Manns v Attorney General of New South Wales & Ors

Supreme Court of NSW|2009-09-16|Before: Slattery J, Mr J

CITATION : Manns v Attorney General of New South Wales & Ors [2010] NSWSC 12

DECISION : See paragraphs [64] and [65] of judgment

CATCHWORDS : SUCCESSION - wills, probate and administration - probate and letters of administration - construction of terms of will - gift for charitable or non charitable purposes severed by application of s 23 Charitable Trust Act 1923 (NSW) - uncertainty alleged in defining trust property and distribution mechanism - trust valid

Abbott v Middleton (1858) 7 HLC 68; 11 ER 28 Allgood v Blake (1873) LR8Ex 160 Attorney General (NSW) v Adams (1908) 7 CLR 100 Attorney General for NSW v NSW Henry George Foundation Ltd [2002] NSWSC 1128 Brodbelt v Thomson (1858)12 Moo PC 116; 14 ER 855 Chichester Diocesan Fund & Board of Finance v Simpson (Diplock's case) [1944] AC 341 Corish v Attorney-General (NSW) [2006] NSWSC 1219 Coshott v Royal Society for Prevention of Cruelty to Animals (1996) 40 NSWLR 446 Darkinjung Pty Ltd v Darkinjung Local Aboriginal Land Council & Ors [2006] NSWSC 1008 Dwyer v Kaljo (1992) 27 NSWLR 728 Edwards & Ors v Attorney General & Anor [2004] NSWCA 272; (2004) 60 NSWLR 667 CASES CITED : Hadaway v Hadaway [1955] 1 WLR 16 Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar The Diocesan Bishop of Macedonian Orthodox Diocese of Australia and New Zealand [2008] HCA 42; (2008) 237 CLR 66 Pocock v AG (1876) 3 ChD 342 Public Trustee v Attorney-General of New South Wales (1997) 42 NSWLR 600 Re Ashton (decd) (1955) NZLR 192 Re Atkinson's Will [1978] 1 All ER 1275 Re Campbell (decd); Campbell v Sherwell [1999] VSC 508 Re Cox (decd); Edwin G Baker v National Trust Co Ltd [1955] AC 627 Rudge v Link [2008] NSWSC 1104 Sir Moses Montefiore Jewish Home v Howell & Co (No 7) Pty Limited [1984] 2 NSWLR 406 Smith v West Australian Trustee Executor and Agency Co Limited (1950) 81 LCR 320 Stratton v Simpson (1970) 125 CLR 138 Union Trustee Company of Australia Limited v Church of England Property Trust (1946) 46 SR(NSW) 298

Plaintiff: William Manns First Defendant: Attorney General of NSW PARTIES : Second Defendant: Public Trustee NSW Third Defendant: Deborah Marcella Deregt Fourth Defendant: Mark Francis Manns

Plaintiff: Mr J B Whittle SC with Mr J O'Connor COUNSEL : First Defendant: Mr C Mantziaris Second Defendant: Mr M K Meek SC Third & Fourth Defendants: Mr W Lyubicic (solicitor)

Plaintiff: Dooley & Associates SOLICITORS : First Defendant: Crown Solicitor's Office Second Defendant: Public Trustee NSW Third & Fourth Defendants: Walter T Lyubicic & Associates

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

1982/09 WILLIAM MANNS v ATTORNEY GENERAL OF NSW; PUBLIC TRUSTEE NSW; DEBORAH MARCELLA DEREGT & MARK FRANCIS MANNS JUDGMENT 1 HIS HONOUR: Paul Clifford Manns died at home in Newman Street, Newtown between 25 January and 2 February 2008 at the age of 53. The exact time of his death is not known. He never married. He had no children. 2 Paul Manns' parents, Clifford Elwyn Manns and Marcella Dorothy Manns predeceased him. Paul Manns predeceased his three siblings, Deborah Marcella DeRegt, William Manns and Mark Francis Manns. 3 Paul Manns owned two properties in Newtown when he died, the one in which he lived in Newman Street and another in Bruce Street. He had a small fund of money on deposit with a financial institution, some superannuation entitlements and a few shares in public companies. In conformity with the Court's policy of reducing the risk of identity theft through the publication of the Court's judgments, the precise addresses of these two properties are not recorded in this judgment. 4 Paul Manns created his own will dated 1 May 1998. He wrote the instrument out in full in his own hand, describing it as his "will". Thus the will is appropriately described therefore as a "holograph" instrument. The will has unusual features that have generated the issues in dispute in these proceedings. 5 The executor, named in the will, was Mr Peter Woodhall. He renounced probate on 27 October 2008. On 5 March 2009 the Supreme Court of New South Wales granted letters of administration of the estate with the will annexed to the Public Trustee of New South Wales. 6 Clause 4(5) of the will contains the provisions in contention in these proceedings. This clause will be considered in more detail later in this judgment. The whole will provides as follows. The text below does not reproduce all the irregular setting out of this holograph will. However two aspects of the form of the will are noted below. "THIS WILL dated 1/5/98 is made by me, Paul Clifford Manns 1. I hereby revoke all former testamentary dispositions. 2. I appoint as my executor[s] and trustee[s], Mr Peter Woodhall at 20 Alice Jackson Crescent Gilmore ACT. In this Will, the expression, "my executors", means my executors and trustees from time to time. 3. I direct my Executors to use the proceeds of my estate to pay all of my just debts, funeral and testamentary expenses. 4. I appoint Peter Woodhall as my executor. I wish him to:- (1) recover all monies I owe to him as he so specifies, up to $150,000 (2) give items of sentimental value to my surviving siblings e.g. coins collected, photos. (3) give my old German Bible and English Bible to Lee Manns my nephew (4) give my red large Family bible to my nephew Lachlan. (The Bible was given to me by my father). - and administer (5) Establish a perpetual trust called the "Paul Manns Unconditional Love Trust" to give money equitably to 4 charities or causes in need. The income is to come from the net income from - and any other income or assets the rental of my properties. He Peter is to take an administrative fee he chooses if he wishes. A percentage of the income from the rent is to go to increasing the growth of the perpetual trust fund annually. (6) On Peter Woodhall's death the New South Wales Public Trust Office is to administer the trust and estate. (7) Have my body cremated with my ashes being spread equally at the following spots/locations:- (1) Between Sydney Heads on the water (2) Fraser Island Tropical Forest on a creek and on the water of the largest lake. (3) On the water at the perimeter at Byron Bay lighthouse at the most extreme point of Australia's East Coast." 7 When considering the true construction of the will Paul Clifford Manns will be referred to as "the testator" and his brother William Manns who commenced these proceedings as "the plaintiff". 8 Two aspects of the setting out of clause 4(5) must be mentioned. The text of that clause, set out above reproduces the position of the writing of the clause as precisely as the typed text of this judgment will allow. In each of the first two sentences of clause 4(5) the deceased added words in what appears to be something of an afterthought. 9 In the text of the first sentence of clause 4(5) the words "- and administer" appear directly above the words "a perpetual trust" and the "and" of the words "and administer". The dash which precedes the words "and administer" sit comfortably between "Establish" and "a perpetual trust". That setting out, together with the content of the words added, allows the Court to infer that the deceased meant the will to be read in the way that the words are set out in this judgment, as "Establish - and administer a perpetual trust…". 10 The second sentence of clause 4(5) poses a similar but slightly more complex problem. In its handwritten form the words "- and any other income or assets" actually appear above the words "my properties" in that sentence. The words "- and any other income or assets" have been added as an afterthought. Although they commence after the words "from the rental of" it makes no grammatical sense to add them at that point. I infer that the testator contemplated when making the will that one or other of his properties might be converted into some other form of income generating asset, which could provide income for the trust and that this should be dealt with in the will. The additional words naturally belong after the words "my properties". I cannot attribute any sensible meaning to the second sentence of clause 4(5) if an attempt is made to place the words "- and any other income or assets" between the words "income from the rental of" and "my properties". They are proximate to and can be more sensibly read as coming after the word "properties". 11 Thus the clause 4(5) should be read as appears in this paragraph: Establish - and administer a perpetual trust called the "Paul Manns Unconditional Love Trust" to give money equitably to 4 charities or causes in need. The income is to come from the net income from the rental of my properties - and any other income or assets. He Peter is to take an administrative fee he chooses if he wishes. A percentage of the income from the rent is to go to increasing the growth of the perpetual trust fund annually.

The Assets of the Estate 12 As events turned out the testator's afterthought in adding the words "- and any other income or assets" was wise. At the time of his death the testator's estate comprised the following property: (a) Newman Street, Newtown $650,000.00 (b) Bruce Street, Newtown $1,000,000.00 (c) Monies in St George Bank Accounts $14,994.81 (d) First State Superannuation $3,117.25 (e) 1,135 Shares in a listed insurer $4,426.50 (f) 202 Shares in listed telecommunications corporation $758.00 Total $1,658,296.56

13 The Newman Street and Bruce Street properties were mortgaged to RHG Mortgage Corporation Limited. This mortgage fell into arrears after the testator's death. The Newman Street property was sold at auction for $750,000. This sale was completed on 7 July 2009. The Bruce Street property was sold at auction for $1,280,000, the sale of which was completed on 31 August 2009. As a result of these sales, the mortgage RHG Mortgage Corporation Limited was paid out. 14 As at the date of hearing of the proceedings the testator's estate was comprised the following property: (a) Cash in the estate account $1,269,290.28 (b) Shares in a listed telecommunications company $668.62 (c) Shares in a listed insurer $4,051.95 Total $1,274,010.85

15 The administrator has been notified of claims against the estate totalling $176,803.51. Thus, in the event the testator has created a valid trust, the amount available to form its corpus is $1,097,207.34 (being $1,274,010.85 minus $176,803.51). This corpus is liable to be reduced by minor tax liabilities associated with the sale of the shares. The corpus may also be reduced by costs orders made in these proceedings. 16 At the time of the hearing there was no "net income from the rental of my properties" but the estate was generating interest income and dividends. 17 The second defendant the Public Trustee, now known as the "NSW Trustee and Guardian" is the administrator of the estate. The second defendant is referred to throughout this judgment as "the NSW Trustee". The Proceedings 18 The plaintiff commenced these proceedings by summons on 13 March 2009. He sues as a person entitled to a one third share of any assets which may pass on an intestacy: ss 61B(6) and 61F Wills Probate and Administration Act 1898. 19 The summons raises a question as to the existence of a charity. The Attorney General is a necessary party to a suit for the declaration of a trust for charitable purposes: Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar The Diocesan Bishop of Macedonian Orthodox Diocese of Australia and New Zealand [2008] HCA 42; (2008) 237 CLR 66. The Attorney General of New South Wales was joined as first defendant.

20 Paul Manns' sister Deborah and his surviving brother Mark declined to join as plaintiffs in the proceedings. They are also necessary parties to the proceedings. Each of them also has a potential entitlement to a one third share of any assets which may pass upon intestacy. The plaintiff amended the summons on 14 May 2009 to join Deborah and Mark as the third and fourth defendants. The Issues 21 By the amended summons the plaintiff asks the Court to determine:

(a) whether on the true construction of clause 4(5) of the will any valid trust or other disposition of property is declared or made, and

(b) what assets of the testator's estate are on the true construction of clause 4(5) affected by or subject to, such trust of disposition. 22 The will does not contain any clause expressly dealing with the residue of the estate. If the gift provided for in clause 4(5) is found to be invalid there will be a partial intestacy under the will. The plaintiff contends that clause 4(5) gift is invalid. The Attorney General and the NSW Trustee both submit that it is valid. 23 The disputes among the parties are quite narrow. It is convenient to set out the plaintiff's arguments first. The Plaintiff's Argument 24 The plaintiff's case can be grouped into three questions which do not correspond precisely with the determination sought by the amended summons; whether there was a trust; whether the testator intended to benefit charity; and whether the trust is invalid for uncertainty. A Trust 25 There is no issue among the parties that by the words he used in clause 4(5) the testator intended to create a trust named "the Paul Manns Unconditional Love Trust". The plaintiff first argues that the testator's use of the word "trust" in clause 4(5) puts beyond doubt that the testator so intended. The plaintiff submits that the description in clause 4(5) of the trust as a "perpetual trust" and named "the Paul Manns Unconditional Love Trust" reinforces that intention. The defendants do not disagree that the testator intended to create a trust. Whether he achieved that outcome is the issue. No Charitable Intention 26 Secondly, the plaintiff argues though that any trust so created is not a valid charitable trust. The plaintiff seeks to negative an intention to create a charitable trust by reference to the descriptive words used by the testator. The plaintiff says that the use of the word "perpetual" in clause 4(5) would not, of itself, show an intention to create a trust, nor would it transform a trust with non charitable objects into a valid charitable trust. The plaintiff further submits that the name of the trust does not itself suggest an intention to create a charity. 27 The plaintiff contends that the words in clause 4(5) "to give money equitably to four charities or causes in need" assist the conclusion that the testator did not intend to create charity. The plaintiff argues that the identification of four charities by that simple description constitutes a permissible exception to the rule against delegation of testamentary powers that the testator may validly leave his estate to his executors to determine what charitable objects shall benefit so long as only charitable and no other objects may benefit: Chichester Diocesan Fund & Board of Finance v Simpson (Diplock's case) [1944] AC 341, per Lord Simonds at 371. 28 The plaintiff's point is that in describing the four charities in these words the testator is speaking of "causes in need". The plaintiff submits that these words do not necessarily refer to charitable objects and that the exception to impermissible delegations of testamentary power identified in Diplock's case is not attracted. The plaintiff submits that the word "causes" is used in the will in the same sense as in phrases such as "good causes" or "worthy causes" meaning deserving objects of bounty but which may or may not be charitable within the law. 29 The plaintiff puts it another way and says that many "causes" can fairly be described as being "in need" of accretions to their funds. But the phrase is not synonymous with "persons in need" of relief from poverty. Used in an appropriate context the phrase "persons in need" could the plaintiff submits, clearly create a charitable trust for the relief of poverty. But the phrase "causes in need" in this will merely means "needy causes or objects", which objects may or may not be charitable. 30 The plaintiff further argues that in the clause 4(5) gift the disjunctive "or" operates to enlarge rather than to limit the class of objects and that it would be possible, therefore, for the trustee to distribute to causes "in need" which were not charitable within the law: see Attorney General (NSW) v Adams (1908) 7 CLR 100 and Diplock's case. The plaintiff submits that the gift is therefore void, unless saved by statute. 31 The plaintiff says the statutory provision which could be used to preserve part of the gift is s 23 Charitable Trusts Act 1993 (as amended). This is former s 37D of Conveyancing Act 1919 and provides as follows: "23 Inclusion of non-charitable purpose not to invalidate trust

(1) A trust is not invalid merely because some non-charitable and invalid purpose as well as some charitable purpose is or could be taken to be included in any of the purposes to or for which an application of the trust property or of any part of it is directed or allowed by the trust. (2) Any such trust is to be construed and given effect to in the same manner in all respects as if no application of the trust property or of any part of it to or for any such non-charitable and invalid purpose had been or could be taken to have been so directed or allowed. (3) This section does not apply to any trust declared before, or to the will of any testator dying before, 1 January 1939, being the date of commencement of the Conveyancing, Trustee and Probate (Amendment) Act 1938." 32 The plaintiff contends that when s 23 Charitable Trusts Act 1993 (as amended) is applied to the present gift it can be read as a gift "to give money equitably to 4 charities". The plaintiff submits this is the only possible way that the gift can be saved. As will be seen below, the plaintiff's submission up to this point only differs from the Attorney General's and the NSW Trustee's submissions in minor respects. The parties' contentions diverge on the plaintiff's next submission. Uncertainty 33 The plaintiff thirdly submits that even if an attempt is made to save a gift under s 23 Charitable Trusts Act 1993 there is still uncertainty in the terms of the gift. The plaintiff says that since the "4 charities" are not named there must be an implied discretion given to the trustees to choose four charities as recipients of money. The plaintiff's case is that the uncertainty of the gift lies in two matters associated with this exercise of discretion. 34 The first uncertainty is that it is not said whether the gift is to pay out all the income given or some of the income and if only some of the income what is to happen to any monies which are retained. For example the plaintiff says that the right to retain rental income to build up corpus given in the last sentence of clause 4(5) clearly suggests a right to retain money. Since no income will now be derived from rent, the plaintiff submits that it would seem that the power given in this sentence is inoperative. The plaintiff therefore submits that it is unclear whether the trustee is under a duty to pay out all monies received or whether, once the trustee makes a selection of four charities, the matter of how much is distributed in total is at large. 35 The second uncertainty is the question of what is meant by the words that the trust should "give money equitably" to the four charities or causes in need. The plaintiff submits this term is too vague in the context of the will to be given any meaning at all. The plaintiff's contention is that this is not a case where the word "equitable" can be taken to mean "by analogy with equitable principles" such as for example in the use of the word in the phrase "just and equitable" under the De Facto Relationships Act 1984: see Dwyer v Kaljo (1992) 27 NSWLR 728 at 744 per Handley JA (with whom Priestley JA agreed). The plaintiff submits there are no equitable principles that readily suggest an analogy to the exercise of discretion required of the trustee under clause 4(5) of the will. 36 To the proposition that the testator may have meant "equitably" in the sense of "equally", the plaintiff says that if that is what the testator had intended then he would have said so. Finally the plaintiff submits that in construing the word "equitably" in context little assistance is provided by the Oxford English Dictionary, which defines "equity" as meaning "in an equitable manner, according to the rules of equity in a spirit of fairness". The plaintiff contends that none of these meanings provide criteria with relevant content in the context of this gift. It would be impossible, the plaintiff submits, to tell whether the trustee had exercised any discretion he had in distributing funds to a charity in accordance with the terms of the gift or whether the trustee had breached the terms of the gift. 37 The plaintiff asks the Court to conclude that the phrase "to give money equitably" is unable to be given any sufficiently clear meaning capable of being enforced in a Court of Equity and that the gift therefore fails for uncertainty. 38 The Attorney General's and the NSW Trustee's arguments in response to the plaintiff's submissions are dealt with in the course of reasoning to the decision. Analysis 39 The issues raised by the parties detailed submissions are not completely stated in the questions set out in the amended summons. Rather, the matters put in issue by the plaintiff's argument set out above and the response of the Attorney General and the NSW Trustee can better be grouped into the two issues of construction propounded by counsel for the Attorney General in paragraph 9 of the Attorney General's submissions:

(a) Is a gift to establish a "perpetual trust" for "4 charities or causes in need" a trust for charitable purposes?

(b) Is a gift which vests in the trustee a discretionary power to "give money equitably" to charity a valid gift?

This judgment adopts this structure for the analysis of the issues. All the relevant arguments advanced by the plaintiff, the Attorney General and the NSW Trustee can be dealt with under these two questions. 40 The Court is engaged on the task of construction of the will. The testator died before 1 March 2008, the date on which the Succession Act 2006 (NSW) commenced. The construction issues in these proceedings are therefore determined under the Probate Administration Act 1989 (NSW) as it stood immediately prior to the passage of the Succession Act. However, the impact of this legislation in the present case is minimal. No extrinsic evidence of the testator's intention in relation to the matters in issue has been filed. 41 The following principles are relevant to the Court's task of construction:

(a) in construction the Court must try and find the true intention of the testator which is to be ascertained from the just reasoning upon the terms of the will and those surrounding circumstances that can be called into evidence: Brodbelt v Thomson (1858)12 Moo PC 116; 14 ER 855.

(b) the general rule is that words and phrases in the will must be given their ordinary and grammatical sense unless obviously repugnant to or inconsistent with the intent of the testator: Abbott v Middleton (1858) 7 HLC 68; 11 ER 28.

(c) the Court's task is to construe the will as made by the testator not to make a will for him and the Court is bound therefore to execute the testator's expressed intention even if there is reason to believe that he has, by a blunder, expressed what he did not mean: Allgood v Blake (1873) LR8Ex 160 at 162-164 per Blackburn J.

(d) with a holograph will the Court should not approach construction in a technical way as may be appropriate for a lawyer drawn document but rather should seek if possible to avoid any intestacy: Re Campbell (decd); Campbell v Sherwell [1999] VSC 508 per Byrne J at [8]. Issue 1 - The Gift to 4 Charities or Causes in Need 42 The parties differ as to the effect that the words "or causes in need" have when added to the expression "give money equitably to 4 charities". The Courts presume that a gift expressed solely to be for "charities" is presumed to be a gift for exclusively charitable purposes: Coshott v Royal Society for Prevention of Cruelty to Animals (1996) 40 NSWLR 446 at 450. The same result is presumed in respect of gifts to charitable institutions or charitable purposes: Stratton v Simpson (1970) 125 CLR 138 at 144-145 and in Re Cox (decd); Edwin G Baker v National Trust Co Ltd [1955] AC 627 at 638. 43 Both the plaintiff and the Attorney General submit that the additional words "causes in need" do not create gifts for charitable purposes. The Attorney General submits that it is difficult to characterise the phrase "causes in need" as being synonymous with the word "charity" or "charitable" in their technical legal meaning. The argument propounded by the Attorney General is that "causes in need" could well refer to objects not traditionally associated with charitable purposes. The Attorney General further submits that the "or" in the phase "charities or causes in need" functions as a disjunction between the first term "charities" and the second "causes in need". The Attorney General submits that it is difficult to read the word conjunctively to facilitate an explanation or exegesis of the first term by means of the second. 44 In contrast, invoking the principles for the construction of lay holograph wills, the NSW Trustee submits that this lay testator was using the words "charities or causes in need" as a whole or composite expression by which he was conveying the meaning that he intended a charitable purpose for the needy or poor. Alternatively the NSW Trustee argues that if there is a disjunction there is no reason why the disjunction must be between "charities or" and "causes in need" rather than "charities or causes" and "in need". The NSW Trustee submits that the words "in need" can be applied distributively across any disjunction "charities or causes" and suggests that the testator was simply conveying the notion that the gift was for charitable causes or purposes for the needy or poor. 45 The plaintiff's and the Attorney General's construction of these words is to be preferred for several reasons. Reading the phrase "in need" distributively across "charities" and "causes" does not assist the NSW Trustee to the conclusion that the gift only intends to benefit charitable objects. Even if the NSW Trustee's construction is accepted and the charities are qualified as "in need" and the causes as "in need", the question is still open as to whether "causes" embraces non charitable causes as well as charitable causes. 46 Secondly, there is much force in the plaintiff's and the Attorney General's submissions that the word "causes" does not merely explain the term "charities" but it enlarges the class of objects to which the trustee may distribute. "Causes" could just as readily refer to causes of a political nature which were in need of support as they might refer to a subset of charitable objects associated with the relief of poverty. The word "cause" here takes the meaning defined by the Macquarie Dictionary as, "that side of a question which a person or party supports; the aim, purpose, etcetera, of a group". It refers to many non charitable objects. 47 Thirdly, authority suggests that in various similar contexts the expression "causes" refers to non charitable objects. Gifts using similar expressions such as "worthy causes" or "any good work" have been held not to create a charitable trust: Re Atkinson's Will [1978] 1 All ER 1275 at 1279-80; Re Ashton (decd) (1955) NZLR 192 at 196-201. 48 Fourthly, principles regarding the construction of lay holograph wills are of little assistance to the NSW Trustee's argument. Here there is nothing else in the will to indicate that what the testator had in mind in using the expression "causes in need" was exclusively the relief of poverty. 49 Accordingly, the discretion the testator conferred upon his trustee "to give money equitably to 4 charities or causes in need" is a gift that may be directed to either charitable purposes, "4 charities", or non charitable purposes, "causes in need". At general law such a gift is invalid: Hadaway v Hadaway [1955] 1 WLR 16. Can this invalidity be overcome by the application of s 23 Charitable Trusts Act 1993 (NSW). Section 23 Charitable Trust Act 1993 (NSW) 50 Subsection 23(1) permits the non charitable purpose to be read down in the case of the gift that may be devoted to either charitable or non charitable purposes or gift for mixed charitable and non charitable purposes: Corish v Attorney-General (NSW) [2006] NSWSC 1219 at [14]-[15]. 51 A precondition for the operation of s 23 is that it must be possible to distinguish the non charitable from the charitable purposes: Public Trustee v Attorney-General of New South Wales (1997) 42 NSWLR 600; Darkinjung Pty Ltd v Darkinjung Local Aboriginal Land Council & Ors [2006] NSWSC 1008 at [186]-[190]; Attorney General for NSW v NSW Henry George Foundation Ltd [2002] NSWSC 1128 at [87]-[90]. 52 There is a clear disjunction in the clause 4(5) gift through placement of the word "or" between the gift for the "4 charities", the charitable purpose, and the gift for "causes in need", a non charitable purpose. Section 23 allows the non charitable purposes to be severed from the gift. This can be effected to clause 4(5) without impermissibly changing the trust into something completely different to that which was intended: Edwards & Ors v Attorney General & Anor [2004] NSWCA 272; (2004) 60 NSWLR 667 at [99]-[103]. Thus the result of the application of s 23 Charitable Trusts Act 1993 is that the non charitable purpose is severed from the gift and a valid gift "to give money equitably to 4 charities" remains. 53 Once s 23 is applied, the trustee's discretionary power to apply trust funds to either charitable or non charitable purposes no longer undermines the validity of the gift. Section 23(2): "(2) Any such trust is to be construed and given effect to in the same manner in all respects as if no application of the trust property or of any part of it to or for any such non-charitable and invalid purpose had been or could be taken to have been so directed or allowed." 54 Section 23(2) works so that the trust is given effect to as if no application of the trust funds to non-charitable and invalid purposes had been directed and as a result the trust fund must be applied wholly for charitable purposes: Union Trustee Company of Australia Limited v Church of England Property Trust (1946) 46 SR(NSW) 298, a decision in relation to s 37D Conveyancing Act 1919 (NSW), the predecessor of s 23. 55 Yet the plaintiff still challenges validity of the trust on a number of grounds. Issue 2 - The Effect of the Trustee's Discretion The Corpus of the Trust 56 The plaintiff submits there is uncertainty about the corpus of the trust. The plaintiff says it is unclear whether the trustee is under a duty to pay out all monies received or whether once the trustee makes a selection of the four charities the matter of how much is distributed to those charities in total, is at large. The issue raised about distributions does not negative the testator's obvious intent that the whole of the residue should be subject to the trust. 57 As the Attorney General has submitted, the plaintiff's contention on this issue really raises an issue concerning the administration of a charitable trust. This is not yet a matter before the Court. The proceedings on the amended summons are not yet "charitable trusts proceedings" within s 5 Charitable Trusts Act 1993 (NSW). It is clear that the testator intended to make a gift for the purposes of charity and the Court will give effect to that intention: Pocock v AG (1876) 3 ChD 342. Questions such as the making of distributions, directions as to the use of income and capital, whether the trust is impracticable and the presence of a general charitable intention are all matters that are not yet before the Court in these proceedings. Those issues can await consideration by the trustee of the exercise of its discretion. Indeed, in the event that its submissions are successful the NSW Trustee has invited the Court to direct it to nominate four charities to receive the gift and failing such nomination to direct the Attorney General to bring in a scheme. It is not yet necessary to consider schemes. 58 The discretion conferred by clause 4(5) of the will is not unusual in gifts for charitable purposes. A gift made in such terms as "to such charitable institutions as my trustee may select" will be construed as a gift for charitable purposes and will be a valid charitable trust: Smith v West Australian Trustee Executor and Agency Co Limited (1950) 81 LCR 320. Such a gift can be given effect to according to its terms and there is not ordinarily a need for a cy-pres scheme. The trustee is required in such cases to select institutions whose constitutions require the application of monies received to charitable purposes, or who otherwise become trustees to use the monies received for charitable purposes: Smith v West Australian Trustee Executor and Agency Co Limited (1950) 81 CLR 320 at 325 per Fullagar J; and Sir Moses Montefiore Jewish Home v Howell & Co (No 7) Pty Limited [1984] 2 NSWLR 406. 59 Through his submissions, the plaintiff has nevertheless raised questions about the administration of the trust corpus which, though they do not invalidate a charitable trust, are still questions of importance. The trustee should consider these questions before making distributions to any selected charities. The appropriate course in the circumstances is the one the Attorney General suggests, namely that the NSW Trustee consider the matters raised issues and indicate to the Court whether (and if so, when) it proposes to deal with them. 60 I will give the NSW Trustee and the Attorney General liberty to apply about this matter. Giving Money "Equitably" 61 The plaintiff's next contention is that the phrase "to give money equitably" cannot be given sufficiently clear meaning to be capable of being enforced and that the gift fails for uncertainty. There are two main answers to this contention of the plaintiff. 62 The first answer is that once it is accepted that there is a general charitable intention the gift is valid and no question of intestacy arises. Issues concerning the equitable distribution of monies to selected charities become questions for the administration of the trust. Such questions, including issues as to the lack of proper machinery for the management and control of the trust property or for regulating its distribution and application, may be made the subject of administrative scheme, especially where the circumstances show that the settlor's stipulation of the means is inadequate or impractical: Corish v Attorney-General (NSW) [2006] NSWSC 1219. These are administrative questions in which the plaintiff and his siblings, the third and fourth defendants, have no legal interest once a valid charitable trust has been found. 63 The second answer is that "equitably" is not in any event a term too vague to be given any clear meaning in the context of this will. Here "equitably" in the context of gifting money to 4 charities bears its ordinary meaning "characterised by equity or fairness; just and right; fair; reasonable". Generally speaking this would mean the trustee acting even handedly among the beneficiaries by implementing an equal division, as occurred for example in Rudge v Link [2008] NSWSC 1104. But the guides of reason and fairness may justify a conclusion that some basis of division other than precise equality is an appropriate division of proceeds among the four selected charities. The concept is not difficult. It does not lead to invalidity of the gift. Conclusion and Orders 64 The questions asked in the amended summons are answered to the following effect.

(a) On the true construction of clause 4(5) of the will a valid charitable trust is created.

(b) The whole of the residue of the estate of the testator is subject to such trust. 65 I will hear argument from the parties on the question of the costs of these proceedings. I direct the parties to bring in short minutes of order to give effect to these reasons for decision. **********

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Charitable Trust Act 1923(NSW)

De Facto Relationships Act 1984(NSW)

Probate Administration Act 1989(NSW)

Wills Probate and Administration Act 1898(NSW)

Charitable Trust Act 1993(NSW)

At a glance

Court

Decision date

Before

Source

Judgment (27 paragraphs)

Parties

Legislation Cited (8)

Cases Cited (15)

Cited By (1)