Monds v Stackhouse

High Court of Australia|1948-07-01|Before: McTiernan JJ

For the reasons I have given, the provision of such a hall is a charitable purpose, and it is within the corporate powers of the body to carry it into execution. But the question remains whether the use of the word "nucleus" does not import into the gift a condition to the effect that before the trust for the charitable object takes effect the nucleus shall have been augumented to some undefined extent by additions of moneys from other sources and if so whether that makes the gift bad for remoteness of limitation. If there is a gift for a charitable purpose to arise only on a future contingent event which may or may not occur within the period allowed by the rule against perpetuities and the subject of the gift is not impressed with an immediate trust for charity, the gift is void for remoteness.

There is therefore a question whether in the use of the word "nucleus" there is to be discovered an intention to make the charitable purpose depend upon a contingency or condition that before the trust attaches there must arise by additions to the moneys paid by the trustees of the will to the corporation a larger fund sufficient for the purpose. If the true meaning of the will is that the gift to charity is to be suspended until the happening of such a contingency or the fulfilment of such a condition without any restriction of time, so that there is a condition precedent to the gift which may occur at any time in the indefinite future, in that case doubtless the gift would be void. But even if there is a condition of like character but the intention is that unless the event occurs within a reasonable time the gift shall not take effect that might be enough to save its validity. To say this assumes, of course, that a reasonable time could not exceed the period of twenty-one years limited by the rule against perpetuities.

If it were implied that the "nucleus" must grow into a sufficient fund within a reasonable time the effect would be in substance to impose a condition that if after a reasonable time had elapsed the fund was still insufficient the gift should fail and there should be a resulting trust to the trustees of the will of the moneys in the hands of the corporation. But apart altogether from the possibility of making such an implication I think that there is no sound foundation for the contention that the gift offends the rule against perpetuities.

The principle by which the question is governed involves what may seem to be a refined distinction, but it is a clear distinction.

If there is a gift impressed with an immediate trust for a charitable purpose it is good, notwithstanding that the actual application of the fund in carrying the purpose into execution must await an event that may or may not happen within the period prescribed by the rule against perpetuities. But if such an event is made the occasion, not of the application or expenditure of the fund, but of the subjection of the fund to the charitable trust itself, that is another matter. A trust which only arises or becomes operative upon a condition which may not occur within the period allowed by the rule against perpetuities is bad for remoteness notwithstanding that it is a charitable trust. Where the trust has a particular charitable object in view, to which the fund cannot be applied until the happening of a future contingent event, it may appear that the gift to charity is subject to a condition precedent, so that if it is capable of fulfilment outside the period allowed by the rule the trust will be void. But consistently with the selection of a particular charitable object as a means of effecting his charitable aims, a testator may manifest a more general charitable intention: cf. Attorney-General (N.S.W.) v. Perpetual Trustee Co. Ltd. [1] . If the general charitable intention is impressed upon the fund from the beginning it is immaterial that the particular means chosen for effectuating the intention may await an uncertain event capable of occurring outside the prescribed period. For there is a gift to charity operative at once and only the particular application is suspended.

I shall not discuss the authorities which support the foregoing statement. It is enough, I think, to give the following references: Sinnett v. Herbert [2] ; Chamberlayne v. Brockett [3] ; In re Lord Stratheden & Campbell; Alt v. Lord Stratheden & Campbell [1] ; In re Gyde; Ward v. Little before North J. [2] , and in the Court of Appeal [3] (adopting a different view of the will); In re Swain; Monckton v. Hands [4] ; In re Finkelstein; National Trustees Executors & Agency Co. of Australasia Ltd. v. Michael [5] ; In re Monk; Giffen v. Wedd [6] ; In re Dyer; Dyer v. Trustees, Executors & Agency Co. Ltd. [7] and the discussion in Tyssen, Charitable Bequests, 2nd ed. (1921), p. 154, et seq. The decided cases show that before adopting a construction which makes the gift to charity depend upon a condition precedent consisting in an uncertain future event, it is necessary to be satisfied that such is the true meaning of the will. If no overriding and more general intention in favour of charity operating from the beginning is discoverable, it may be found that what looks like a condition precedent is in truth a condition subsequent. In some cases it has been tacitly assumed, as it would seem, that the given trust is such that either it must be carried into execution or its failure must appear within the period allowed.

(1872) 7 Ch. App. 232. 2. (1872) 8 Ch. App. 206. 3. (1894) 3 Ch. 265. 4. (1898) 78 L.T. 449. 5. (1898) 79 L.T. 261. 6. (1905) 1 Ch. 669. 7. (1926) V.L.R. 240. 8. (1927) 2 Ch. 197. 9. (1935) V.L.R. 273.

In the present case I do not think that a more general charitable intention than to provide, or assist in providing, a public hall in Launceston can be ascribed to the testator. But I do not think the use of the word "nucleus" ought to be treated as importing into the gift a condition precedent suspending the operation of the gift indefinitely. It means no more than the words "as a contribution towards" would have meant if the will had been written "as a contribution towards the provision of a suitable hall."

The corporation is chosen as the donee because it is the authority whose responsibility it would be to build such a hall. It might do so out of funds it decided to raise for the purpose. If the corporation accepts the gift, the questions must be determined by the corporation what kind of hall it will erect or provide and where. I do not think that the will means that the corporation may simply invest the money until at some future date, if ever, that body is minded to build a hall. No positive duty to proceed in the matter is laid upon the corporation, at all events expressly. But an abandonment of the project for which the testator gave his money would mean a failure of the purpose of the gift and a consequent resulting trust to the trustees of the will. To relinquish all consideration of the question, take no active steps and simply invest the money, would be to authorize the court to conclude that the purpose of the gift has failed. The gift is to an administrative body in aid of the exercise of one of its powers for the public benefit. It is for the donee to decide whether and when and how it will exercise its power. The only event upon which the application of the money in providing a hall depends is the exercise of the donee's authority or discretion. There is no external contingency but only the action of the donee-trustee itself. The case is peculiar because the power it must exercise is a public administrative authority and not one conferred by the trust. It is moreover a power involving or possibly involving it in a liability, as for instance if it uses its borrowing powers. But from the beginning the money is in its hands impressed with a trust for a public purpose. A trust for the building of a public municipal hall is charitable. But I think it is possible to go further and say that a trust to enable or help a public authority to build or otherwise provide such a hall is charitable. To contribute to the funds of a municipal corporation for the purpose is to impress a fund immediately with a charitable trust taking effect at once. If the corporation fails to exercise its powers the gift fails. But otherwise it is a good charitable bequest.

In my opinion the residuary bequest in the present case is not bad for remoteness of limitation.

The appeal, I think, fails in substance. But I think that the appellant is right in his complaint that the actual order made on the originating summons may operate to his prejudice if it should turn out that the testator's purpose is impracticable and for that reason the trust fails, or if, at the other extreme, a surplus remains after the purpose is fulfilled. To prevent this I think that it is desirable to vary the order. It might be enough to substitute for the answer "Yes" to the first question the answer "It is a valid charitable gift," and to substitute for the answer "No" to the sixth question the answer "Not unless it is found impracticable to carry into execution the trust expressed in the gift mentioned in question 1, or unless it is found that a surplus of such proceeds remains in the hands of the said corporation after such trust has been fully executed."

But as a matter of administration the Court may go further in protecting the fund, and I see no objection to the order proposed.

Subject to this variation I think that the appeal should be dismissed.

The question is whether the gift to the corporation of the money constituting the residue of the estate is charitable. It is a gift made with the intent that the corporation should carry out the directions in the will. The money is given to the corporation upon trust. If the trust is charitable, the corporation has power under the Act establishing it to carry out the trust. The purpose of the gift is of a municipal or public character: it aims at assisting the citizens of Launceston by providing a public hall. This is an object analogous to those mentioned in the Statute of Elizabeth. The decisions cited in Halsbury's Laws of England, 2nd ed., vol. 4, pp. 123, 124, fully warrant this conclusion. The purpose of the gift is charitable.

I do not find in the will a general charitable intention. I think that the only purpose of the gift is the intended hall or theatre. There is therefore a gift to the corporation for the particular purpose of providing a hall or theatre suitable for the activities mentioned by the testator. The discretion given to the corporation in disposing of the said money is not in harmony with the words creating the trust with which the will impresses the money; the grant of the discretion is open to attack as an attempt to deprive the court of jurisdiction to keep the application of the money within the scope of the trust.

The moneys, the subject of the trust, are given as the "nucleus of a fund to provide" the intended hall or theatre. The trust to which the moneys are subject arises immediately upon the testator's death. Hence the gift does not contravene the rule against perpetuities. It is true that the application of the money to the provision of the intended hall may be postponed indefinitely or may not take place at all. But nevertheless there is an immediate gift of the money to the corporation subject to the trust declared by the testator. If it turns out to be impracticable to provide the intended hall or theatre, there would be a resulting trust of the money the subject of the gift to the next of kin. It would be otherwise if the will manifests a general charitable intention.

The order made by the Supreme Court contains no provision protecting the next of kin in the event of the failure of the purpose of the gift. I think that the order should be amended by adding such a provision.

I agree with the order proposed by the Chief Justice of this Court.

High Court of Australia Latham C.J. Dixon and McTiernan JJ. Monds v Stackhouse [1948] HCA 47

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