Perpetual Trustee Company Ltd v Attorney General of New South Wales

Supreme Court of NSW|2024-02-16|Before: Hmelnitsky J

D Barlin (Plaintiffs) J Davidson (First Defendant) D Creais (sol) (Second Defendant)

Bedson Legal (Plaintiffs) Crown Solicitor's Office (First Defendant) Bartier Perry (Second Defendant) File Number(s): 2022/259163

JUDGMENT

The first plaintiff is the trustee of a charitable trust known as the "Casey Trust". The first, second and third plaintiffs are joint trustees of a charitable trust known as the "Litchfield Trust" (together with the Casey Trust, the Trusts). By summons filed on 31 August 2022, the plaintiffs seek orders pursuant to s 9 of the Charitable Trusts Act 1933 (NSW) (the Act) for the approval of a cy pres scheme in relation to the Trusts and for related relief.

General Background

The Casey Trust is a testamentary trust created by the will of the late Sydney John Casey, who died on 29 September 1976. The Litchfield Trust is a testamentary trust created by the will of the late Isobel Emily Litchfield, who died on 2 February 1999. Mrs Litchfield is sometimes referred to in these reasons as Mrs Casey, which is the name by which she was generally known during her marriage to Mr Casey. For many years, Mr and Mrs Casey lived together on a large grazing property known as Coolringdon on the Kosciuszko Road near Cooma.
Some parts of the lands on which Coolringdon is situated were owned by Mr Casey. Other parts were owned by Mrs Casey. Mrs Casey also owned a block of alpine land to the west of Coolringdon known as "Snowy Plain". For many years prior to Mr Casey's death, they farmed Coolringdon as partners. Snowy Plain was apparently used for depasturing livestock from time to time.
Mr Casey's will was dated 6 June 1974. After some specific legacies, he left the whole of his residuary estate including those parts of Coolringdon which he owned to trustees, with the income of the resulting fund to be paid to Mrs Casey during her lifetime and thereafter to the second defendant, the University of Sydney, to be used to establish a research trust. His will relevantly provided as follows: "I GIVE DEVISE AND BEQUEATH all the rest and residue of my property both real and personal and wheresoever situated unto my Trustees UPON TRUST to pay thereout all my just debts funeral and testamentary expenses and the State Death Duty and Federal Estate Duty on my Estate and to stand possessed of the residue thereof (hereafter called "my residuary estate") UPON TRUST to pay the income to arise therefrom to my said wife during her lifetime for her own use and after her death both as to capital and income of my residuary estate upon the trusts hereinafter contained regarding the same WHEREAS it is my desire and intention to promote in New South Wales education in the better development of the Pastoral Industry and the usage of its products with particular emphasis on the improvement of sheep wool and cattle and so to that end (as from the death of my wife) I DECLARE that my surviving Trustee namely the said Perpetual Trustee Company (Limited) of 33-39 Hunter Street, Sydney shall hold my residuary estate in perpetuity on the following trusts namely: - 1. The income of my residuary estate shall be paid to THE UNIVERSITY OF SYDNEY in perpetuity for credit of a Trust under the auspices of that University to be known as "THE JOHN AND BETTY CASEY RESEARCH TRUST"."
Mrs Litchfield, as she was known at the time she made her will on 15 December 1995 (with a codicil dated 30 June 1998), left the residuary of her estate to trustees on the following terms: "I GIVE DEVISE AND BEQUEATH all the rest and residue of my property both real and personal and wheresoever situated including the residue of my property "Coolringdon", Cooma and the whole of my property known as "Snowy Plain", Cooma to my trustees UPON TRUST to continue to operate my farming and grazing business conducted on my properties "Coolringdon", Cooma and "Snowy Plain", Cooma whether alone or in partnership with the estate of my first husband, the late SJ Casey (but without derogating from my trustees' right to exercise their powers of trustees for sale) and out of my ready monies and proceeds of sale of any other of my real and personal property to pay my just debts, funeral and testamentary expenses and any death and estate duties or taxes payable on or by reason of my death and to pay the legacies herein bequeathed and to stand possessed of the residue of my estate (hereinafter called "my residuary estate") to be held in perpetuity to pay the income therefrom: (i) FIRSTLY in payment of the expenses and outgoings arising out of the conduct of the farming and grazing business on my properties as aforesaid whether alone or in partnership and in meeting the cost of preservation and protection of the Alpine environments in so far as they relate to the depasturing of livestock on the property "Snowy Plain", Cooma; (ii) SECONDLY in payment of all reasonable expenses incurred by The National Trust in the operation of the property bequeathed under Clause 5 hereof in accordance with such reasonable costs (after deducting receipts of rental or inspection charges) as certified by The National Trust and approved by my trustees; and (iii) THIRDLY to pay the balance of any such income to the UNIVERSITY OF SYDNEY (hereinafter called "the University") in perpetuity for the credit of a charitable trust under the auspices of the University to be known as "THE JOHN AND BETTY CASEY RESEARCH TRUST" (hereinafter called "the said Research Trust") in furtherance of my desire and intention to promote for public purposes not exclusively but in priority in that district located when the boundaries of the Shires of Monaro, Snowy River and Bombala in New South Wales the better development of the pastoral industry and the usage of its products with particular emphasis on the improvement of sheep, wool and cattle including education in relation thereto."
It will be necessary to say more about the terms of clause 6 of Mrs Litchfield's will in due course.
Each will also provided the trustees with power to continue the Coolringdon farming partnership or to enter into a new partnership with the trustees of the estate of the other to carry on the grazing business.
Thus, since 1999 the trustees of the Casey Trust and the trustees of the Litchfield Trust have carried on a business of grazing and wool production on Coolringdon. The profit produced by that business together with other income produced by the Trusts has been paid to the University for the purpose of the Research Trust.
This brief description of the facts demonstrates the obvious impracticality and inconvenience which has prompted this application. By accident of history, the one farming enterprise is being conducted by two trusts with fundamentally similar but not quite identical charitable purposes, by means of a partnership among overlapping trustees (the first plaintiff is the only remaining trustee of the Casey Trust but is one of three trustees of the Litchfield Trust) for the purpose of paying the resulting income to the University who, in turn, is bound to deal with that income as trustee on the terms of the two wills, each of which contains a fundamentally similar but not quite identical description of the purposes of the "Research Trust".
The plaintiffs have therefore proposed a cy pres scheme whereby the property of the Casey Trust would be assigned to the Litchfield Trust and, in turn, the trustees of the Litchfield Trust would henceforth hold all property on the terms of a new trust to be known as the "Coolringdon Trust". The substantive issue in dispute between the plaintiffs and the University concerns the identification of the purposes of the Coolringdon Trust and the effect, if any, which the identification of those purposes has on the terms of the University's Research Trust or Trusts.

Mr Casey's will

Clause 5 of Mr Casey's will dictates the purposes for which the Research Trust may apply the income which it receives from the Casey Trust. It provides: "The income of my residuary estate shall be paid by my Trustee to the University of Sydney for credit of the Research Trust to be applied for education of students and in development of and the study of and research in New South Wales into the Pastoral Industry generally and in particular but without restricting the generality of the bequest into the growth shearing transport storage and marketing of wool as well as its manufacture and usage generally for the benefit of the public to the intent and without restriction to the foregoing that such research may involve the investigation of diseases and other causes of deficiencies in soils and pastures; methods and facilities for irrigation and other means of watering pastures and the like; development and improvement of seeds and grasses and for other types of pastures; genetics and development of the science of breeding sheep and cattle, the development and improvement of the growth of all classes and types of wool; combating and eradicating pests and diseases of sheep and cattle; methods of husbandry associated with the feeding and pasturing of sheep and cattle; development of supplementary fodders; for the better shearing of sheep; the grading packing and transport of wool to store and market; manufacture marketing and use generally of the products of sheep and cattle and wool and the usages to which they are their products can be put for the benefit of the community generally."
So far as the ongoing business of grazing is concerned, it is relevant first to note the following terms of clause 8: "AND I ALSO DECLARE that my Trustees may carry on and manage the business of grazing or any other business owned by me for so long as they think fit on my grazing property known as "Coolringdon" near Cooma and on any other grazing property owned by me it being my wish that any such business be carried on for the benefit of my wife during her lifetime and after her death that the same be carried on indefinitely for the benefit of the said Research Trust. AND I FURTHER DECLARE that my Trustees may carry on any such partnership with my said wife and may employ or allow to remain as capital in any such business or partnership such part of my estate and upon such terms as my Trustees think fit AND I ALSO DECLARE that my Trustees may renew any partnership existing at the time of my death or enter into a new partnership with my wife for such term and upon such conditions as they think fit for the carrying on of the said business of grazing"
Clause 7 states: "My Trustees shall cause an account to be taken annually of the Income of the grazing business carried on at "Coolringdon" and after making such provision as they in their discretion think fit for "carry on" expenses and for reserves for contingencies shall fix the amount of distributable profit for the year and their decision as to the amount shall be final and binding on the University and the Committee of the Research Trust."
The will contains, at least impliedly, a limited power to accumulate income. For example, clause 6 contains a power to advance capital up to an amount equal to 10% of the value of the residuary estate to pay to the Research Trust for certain purposes, on condition that that capital is "replaced" out of "Income" (in context, a reference to the income from the grazing business) within five years.
The will also contains a general power of investment. The evidence shows that the Casey Trust has some financial investments that do not seem to have been made in the course of the grazing business. These investments appear in the accounts of the trust, not the partnership accounts, and I was informed that the income from those investments is also paid to the University.

Mrs Litchfield's will

The key terms of the trust of the residue in Mrs Litchfield's will have already been set out at [5] above. In order to understand the reference to the National Trust in clause 6(ii), it is necessary also to note that clause 5 of the will made a gift of the Coolringdon homestead and outbuildings, together with their contents, to the National Trust as items of national or cultural or historical interest. However, the National Trust disclaimed the gift. All of the properties referred to in clause 5 of the will therefore remain property of the Litchfield Trust.
Clause 9 of Mrs Litchfield's will provides: "9. THE NETT INCOME of my residuary estate under Clause 6(iii) hereof shall be paid by my trustees to the University for credit of the said Research Trust to be applied in development of and the study of and research not exclusively but in priority in that district located within the boundaries of the Shires of Monaro, Snowy River and Bombala of New South Wales into the pastoral industry generally (including the education of students) and. in particular but without restricting the generality of the bequest into the growth shearing transport storage and marketing of wool as well as its manufacture and usage generally for the benefit of the public to the intent and without restriction to the foregoing that such research may involve the investigation of diseases and other causes of deficiencies in soils and pastures; methods and facilities for irrigation and other means of watering pastures and the like; development and improvement of seeds and grasses and for other types of pastures; genetics and development of the science of the breeding of sheep and cattle; the development and improvement of the growth of all classes and types of wool; combating and eradicating pests and diseases of sheep and cattle; methods of husbandry associated with the feeding and pasturing of sheep and cattle; development of supplementary fodders; for the better shearing of sheep; the grading packing and transport of wool to store and market; manufacture marketing and usage generally of the products of sheep and cattle and wool and the usages to which they and their products can be put for the benefit of the community generally PROVIDED THAT EXCEPT for the purposes of: (a) Healing injury and curing illness; (b) Procedures performed for the prevention of illness or parasitic infestations; (c) Animal husbandry procedures which are common practice within the pastoral industry no vivisection shall be conducted upon any animal without the prior consent of my trustees."
Mrs Litchfield's will also contains a power to advance capital to the Research Trust coupled with an obligation to replace that capital by accumulating income. Her will also contains a general power of investment. The evidence shows that the Litchfield Trust has also made investments outside the grazing business and, as with the Casey Trust, I was informed that that income was paid to the University.
Clause 12 of Mrs Litchfield's will provides: "MY TRUSTEES may at their discretion in addition to or in conjunction with the carrying on of the business of grazing on any property forming part of my estate under the powers hereinafter contained permit any such property and the livestock and plant thereon to be used for research into any of the matter to which the income of my residuary estate may be applied under the provisions hereinbefore contained."
The trustees of the Litchfield Trust also have a power to make provision for 'carrying on' expenses and to make reserves for contingencies, but only from the grazing business. They have a power to "fix the amount of distributable profit" which is to be applied to the "research trust", with that exercise to be "final and binding" on the University. There is a similar provision (being a power vested in the trustee) with respect to the Casey trust in clause 7 of Mr Casey's will.
I note that both Mr Casey and Mrs Litchfield vested the powers contained in the respective Wills in the trustees (and not, for example, the University). Clause 13 of Mrs Litchfield's will refers to the carrying on of the business "… without derogating from my trustees' unfettered discretion …".

The management of the trusts

The evidence demonstrates administrative and practical difficulties associated with the fact that the business is being conducted by the two Trusts.
Some of the evidence was directed to issues which, in my view, do not arise, namely (a) to the advantages of being able to farm the lands together as a single enterprise and (b) to the disadvantages of having to farm the lands of the two trusts separately.
The fact that the lands are held by trustees of two separate trusts is not an impediment to the lands being farmed in partnership as a single enterprise. The trustees have ample power to continue to farm the lands in partnership. The disadvantages associated with attempting to split the business up into a "Litchfield" farm and a "Casey" farm are not necessary to consider, although I note that any attempt to do so would be costly and inefficient. I accept that it would not be viable to attempt it.
What matters is the manifest inconvenience of having to account for the activities of the partnership via two separate charitable trusts, each with its own administrative and accounting burden, but in circumstances where the technical legal differences between the two trusts seem to serve no meaningful practical purpose. It is easy to accept the submission that it has apparently not always been possible to ensure that income of one trust is used exclusively for that trust's specific purposes.
I do not have evidence of any specific practical difficulty encountered by the trustees of each Research Trust, but it is inevitable that the receipt of funds from two sources and on terms that they be applied to two distinct purposes cannot be the least bit straightforward having regard to the fine distinctions between the two.
The evidence also demonstrates that the plaintiffs' requirements for working capital are difficult to meet having regard to the absence of a general power to accumulate income. The need for working capital extends beyond day-to-day farming operations of the partnership and includes maintenance and upkeep of trust property and administration costs. Such power as presently exists only authorises the trustees to accumulate income of the grazing business, not other trust income.

Relevant principles

Section 9 of the Charitable Trusts Act provides as follows: "9 Extension of the occasions for applying trust property cy pres (1) The circumstances in which the original purposes of a charitable trust can be altered to allow the trust property or any part of it to be applied cy pres include circumstances in which the original purposes, wholly or in part, have since they were laid down ceased to provide a suitable and effective method of using the trust property, having regard to the spirit of the trust. (2) References in this section to the original purposes of a charitable trust are to be construed, if the application of the trust property or any part of it has been altered or regulated by a scheme or otherwise, as references to the purposes for which the trust property are for the time being applicable."
The relevant legal principles were set out by Payne JA 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 [191]-[219] (Free Serbian). In Free Serbian, his Honour (with whom Ward and Gleeson JJA agreed) pointed out that s 9 is engaged through three interacting criteria "through which to consider the continuing utility of the original trust purposes": 1. "wholly or in part"; 2. "suitable and effective method"; and 3. that I must "have regard to the spirit of the trust".
The above was endorsed by Leeming JA in Perpetual Trustee Company Ltd v Attorney-General (NSW) [2018] NSWSC 1456 at [48]-[49] (the Nesbitt Case).
Importantly, Payne JA observed that s 9 sets a lower bar than the general law requirement of impossibility or impracticality, as his Honour held at [196]: "The test is whether the original purposes of the trust have ceased to provide a suitable and effective method of using the property, in whole or in part, having regard to the "spirit of the trust". The spirit of the trust is thus a broader conception than the original purposes of the trust. It is clear that the general law requirement for impossibility or impracticability of achievement of the trust purposes is no longer a condition precedent to the making of an order." The general law standard in question was where the original purposes of the trust (a narrower conception) had become impossible or impractical to carry out (a higher bar): see Attorney General for NSW v Fulham [2002] NSWSC 629 at [12]-[15]. This was remarked upon by Windeyer J in Northern Sydney and Central Coast Area Health Service v The Attorney-General for NSW [2007] NSWSC 881 at [26], in which his Honour said that the purpose of s 9 is "to allow schemes to be ordered even if, strictly speaking, the trust purpose can in some way be carried out albeit not in an economic and most effective or beneficial way".
By way of statutory context, Payne JA noted in Free Serbian at [208]-[209]: "The Explanatory Notes to the enacting bill, the Charitable Trusts Bill 1993 (NSW), explained that s 9: extends the circumstances in which the original purposes of a charitable trust fail and the trust property can be applied cypres i.e. for a similar purpose. The circumstances are to extend to trusts whose original purposes have ceased to provide a suitable and effective method of using the trust property having regard to the spirit of the trust. A similar extension has been made in other States. The second reading speech for the bill also acknowledges that the bill expands the test for when a charitable trust fails."
His Honour further endorsed the reasoning of Morritt and Chadwick LJJ in Varsani v Jesani [1999] Ch 219 as to the meaning of the "spirit of the gift". The expression was described by Morritt LJ as "the basic intention underlying the gift or the substance of the gift rather than the form of the words used to express it or conditions imposed to effect it" (at 234). Chadwick LJ (at 238) said: "The need to have regard to the spirit of the gift requires the court to look beyond the original purposes as defined by the objects specified in the declaration of trust and to seek to identify the spirit in which the donors gave property upon trust for those purposes." His Lordship noted the importance, in this regard, of "value judgments".
In the Nesbitt Case, Leeming JA had observed of s 9 of the Act and the "spirit of the trust" more broadly at [57]: "There are two elements in this part of the statute. The first is the dilution of the traditionally strict test, seen in the words 'suitable and effective', which may be contrasted with 'impossible or impracticable'. The second is the mandatory but metaphoric if not metaphysical consideration, the 'spirit of the trust'. The latter words, which to a reader unfamiliar with the case law in this area might well be regarded as an unusual element in a statutory test, are best addressed first."
Payne JA's treatment of s 9 of the Act has in turn been endorsed in University of New South Wales v Attorney General (NSW) [2019] NSWSC 178 at [32] (University of NSW), King v Attorney General (NSW) [2020] NSWSC 629 at [38]-[40], Harmony - The Dombroski Foundation Ltd v Attorney General (NSW) [2020] NSWSC 1276 at [69]-[70], Smolonogov v Our Lady of Kazan Russian Community of Lidcombe [2020] NSWSC 1484 at [12], Robinson v Attorney General (NSW) [2022] NSWSC 996 at [29]-[31], Northern NSW Helicopter Rescue Service Ltd v Attorney General (NSW) [2023] NSWSC 515 at [124] and Green v Attorney General (NSW) [2023] NSWSC 1229 at [96]-[99].
The above principles are of significance in the present case, particularly the requirement in s 9 that the "purposes have … ceased to provide a suitable and effective method of using the trust property" (emphasis added).

The proposed scheme

Although all parties are in favour of a scheme which allows the assets of both trusts to be held subject to a single trust and to be applied cy pres for new purposes, there was some division between the plaintiffs, on the one hand, and the University, on the other, as to how best to achieve that outcome.
The terms of the plaintiffs' proposed scheme underwent some refinement during the course of the proceedings. The final form of scheme proposed by the plaintiffs identified the purposes of the new Coolringdon Trust in detail and as follows: "3.1 The Trustees hold the Trust Fund for the following purposes: (a) the promotion, for public purposes, of the development of the pastoral industry and the usage of its products, with particular emphasis on the improvement of sheep, wool and cattle, including research and education in furtherance of those purposes, not exclusively, but in priority, in that district located within the boundaries of the Snowy Monaro Regional Council in New South Wales PROVIDED THAT no vivisection shall be conducted on any animal without the prior written consent of the Trustees; and (b) the development of and the study of and research not exclusively but in priority in that district located within the boundaries of the Snowy Monaro Regional Council in New South Wales (including the education of students) and in particular but without restricting the generality of the gift into the growth shearing transport storage and marketing of wool as well as its manufacture and usage generally for the benefit of the public to the intent and without restriction to the foregoing that such research may involve the investigation of diseases and other causes of deficiencies in soils and pastures; methods and facilities for irrigation and other means of watering pastures and the like; development and improvement of seeds and grasses and for other types of pastures; genetics and development of the science of the breeding of sheep and cattle; the development and improvement of the growth of all classes and types of wool; combatting the eradicating pests and diseases of sheep and cattle; development of supplementary fodders; for the better shearing of sheep; the grading packing and transport if wool to store and market; manufacture marketing and usage generally of the products of sheep and cattle and wool and the and the usages to which they and their products can be put for the benefit of the community generally PROVIDED THAT EXCEPT for the purposes of (i) healing injury and curing illness; (ii) procedures performed for the prevention of illness or parasitic infestations; (iii) animal husbandry procedures which are common practice within the pastoral industry; no vivisection shall be conducted upon any animal without the prior consent of my trustees; ("the Trust Purposes"). 3.2 The Trustee is to pay to the University of Sydney as trustee of the John and Betty Casey Research Trust, the income of the Trust Fund and as provided for in this Scheme, for the Trust Purpose ("the John and Betty Casey Research Trust")."
Before turning to the limited areas of dispute in relation to this language, it may be noted that this overall statement of purpose generally conforms very closely to statements of purpose contained in Mrs Litchfield's will. That, in my view, is appropriate. Mrs Litchfield's will is the latter of the two and dealt with the larger and more valuable landholdings of which Coolringdon is comprised; her Will also identified slightly more specific purposes. Mrs Litchfield had a longer and deeper family connection with the properties. It is not possible to create a new trust without either adopting one or other of the statements of purpose from one or other of the wills or, alternatively, seeking to formulate some sort of compromise statement of purpose. In the circumstances, having particular regard to the spirit of each testamentary trust, the most appropriate course is for the Coolringdon Trust to adhere to the purposes of the Litchfield Trust broadly as proposed by the plaintiffs.

Objection as to research

The first area of disagreement concerns the words "research and" in clause 3.1(a). The University objects to the inclusion of this reference to research in the statement of purpose on various grounds. I agree with the University's objection, but not necessarily with all of its grounds of objection.
In my view, the fact that there is a power in clause 12 of Mrs Litchfield's will to conduct research outside of the Research Trusts does not make it either necessary or appropriate to elevate this power to a statement of trust purpose. Mrs Litchfield did not consider it necessary or appropriate to frame the trust purposes in such a way, despite wishing the trustees to have a power to conduct research. The evidence does not suggest that this is a circumstance that has led to any inconvenience requiring clarification of the purpose of the trust.
That, in my view, is a sufficient reason to decline to approve the inclusion of the words "research and" in clause 3.1. It is unnecessary to decide the University's other grounds of objection, such as its submission that on their proper construction, the wills do not authorise the plaintiffs to conduct research outside the Research Trusts in any event.

Objection as to clause 3.1(b)

The most substantive area of disagreement concerned the appropriateness of including 3.1(b). As I understood the University's position, there was no opposition to that language appearing in the scheme altogether, rather that that language, or something similar, should be used to describe the purposes of the Research Trust, as it presently does in Mrs Litchfield's will.
The question of whether it is appropriate to include proposed clause 3.1(b) needs to be approached in the light of some broader difficulties with which the parties here are grappling. Each of Mr Casey and Mrs Litchfield created a testamentary charitable trust, the income but not the capital of which is required to be paid to trustees of the Research Trusts, each of which is also a charitable purpose trust. In neither case did the will state the purpose of the testamentary trusts in terms that can be entirely divorced from the stated purposes of the Research Trusts.
All parties agree that it is necessary to identify the purposes of the proposed Coolringdon Trust with some precision. However, the matters referred to in the previous paragraph mean that it is probably not possible to formulate a statement of purpose that does not affect the Research Trusts in one way or another.
At the same time, the subject matter of this application is the proposed scheme for the testamentary trusts alone. The Court is not concerned with any proposal concerning the Research Trusts. The plaintiffs have sought to address at least some of the difficulties referred to above by proposing that the scheme include a recital (Recital P) as follows: "Whilst this Scheme affects the Casey Trust and the Litchfield Trust, it only affects the Research Trust with respect to the trust purposes and not the administration of the Research Trust which remains within the terms of John's Will and Betty's Will"
This, taken together with the language which they propose in clause 3.1(b) and clause 3.2, seeks to clarify the purpose for which the capital of each testamentary trust is held, but to do so in a way that attempts to align the purposes of the testamentary trust with the purposes of the Research Trust.
It is this to which the University takes objection. The University submits that proposed clause 3.1(b) is really a statement of the purpose of the Research Trusts, and not of the testamentary trusts themselves. The University also submits that there is no need to draw any distinction between the trusts for capital and the trusts for income because, so they submit, both are held for the trust purposes.
As the University points out, the effect of proposed clause 3.1(b) would be to take language which presently describes the purpose of the Research Trust set up by Mrs Litchfield's will and to use it to describe the purpose of the testamentary trusts in general. If clause 3.1(b) is adopted, the trustees will hold the capital of the Coolringdon Trust for purposes which mirror the purposes for which the income is paid to the Research Trusts.
The University submits that a more appropriate formulation of purpose would be as follows: "3. Trust Purpose The Trustees hold the Trust Fund for the promotion for public purposes, of the development of the pastoral industry and the usage of its products, with particular emphasis on the improvement of sheep, wool and cattle including education in furtherance of those purposes, not exclusively, but in priority, in that district located within the boundaries of the Snowy Monaro Regional Council in New South Wales (provided that no vivisection shall be conducted on any animal without the prior written consent of the Trustees) by payment to the University of Sydney as trustee of the John and Betty Casey Research Trusts of the income of the Trust Fund as provided for in this Scheme."
The Attorney-General submits that the question of whether the provisions in the respective wills in relation to the Research Trusts could make sense absent the testamentary trusts in their present form is a matter that may be taken into account in determining whether to approve the scheme, specifically the proposed language in clause 3.1(b). The Attorney-General also points out that it is not obvious that the proposed language of clause 3.1(b) resolves the difficulty in any event.
There is some merit to each party's position on this issue. I accept the plaintiffs' submission that there is a distinction between the capital and the income of the testamentary trusts and that any statement of purpose must capture the purposes for which the whole of the fund is held and for which it is to be applied. I also accept that there is general merit in attempting to align the purposes of the testamentary trusts and the Research Trusts.
I am however not persuaded that clause 3.1(b) is either necessary or appropriate in the context of the cy pres scheme as a whole. The evidence does not show that there has been any particular difficulty in identifying the purposes of the trusts to date. Rather, the difficulties have related to the identification and use of trust income. Nor does the evidence suggest that there has been any particular difficulty in identifying the purposes for which capital is to be held as distinct from the purposes to which income is to be applied. The fact that the scheme will include a general power to accumulate income does not give rise to a need to rewrite the purposes of the testamentary trusts.
However, I am also not persuaded that it would be appropriate to adopt clause 3 as proposed by the University. On one view, the University's proposed language suggests that the charitable purposes of the Coolringdon Trust must only be achieved by the payment of income to the University, which is a somewhat incomplete description of the existing trusts. The present position is that trust income (subject to terms as to identification of profits, accumulation of income etc as described above) must be paid to the trustees of the Research Trusts but that the trustees otherwise have the power to deal with the capital and income of the fund set out in the wills, including powers of investment, powers (and obligations) to maintain assets and so on. Clause 3 as proposed by the University impermissibly curtails those powers.
In a sense, the language proposed by the University falls into the same category of error which the University identifies in the plaintiffs' proposed clause 3.1(b), in that it tends to confuse the charitable purposes of the trusts, on the one hand, and the trustees' powers to give effect to those purposes, on the other.
As a practical matter, the competing descriptions of the proposed purpose of the Coolringdon Trust may not make much of a difference. But as a matter of principle the scheme should ensure that the assets of the testamentary trusts are applied as nearly as possible to the existing charitable purposes. That is best achieved, in my view, by the language of clause 3.1(a) as proposed by the plaintiffs, but without the further elaboration of the purposes contained in clause 3.1(b). That language would more appropriately be used to describe the purposes of the Research Trust.

Recital P

I have set out the terms of proposed Recital P at [45] above. The University objected to this recital as part of its wider objection to the statement of purpose in clause 3. In the light of my conclusions about clause 3, it will be a matter for the plaintiffs to decide whether they still wish to include Recital P. If they wish to retain it, then that is a matter for them and I would be prepared to approve its inclusion in the scheme.

Definition of the Research Trusts.

The proposed scheme defines the Research Trust to mean the John and Betty Casey Research Trust which, in turn, is defined as follows: "John and Betty Casey Research Trust means the trust established by clause 1 of John's Will and clause 6(iii) of Betty's Will, and the purposes for which are now provided for in clause 3"
The University objects and instead contends that the scheme should identify the Research Trusts as follows: "John and Betty Casey Research Trusts means the trusts established by clause 1 of John's Will and clause 6(iii) of Betty's Will"
The difficulty with this proposal by the University is that regardless of the formulation of clause 3 of the scheme, the University will be bound to have regard to the Coolringdon Trust to identify the trusts on which funds are held in the future, not merely to the wills as drafted. That is because henceforth it will receive funds from the trustees of the Coolringdon Trust to be applied for the purposes identified in the scheme. This seems to be an unavoidable aspect of applying the property of the testamentary trusts to new albeit extremely similar purposes.
The language proposed by the University seems to me to assume that the change to the purposes of the testamentary trusts is something which will have no consequences whatsoever for the University. That is not necessarily so, although it is hard to see that there would be consequences of any practical significance for the administration of the Research Trust.
The most appropriate approach, in my view, is for the scheme to identify the purposes of the Coolringdon Trust in the more limited manner previously discussed, and for the scheme also to identify the purposes of the Research Trust along the lines of Mrs Litchfield's will (essentially using the language of proposed clause 3.1(b)). This is a change that should have no meaningful impact on the University. As matters stand, they receive funds from trustees of two testamentary trusts to be held for slightly differing purposes. They would instead henceforth just receive funds for one of those purposes. This should not necessitate any change in the administration of the Research Trust, any more than if the University had simply ceased to receive funds from Mr Casey's testamentary trust.

Proposed clause 4.2(c)

The first part of proposed clause 4.2(c) of the scheme reads as follows: "The Distributable Profit is the amount of income however so derived, (including but not limited to) from the farming and grazing business carried on at Coolringdon and any lease and licence fees with respect to Coolringdon which is to be annually fixed by the Trustee for payment to the Research Trust…"
The University submits that the word "income" here should be qualified by the words "from the Trust Fund". I do not see the need for those words to be included here.

An administrative scheme?

The practical effect of the scheme as now proposed by the plaintiffs will be that Coolringdon will be farmed and the combined trust funds will be held on, essentially, the terms of Mrs Litchfield's will. During the course of argument, I asked the parties to consider whether in those circumstances the same result might be achieved by the approval of an administrative scheme pursuant to Part 4 of the Charitable Trusts Act 1993.
All parties accepted that the facts here may well provide a basis for approval of an administrative scheme. However, it is in my view appropriate that the present difficulties be addressed by way of a cy pres scheme, as the plaintiffs contend.
The differences between the two kinds of scheme were explained Brereton J in College of Law Pty Ltd v Attorney-General of NSW [2009] NSWSC 1474 at [7] and by Ward CJ in Eq in University of NSW at [34]. Her Honour said: "Unlike a cy-près scheme, an "administrative scheme" is not directed towards altering the trust purposes. Rather, an administrative scheme enables the court to provide further and detailed machinery for the practical application of the trust property, where the stipulated means for the achievement or pursuit of the charitable objects have not been specified or are not sufficient for the practical application of the gift for the charitable purpose. Thus, Campbell J (as his Honour then was) said in Corish v Attorney-General's Department (NSW) [2006] NSWSC 1219 (at [9]) that: 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."
This is not really a case where the mode of carrying out the Casey Trust has become uncertain. It is rather a case where the practical application of the two Trusts has become quite inefficient. The solution will involve the application of the property of Mr Casey's will trust being applied to very similar but not quite identical purposes. Those circumstances are of the kind to which the power in Part 3 of the Charitable Trusts Act 1993 is directed.

Orders

It will be necessary for the plaintiffs to bring in a revised form of scheme that takes my reasons into account. I direct the plaintiffs to do so within 14 days of the delivery of these reasons.
When I make final orders approving the scheme I will also make an order that the costs of the Attorney-General and of the University be paid from the trust fund on the ordinary basis as agreed or assessed in equal proportions. If any party wishes to make any submission about that proposed order, they should do so within 14 days.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 19 March 2024

Charitable Trusts Act 1933(NSW)s 9, Pts

At a glance

Court

Decision date

Before

Source

Judgment (17 paragraphs)

Parties

Legislation Cited (1)

Cases Cited (14)