Lions Clubs NSW-ACT Save Sight and Health Care Limited v Attorney General of NSW

Cases Cited: Corish v Attorney-General’s Department of NSW [2006] NSWSC 1219
Free Serbian Orthodox Church Diocese for Australia and New Zealand Property Trust v Bishop Irinej Dobrijevic (2017) 94 NSWLR 340; [2017] NSWCA 28
Glasby & Ors as trustees of the BCS Foundation v Attorney General of New South Wales [2017] NSWSC 837
McCabe as Syndic for the Victor Chang Cardiac Research Institute Ltd (ACN 068 363 235) v Baltins Superannuation Fund [2017] NSWSC 1671
Perpetual Trustee Co Ltd v Federal Commissioner of Taxation (1931) 45 CLR 224; [1931] HCA 20
Perpetual Trustee Company Ltd v Attorney General of New South Wales [2024] NSWSC 257
Re Seaton, Noble & Motteram [2022] SASC 152
Robinson atf the Trust Fund of the Fairfax Fellowships at Balliol College v Attorney General of New South Wales [2022] NSWSC 996

Category: Principal judgment

Parties: Lions Clubs NSW-ACT Save Sight and Health Care Limited (First Plaintiff)
Lions NSW-ACT Sight and Health Foundation Limited (Second Plaintiff)
Attorney General of NSW (Defendant)

Representation: Counsel:
A P Cheshire SC and A L Oakes (Plaintiffs)
P Singleton (Defendant)
Solicitors:
Macpherson Kelley (Plaintiffs)
Crown Solicitor’s Office (NSW) (Defendant)

File Number(s): 2025/00146609

Publication restriction: Nil

JUDGMENT

1. By summons filed on 15 April 2025, the plaintiffs seek orders in relation to two charitable trusts (collectively, the existing trusts):

2. Lions NSW-ACT Save Sight Foundation Charitable Trust (the Save Sight Trust); and

3. Lions Clubs N.S.W.-A.C.T. Public Health Care Foundation (the PHCF Trust).

4. The first plaintiff, Lions Clubs NSW-ACT Save Sight and Health Care Ltd (Current Trustee), has been the trustee of the Save Sight Trust since its inception. The Current Trustee has also purported to act as the trustee of the PHCF Trust since around 2002. The second plaintiff, Lions NSW-ACT Sight and Health Foundation Ltd (New Trustee), is the trustee of the Lions NSW-ACT Sight & Health Fund (New Trust).

5. The substantive relief sought in the summons falls into two broad categories:

6. Prayers 1 to 3 of the summons are concerned with regularising the appointment of the Current Trustee as trustee of the PHCF Trust and addressing the consequences (if any) of the deregistration of the former trustee of that Trust.

7. Prayers 4 to 6 of the summons seek to implement a scheme whereby the assets of the existing trusts are transferred to the New Trust, following which the existing trusts are to terminate. The proposed scheme is the outcome of a detailed review of the affairs of the existing trusts which commenced in 2021 with a review by the Australian Charities and Not-for-profits Commission (ACNC) and revealed a number of issues regarding the terms of the trust deeds of the existing trusts and related compliance concerns.

8. The defendant, the Attorney General of NSW, authorised the commencement of the proceedings pursuant to s 6(1)(a) of the Charitable Trusts Act 1993 (NSW) (the Act) and supports the Court making the orders sought, although there was some difference of opinion between the plaintiffs and the Attorney General as to whether the proposed scheme is properly characterised as a cy près scheme or an administrative scheme.

Evidence in support of the summons

5. The plaintiffs read an affidavit affirmed on 15 April 2025 by John Alick Sheather. Mr Sheather has been the Honorary Solicitor/Legal Officer of the Current Trustee since 2013 and holds the same position for the New Trustee. Mr Sheather’s affidavit and the accompanying exhibit set out most of the relevant background. The plaintiffs also read an affidavit affirmed on 22 May 2025 by Sarah Michelle Sinclair, a Principal Lawyer employed by the plaintiffs’ solicitor on the record, the purpose of which was to detail recent correspondence with the Australian Taxation Office (ATO) regarding the proceedings. The plaintiffs separately tendered recent correspondence with the ACNC about the proceedings.

Background to the existing trusts

6. The Save Sight Trust was established on 15 December 1974, and the PHCF Trust was established on 15 January 1981. The trust deeds of the existing trusts are substantially identical. Relevantly for present purposes, and using the deed for the PHCF Trust, cl 2 provides as follows:

“2. (a) Subject to Clauses 5 and 10 of this Deed the settled property and all moneys and property in the nature of income from any moneys property or investments for the time being forming part of the settled property shall be applied and used exclusively for the purpose of providing money property or benefits to or for funds authorities or institutions referred to or for the purposes if any referred to in any of the sub-paragraphs of paragraph (a) of subsection (1) of Section 78 of the Income Tax Assessment Act 1936 as amended by subsequent Acts for the time being and from time to time.

(b) No part of the settled property as constituted at the date of any variations or alterations lawfully made to this Deed shall without the approval of the Commissioner of Taxation first had and obtained become freed from the limitations imposed by paragraph (a) of this Clause.”

7. At the date that the existing trusts were established, s 78(1)(a) of the Income Tax Assessment Act 1936 (Cth) (ITAA 1936) provided:

“(1) The following shall, subject to section 77B, sub-section (11) of section 77D and section 79C, be allowable deductions:-

(a) Gifts (not being testamentary gifts) of the value of Two dollars and upwards of money or of property other than money which was purchased by the taxpayer within twelve months immediately preceding the making of the gift, made by the taxpayer in the year of income to any of the following funds, authorities or institutions in Australia:-

(i) a public hospital

…

(xliv) the Australian Conservation Foundation Incorporated,

or to a public fund established and maintained under a will or instrument of trust exclusively for the purpose of providing money, property or benefits to or for funds, authorities or institutions referred to, and for the purposes (if any) referred to, in any of the sub-paragraphs of this paragraph. …”

8. It is apparent from the terms of cl 2(a) of the trust deed that the existing trusts fall within the concluding words in s 78(1)(a), namely, “a public fund established and maintained under a[n] … instrument of trust exclusively for the purpose of providing money, property or benefits to or for funds, authorities or institutions referred to, and for the purposes (if any) referred to, in any of the sub-paragraphs of” paragraph a. As the plaintiffs submitted, this purpose aligns with a charitable distribution trust (being a trust that distributes its assets to one or more charitable entities) rather than a charitable works trust (which itself undertakes charitable works): see Re Seaton, Noble & Motteram [2022] SASC 152 at [20] (Blue J). Consistently with this characterisation, at around the time that the existing trusts were respectively established the ATO confirmed that each was a deductible gift recipient in the nature of a public fund.

9. There is no express reference to charitable purposes in cl 2 of the trust deed. Nonetheless, as the clause limits the distribution of trust assets to charitable entities I am satisfied that the existing trusts are charitable trusts within the meaning of the definition in s 3 of the Act and that the proceedings are “charitable trust proceedings” within the meaning of s 5(1) of the Act.

10. As cl 2(a) of the trust deed anticipated, s 78 of ITAA 1936 was amended from time to time; and it was ultimately repealed in 2006. Most relevantly, in 1993 the Taxation Laws Amendment Act (No*.* 2) 1993 (Cth) repealed and replaced s 78, with sub-ss (4) and (5) of the substituted section making similar provision to what was formerly in s 78(1)(a). Immediately after the commencement of the Income Tax Assessment Act 1997 (Cth) (ITAA 1997) on 1 July 1997, Division 30, titled “Gifts and contributions”, was inserted into ITAA 1997, covering the same subject matter as s 78 of ITAA 1936 albeit by more detailed provisions: Tax Law Improvement Act 1997 (Cth), s 3 and Sch 1 item 7. Subsections (4) and (5) of s 78 were amended in the first instance to limit their operation to gifts and contributions made in the 1996-7 income year or earlier (Tax Law Improvement Act*,* Sch 9 items 17 and 19), before the section was ultimately repealed in 2006: Tax Laws Amendment (Repeal of Inoperative Provisions) Act 2006 (Cth), Sch 1 item 86.

11. The table in s 30-15 of ITAA 1997 sets out the identity of eligible gift recipients, the type of gift or contribution that can be made to the recipient, how much can be deducted, and any special conditions. Relevantly for present purposes, item 1 in the table in s 30-15 applies to recipient institutions listed in the tables in Subdiv 30-B. Item 2 in the table applies to ancillary funds established and maintained under a will or instrument of trust solely for the purpose of providing benefits to institutions listed in the tables in Subdiv 30-B.

12. Clause 2(a) of the trust deeds of the existing trusts continues to refer to s 78 of ITAA 1936 despite its repeal. Nonetheless, in correspondence addressed to the (common) Honorary Treasurer of the existing trusts dated 4 November 1999, the Deputy Commissioner of Taxation (Deputy Commissioner) confirmed that the existing trusts maintained their status under ITAA 1997, stating:

“Both trusts had been approved as tax deductible ancillary funds under section 30-15 Item 2 of the Income Tax Assessment Act 1997 (ITAA97) (formerly section 78(5) Income Tax Assessment Act 1936). That is, funds established under an instrument of trust for the purpose of providing money, property or benefits to a fund which is tax deductible under Division 30-B ITAA97.”

(Emphasis in original.)

Purported appointment of the Current Trustee as trustee of the PHCF Trust

13. As I noted above, the Current Trustee has been the trustee of the Save Sight Trust since the establishment of that trust (initially with the name Lions (NSW-ACT) Save Sight Foundation Ltd). The original trustee of the PHCF Trust was Lions Clubs (NSW-ACT) Health Ltd (Former PHCF Trustee), which has been deregistered in the circumstances outlined below.

14. Between August and November 1999, the Honorary Treasurer for the existing trusts exchanged correspondence with the Deputy Commissioner about a proposal whereby the Current Trustee would become the trustee of the PHCF Trust and the existing trusts would be merged into a single charitable foundation. Although that proposal did not proceed at that time, in late 2001 or early 2002 the PHCF Trust purported to substitute the Current Trustee as trustee of the PHCF Trust, in place of the Former PHCF Trustee.

15. The Current Trustee sent a letter to the New Lambton Branch of the ANZ Bank dated 24 November 2002, with its letterhead describing it as trustee for both the Save Sight Trust and the PHCF Trust. In the letter, the Current Trustee referred to the following having occurred consequent upon resolutions passed at the Annual General Meeting of both the Current Trustee and the Former PHCF Trustee as well as meetings of the District Conventions:

“On 1 January 2002, Lions NSW-ACT Save Sight Foundation Ltd, which was already Trustee of ‘Lions NSW-ACT Save Sight Foundation Charitable Trust’ became Trustee of ‘Lions Club NSW-ACT Public Health Care Foundation’, and the Company’s name was changed as mentioned above.

Motions have been set in train for ‘Lions Club (NSW-ACT) Health Ltd’ to be wound up, after it ceased to be the trustee of ‘Lions Club NSW-ACT Public Health Care Foundation’.”

16. The addition of the words “and Health Care” to the name of the Current Trustee reflected its purportedly expanded role as trustee for both of the existing trusts. In its letter to the ANZ Bank, the Current Trustee referred to the registration of its name change and requested that the bank accounts “held by the Foundations at the bank” each record the Current Trustee “as Trustee for” the relevant trust.

17. As foreshadowed in the Current Trustee’s letter to the ANZ Bank, on 26 August 2003 the Former PHCF Trustee was deregistered. Senior counsel for the plaintiffs called attention to the deregistration occurring on a voluntary basis, one of the conditions for which is that the company’s assets are worth less than $1,000: see Corporations Act 2001 (Cth), s 601AA(2)(c).

18. Clause 6 of the trust deeds for the existing trusts provides that a trustee or trustees “may be appointed or removed and may retire at any time in accordance with the law for the time being in force in the State of New South Wales”. The Trustee Act 1925 (NSW) requires a registered deed to appoint a new trustee in place of a trustee (s 6) and for a trustee to retire (s 8). Mr Sheather has not located any deed of appointment, removal or substitution for the Current Trustee or the Former PHCF Trustee in relation to the PHCF Trust, nor any record of one having been registered. There is thus no evidence that the formal requirements for appointing the Current Trustee as trustee of the PHCF Trust and retiring the Former PHCF Trustee were satisfied.

19. As senior counsel for the plaintiffs accepted in oral submissions, on any view of the evidence the Current Trustee was not properly appointed as trustee of the PHCF Trust. Nonetheless, on Mr Sheather’s evidence, which I accept, it is the case that the Current Trustee has been acting as the trustee of the PHCF Trust since at least 2002, including taking control of the known trust assets and making all decisions regarding the operation of the trust.

Problems identified with the management of the affairs of the existing trusts

20. As I mentioned above, in 2021 the ACNC initiated a review of the existing trusts’ affairs. The review revealed a number of irregularities in the operation and management of the existing trusts, in particular the PHCF Trust. Following receipt of correspondence with the ACNC, the Current Trustee sought legal advice which raised a number of further irregularities, including in relation to the Current Trustee’s appointment as trustee for the PHCF Trust. There is no dispute about the nature of these matters and it is sufficient to summarise them by reference to Mr Sheather’s affidavit and the plaintiffs’ submissions.

21. I have referred in [12] above to the Deputy Commissioner’s approval of the existing trusts as tax deductible ancillary funds under item 2 of the table in s 30-15 of ITAA 1997. As part of the implementation of the Australian Business Register, the existing trusts re-applied for approval as income tax exempt charities and confirmation of their status as deductible gift recipients.

22. The Save Sight Trust received a document from the ATO titled “Endorsement as a deductible gift recipient”, dated 14 August 2000, which confirmed that the applicable provision for gift deductibility for the trust was item 2 of the table in s 30-15 of ITAA 1997. The ATO issued the same type of document for the PHCF Trust, dated 2 August 2000. However, the provision for gift deductibility for the PHCF Trust was identified in the document as “item 1 of the table in section 30-15” of ITAA 1997. The document also stated that for the purposes of Subdiv 30-B of ITAA 1997, the PHCF Trust was a “public benevolent institution” (PBI).

23. A PBI is an institution that is organised, conducted, or promoted for the relief of poverty, sickness, destitution, helplessness, suffering, misfortune, disability or distress: Perpetual Trustee Co Ltd v Federal Commissioner of Taxation (1931) 45 CLR 224 at 232, 233, 235; [1931] HCA 20. It is apparent from the terms of cl 2(a) of the trust deed for the PHCF Trust that it is not of that character. Rather, the purpose of the PHCF Trust is, and has always been, to provide money to institutions within item 1 in the table in s 30-15 of ITAA 1997, which includes PBIs.

24. The plaintiffs accept that consistently with the terms of cl 2 of the trust deed, the PHCF Trust should never have been classified as within item 1 of the table in s 30-15 of ITAA 1997 and a PBI. Instead, like the Save Sight Trust, it should have been classified as a public ancillary fund and within item 2, as it was before 2000. Records of the PHCF Trust indicate that this issue was raised in around 2012 but was not pursued at that time.

25. Notwithstanding that it was in 2000 that the ATO erroneously notified the PHCF Trust as within item 1 of the table in s 30-15 of ITAA 1997, the distributions made from the PHCF Trust complied with cl 2(a) of the trust deed until 2016. Minutes of a board meeting of the Current Trustee for the PHCF Trust on 3 April 2016 recorded a resolution that “the Deductible Gift Recipient requirements be removed from the grants funded by the Lions Club NSW-ACT Public Health Care Foundation”. Records of the PHCF Trust indicate that after that date, the Current Trustee made distributions from the PHCF Trust to entities that were not endorsed as item 1 deductible gift recipients, including various Lions Clubs. Those payments did not comply with cl 2(a) of the trust deed, which the Current Trustee now acknowledges (according to Mr Sheather this was not appreciated at the time).

26. As part of its review, the ACNC raised concerns with the Current Trustee that the PHCF Trust did not satisfy the requirements of a PBI and should not be registered as such. The ACNC also identified issues with the trust deed for the Save Sight Trust (and, given its similarity, the trust deed for the PHCF Trust), including that it did not contain an appropriate revocation clause and it otherwise needed updating to align with the ATO’s model trust deed for a public ancillary fund, thereby ensuring compliance with the Public Ancillary Fund Guidelines 2011 (Cth) (2011 Guidelines) which were then in force. Following the Current Trustee’s engagement of the plaintiffs’ present solicitors, it received more detailed advice about its past management and compliance with the requirements of the 2011 Guidelines. I note that the public ancillary fund guidelines that are presently in force are the Taxation Administration (Public Ancillary Fund) Guidelines 2022 (Cth) (2022 Guidelines), made pursuant to s 426-103 of Sch 1 to the Taxation Administration Act 1953 (Cth).

27. The non-compliance issues that the ACNC and/or the plaintiffs’ solicitors raised in relation to the administration of the existing trusts included the following:

28. The Guidelines require that if a public ancillary fund is wound up or ceases to be a public ancillary fund, all of its assets are to be provided as described in paragraph (a) of item 2 in the table in ITAA 1997 s 30-15, which in substance requires the assets be transferred to another deductible gift recipient (2011 Guidelines 49; 2022 Guidelines 26). The trust deeds of the existing trusts make no provision for what is to happen on a winding up.

29. The Guidelines require that a public ancillary fund distribute at least 4 per cent of the market value of its net assets during each financial year (2011 Guidelines 19; 2022 Guidelines 15). This creates an issue for the existing trusts because cl 14 of their respective trust deeds expressly prevents recourse to the capital of the trust fund. In the event that the income of the trust in a given year is insufficient to meet the minimum annual distribution requirement, cl 14 precludes the Current Trustee from using the corpus of the fund to make up the shortfall.

30. The annual report for both existing trusts indicated that donations were “unsolicited”, which suggested non-compliance with the Guidelines as they require the public to be actively invited to contribute (2011 Guidelines 45; 2022 Guidelines 24).

31. The financial statements of the Save Sight Trust indicated that the Trust had maintained borrowings from the PHCF Trust, in the order of $1.5 million as at 31 December 2020. The Guidelines provide that a trustee of a public ancillary fund must not borrow money or maintain an existing borrowing of money except in certain circumstances (2011 Guidelines 33).

32. Additionally, although not raised as an ongoing compliance issue, neither of the trust deeds contains an express power to vary the terms of the deed. Accordingly, any variation of the trust deeds could only be affected by applying to the Supreme Court to deal with the administration and/or management of charitable trusts.

Steps taken by the Current Trustee to address identified issues

29. From around March 2022 the Current Trustee paused its fundraising activities for the existing trusts. It accepted that the PHCF Trust did not meet the requirements for registration as a PBI and took steps to have that status revoked (a letter from the ATO dated 29 April 2022 confirmed the voluntary revocation of PBI status for the PHCF Trust and the consequential revocation of its tax concession and deductible gift recipient status). The Current Trustee engaged with the ACNC about these matters and the need to update the terms of the trust deeds to comply with the Guidelines, and foreshadowed applying to the Supreme Court. The ACNC accepted the Current Trustee’s undertaking to keep it updated as to the steps it was taking in relation to the existing trusts.

30. By letter dated 6 September 2022, the Current Trustee received further advice from its solicitors and senior counsel which raised for the first time (according to Mr Sheather) the potential defects in the appointment of the Current Trustee as trustee of the PHCF Trust.

31. On instructions from the Current Trustee, by letter dated 11 October 2022 the Current Trustee’s solicitors approached the ATO about a proposal to restructure the existing trusts, describing it as involving the following elements:

“(a) incorporate a new company limited by guarantee (New Trustee) and apply for registration of this entity as a charity with the ACNC;

(b) prepare a new Trust Deed which establishes a new public ancillary fund (New Fund) which complies with the Guidelines and generally adopts the provisions of the public model trust deed for a [public ancillary fund] (Model Deed);

(c) apply for the New Fund to be registered as a charity with the ACNC;

(d) seek orders from the Court to fold the trust funds of the PHCF Trust and the Save Sight Trust into the New Fund; and

(e) on receipt of such orders:

(i) apply to the ACNC to have the PHCF Trust and the Save Sight Trust deregistered as charities; and

(ii) have the Trustee enter into a Termination Deed in respect of the PHCF Trust and the Save Sight Trust.”

32. Mr Sheather detailed in his affidavit the steps that have been taken to complete items (a) through (c), including:

33. incorporation of the New Trustee on 30 October 2023 as a company limited by guarantee;

34. registration of the New Trustee as a charity with effect from the date of its incorporation (as notified by the ACNC on 27 November 2023);

35. establishment of the New Trust by way of a trust deed dated 12 February 2024, with a variation deed poll executed on 2 April 2024 to amend certain provisions;

36. registration of the New Trust as a charity with effect from the date of the trust deed (as notified by the ACNC on 30 April 2024); and

37. approval of the New Trust as exempt from income tax and its endorsement as an item 2 deductible gift recipient (as notified by the ATO on 27 May 2024).

38. The present application is step (d). On 30 October 2024, the plaintiffs’ solicitors wrote to the Attorney General, providing a draft summons, affidavit and submissions and seeking the Attorney General’s authorisation to commence the proceedings and his position on the relief sought in the summons. On 1 April 2025, the Crown Solicitor replied on behalf of the Attorney General, authorising the proceedings (subject to notifying the ATO and ACNC before commencing) and supporting the relief. The plaintiffs’ solicitors also wrote to the Australian Securities and Investments Commission (ASIC) on 30 October 2024, for the purpose of:

39. drawing its attention to proposed prayer 1 of the summons, which sought to appoint the Current Trustee as trustee of the PHCF Trust nunc pro tunc, and proposed prayers 2 and 3 by which the plaintiffs sought to transfer any assets of the PHCF Trust that have vested in the Commonwealth (by reason of the deregistration of the Former PHCF Trustee); and

40. noting that it proposed to join ASIC to the proceedings in circumstances where, by s 8(6) of the Australian Securities and Investments Commission 2001 (Cth), ASIC may, for and on behalf of the Commonwealth, perform all the duties and exercise all the powers of the Commonwealth as trustee in relation to any real and personal property or money held on trust by the Commonwealth, and requesting an indication of ASIC’s in-principle position to the relief sought.

41. In its reply of 18 November 2024, ASIC indicated that it did not wish to be heard or joined as a party and that it would not oppose the relief sought “on the basis that the plaintiff notifies the former director/s of the company providing them an opportunity to reinstate the company”. Mr Sheather gives evidence that each of the surviving former directors of the Former PHCF Trustee who remain able to comprehend what is required regarding reinstatement has confirmed that they do not wish to have the Former PHCF Trustee reinstated.

42. Consistently with cl 2(b) of the trust deeds of the existing trusts, on 9 December 2024 the plaintiffs’ solicitors wrote to the ATO regarding the proposed proceedings, seeking its consent and confirmation that the ATO would approve the changes proposed. The response from the Deputy Commissioner, dated 7 April 2025, indicated that the ATO supported the process outlined in the draft summons. In subsequent correspondence the plaintiffs’ solicitors confirmed with the ATO that its policy is to provide a letter of support before proceedings of the nature here involved, and only to approve the transfer trust assets following the proceedings (with such approval likely to be given if the Court makes the orders).

43. The ACNC was provided with copies of the correspondence from the Crown Solicitor (on behalf of the Attorney General), the ATO and ASIC in relation to the proposed proceedings. In an email dated 15 April 2025, the ACNC indicated that it did not propose to provide any further comment.

The orders sought in the summons

37. The summons seeks the following substantive relief (omitting the headings and using the terms as defined above):

“1. An order, to the extent necessary, that the Current Trustee is appointed as trustee of the PHCF Trust, nunc pro tunc, from 1 January 2002, in substitution of the Former PHCF Trustee.

2. An order, to the extent necessary, that any assets of the PHCF Trust currently vested in the Commonwealth pursuant to section 601AD of the Corporations Act 2001 (Cth), as a result of the deregistration of the Former PHCF Trustee, vest in the Current Trustee as trustee for the PHCF Trust.

3. Further and/or in the alternative to Order 2, an order, to the extent necessary, that any assets of the PHCF Trust currently vested in ASIC pursuant to section 601AD of the Corporations Act 2001 (Cth), as a result of the deregistration of the Former PHCF Trustee, vest in the New Trustee as trustee for the New Trust.

4. An order that the Current Trustee, after discharge of existing liabilities of the Save Sight Trust and, to the extent necessary, the PHCF Trust (including costs of these proceedings and of compliance with these orders), is to transfer all assets of the Save Sight Trust and, to the extent necessary, the PHCF Trust to the New Trustee as trustee for the New Trust.

5. Order that, upon completion of the transfer of the assets of the PHCF Trust to the New Trustee as trustee for the New Trust in compliance with these orders, the trust deed in respect of the PHCF Trust dated 15 January 1981 will terminate.

6. Order that, upon completion of the transfer of the assets of the Save Sight Trust to the New Trustee as trustee for the New Trust in compliance with these orders, the trust deed in respect of the Save Sight Trust dated 15 December 1974 will terminate.”

38. Prayers 1 to 3 address issues relating to the ineffective appointment of the Current Trustee as trustee for the PHCF Trust, while prayers 4 to 6 address the proposed scheme to restructure the existing trusts. I will address the proposed scheme before addressing the position of the Current Trustee with respect to the PHCF Trust and the assets of that trust.

Prayers 4 to 6: transfer of assets to the New Trustee as trustee for the New Trust and termination of the existing trusts

39. In the plaintiffs’ written submissions, the plaintiffs described the relief that they sought in prayers 4 to 6 as involving “in substance, an administrative scheme by which the two existing trusts are folded into the New Trust, of which the New Trustee will be the trustee”. The plaintiffs observed that the trust deeds for the existing trusts purport to limit the application of funds towards funding entities referred to in s 78(1)(a) of ITAA 1936, which has been repealed. Further, the trust deeds are inconsistent in a number of respects with current legislative and regulatory requirements, including the prohibition on recourse to the capital of the trusts and the absence of any power of amendment or provision for what is to occur on a winding up.

40. The plaintiffs accept that the trust deeds of the existing trusts could each be varied by application to the Court. In support of the orders seeking to transfer the assets of the existing trusts into the New Trust, the plaintiffs pointed to the following:

41. There is substantial identity between the trust deeds for the existing trusts.

42. A consolidated trust would avoid duplication of administration, such as liaising with regulators, organising and holding board meetings, and costs involved in making further changes to the governing documents.

43. Relatedly, there were potential cost savings in administering and investing the funds of the existing trusts together (the plaintiffs accepted that these savings were modest, with Mr Sheather estimating that they would amount to approximately $22,000 per year).

44. The issues that have arisen in the administration of the existing trusts that I have outlined above, which would not of itself carry weight in support of what the plaintiffs proposed but nonetheless demonstrated that dealing with the funds under a single structure going forward would be more likely to minimise those types of issues.

45. The purpose of the New Trust is set out in cl 5 of the trust deed:

“5.1 Trust Purpose

5.1 Payment and application of the Trust Fund

(a) The Trustee must pay or apply the Trust Fund solely for the purpose of providing money, property or benefits to or for Eligible Entities or the establishment of Eligible Entities as the Trustee decides, in accordance with the Public Ancillary Fund Guidelines, in order to relieve poverty, distress or disadvantage including by:

(i) caring for and supporting individuals with disabilities and serious illnesses and their families including by provision of equipment, mobility aids and modified transportation;

(ii) funding and promoting research in respect of, and funding the treatment and the acquisition of equipment used in the treatment of, eye diseases and related conditions; and

(iii) funding the purchase of equipment at hospitals and the provision of life saving medical equipment such as defibrillators at public facilities.

(b) Where gifts to an Eligible Entity are deductible only if, among other things, the conditions set out in the relevant table in Subdivision 30-B of ITAA 97 are satisfied, a payment or application of the Trust Fund must be made in accordance with those conditions.”

42. Consistently with the purpose of the existing trusts, the definition of “Eligible Entity” in the trust deed of the New Trust requires that the fund, authority or institution have deductible gift recipient status under item 1 of the table in s 30-15 of ITAA 1997.

43. Senior counsel for the plaintiffs observed that the references in cl 5.1(a)(i) to (iii) of the trust deed, to purposes related to individual and public health, and the treatment of eye diseases and related conditions (which are not present in clause 2), pick up the respective titles of the existing trusts (the Save Sight Foundation Charitable Trust and the Public Health Care Foundation). Consistently with cl 2 of the trust deeds of the existing trusts, those specific purposes are not exhaustive and the general purpose remains broader. Nonetheless, and by contrast to cl 2 of the existing trust deeds (see [9] above), there is an express reference in cl 5.1(a) to the charitable purpose of relieving poverty, distress or disadvantage.

44. The term “Trust Fund” is defined in cl 1 of the trust deed for the New Trust as follows:

“Trust Fund means:

(a) the Settled Sum;

(b) all money, investments and assets paid or transferred to and accepted by the Trustee as additions to the Trust Fund including all Gifts and Deductible Contributions;

(c) all income of the Trust Fund including income earned or to which it is entitled;

(d) all accretions to the Trust Fund;

(e) all accumulations of income;

(f) all money, investments and property from time to time representing the above or into which they are converted; and

includes any part of the Trust Fund.”

45. When considered with other provisions in the trust deed which relate to making distributions from the Trust Fund, the scope of this definition means that distributions may be drawn from the capital of the Trust Fund. As I noted above, cl 14 of the trust deeds of the existing trusts precludes this.

46. There are a number of provisions which indicate that the trust deed of the New Trust has been formulated to ensure observance of the 2022 Guidelines, including an express requirement that before exercising a discretion or power vested in the Trustee under any provision of the deed or by law, the Trustee must ensure that the proposed exercise is in accordance with the Guidelines: cl 9(a). Additionally, and consistently with the 2022 Guidelines, cl 5.6 provides that the public must be invited to contribute to the Trust Fund.

47. The trust deed of the New Trust also makes provision for the establishment of advisory committees, the functions of which will be decided by the Trustee and, subject to its decision, will advise the Trustee on how payments or applications of income and capital should be made under cl 5: cl 13(a) and (c). Clause 14 of the trust deed requires the Trustee to establish a Fund Advisory Committee, the purpose of which is to make binding recommendations to the Trustee with respect to the merit of any application for distribution of income or capital of the Fund (cl 14(f)). Clause 14(h) of the trust deed provides that in each accounting period, the Fund Advisory Committee must recommend to the Trustee a distribution of income for the purposes specified in cl 5.1(a) and the Trustee must implement the recommendations of the Committee and distribute such an amount in accordance with the terms of the deed.

48. Clause 16.1 of the trust deed confers a power on the Trustee to revoke, add to or vary any of the provisions of the trust deed on the following conditions:

“(a) no part of the Trust Fund becomes subject to any trusts other than trusts for the provision of money, property or benefits to or for Eligible Entities; and

(b) unless the Commissioner consents to the revocation, addition or variation:

(i) no amendment is made to clause 3, or is made materially affecting clauses 5, 6, or 8.1 or the definition of Trust Fund in clause 2.1;

(ii) no amendment is made that is contrary to the requirements of, or would result in the Trust not complying with, the Public Ancillary Fund Guidelines; and

(iii) no amendment is made to this clause 16 so as to permit this deed to be amended in a manner prohibited by subclauses 16.1(b)(i) to 16.1(b)(ii); and

(c) the Trustee notifies the Commissioner of the ACNC or the Commissioner of the amendment within 21 days in accordance with the Public Ancillary Fund Guidelines.”

49. On whichever is the earliest of the winding up of the New Trust, its ceasing to be a public ancillary fund or the revocation of the New Trust’s endorsement as a deductible gift recipient, cl 19 of the trust deed provides that the Trustee is to pay or apply any assets of the Trust Fund remaining after satisfying all of its debts and liabilities “to or for Eligible Entities, as the Trustee decides”.

50. There was a difference of opinion between the plaintiffs and the Attorney General as to the proper characterisation of the proposed scheme as cy près or administrative. In Corish v Attorney-General*’s Department* of NSW [2006] NSWSC 1219 (“Corish”), Campbell J explained the distinction at [9]:

“There is a clear conceptual difference between a cy près scheme and an administrative scheme for a charitable trust. It is the difference between ends and means. A cy près scheme can be directed when it is impossible or impractical to carry out the objects of the trust in all the details the settlor stipulated. An administrative scheme supplements and/or clarifies any provisions the settlor has stipulated concerning the manner in which the objects of the trust are to be pursued, when practical circumstances show that the settlor’s stipulation (if any) of the means is inadequate or impractical.”

51. Referring to Corish in Glasby & Ors as trustees of the BCS Foundation v Attorney General of New South Wales [2017] NSWSC 837 (“Glasby”), Sackar J considered that a cy près scheme was necessary to amend the trust deed in that case so as to remove and replace the references to the repealed s 78(4) of ITAA 1936 with references to the now applicable provisions of ITAA 1997: at [17]. His Honour stated at [19]:

“I am satisfied these amendments concern the ends, not the means. As the Defendant submits, correctly in my view, the repeal of s 78 means the Plaintiffs can no longer pursue the purpose of cl 4(a) of the Trust Deed as initially drafted (Defendant’s written submissions at [22]-[23]). References to a new statutory regime (namely Subdiv 30-B of the ITAA 1997) in cl 4(a) introduce a different, albeit similar, purpose the Plaintiffs must now pursue. In my view, it is therefore more appropriate to consider the amendments to the ITAA references under the rubric of a cy-près scheme, as this court is empowered to do pursuant to s 9(1) of the Charitable Trusts Act and at general law; Dobrijevic v Free Serbian Orthodox Church, Diocese for Australia & New Zealand Property Trust [2015] NSWSC 637 at [426].”

52. By contrast, Sackar J considered that the amendments that the plaintiffs sought to bring the trust deed into line with the 2011 Guidelines, including adopting the ATO’s model trust deed, were within the proper scope of an administrative scheme: at [24]. His Honour considered that ensuring the trust maintained its status as a deductible gift recipient was important, referring again to Corish in which Campbell J stated at [18]:

“In my view, achieving tax-exempt status for a fund like this is something which is of high importance for the practical operation of the fund. It is within the scope of an administrative scheme to restrict the activities of the Trustees to a manner of proceeding which would accord the Trust Fund significant benefits under the tax law.”

53. As was the case in Glasby, what the plaintiffs have proposed in the present case has elements that are directed to what Campbell J described in Corish as the ends and also the means. The amendments to the purpose of the existing trusts, in cl 5.1 of the trust deed for the New Trust, concern the ends and are within the proper scope of a cy près scheme. By reason of the repeal of s 78 of ITAA 1936, the Current Trustee can no longer pursue the purpose of cl 2(a) of the trust deed of the existing trusts as presently drafted. Clause 5.1 of the trust deed for the New Trust limits the payment or application of the Trust Fund to Eligible Entities, the definition of which references the new statutory regime in ITAA 1997, which Sackar J described in Glasby as a different albeit similar purpose. At the same time, cl 5.1 gives some (albeit non-exhaustive) emphasis to particular purposes that find reflection in the names of the existing trusts.

54. In my view, what is sought in this regard is best characterised as a cy près scheme in respect of which s 9(1) of the Act is engaged, applying the criteria in Free Serbian Orthodox Church Diocese for Australia and New Zealand Property Trust v Bishop Irinej Dobrijevic (2017) 94 NSWLR 340; [2017] NSWCA 28 at [196]. The provisions of the trust deed for the New Trust also, necessarily, address the means of administering the trust into which the assets of the Save Sight Trust and the PHCF Trust are proposed to be transferred. The New Trust is consistent with the model deed for public ancillary funds, while remaining consistent with the spirit of the trust deeds of the existing trusts.

55. An obvious point of distinction between the amendments in Glasby concerning the updating of the trust deed to comply with existing regulatory requirements and those in the present case is that the scheme proposed here involves the New Trust with a new trust deed, and transferring the funds of the existing trusts into the New Trust. The funds will be administered by the New Trustee, for substantially the same, albeit not identical, purposes as the existing trusts (having regard to the terms of cl 5 as compared to cl 2(a) of the trust deed for the existing trusts). The plaintiffs referred in this context to two decisions, the first in time being a decision of Kunc J in Robinson atf the Trust Fund of the Fairfax Fellowships at Balliol College v Attorney General of New South Wales [2022] NSWSC 996 (“Robinson”), and the second being a decision of Hmelnitsky J in Perpetual Trustee Company Ltd v Attorney General of New South Wales [2024] NSWSC 257 (“Perpetual Trustee”). Neither case is on all fours with the circumstances of the present case, and that was not the plaintiffs’ purpose in providing them. Rather, as I understood the point that the plaintiffs sought to make, it was that whether the scheme be characterised as administrative (as in Robinson) or cy près (as in Perpetual Trustee), a scheme could permissibly involve the transfer of trust property to a new trust and the winding up of the existing trusts.

56. The scheme that is proposed involves the application of the trust property of the existing trusts to a charitable purpose that is substantially similar, albeit not identical, to the original purposes of the existing trusts, to be administered by a single entity pursuant to a trust deed that is compliant with the requirements of the Guidelines and thereby incorporates particular provisions that the trust deeds of the existing trusts were lacking. Given the substantial identity of the purposes of the existing trusts save for what might have been implicit in their names, there are clear practical, administrative and financial benefits in the creation of a single fund that includes the assets of the existing trusts, with a single trust entity to administer it, for a purpose that reflects the current legislative position whilst giving some emphasis to the purposes inherent in the names of the existing trusts. The orders sought in prayers 4 to 6 of the summons should be made.

Prayers 1 to 3: regularising the appointment of the Current Trustee of the PHCF Trust

57. In oral submissions, senior counsel for the plaintiffs explained prayer 1 of the summons as resolving and regularising the appointment of the Current Trustee as trustee for the PHCF Trust so as to ensure that it can give good title of the assets of the PHCF Trust to the New Trustee. The proposed order being formulated on a “nunc pro tunc” basis was for abundant caution, to regularise “as much as possible what has gone on”.

58. I have referred to the circumstances giving rise to the plaintiffs seeking this relief above. The plaintiffs referred to authorities regarding some uncertainty as to whether, as a result of the deficiency in the appointment of the Current Trustee, the Commonwealth had assumed the office of trustee of the PHCF Trust on deregistration of the PHCF Trustee or whether that office remained vacant: see the discussion of Slattery J in McCabe as Syndic for the Victor Chang Cardiac Research Institute Ltd (ACN 068 363 235) v Baltins Superannuation Fund [2017] NSWSC 1671 (“McCabe”) at [14]-[15], referring to Danich Pty Ltd Re Cenco Holdings Pty Ltd [2005] NSWSC 293 (Barrett J) and Thorne Developments Pty Ltd v Thorne [2015] QSC 156 (Mullins J). In McCabe at [15], Slattery J observed that those differences added impetus to the arguments in that case that the Court should exercise its powers (in that case, under the Trustee Act) to appoint a replacement trustee and also to vest the trust property in that trustee.

59. In support of the relief sought in prayer 1 of the summons, the plaintiffs relied on s 7 of the Act, which is titled “Extension of powers of Court to protect charitable property”. Subsections (1) and (2) provide as follows:

(1) If the Court, in charitable trust proceedings, is satisfied that:

(a) there has been any misconduct or mismanagement in the administration of a charitable trust, and

(b) it is necessary or desirable to act for the purpose of protecting existing or future trust property or securing a proper application, for the purpose of the charitable trust, of existing or future trust property,

the Court may, without limiting any other powers of the Court, make one or more of the orders specified in subsection (2).

(2) The orders which may be made by the Court are as follows:

(a) an order removing any or all trustees of the charitable trust,

(b) an order appointing a person as a trustee of the charitable trust,

(c) an order precluding the employment or engagement of a person in the affairs of the charitable trust,

(d) an order directing any bank or person who holds property of the charitable trust not to part with the property without the approval of the Court or the Attorney General (or a person authorised by the Attorney General) or of some other person,

(e) an order restricting the transactions which may be entered into or the nature or amount of the payments which may be made, in the administration of the charitable trust, without the approval of the Court or the Attorney General (or a person authorised by the Attorney General) or of some other person,

(f) an order appointing a receiver of the property of the charitable trust,

(g) an order which is necessary or convenient to be made for giving effect to an order referred to in this subsection.

60. The Current Trustee submitted that the Court could be satisfied that there had been mismanagement in the administration of the PHCF Trust by relying on its own conduct in terms of one or both of: (i) the apparent defects in the change of trustee in around 2002; and/or (ii) the use of funds of the PHCF Trust as if it were a PBI rather than in accordance with cl 2(a) of the trust deed. It then submitted that, being so satisfied, the Court could appoint it as the trustee pursuant to s 7(2)(b) in circumstances where the evidence demonstrated that it had acted honestly and that the mismanagement of the trust funds was a consequence of the ATO’s inadvertent classification of the PHCF Trust as a PBI. The Current Trustee further submitted that, subject to the restructure proposal, the Current Trustee was the most appropriate entity to act as the trustee of the PHCF Trust.

61. I am satisfied that the failure to formalise the appointment of the Current Trustee and the retirement of the Former PHCF Trustee falls within the scope of mismanagement in the administration of a charitable trust for the purposes of s 7(1)(a), although there is no suggestion that the failure to do so was anything other than inadvertent. I am further satisfied that it is desirable to make an order appointing the Current Trustee as trustee of the PHCF Trust to secure the proper application of the PHCF Trust’s property, so as to confirm the Current Trustee’s control of the Trust’s assets for the purposes of their transfer to the New Trust.

62. However, I decline to make an order appointing the Current Trustee nunc pro tunc. In so declining I have assumed, without deciding, that s 7 permits the making of an order in those terms. I am not satisfied that it is necessary or desirable to make such an order for the purpose of protecting existing or future trust property of the PHCF Trust, or securing a proper application of existing or future trust property, particularly having regard to the scheme involving the New Trust. As senior counsel for the plaintiffs submitted at the hearing, that scheme does not require any retrospective validation of the Current Trustee’s appointment as trustee of the PHCF Trust; and there is no evidence that would otherwise support the desirability of such an order.

63. As to the orders sought in prayers 2 and 3, which were sought in the alternative, the Current Trustee took control of the bank accounts of the PHCF Trust in or around 2002 with notice of the PHCF Trust, and intended to (and did) hold that property on trust. The plaintiffs submitted that it followed that at the point of deregistration of the Former PHCF Trustee, it did not have either the legal or beneficial title to those assets such that upon deregistration they would have vested in ASIC (pursuant to s 601AD(2) of the Corporations Act as at that time) and now vested in the Commonwealth (by reason of amendments to s 601AD pursuant to the Governance Review Implementation (Treasury Portfolio Agencies) Act 2007 (Cth)). Nonetheless, the plaintiffs sought the relief in prayers 2 (or prayer 3) in view of what they described as the uncertainty surrounding the exact date on which all of the assets of the PHCF Trust were transferred to the Current Trustee, to foreclose any concern that the Current Trustee held the assets of the PHCF Trust on trust for the Former PHCF Trustee (as opposed to on trust for the PHCF Trust), as well as to cover any other property held on trust by the Former PHCF Trustee at the time of its deregistration.

64. Apart from the bank accounts of the PHCF Trust that the Current Trustee took control of when it purported to take on the role of trustee of the PHCF Trust in January 2002, there is no evidence before me that the PHCF Trust had any other assets at the time of deregistration of the Former PHCF Trustee. Mr Sheather, who has been the Honorary Secretary of the Current Trustee since 2013 and gave evidence of conversations with other persons involved in the affairs of the existing trusts over many years, did not give evidence about the PHCF Trust potentially holding any other assets that would have vested in ASIC or the Commonwealth upon deregistration of the Former PHCF Trustee. I note also in that regard the basis on which the Former PHCF Trustee was deregistered (see [17] above).

65. If prayer 2 (or prayer 3) were sought only to address the position of unknown but potential property of the PHCF Trust, there would be an insufficient evidentiary basis to warrant it. However, I accept that there may be some uncertainty surrounding the Current Trustee’s position with respect to the known assets of the PHCF Trust, namely, the bank accounts. Having regard to the relief sought in prayer 1, which I consider should be granted, I will make the order sought in prayer 2 so as to confirm the position of the Current Trustee with respect to the known assets of the PHCF Trust, in the interests of ensuring the efficacy of the relief sought in prayers 4 to 6.

Conclusion

66. I make the following orders:

67. Lions Clubs NSW-ACT Save Sight and Health Care Limited (ACN 001 232 659) (Current Trustee) is appointed as trustee of the Lions Clubs N.S.W.-A.C.T. Public Health Care Foundation (ABN 75 575 730 056) (PHCF Trust), in substitution of Lions Club (N S W-A C T) Health Ltd (deregistered) (ACN 002 004 537) (the Former PHCF Trustee).

68. Any assets of the PHCF Trust currently vested in the Commonwealth pursuant to section 601AD of the Corporations Act 2001 (Cth), as a result of the deregistration of the Former PHCF Trustee, vest in the Current Trustee as trustee of the PHCF Trust.

69. The Current Trustee, after discharge of existing liabilities of the Lions NSW-ACT Save Sight Foundation Charitable Trust (Save Sight Trust) and the PHCF Trust (including costs of these proceedings and of compliance with these orders), is to transfer all assets of the Save Sight Trust and the PHCF Trust to Lions NSW-ACT Sight and Health Foundation Ltd (New Trustee) as trustee for the Lions NSW-ACT Sight & Health Fund (New Trust).

70. Upon completion of the transfer of the assets of the PHCF Trust to the New Trustee as trustee for the New Trust in compliance with these orders, the trust deed in respect of the PHCF Trust dated 15 January 1981 will terminate.

71. Upon completion of the transfer of the assets of the Save Sight Trust to the New Trustee as trustee for the New Trust in compliance with these orders, the trust deed in respect of the Save Sight Trust dated 15 December 1974 will terminate.

72. The Current Trustee’s costs of these proceedings are to be met from the assets of the Save Sight Trust and the PHCF Trust.

73. The New Trustee’s costs of these proceedings are to be met from the assets of the New Trust.

74. The Defendant’s costs of these proceedings are to be met from the assets of the New Trust.