunately the testatrix had left the fulfilment of her wish to the discretion of her trustees. She did not create a trust for a charitable purpose; she left it to her trustees to decide whether or not her property should go to charity. A case such as Smith v. West Australian Trustee Executor & Agency Co. Ltd. (1), is clearly distinguishable. There it was held that there was a good charitable bequest because, by the terms of the will, the money had to go to charity. Here the property would not go to charity unless the trustees should so decide. If cl. 6 of the will were to be regarded as a testamentary disposition it would follow that a testator could delegate to his executor the power to decide whether part of his estate should be transferred to a particular person. Nothing can turn upon the unquestionable fact that a gift for the building of homes for aged blind pensioners would be charitable for the simple reason that the testatrix has made no such gift. Here there is no trust for charitable purposes, no general power of appointment, no special power of appointment. The words used simply leave it to the trustees to decide, at some time after the death of the testatrix, whether or not to establish a trust without provision for the period between the date of death and the constitution of such trust ...
Here not only is there no gift to a charity; there is no gift to charity. There is simply no gift. Here the testatrix has purported to authorize her trustees, if they should think fit, to constitute a trust in favour of a named charity. As such an authority it must fail."
36 In Gregory v Hudson (1997) 41 NSWLR 573, Young J considered the rule against the delegation of testamentary power at length. It is unnecessary to discuss the facts of that case. In my opinion, the conclusions expressed by Young J represent the law in this State. Young J said (at 586):
"In summary, reducing the foregoing to their simplest form, the position as to the rule against delegation of will-making powers is as follows:
1. The rule is part of the law of New South Wales.
2. A person will not exercise the power personally where a power is given to an executor or some third person to choose the persons who are to benefit from the testator's bounty.
3. There are exceptions to that rule in the case of powers of appointment including powers of appointment where there is a trust to exercise the power in favour of: (a) charitable purposes; (b) powers where the appointor can appoint to himself or herself so that the interest conferred is equivalent to ownership; and (c) special powers where the class of persons who can be benefited is defined with sufficient precision.
4. It is not a breach of the rule to give property by will [to] a pre-existing trust or to constitute a trust which is sufficiently constituted according to the rules of certainty in trust law.
5. There is a further apparent exception where secret or half-secret trusts are used."
The decision of Young J was affirmed on appeal: (1998) 45 NSWLR 300.
37 An exception to the rule against the delegation of testamentary power applies in the case of a trust for charitable purposes. If property is given to a trustee for such charitable purposes as the trustee may select then the gift is valid. In Smith v West Australian Trustee Executor & Agency Co Ltd [1950] HCA 32; (1950) 81 CLR 320 the High Court upheld as a good charitable bequest a bequest in the following terms:
"Upon Trust to pay and distribute the balance of my estate between such charitable institutions bodies and organisations in the Perth-Fremantle Area as my Trustees may select in such proportions and in such manner and at such times as my Trustees shall think fit ..."
38 Furthermore, the trust is valid if the power to appoint or select the relevant charities is given to a third person (Jacobs', par 1061 - 1062).
39 In my opinion, the purported gift in clause 4(b) of the testatrix's will is contrary to the rule against the delegation testamentary power unless it is a gift for such charitable purposes as may be selected by Mr Lines. I turn now to that question.
40 At the outset, I must consider to what extent I should have regard to the provisions of Mr Lines' will of 1 July 1994 and to the undoubted fact that the Raydon Ayers Lines Charitable Trust to be established under that will would be a charitable trust. The parties were agreed that I should not have any regard to the provisions of Mr Lines' will of 1 July 1994. The Attorney-General submitted that it might be permissible to look at the provisions of that will if the Court reached the point of considering what would be an appropriate scheme. I think the approach of the parties is correct. A Court may in certain circumstances look at an earlier will of another person (Executor Trustee & Agency Company of South Australia Ltd v Warbey [1971] SASR 255) and may also look at a contemporaneous will (Foundling Hospital and Infants' Home v Trustees Executors & Agency Co (1946) 19 ALJ 383). However, in this case the testatrix does not refer specifically to Mr Lines' will of 1 July 1994, but rather his last will "whenever executed". I agree with the submission of counsel for the plaintiff that a future document may not be validly incorporated by reference into a prior testamentary instrument (Hardingham, Neave & Ford, Wills and Intestacy in Australia and New Zealand (2nd ed, 1983), par 703).
41 I also agree with the submission of counsel for the plaintiff that reference to Mr Lines' will of 1 July 1994 is not justified by resort to the armchair principle (Hardingham, Neave & Ford, par 1103) for the simple reason that the testatrix herself made it clear that she was referring to Mr Lines' last will whenever executed. That may or may not have been his will of 1 July 1994.
42 Although it is relevant in this case to consider whether the testatrix had a charitable intention, this is not a case where a gift has been made to a particular charitable institution or for a particular charitable purpose and the gift has failed and the question arises as to whether the testatrix had a general charitable intent. As to the resolution of that issue see, for example, In Re Wilson [1913] UKLawRpCh 4; [1913] 1 Ch 314 per Parker J at 320 - 321; Attorney-General (NSW) v Perpetual Trustee Co Ltd [1940] HCA 12; (1940) 63 CLR 209 per Dixon and Evatt JJ at 225 - 226; Executor Trustee v Warbey (No 2) (1973) 6 SASR 336 per Bray CJ at 345 - 346. In this case the testatrix makes no reference in clause 4(b) of the will to particular charities or particular charitable purposes and to that extent, the question of general charitable intention in the sense discussed in the above cases does not arise.
43 Nor in my opinion do questions of lapse or the failure of a condition arise. The real issue in this case is one of construction. Is the trust referred to in clause 4(b) a trust for charitable purposes? In determining this question, I can apply the rule of construction referred to in s 69A(1) of the Trustee Act 1936. If the trust is expressed to be a trust for charitable purposes then it is valid even though no specific beneficiaries or purposes are identified and Mr Lines is given the power to prescribe the purposes of the trust (Smith v West Australian Trustee Executor and Agency Co Ltd). If in his last will Mr Lines did not prescribe the charitable purposes of the Raydon Ayers Lines Charitable Trust then a scheme would be imposed. If, on the other hand, the trust is for non-charitable purposes then it is invalid for the reasons I have given. The only indication in clause 4(b) that the testatrix had charitable purposes in mind is the reference to the Raydon Ayers Lines Charitable Trust (emphasis added). The purposes for which the trustee must or may apply the trust property are otherwise entirely at the discretion of Mr Lines.
44 In my opinion, had clause 4(b) referred simply to the Raydon Ayers Lines Trust and omitted any reference to "charitable", the trust would be invalid and the gift would fail. The rule of construction in s 69A(1) would not save the trust, for reasons which I will explain. I do not think the mere reference to the name of the trust as a Charitable Trust is sufficient to conclude that there is an obligation on Mr Lines to select only charitable purposes. I do not understand there to be any requirement to the effect that if a person calls a trust a charitable trust then at least some of the purposes of the trust must be charitable. It follows that the trust fails unless it is saved by the rule of construction in s 69A(1) of the Trustee Act. That subsection provides as follows:
"(1) Where the purposes for which property is required or permitted to be applied in pursuance of a trust (whether constituted before or after the enactment of this section) are partly charitable, and partly non-charitable and invalid, the trust shall not be held to be invalid, but shall be construed as if no provision had been made requiring or permitting the application of property for purposes that are non-charitable and invalid."
45 In In re Hollole (dec'd) [1945] VicLawRp 36; [1945] VLR 295, O'Bryan J considered the validity of a clause in a will in the following terms:
" ... The balance of my real and personal estate I give to my trustee and executor to be disposed of by him as he may deem best."
Section 131 of the Property Law Act 1928 (Vic) provided as follows:
"(1) No trust shall be held to be invalid by reason that some non-charitable and invalid as well as some charitable purpose or purposes is or are or could be deemed to be included in any of the purposes to or for which an application of the trust funds or any part thereof is by such trust directed or allowed. (2) Any such trust shall be construed and given effect to in the same manner in all respects as if no application of the trust funds or of any part thereof to or for any such non-charitable and invalid purpose had been or should be deemed to have been so directed or allowed."
O'Bryan J considered whether s 131 saved the trust. In an important passage he said (at 301):
"In my opinion that section has no operation in a case such as this where the subject-matter of the trust is quite vague and uncertain and no attempt has been made by the settlor to define objects. Such a trust cannot under any of the authorities relating to severability be severed. You cannot carve out of a completely undefined object a piece, which you will call for charitable purposes only. This would make an entirely new will for the testator. The testator intended that the trustee should be left completely at large in his choice of persons or objects, whereas the result of such a limitation would be that he was confined to charitable objects only. A quite different problem would arise if the trust had been "for charities or other good objects selected by the trustee". Such a trust would probably be severable and section 131 would probably have saved the gift. What is left after "other good objects" is excised is a trust for charities, which is one of the alternative selections clearly directed by the testator. I may add that, in my opinion, the conversations cannot in this case be read as creating a trust for charities or other purposes. What the testator intended was to leave the whole matter of disposition to Mr Grogan's discretion.
Section 131 contemplates a severable trust, one which is partly charitable and partly non-charitable, and not a trust which is entirely undefined and uncertain as to subject-matter and the section therefore does not save this trust - see Roman Catholic Archbishop of Melbourne v Lawlor."
46 The New South Wales equivalent of the Victorian provision was considered by the High Court in Donnelly. The section under consideration in that case was s 37D of the Conveyancing Act 1919 (NSW) which provided as follows:
"(1) No trust shall be held to be invalid by reason that some non-charitable and invalid purpose as well as some charitable purpose is or could be deemed to be included in any of the purposes to or for which an application of the trust funds or any part thereof is by such trust directed or allowed.
(2) Any such trust shall be construed and given effect to in the same manner in all respects as if no application of the trust funds or any part thereof to or for any such non-charitable and invalid purpose had been or could be deemed to have been so directed or allowed."
One of the clauses of the will considered in that case dealt with the disposal of the testator's residuary estate and was in the following terms:
"... upon trust to use the income as well as the capital to arise from any sale thereof in the provision of amenities in such Convents as my said executors and trustees shall select either by way of building a new Convent where they think necessary or the alteration of or addition to existing buildings occupied as a Convent or in the provision of furnishings in any such Convent or Convents."
The clause went on to give (among other things) a complete discretion to the trustees as to the order or orders of nuns who should benefit under the clause. As a matter of fact, some orders of nuns were engaged in activities recognised by the law as charitable whereas others (eg contemplative orders) were engaged in activities not recognised by the law as charitable. The Court was unanimous in holding that the trust was saved from invalidity by the application of s 37D.
47 There was no dispute that s 37D could be used where there was a specific reference to something charitable and a specific reference to something which was not charitable. The issue raised in Donnelly was whether the section could be used to confine general words. All members of the High Court held that s 37D should be given a liberal interpretation, and that it could be used to confine general words. The difficulty is where to draw the line once that step is taken. There clearly needs to be a line drawn. All members of the Court approved the decision of O'Bryan J in In re Hollole. Dixon CJ and McTiernan J formulated the relevant test in the following terms (at 560):
"It appears to us that what must be found in order to justify an application of the provision is a distinct or sufficient indication of an intention to authorise the application of the income or corpus of the fund or other property to what is clearly a charitable purpose even although the description which embraces the purpose is so wide that it may go beyond charitable purposes or there is associated with the description a description of non-charitable purpose or purposes capable of going beyond the legal conception of charity. But it is perhaps unsafe to generalise. For ourselves we should think that the conclusion of O'Bryan J in In re Hollole (dec'd) was right on the ground that the wide general words 'to be disposed of by him as he may deem best' did not seem necessarily to advert to any charitable object and were so vague as to be quite indeterminate and only embraced anything that lies within the legal conception of charity because of their indeterminancy. But in the present case it appears to us that the reference is prima facie charitable in the sense that it is known that most convents would be the object of legal charity. The words are distributive and it is plain that by restricting their application they may be restrained to charitable objects."
48 Williams and Webb JJ said that s 37D could be used to confine general words and that the decision in In re Hollole was correct. Kitto J formulated the relevant test in the following terms (at 583 - 584):
"The argument is that if the section applies whenever a dissection of the purposes which are made the objects of the trust would yield both charitable and non-charitable purposes, it must apply even to a case such as that which came before O'Bryan J in In re Hollole (dec'd), where there was a gift to a trustee 'to be disposed of by him as he may deem best'. The learned Judge held that this gift was not saved by the section. In my opinion, the decision was clearly correct, because the section applies only where the trust fund or part of it is directed or allowed to be applied for some designated purposes, the designation or designations extending into but also beyond the area of charity. The key to the section, I think, is to be found in the expression 'included in any of the purposes to or for which' etc., considered with the fact that the section is dealing with cases of invalidity arising from the nature of those purposes. For the section to apply, purposes must be designated as the objects of the trust, and they must be purposes not for the benefit of definite beneficiaries. But I see nothing in the section to suggest that it means to discriminate between, on the one hand, cases where charitable purposes and non-charitable and invalid purposes are designated by separate descriptions and, on the other hand, cases where they are designated by a composite description."
49 The decision of the High Court was the subject of an appeal to the Privy Council (Leahy v Attorney-General (NSW) [1959] UKPC 1; [1959] AC 457). Viscount Simonds delivered the reasons for judgment of the Board. The approach of the High Court on this point was approved. In fact, I think the approach taken by Dixon CJ and McTiernan J was endorsed. The relevant passage in the reasons for judgment of Viscount Simonds is lengthy but I think it is appropriate to cite it in full (at 475 - 476):
"But, though their Lordships are of opinion that the section may operate where there is a composite expression covering charitable and non-charitable purposes, and does so in the present case, it is clear that not every expression which might possibly justify a charitable application is brought within it. For instance, in In re Hollole there was a gift to a trustee 'to be disposed of by him as he may deem best'. The trustee might presumably have deemed it best to dispose of it for a charitable purpose, and, if he had done so, could not be said to have exceeded his powers. Yet O'Bryan J held that the gift was not saved by the section, and his decision has been rightly approved in the High Court. This was a clear case because the testator did not designate any purpose at all but in effect delegated his testamentary power in a manner that the law does not permit. Greater difficulty will arise where the permissible objects of choice are described in a composite expression which, though not so vague and general as to amount to a delegation of testamentary power, does not very clearly indicate a charitable intention on the part of the testator. 'In the present case,' say the Chief Justice and McTiernan J, 'there is reference to a distributable class which, while not exclusively charitable, is predominantly charitable in character'. The same concept appears in a different form in the judgment of Williams J and Webb J. 'One can also agree with him' (ie., Myers J) they say 'that in order to satisfy the section the application of the whole fund to charity must be one way of completely satisfying the intention of the testator. But, if the trust either directs or allows this to be done, the testator's intention will be completely satisfied if the trust funds are so applied....' Thus whether the gift be to Orders of Nuns, an object so predominantly charitable that a charitable intention on the part of the testator can fairly be assumed, or for (say) benevolent purposes, which connotes charitable as well as non-charitable purposes, the section will apply. Inevitably there will be marginal cases, where an expression is used which does not significantly indicate a charitable intention, and their Lordships do not propose to catalogue the expressions which will or will not attract the section. It may be sufficient to say that in the chequered history of this branch of the law the misuse of the words 'benevolent' and 'philanthropic' has more than any other disappointed the charitable intention of benevolent testators and that the section is clearly designed to save such gifts."
50 With respect, it seems to me that no single clear test emerges from the reasons of the High Court or Privy Council. The decision in In re Hollole was approved by both Courts. For present purposes, I do not think the difference in wording between s 69A(1) and s 37D means that a different approach should be taken in the case of the former section. That appears to have been the view of Mitchell J in In the Estate of Cole (1980) 25 SASR 489 at 497 - 498.
51 In my opinion, the answer to the question whether the trust in clause 4(b) is saved from invalidity by the operation of s 69A(1) of the Trustee Act is by no means obvious. It might be said that the testatrix proceeded on the basis that the Raydon Ayers Lines Charitable Trust would be established and that some of the purposes of that trust would be charitable. On the other hand, the testatrix does not identify the purposes in any way and it would be open to Mr Lines to establish a trust with no charitable purposes and call it the Raydon Ayers Lines Charitable Trust. I do not think the trust in clause 4(b) satisfies the test suggested by Dixon CJ and McTiernan JJ. I do not think that it can be said that clause 4(b) provides a distinct or sufficient indication of an intention to authorise the application of the trust property to what is clearly a charitable purpose. The trust is not prima facie charitable. Although the facts in this case are not as extreme as those in In re Hollole there is a sense in which it may be said that the words in clause 4(b) are vague and indeterminate and only embrace "anything that lies within the legal conception of charity because of their indeterminacy". Nor does the trust in clause 4(b) satisfy the test suggested by Kitto J because there are no designated purposes. I recognise that the remarks of Kitto J are in part based on the words in s 37D of the Conveyancing Act and that it might be said that s 69A(1) is in different terms. Nevertheless, I think with respect that his remarks are helpful and might be said to be based on the more general principle that for the section to apply there must at least be some designation of the purposes which are the objects of the trust. To say that the purposes are such purposes as may be selected by another is not a designation of purposes as the objects of the trust. To refer to the name of the proposed trust is not to designate the purposes of the trust. In the result, that is the test which I think it is appropriate to apply. I do not think s 69A(1) was intended to "rescue" the type of clause considered in In re Hollole. Some designation of the purposes of the trust is required. The purposes of the trust in clause 4(b) are not designated in any way.
52 For these reasons, I do not think s 69A(1) of the Trustee Act operates to save the trust referred to in clause 4(b) of the testatrix's will.
53 The gift fails and the Nailsworth property falls into the testatrix's residuary estate (Sherrin and Ors, Williams on Wills (7th ed, 1995) at p 503).
1(b) In view of the answer to 1(a), unnecessary to answer.
55 I will hear the parties as to whether they seek any further orders.
LINES
LINES & ORS No. SCCIV-01-964 [2003] SASC 173
(1958) 98 CLR 538
(1950) 81 CLR 639
(1970) 121 CLR 628
(1997) 41 NSWLR 573
(1998) 45 NSWLR 300
(1950) 81 CLR 320
(1940) 63 CLR 209
(1973) 6 SASR 336
(1980) 25 SASR 489
The court answered question 1(a) yes, question 1(c) no, and found question 1(b) unnecessary to answer. It answered question 2(a) no and question 2(b) yes. The clause 4(b) gift failed, and the Nailsworth property fell into the testatrix’s residuary estate. Further orders were reserved.