NSW MASONIC YOUTH PROPERTY TRUST & ANOR v HER MAJESTY'S ATTORNEY-GENERAL IN AND FOR THE STATE OF NSW & ANOR

NSW MASONIC YOUTH PROPERTY TRUST & ANOR v HER MAJESTY'S ATTORNEY-GENERAL IN AND FOR THE STATE OF NSW & ANOR - [2009] NSWSC 181 - NSWSC 2008 case summary — Zoe

[11]

(3) If the plaintiffs hold the Fund on trust for charitable purposes, how should the charitable purposes be described? 6 In the course of submissions on behalf of the Attorney-General, a question emerged as to who were the original trustees under the minutes of a general meeting held on 23 March 1923 which have been accepted as recording the constitution of the Fund. Accordingly, on 27 August 2008, the following order was made by consent:- "Orders that the following separate question be decided in the proceedings on a date to be fixed:- On the assumption that a valid trust was created by the resolution passed at a meeting of the members of the NSW Masonic Schools Welfare Fund held on 28 March 1923, and that the trust has continued to exist, were the trustees of the trust on and from 28 March 1923:- (a) The members from time to time of the Fund?; or (b) The members from time to time of the executive of the Fund?" 7 On 1 October 2008, the third and fourth defendants were joined as parties to the proceedings for the purpose of arguing the separate question. 8 Mr Raymond Brooke, who was a member of the Fund, was joined as the third defendant to contend that past and present members of the Fund are not, and never have been, the trustees of the Fund. 9 Mr Oliver Bergstrom, the fourth defendant, was also joined to argue that past and present members of the executive of the Fund are not, and never have been, the trustees of the assets of the Fund but that the members of the Fund were the original trustees. 10 Alan Charles Prettyman, company director, has given evidence that he has been a director of each of the plaintiffs since about 10 September 2001 and that the first and second plaintiffs are the corporate trustees of the Masonic Youth Welfare Fund of New South Wales and ACT. 11 All property of the Welfare Fund, including bank accounts, has been directly or indirectly held by the first and second plaintiffs. The bank accounts are held in the name of the "Masonic Youth Welfare Fund of NSW & ACT" and are controlled and operated by the corporate trustees. 12 In his primary affidavit sworn on 15 November 2007, Mr Prettyman said that, so far as he has been able to ascertain, there is no living person who has been associated with the Welfare Fund since its formation. 13 Exhibited to his abovementioned affidavit were three white binder folders containing various documents. They comprise:-

[12]

(3) Exhibit "AP-2" being one small binder containing documents relating to the Edith Boyd Fund referred to in Mr Prettyman's affidavit. 14 In about 1922, the United Grand Lodge founded the William Thompson Masonic Schools and Hostels at Baulkham Hills, New South Wales. Mr Prettyman observed that the Welfare Fund was formed a year or so later (in about 1923). 15 In the joint opinion of Mr J B Whittle SC and Mr R C Titterton of counsel dated 15 February 2005 which has been tendered in the proceedings, a history of the Welfare Fund as set out in Chapter XXX1 of Volume 2 of A History of the United Grand Lodge of Ancient, Free and Accepted Masons of New South Wales is extracted as follows:- "The establishment of the New South Wales Schools Welfare Fund followed the foundation of the William Thompson Masonic Schools at Baulkham Hills. Just as the idea for a special place for the education and upbringing of sons and daughters of deceased Masons was nurtured in the mind of Most Wor. Bro. William Thompson (of beloved memory), so did he conceive the proposal of bringing into being a Committee of Masons whose duty it would be to give special attention to the after-care of the pupils of the school, and place them in suitable positions as well as to assist them financially until they were able to support themselves." 16 The primary purpose of the William Thompson Masonic Schools was said to have been to provide free education and maintenance to the children of deceased brethren who, at the time of death, were members of a Lodge under the jurisdiction of the Grand Lodge of New South Wales. At that time, according to Mr Prettyman, the children admitted were boys between the age of 5 to 12 years and girls between the age of 5 to 14 years. Such children were provided with accommodation, food, clothing, medical and dental attention and were supplied with text books, notebooks, sporting accessories, pocket money and other items to enable them to continue and complete their eduction.

[13]

(1) Early events 17 Specific documents contained in the exhibits to Mr Prettyman's affidavit were addressed by him and have been the subject of close attention in submissions. 18 The first circular letter in evidence was sent by Mr B Dummer to all lodges dated 29 November 1922 (Tab 1 of Exhibit AP-1(1)). 19 On about 12 January 1923, in a letter to Grand Master William Thompson, an unknown author advised that he had been directed by Mr B Dummer, Chairman of the Baulkham Hills Christmas Tree Committee, to take "the necessary steps towards the formation of a permanent committee which shall be the representative of all Lodges in New South Wales and whose duty will be to provide for the children of the Masonic Schools those benefits which do not strictly come within the province of the management of the school" (Tab 3 of Exhibit AP-1(1)). 20 The letter of 12 January 1923 refers to the need for "a central body to co-ordinate the work of the various Lodges, thereby assuring a definite and satisfactory policy". 21 The letter set out "From the many suggestions that have been made as to the objects of this Committee" a number of possible objectives. 22 In about February/March 1923, a circular letter was sent to all Lodges by Mr Hiller, requesting a volunteer from each Lodge to form the Committee (Tab 4 of Exhibit AP-1(1)). The circular letter referred to:- "The necessity of a Committee or central body to co-ordinate these efforts at once suggested itself, and many other matters that are usually attended to by the Parents or Guardians, and that do not come within the functions of a School or College or also presented for consideration." 23 The letter referred to the constitution of the Committee in the following terms:- "This Committee will elect an executive consisting of a Chairman, Treasurer, Secretary and three Committeemen who will keep in touch with the Superintendent of the Schools, assist him in every way he may deem necessary, and perform such other functions as come within the scope of action previously suggested." 24 The circular letter went on to state:- "Funds necessary for this purpose. It is proposed to obtain through the Committeemen asking each member of his Lodge to contribute the sum of 6d (sixpence) annually, and by donations from the Lodges." 25 There is also reference to financial assistance being extended by the Committeemen from the funds contributed to by members of each Lodge and to be used as the Superintendent of the Schools deemed necessary.

[14]

(2) The general meeting held on 28 March 1923 26 Significantly, on 28 March 1923, a general meeting was held between representatives of the various Lodges. A resolution was passed to constitute a Fund to be called the "NSW Masonic School Welfare Fund". This has been referred to in the evidence as the "1923 Resolution". The document comprising the minutes of the meeting (at Tab 6 of Exhibit AP-1(1)) is a significant one and it has received considerable attention in the course of submissions. 27 The minutes initially referred to the circular convening the meeting and set out the objects of the Committee. Further, a draft of the regulations to govern a committee were then dealt with and the detail is set out in the minutes. 28 The objects are stated to include relief being provided to "the Honorary Superintendent" of responsibility in matters "outside the school functions and render him any assistance he may find necessary to seek". 29 The objects manifest the intention of providing the means whereby there would be provision made for matters that are said to fall "outside the School functions". In that respect the minutes recorded:- "To provide for the children of the Masonic Schools of N.S.W. such benefits as shall be deemed, by agreement with the Hon. Supt. and the Trustees, to be outside of their domain such as:-" 30 There then is set out in sub-paragraphs (a) to (i) the specific objects. 31 The minutes also provided for the election of members of the Executive from the Representatives. 32 They recorded on the matter of "ACCOUNTS" a provision for the lodging of funds with the Commonwealth Bank, Sydney in the name of the Fund and for the mechanics relating to the making of payments. 33 In relation to "MANAGEMENT", the minutes recorded:- "The affairs and business of the Fund shall be administered by an Executive consisting of a President, Vice-President, Hon. Treasurer, Hon. Secretary and six other members of the Fund. The Executive shall meet at least once a month for the dispatch of business, four to form a quorum." 34 The minutes also recorded the conferral of power upon the Executive to procure and raise funds from time to time. 35 Accordingly, by the 1923 resolution, a new structure for the establishment of the Fund was formed. Representatives of the lodges had the right to elect members to the Executive and the Executive of the Committee was established as the body responsible for the management of the Fund. 36 Subsequently, on 18 June 1923, a circular was sent which confirmed that on 28 March 1923 a meeting was held "… to consider the advisability of forming a committee to look after the interests of our children at the Masonic Schools in matters outside the ordinary school functions". 37 The circular recorded the unanimous resolution passed for the formulation of a committee to be known as the "NSW Masonic Schools Welfare Fund" (Tab 6, Exhibit AP-1(1)). 38 On 20 December 1926, a Special General Meeting of the Welfare Fund was held at which it was resolved that further clauses be added to the constitution. At this meeting it was resolved that a property in Petersham be purchased for a Hostel for the boys who had left the school and who were in employment to be furnished and maintained. 39 The minutes also recorded a resolution (Tab 10, Exhibit AP-1(1)) as follows:- "(1) The monies and property of the fund other than monies used for current expenses shall be vested in five (5) trustees to be elected by the members. (2) The said trustee shall have power out of the trust funds to purchase:- (a) Real and personal estate for the purpose of the erection and equipment of Masonic Hostels. (b) To provide for the maintenance of the said Hostel and the occupants thereof.

[15]

(c) To expend the monies entrusted to them in such manner as may be deemed by the Executive." 40 On 14 January 1927, the trustees executed a Deed of Trust (Tab 11, Exhibit AP-1(1)). 41 On 14 February 1927, a meeting of the Executive Committee of the Welfare Fund was held at which it was resolved that the Constitution of the Welfare Fund be further amended to incorporate a new trustee structure (Tab 12, Exhibit AP-1(1)). 42 In the 1927 Constitution, it was recorded that all property, including invested monies, belonging to the Fund was to vest in five trustees to be elected at the Special General Meeting of the Fund. 43 In his primary affidavit, Mr Prettyman recounted the subsequent history including, in particular, amendments made to the Welfare Fund Constitution between 1927 and 1971. 44 On about 27 August 1971, his Honour (then) Mr Justice Street of the Supreme Court, Equity Division (No 1064 of 1971) gave judicial advice to the trustees of both the Welfare Fund and the Edith Boyd fund as to the expenditure of the trust funds and with respect to the incorporation of two companies, Juventis Nominees and Welfare Nominees respectively with a view to the appointment of each as trustees respectively of the Welfare Fund and the Edith Boyd Fund concurrent with the retirement of the applicant individual trustees (Tab 32, Exhibit AP-1(1)). 45 The name of Juventis Nominees was later changed to the NSW Masonic Welfare Property Trust. The name of the Welfare Nominees was later changed to the NSW Masonic Youth Property Trust. 46 By Trust Deed No 912 Book 3081 dated 21 November 1972, the corporate trustees were appointed. The Trust Deed was registered on about 7 February 1973. From about 21 November 1972 and continuing, all property of the Welfare Fund, including any bank accounts, were vested in the two plaintiff companies. The bank accounts have been conducted in the name of the "Masonic Youth Welfare Fund of NSW & ACT". All other assets, including the Welfare Fund's property, are held in the name of the corporate trustees. 47 In the joint opinion, to which I have earlier referred, there is reference to the minutes of the meeting held on 28 March 1923. In paragraph 20, it is observed:- "… the minutes of the meeting on 28 March 1923 record an expression of the collective will of those present at the meeting then and there to constitute the Welfare Fund in a manner which was binding upon them and to state the object or objects they had in forming the Welfare Fund …"

[16]

Submissions 48 Mr Whittle SC for the plaintiffs and Mr Stephen Free of counsel for the Attorney-General provided written outlines of submissions in relation to the substantive issues arising on the amended summons. In the Attorney-General's Outline of Submissions dated 11 July 2008, Mr Free submitted as follows:- " Legal characterisation of the creation and purported variation of the trust 4. Before considering whether it is appropriate to order a cy pres scheme, the Court must be satisfied that the trust in question was validly constituted as a charitable trust: Attorney-General for New South Wales v Fred Fulham [2002] NSWSC 629 at [49]. This involves, at least in the present case, basic questions as to whether a trust of any kind was validly constituted and, if so, on what terms. 5. The formation of the Fund in March 1923 on the terms set out in the constitution, when combined with the payment of money into the Fund from that time, was sufficient to create an express trust. The essential elements of a trust were present - trust property (in the form of financial contributions by members of the NSW Lodge of Masons) was settled on the Fund, with the intention that the Fund would hold that property as trustee for the benefit of the identified beneficiaries (ie, children of the Masonic Schools of NSW) expressly described in the constitution of the Fund. On this analysis, the settlement of the trust had the effect of appointing all the members of the Fund (ie, the members of that unincorporated association) as the trustees of the trust property. This is consistent with the fact that the bank account holding the trust property was in the name of the fund. Alternatively, the effect of the settlement may have been to vest the trust property in the Executive officers of the Fund given that the Executive officers exercised exclusive control of the bank account and were responsible for receiving contributions and for distributing the trust property for the benefit of those described in the objects of the Fund. In either case, the decisive matter for the establishment of the trust is that trust property was provided by individual settlors to the Fund with the intention that it be applied for the specified beneficiaries/purposes described in the constitution of the Fund." 49 Mr C M Simpson SC, who appeared on the separate question on behalf of the third defendant, Mr Brooke, submitted that the determination of the question posed by the orders of 29 August 2008 is resolved by determining what, objectively ascertained, was the intention of the participants at the meeting of 28 March 1923 as to who was to undertake the acts which would constitute the persons so acting the trustees of the monies to be received. In that respect, Mr Simpson submitted that that intention was to be determined by:-

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(e) the fact that membership was dependent upon the continued existence of the Lodge they represented which existence could well be less than the life of the Fund. The commonsense inference is that it was the Executive from time to time who were the trustees of the trust created." 56 On the separate question, Mr F G Lever SC, who was appointed to represent the executive on the separate question, contended in his written submissions dated 10 November 2008 that the records of the Fund point to the conclusion that money was originally settled on it with the intention that it would hold the property as trustee for the benefit of the identified beneficiaries, having the effect that the members of the Fund (that is, the members of an unincorporated association) were trustees of the trust property, not the executive appointed by those members. 57 Mr Lever submitted that the alternative formulation in the Attorney-General's submissions set out above, that the effect of the settlement was to vest the trust property in the executive officers of the Fund, ought not be accepted as the correct one. The Executive, he observed, was elected to manage and administer the Fund on behalf of its contributing members (paragraph 11). 58 In his written submissions dated 10 November 2008, Mr Lever submitted that the Executive was elected to manage and administer the fund "… on behalf of its contributing members" (paragraph 11). 59 He referred to the fact that the Executive officers were transient in that they were elected annually to administer the business of the Fund and he drew a comparison with corporate trustees whose affairs are administered by its executive officers and directors. 60 On this analogy, the company itself holds the property as trustee but that the company itself has to be administered by an Executive constituted by its directors and executive officers. In the case of the Fund, members of the various Lodges collected monies which were then delivered to the Treasurer who, Mr Lever noted, they had elected to manage the Fund and the Treasurer placed them into a bank account in the name of the Fund. He contended that the Executive did not act as trustee but simply administered the affairs of the members, the Fund being held for them. 61 In oral submissions, Mr Lever emphasised the fact that the bank account holding the trust funds was in the name of the Fund and that the documentation to which he referred (discussion below) indicated that monies were recorded as owned by the Fund and not by the Executive. 62 Mr Lever also relied upon subsequent events including amendments to the 1923 Constitution as confirming "… the intention of those who establish the fund that, initially the members of the fund (and not the executive) were to act as trustees of money raised by the fund from Lodges in New South Wales. The members attempted to replace themselves by the appointment of five trustees in the 1926 Constitution" (paragraph 15). 63 He referred to the resolution of the Special General Meeting held on 20 December 1926 whereby the money and properties of the Fund, other than for current expenses, were to be "vested in five trustees to be elected by the members". He referred to the Trust Deed adopted at that meeting which recorded the resolution and the vesting in the five trustees of the property belonging to the Welfare Fund. Reliance was also placed upon the adoption at the Annual General Meeting of the Fund held on 11 April 1927 of a further amended Constitution whereby amendment of the Constitution could be achieved by a vote of two-thirds of the members present at either an Annual General Meeting or a Special General Meeting. 64 Mr Lever concluded:- "19. The records of the fund (including those reviewed above) point to the conclusion that money was originally settled on the fund with the intention that it would hold the property as trustee for the benefit of the identified beneficiaries, having the effect that the members of the fund (that is, the members of the unincorporated association) were trustees of the trust property, not the executive appointed by those members." 65 Mr Whittle, in his oral submissions, stated that a further question may arise at the end of the day, namely, whether there have been "proper successors to those trustees down the line" (transcript, 14 November 2008, p.1), whether his clients are properly the trustees of the Fund, which would be according to a chain of survival or whether they were the original trustees. 66 On the hearing of the separate question, Mr Whittle referred to the affidavit evidence that had been earlier read in the proceedings. The affidavits read on the present application were:-

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(5) The affidavit of Alan Charles Prettyman sworn 13 August 2008. 67 Subsequent to the hearing of the oral submissions on 14 November 2008, an email was sent to my associate on 27 November 2008 attaching a copy of an affidavit of Damien Gregory Ward sworn 27 November 2008. The email stated that the original affidavit had been forwarded to the Court and copies of it had been served on the parties. Mr Ward's affidavit was filed on behalf of the plaintiffs. 68 On 3 December 2008, Peter Kennedy Lawyers, for the fourth defendant, made additional submissions in relation to matters established in the affidavit of Mr Ward. In particular, it was submitted for the fourth defendant that the documents annexed to the affidavit and summarised by Mr Ward supported the fourth defendant's position that the Executive "are not trustees". It was further submitted:- "1. That part of the Deed of Trust (extracted in paragraph 17 of the Fourth Defendant's original submissions dated 10 November 2008) indicates that the property of the trust belongs to the Welfare, that is, the members, not the Executive. 2. The trustees appointed at the Special General Meeting held on 20 December 1926 were:- (a) elected by the members of the Welfare Fund; (b) from amongst the office holders … and the Executive Committee … at a time when the office holders and members of the Executive Committee totalled 24 members of the Welfare Fund. 3. This, we would say, supports the conclusion in paragraph 19 of the Fourth Defendant's submissions that the records of the Welfare Fund point to the conclusion that money was originally settled on the fund with the intention that it would hold property as trustee for the benefit of identified beneficiaries, having the effect that the members of the Fund (that is, the members of the unincorporated association) were trustees of the trust property, not the Executive appointed by those members." 69 Mr Simpson made supplementary submissions. I will refer to them in the discussion below (paragraph [83])

[39]

(5) Given the disparate sources from which monies for the Fund could be raised, and the need for their due and proper administration, it is, in my opinion, both permissible and appropriate in ascertaining the intention of the representatives attending the General Meeting to have some regard to the practicalities in resolving the question as to the identity of the trustee(s). These include the practicalities as to how and by whom such administration could be properly effected. Proper administration and control of the finances of the Fund by a comparatively large group of individual members as representatives of what was an unincorporated association would, of course, have been attendant with marked difficulty. The fact, for example, that the 1923 Resolution required monthly meetings of the Executive "for the despatch of business" itself is but one indication of the perceived need by the representatives at the 28 March 1923 meeting for there to be frequent oversight and managerial control exercised over the funds in the course of achieving the welfare objectives for which the Fund was established. 79 It is, in my opinion, accordingly unlikely that those representatives envisaged that trustee obligations could properly be discharged by a large group of members. It is more likely that they proceeded upon the basis that they could and should be discharged by a designated elected body such as the Executive the member of which were made responsible for receiving donations or contributions and for distributing the trust property for the benefit of those identified in the objects of the Fund. A commonsense answer, having regard, in particular, to the terms of the 1923 Resolution, in my opinion, clearly points to the Executive (or the elected officers thereof) as the intended trustee(s). 80 The terms of the minutes established the functions (powers and duties) in the Executive which conferred on it ultimate and overriding control over the Fund whilst limited provisions only were made for the conferral of certain limited rights (eg, the right to attend annual general meetings and to elect members of the Executive) in the representatives beyond stating that "the Representatives shall be the Lodge collector for the Fund". 81 The submissions for the fourth defendant to which I have referred in paragraphs [61] and [63] to [65] drew attention to the resolution of the special general meeting of the fund (as distinct from the Executive) as set out in paragraph 16 of the written submissions and the adoption of the Deed of Trust in terms, in part, set out in paragraph 17 of the written submissions for the fourth defendant. Reference is there made to "all … property belonging to the said Welfare" and for vesting of the property in five Trustees "… to be elected by the said Welfare" for the use and benefit of the said Welfare …". This and the amendment to the constitution on 11 April 1927 were relied upon as subsequent conduct which was said to be inconsistent with the Executive being the trustee and consistent with the member being trustees. 82 Mr Lever contended that such conduct reflected the members considering that they were the trustees and of them wishing to divest themselves of responsibility in the context of an intention that had then arisen to acquire real estate. This conduct, Mr Lever argued was "an admission of how the fund itself, the members of the fund regarded themselves, and how the property was held had they thought about ti more thoroughly at the time …" (transcript, p.10). 83 In the Supplementary Submissions dated 22 December 2008, Mr Simpson submitted, inter alia:- "1. I previously submitted that the intention of the participants at the meeting of the 28th March 1923 was to appoint the Executive from time to time the trustees of the Fund reserving to the Members the power to participate in appointments of new trustees from time to time. 2. On the 22nd April 1924 at the annual meeting of the Fund it was resolved to increase the Executive Committee from the 6 members provided for by the resolution of the 28th March 1923 to 12 members. 3. All of the persons elected at or consequent on the meeting of the 20th December 1926 as the persons to hold the property and express the declaration contained in the deed of the 14th January 1926 were members of the enlarged Executive provided for by the meeting of the 22nd April 1924. 4. The meeting of the 20th December 1926 was a special meeting of the Fund to receive a report and recommendation of the Executive that certain land be bought and held on the terms provided in the deed presented to the meeting. 5. The motion was proposed and seconded by Executive members. 6. It is not known whether the names of the five (5) members of the Executive who appear in the deed as executed appeared in the deed presented at the special general meeting such that its adoption was also their election. It is probable they did. 7. It is a reasonable inference the course adopted was to avoid the practical inconvenience of all members of the enlarged committee being the registered proprietors of the real estate to be acquired. 8. Resort to the Members to elicit those amongst the Executive (albeit a guided election) who were to hold the real estate is consistent with both the Executive being the trustees and/or a recognition of the right reserved to the Members to which I referred in paragraph 1 above. 9. That right of election was preserved by the deed of trust of 14th January 1927." 84 I consider that the terms of the resolution passed on 20 December 1926 and the Trust Deed adopted on 20 December 1926 should be considered in light of the matters to which Mr Simpson referred and, of course, the terms of the 1923 resolution. As noted earlier, the latter resolution did not impose or prescribe obligations upon the representatives of the Lodges who were, in terms of the resolution, "to become a member of the Fund" in contrast to the position of the Executive. 85 It is clear from the minutes of the Special General Meeting held on 20 December 1926 that it was the Executive who had made a report and a recommendation for the Fund to purchase the real estate in Petersham for use as a hostel and that at that time the attendees at the meeting were, inter alia, dealing with the appointment of new trustees who could held the real property instead of the comparatively large number of persons constituting the Executive. I consider this is a relevant contextual matter in determining the construction to be given to the recitals to the Trust Deed adopted on 20 December 1926. 86 Accordingly, the reference to "all property … belonging to the Welfare" must be considered in light of the 1923 Resolution and the facts that had arisen and that led to the Executive making its report and recommendation to which I have referred in the preceding paragraph. 87 It may be inferred that in December 1926 the Executive took the view that they should no longer remain in the position as trustees and that the members' representatives had the right to appoint new trustees as they proceeded to do on 20 December 1926. It is to be recalled in this respect that under the 1923 Resolution, the Executive was to be elected "from the Representatives". By 1926, it is evident that they had determined that with the proposed purchase of real estate trustees should be appointed as provided in the Deed of Trust. 88 Accordingly, the Trust Deed of 1926 is to be considered not alone or in isolation but together with the constitution establishing the trust, its terms being of primary importance in the determination of the separate question. 89 Accordingly, I have concluded that in relation to the separate question:- "On the assumption that a valid trust was created by the resolution passed at a meeting of the members of the NSW Masonic Schools Welfare Fund held on 28 March 1923, and that the trust has continued to exist, were the trustees of the trust on and from 28 March 1923:- (a) The members from time to time of the Fund?; or (b) The members from time to time of the executive of the Fund?" ,

At a glance

Court

Decision date

Before

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Judgment (42 paragraphs)

Parties

Cases Cited (1)

Cited By (2)