//
[2001] SASC 73
General information, not legal advice.
Supreme Court of SA
2001-03-16
Bleby J
Original judgment source is linked above.
CONSTRUCTION OF TRUST DEED - OBJECT OF TRUST Land held upon trust "to permit the same to be used as a polo ground and subject to such use by any polo club to permit the said land to be used as a recreation ground or by any society as a show ground or for the purposes of any sport or sports or games ..." - priority for use as a polo ground and by a polo club or clubs - whether polo club or clubs entitled to beneficial interest and vesting order - validity of trusts for the playing of polo - whether trusts for purposes of playing polo charitable - consideration of trusts for promotion of sport - whether trust for establishment of sporting or recreational facilities - whether for public benefit - consideration of what constitutes relevant public benefit - whether "polo" purposes for benefit of public - whether polo purposes charitable under s 69C Trustee Act 1936 - whether balance of permitted uses charitable - whether invalid purposes render whole trust invalid - application of s 69A Trustee Act to validate trust. WHO MAY APPLY Licensee under licence to use land for promotion of equestrian and recreational activities - validity of licence - use of land circumscribed by trust deed - whether licence agreement in breach of trust deed - whether licensee has standing to seek declaratory relief as to validity of trusts.
Counsel: MR P A MCNAMARA - Solicitors: RONALD A FLETCHER
Counsel: MR J J MOORE - Solicitors: JEREMY MOORE & ASSOCIATES
Counsel: MR J J MOORE - Solicitors: JEREMY MOORE & ASSOCIATES
Counsel: MR J J MOORE - Solicitors: JEREMY MOORE & ASSOCIATES
Counsel: MR G J PARKER - Solicitors: CROWN SOLICITOR (SA)
Defendant: THE POLO GROUNDS ASSOCIATION OF STRATHALBYN
Counsel: MR J S RODER - Solicitors: TRELOAR & TRELOAR
Counsel: MR J S RODER - Solicitors: TRELOAR & TRELOAR
Counsel: MR A LUCKHURST-SMITH - Solicitors: WARD & PARTNERS
Judgment No. [2001] SASC 73
STRATHALBYN SHOW JUMPING CLUB INC v MAYES and OTHERS
1 The sport of polo appears to have enjoyed some popularity in the Strathalbyn area in the first half of the 20th century. Its popularity waned during the second half of the century, but the sport is now enjoying a resurgence of interest. It is a combination of this fluctuating interest and the intervention of competing recreational interests which gives rise to the present dispute over the use of some land on the outskirts of Strathalbyn.
2 The land in question is comprised in two certificates of title. The land presently comprised and described in Certificate of Title Register Book Volume 717 Folio 184 is a parcel of approximately 25 acres ("the original land"). On 26 December 1903 Richard Smith, Sir John Lancelot Stirling and Henry Herbert Butler accepted a transfer of that land. By declaration of trust dated 22 February 1904 ("the Trust Deed"), the transferees declared that they held the original land "and premises and any erections or buildings for the time being thereon and the rents and profits thereof" upon the trusts declared in that deed.
"1. The trustees shall hold the premises upon trust to permit the same to be used as a polo ground and subject to such use by any polo club to permit the said land to be used as a recreation ground or by any Society as a show ground or for the purposes of any sport or sports or games as the trustees or any such committee or persons acting by a delegation under the trustees as hereafter mentioned shall think fit.
2. So long as and whenever a polo club shall exist at Strathalbyn the whole or so much of the said land and premises shall if so demanded be kept for the unrestricted use and enjoyment of such polo Club and shall be so used free from cost to such club.
3. The trustees may subject to the right of user by any polo club let the said land or any part thereof for grazing at such rental for such term and upon such conditions as they may think fit or may take in sheep, cattle, horses or other stock at agistment on such terms and conditions as they shall think fit and/or let the said land or any part thereof for the purposes of sport and recreation and/or for the use of any public society or body corporate or otherwise of the people of Strathalbyn for such term at such rental and on such conditions as the Trustees may approve and the trustees may charge or permit to be charged for admission or entrance to the said land and grandstand or pavilion thereon or any reserve thereon such a sum or sums as the trustees shall think fit."
4 Clause 6 of the deed enables the land and improvements to become vested in the Corporation of the Town of Strathalbyn after the expiration of ten years, but subject to the trusts contained in the deed. There is power conferred on the trustees to alter or revoke any of the powers and directions contained in the deed "for what in the opinions of the trustees shall be of benefit to the town and townspeople of Strathalbyn provided that privilege to use the said land or so much thereof as shall be necessary for the purposes of polo shall not be restricted or taken away and any polo club or clubs for the time being at Strathalbyn shall forever have the use of the said land for purposes of the game of polo and free of charge".
5 The trustees are able to delegate the control, management and use of the land to a committee appointed for that purpose (clause 8), and are to apply the rents, income, tolls and profits from the land in payment of rates and taxes, fencing, or in improving and maintaining the land or in erecting buildings or additions to buildings and to undertake other works "for the purposes of improving the said land as a polo ground or as a recreation ground.... or in promoting or establishing polo at Strathalbyn provided however that no trees or shrubs or buildings shall be planted or placed upon the said land that may be or become an obstacle on that portion of the said land used as and for a polo ground". (Clause 9)
6 There are other provisions relating to the conduct of the business of the trustees and the appointment of new trustees.
7 The trusts were protected by the trustees lodging a caveat on the Certificate of Title for the original land at the time when they executed the trust deed.
8 On 12 May 1931 the then trustees accepted a grant of an additional four acres and three roods, being the land comprised in Certificate of Title Register Book Volume 1591 Folio 119 ("the additional land"). The additional land adjoins the northern boundary of the original land. No trusts were declared in respect of the additional land, but it has been used in common with the original land and treated as one with it since its acquisition in 1931. In 1951 the then trustees placed a caveat on the Certificate of Title for the additional land purporting to forbid dealings in that land other than in accordance with and subject to the Trust Deed.
9 One of the declarations sought by the plaintiff is that the additional land is held subject to the same trusts and to the provisions of the Trust Deed. No-one opposes such a declaration, and it is appropriate, in the circumstances, that such a declaration be made. I will refer hereafter to the land in both certificates of title as "the land".
10 Until 1962 polo was played on the land by various persons or clubs from time to time. It appears that for some time there was an unincorporated club known as the Strathalbyn Polo Club. On 16 October 1962 it resolved at its Annual General Meeting that due to lack of interest in the playing of polo, the club would go into recess for a period of twelve months. In fact, no polo was played on the land from 1962 until 1994. Since then, polo has been played during each polo season between October and April.
11 In 1963 several former members of the Strathalbyn Polo Club resolved to form a show jumping club. It was originally known as the Southern Branch of the SA Show Jumping Club, but then became known as the Strathalbyn Show Jumping Club. The club was incorporated under the Associations Incorporation Act 1956 on 26 June 1985. That body is the present plaintiff.
12 In 1963 the land was largely unimproved. The plaintiff and its unincorporated predecessor caused substantial improvements to be made to the land, including stables, a storage shed, a toilet block, a clubroom/canteen and various irrigation works, fencing, turf renovation, earthworks and road maintenance.
13 Until 1987 the activities of the plaintiff and its predecessor seem to have been carried out on the land with the approval of the trustees, although no documents have been tendered which indicate the nature or extent of such occupancy. On 17 May 1987 the trustees and the plaintiff entered into a licence agreement. By clause 2 of the licence agreement, the licence given to the plaintiff to use the land was to continue indefinitely unless terminated in accordance with the agreement. The trustees could give fourteen days notice of termination in the event of any breach of conditions of the agreement by the plaintiff and the failure to rectify such breach within thirty days, or if the club committed or permitted to be committed any unlawful act upon the land (clause 3). The trustees could also terminate the agreement on 60 days' notice in the event that the trustees "or any other persons having an interest" in the trusts were able to establish that the agreement or continuity of the same was in breach of the terms of the Trust Deed (clause 4).
14 By clause 6 the plaintiff was able, at its expense and with the approval of the trustees, to add further improvements to the land. In the event of termination, the plaintiff was to be granted a reasonable period (not less than 6 months) to remove all improvements made by it or its predecessors. The plaintiff was to control the land and to pay rates and taxes and other outgoings. It was permitted to use the land for the promotion of activities within its own constitution, and was able to hire the land to other persons and bodies, but not if that would be in breach of the terms of the Trust Deed (clause 11).
15 The plaintiff continued to use the land for equestrian and show jumping activities and events and for other community activities, and facilitated, promoted and permitted the use of the land as a recreation ground for a wide variety of community and public organised events and for public purposes.
16 In 1994 the Strathalbyn Polo Club Incorporated ("SPC") was formed. It is the 7th defendant. It gave notice to the plaintiff that it intended to play polo on the land in reliance upon the provisions of the Trust Deed. Since 1994 the SPC has in fact played polo on the land, but not without attendant disruption to the activities carried on by the plaintiff, and has claimed the right to use the stables, ablution facilities and clubhouse without paying any hiring fees. The SPC alleges that the Trust Deed ensures priority for the playing of polo on the land, free of cost to it.
17 The plaintiff has accommodated some of the requirements of the SPC, but the alleged priority of polo as a use of the land has given rise to some disputes. The matter has been complicated by the incorporation in August 1998, by one of the original promoters of the SPC, of a second polo club known as the Outback Polo Club Inc, the 6th defendant. That club has also sought polo playing rights on the land in reliance on the terms of the Trust Deed. In June 1999 the same person caused a third association to be incorporated under the name "The Polo Grounds Association of Strathalbyn Inc", one of the objects of which is to acquire the land by purchase gift or vesting. That association is the 5th defendant.
18 On 15 August 1997 the SPC lodged a caveat on the land claiming an equitable interest in it by virtue of the Trust Deed, and forbidding registration of any dealing in the land without the consent of the SPC.
19 There have not only been disputes between the plaintiff and the SPC but between the SPC and the 5th and 6th defendants. It appears that attempts have been made from time to time to reach some type of accommodation between the SPC and the plaintiff, but at the heart of the dispute appears to be a difference of opinion as to the proper interpretation of the Trust Deed.
20 The land has never been transferred to the Corporation of the Town of Strathalbyn, and throughout this time the trustees appear to have taken little (if any) action to endeavour to resolve the dispute or to interfere with the current occupation and management of the land by the plaintiff.
21 Against that background, the plaintiff seeks the following declarations and orders:
1. A declaration that the Trust Deed did not create any valid trust in favour of any ascertained or reasonably ascertainable beneficiary;
2. A declaration that the polo playing provisions of the Trust Deed did not create any trust for the playing of polo which was either (i) a valid charitable purposes trust at common law, or (ii) a valid charity for the provision of recreational facilities, within the meaning of section 69C of the Trustee Act;
3. A declaration that the provisions of the Trust Deed created either (i) a valid charitable purposes trust at common law, namely a valid trust for the purposes of the provision of public recreational facilities, and/or (ii) a valid charity for the provision of recreational facilities within the meaning of section 69C of the Trustee Act;
4. An order that the polo playing provisions of the Trust Deed be severed (if the court deems it necessary to do so) from the balance of the provisions of the Trust Deed pursuant to section 69A of the Trustee Act;
5. A declaration that the 1987 licence agreement is valid and enforceable;
6. A declaration that the additional land is subject to the Trust and to the provisions of the Trust Deed;
7. An order that the caveat no 8346531 dated 15 August 1997 registered by the Strathalbyn Polo Club Inc on the Titles to the land, claiming an equitable interest in the land by virtue of the Trust Deed, be withdrawn or removed;
8. An order that the costs of the plaintiff be met out of the assets of the Trust, such assets to be realised by sale or otherwise for that purpose.
22 Polo Grounds Association of Strathalbyn Inc (the 5th defendant) and Outback Polo Club Inc (the 6th defendant) seek by way of counterclaim the following declarations and orders:
(1) A declaration that the Trust Deed created a valid enforceable trust in all its objects;
(2) A declaration that the 1987 licence agreement is void;
(3) An order pursuant to Section 62 of the Law of Property Act 1936 that the land be vested in Polo Grounds Association of Strathalbyn Inc to be held by it in accordance with the objects of that Association.
There is no counterclaim by the SPC, although it seeks a resolution of any dispute concerning the interpretation of the Trust Deed and one which sees the land used as a common community facility for the Strathalbyn district and those who are interested in equestrian activities, and in particular, the sport of polo.
23 The fifth and sixth defendants mounted a threshold challenge to the standing of the plaintiff to bring the proceedings. They sought to challenge the validity of the licence agreement without which, they argued, the plaintiff could have no standing.
24 In short, they argued that the licence agreement was not a lease under clause 3 of the Trust Deed and was not a delegation of the trustees' powers under clause 8 of the Trust Deed. The plaintiff was a body corporate and was therefore not a "committee or persons" for the purpose of acting as a delegate of the trustees. The licence agreement was not immediately revocable by the trustees as required by that clause. They argued that the licence went beyond delegation and created an absolute right of user in the plaintiff "for all proper purposes within its constitution" (licence agreement, clause 14). The plaintiff's constitution only allowed it "to stage, convene, conduct and promote show jumping and other equestrian events" (plaintiff's Constitution clause 3(a)). That was not a charitable use, as it was lacking the necessary public element.
25 The short answer is that the plaintiff does not have to be established for a charitable purpose in order for its use of the land to fall within the terms of the Trust Deed. The permitted use under clause 14 of the licence agreement included purposes "as might otherwise arise as permitted by this Agreement". Clause 11 of the licence agreement provides:
"The Club shall be permitted to use the land for the promotion of such activities as are within its constitution and may hire the land upon such reasonable terms and conditions as it may determine from time to time to such other persons or bodies that may wish to conduct some short term activity thereon provided such activities are open to the public at large whether for payment or otherwise but no such hire arrangements shall be made by the Club if same would be in breach of the terms of the trust upon which the Trustees hold the land."
26 The purposes for which the plaintiff can use the land or permit it to be used by others were therefore circumscribed by the terms of the Trust Deed, and were not limited to the plaintiff's own objects.
27 In granting the licence the trustees were acting under clause 1 of the Trust Deed by permitting the land, by means of the licence agreement, "to be used as a recreation ground", or alternatively to be used "by [a] society.... for the purposes of any sport or sports or games".
28 I am not satisfied that the licence was granted in breach of the terms of the Trust Deed, but even if it were, at worst the licence would merely be voidable, given that the trustees could seek relief from the court for the alleged breach of trust under s 56 Trustee Act 1936. Alternatively, the transaction could possibly be validated under s 59B of the Trustee Act.
29 The plaintiff plainly has a relevant interest in the land which is subject to deprivation or qualification if the priority use of the land as a polo ground is valid. If its licence must be terminated in order to accommodate the interests of the 5th, 6th or 7th defendants, it will be required, under clause 8 of the licence agreement, to remove the improvements to the land made or constructed by it or its predecessors. The interests I have described are sufficient to give the plaintiff a special interest in the subject matter of the application as that term has been described in such cases as Australian Conservation Foundation v The Commonwealth (1980) 146 CLR 493 per Gibbs CJ at 530 - 531, Shop Distributive and Allied Employees Association v Minister for Industrial Affairs (SA) (1995) 183 CLR 552 and Bateman's Bay Local Aboriginal Land Council v Aboriginal Community Benefit Fund Pty Ltd [1998] HCA 49; (1998) 194 CLR 247 at 265. Accordingly, the plaintiff has standing to seek the relief claimed in its summons, and the relief sought in paragraph (2) of the prayer for relief in the counterclaim of the 5th and 6th defendants must be refused.
30 Before analysing in detail the object as set out in the Trust Deed, it is to be remembered that, if a trust is not a valid trust for charitable purposes, it must be a trust for an organisation or group of individuals entitled to a beneficial interest in the land for their own purposes. In Leahy v Attorney-General (NSW) [1959] UKPCHCA 3; [1959] 101 CLR 611 a testator provided that a grazing property would be held on trust "for such Order of Nuns of the Catholic Church or the Christian Brothers as my said Executors and Trustees shall select....". The remainder of his estate was to be put towards the building of a new convent, or the alteration, extension and furnishing of existing convents. The Privy Council, on appeal from the High Court of Australia, held that there was no valid trust. The trust was not for a charitable purpose, as the reference to "such Order of Nuns" included purely contemplative orders, who did not qualify the charitable purpose, they being distinct from nuns who provide various services to the community. The orthodox view was stated by Viscount Simonds, delivering the unanimous opinion of the Privy Council, at 620:
"A gift can be made to persons (including a corporation) but it cannot be made to a purpose or to an object: so also a trust may be created for the benefit of persons as cestuis que trustent but not for a purpose or object unless the purpose or object be charitable. For a purpose or object cannot sue, but, if it be charitable, the Attorney General can sue to enforce it.... It is therefore by disregarding the words 'for the general purposes of the association' (which are assumed not to be charitable purposes) and treating the gift as an absolute gift to individuals that it can be sustained."
31 A little later in his judgment Viscount Simonds continued (at 625 - 626):
"At the risk of repetition their Lordships would point out that, if a gift is made to individuals whether under their own names or in the name of their society and the conclusion is reached that they are not intended to take beneficially, then they take as trustees. If so, it must be ascertained who are the beneficiaries. If at the death of the testator the class of beneficiaries is fixed and ascertained or ascertainable within the limit of the rule against perpetuities, all is well. If it is not so fixed and not so ascertainable the trust must fail. Of such a trust no better example could be found than a gift to an order for the benefit of a community of nuns once it is established that the community is not confined to living and ascertained persons. A wider question is opened if it appears that the trust is not for persons but for a non-charitable purpose. As has been pointed out, no one can enforce such a trust. What follows? Ex hypothesi the trustees are not themselves the beneficiaries yet the trust fund is in their hands and they may or may not think fit to carry out their testator's wishes. If so, it would seem that the testator has imperfectly exercised his testamentary power; he has delegated it, for the disposal of his property lies with them not with him. Accordingly the subject matter of the gift will be undisposed of or fall into the residuary estate as the case may be."
32 His Lordship went on to refer to some exceptions to the general rule which are not material for present purposes. It was held that the gift in that case was not to the members of the selected body individually, and would have failed but for the operation of s 37D of the Conveyancing Act 1919 (NSW).
33 Since 1996 in this State, the rule against perpetuities has not been a relevant consideration: S 61 Law of Property Act 1936, but the rule nevertheless prevails that there must be an individual or a group of individuals who can take beneficially, unless the trust is a valid charitable trust.
34 The rule was elaborated on in some more detail by Kitto J in Attorney-General (NSW) v Donnelly [1958] HCA 1; (1958) 98 CLR 538 at 578 - 580, being the decision which gave rise to the unsuccessful appeal in Leahy v Attorney-General (NSW). It is not necessary to set that passage out in full.
35 Of the many cases on the topic, one which I find particularly helpful in present circumstances is Bacon v Pianta [1966] HCA 44; (1966) 114 CLR 634. In that case a testator gave the whole of his estate upon trust to the Communist Party of Australia for its solid use and benefit. The party existed as an unincorporated association. The gift was held for it, as it could not be said that the testator intended to benefit the existing membership of the Communist Party at the time of his death, but was a bequest to the members, both present and future, in trust for the purposes of that party. That was not a charitable purpose, and the gift was void. McTiernan, Taylor and Owen JJ in their joint judgment, in a rather long but helpful passage described the position as follows (638 - 639):
"The difficulty in the case arises from the fact that The Communist Party of Australia is an unincorporated voluntary association. Cases dealing with the problem which arises from such a circumstance with respect to testamentary dispositions are numerous and some of them are, to say the least, not readily reconcilable. However, in the recent case of Leahy v Attorney-General (N.S.W.) [1959] UKPC 1; [1959] A.C. 457; (1959) 101 C.L.R. 611 many of them were referred to and reviewed and the guiding principles were restated. It was accepted that, as had been held in cases such as Bowman v. Secular Society [1917] A.C. 406 and In re Ogden; Brydon v. Samuel [1933] Ch. 678, a gift to an unincorporated association operates, prima facie, as a gift to the individual members at the time when the bequest becomes operative. However, circumstances may appear which preclude this conclusion; it may appear that the disposition amounts to a trust for the benefit of both present and future members, or, that it is not for the benefit of individuals at all but stands revealed as a trust for some purpose or purposes disclosed by the terms of the bequest. In the former of these two cases the gift may well fail as infringing the rule against perpetuities and, in the latter case, it will fail unless the purpose is, in the legal sense, charitable. Indications sufficient to rebut the prima facie presumption may be found to some extent in the form which the gift takes, in the number and disposition of the members of the association, in the subject matter of the gift and in the capacity of the members to put an end to their association and distribute its assets. As was said of the disposition in question in Leahy's Case [1959] UKPC 1; [1959] A.C. 457; (1959) 101 C.L.R. 611: 'In the first place it is not altogether irrelevant that the gift is in terms upon trust for a selected order. It is true that this can in law be regarded as a trust in favour of each and every member of the order. But at least the form of the gift is not to the members, and it may be questioned whether the testator understood the niceties of the law. In the second place the members of the selected order may be numerous, very numerous perhaps, and they may be spread over the world. If the gift is to the individuals it is to all the members who are living at the death of the testator but only to them. It is not easy to believe that the testator intended an "immediate beneficial legacy" (to use the words of Lord Buckmaster [1943] Ch., at p. 436) to such a body of beneficiaries. In the third place, the subject matter of the gift cannot be ignored. It appears from the evidence filed in the suit that "Elmslea" is a grazing property of about 730 acres, with a furnished homestead containing twenty rooms and a number of outbuildings. With the greatest respect to those learned judges who have taken a different view, their Lordships do not find it possible to regard all the individual members of an order as intended to become the beneficial owners of such a property. Little or no evidence has been given about the organization and rules of the several orders, but it is at least permissible to doubt whether it is a common feature of them, that all their members regard themselves or are to be regarded as having the capacity of (say) the Corps of Commissionaires (see In re Clarke; Clarke v. Clarke [1901] 2 Ch. 110) to put an end to their association and distribute its assets. On the contrary, it seems reasonably clear that, however little the testator understood the effect in law of a gift to an unincorporated body of persons by their society name, his intention was to create a trust, not merely for the benefit of the existing members of the selected order but for its benefit as a continuing society and for the furtherance of its work' [1959] A.C., at pp. 485, 486; (1959) 101 C.L.R., at pp. 627, 628. We do not think that this passage was intended as an exhaustive catalogue of the matters which might induce a court to hold that the prima facie conclusion was displaced; they were matters which presented themselves for consideration in Leahy's Case [1959] UKPC 1; [1959] A.C. 457; (1959) 101 C.L.R. 611 and they were thought to lead to the conclusion which is stated in the last sentence of the passage which we have quoted."
36 As mentioned above, a disposition which amounts to a trust for the benefit of both present and future members of an association will not now fail as infringing the rule against perpetuities. However, it will fail if it is, in reality, a trust for some purpose which is not charitable.
37 It is convenient to determine first whether this is a trust for individuals, for it is only if that is so that the vesting order sought by the fifth and sixth defendants in favour of the fifth defendant could be made. If it is not a trust in favour of individuals, then it will be necessary to consider whether the gift is a valid charitable trust.
38 The first thing to be noticed about Clause 1 of the Trust Deed is that it is a trust "to permit (the land) to be used as a polo ground". That is expressed as being in the nature of a power or authority, and allowing the land to be used for a particular purpose. It is not consistent with a disposition of a personal interest.
39 There is, however, an assumption evident from the expression of the subsidiary use as a recreation ground and for other purposes that the land will only be used "by an polo club". However, the contemplated use is by any polo club, not any specifically named polo club, suggesting that the reference to polo is a generic one. In 1904 there was no incorporated polo association or club in existence. Mr Roder, counsel for the 5th and 6th defendants, may be correct in suggesting that that was not then possible under the Associations Incorporation Act 1890. But even the evidence as to the existence at the time of an unincorporated polo club is sparse.
40 However, there are other pointers in the Trust Deed to the intention of the settlors being the creation of a purpose trust rather than a trust for individuals. Both Clauses 1 and 2 of the Trust Deed contemplate that there will be periods, as history has proved, where there may not be a polo club in existence, and the land may be applied for other uses. That must mean that there can be no absolute interest intended for members of any club which may have existed in 1904 or of any club first formed thereafter. The land is not for their absolute benefit but is to remain to permit other clubs which may come into existence later to enjoy it also, and for other persons to do so in the meantime. There can be no vesting in or absolute benefit for the members of any later clubs for the same reason, namely that the intention is that if such a club ceases to exist, the land will be available for use for other purposes. The use of such expressions as "so long as" and "whenever", relating to the existence of a polo club suggests that the land is to be kept in perpetuity for use by such clubs as and when they may exist, but not for the beneficial interest of any particular club or of its members.
41 It is also to be noted that Clause 2 requires the land to be kept for the unrestricted use and enjoyment of a polo club only "if so demanded", thereby recognising other possible uses compatible with that of a polo ground. That is hardly consistent with an intention to confer a beneficial interest in an identified or identifiable group of people.
42 The reference to "any" polo club in Clauses 1 and 3 suggests that the settlors did not intend to benefit any particular club and that there might be uses by a variety of polo clubs either sequentially or at the same time. Although the singular is used in Clause 2, that clause itself does not preclude the simultaneous existence of more than one polo club, a fact that seems to be specifically contemplated by the proviso in Clause 6.
43 It is significant that if and when the land is let, whether for the purposes of sport or recreation, for other public purposes or for agistment, clause 9 of the Trust Deed requires that the trustees apply the rents, income, tolls and profits from the land for a number of purposes therein stated "for the purposes of improving the said land as a polo ground or as a recreation ground.... or in promoting or establishing polo at Strathalbyn". The rents and profits are not to be applied for the purposes of a particular club or association or group of individuals but for the making of improvements and repairs etc for its purpose as a polo ground or as a recreation ground or for other stated purposes.
44 Finally, to allow the trust property to become vested in any particular group of individuals or incorporated body for their or its exclusive use or purposes beneficially is to destroy the remaining possible uses which the settlors clearly intended in clauses 1 and 3.
45 For all these reasons, in my opinion the trust lacks any ascertainable beneficiary, and is a trust for purposes. Insofar as one of those purposes is the playing and promotion of polo, those are purposes which may only arise at some unascertainable time in the future. It is a trust to allow the playing of polo on the land, typical of a purpose trust. It is not intended to confer a beneficial interest in individuals, and it is not for any one polo club to be able to appropriate the land for its own use or to terminate its use as a polo ground and to appropriate the land or the proceeds of sale thereof for some other purpose consistent with the object of such a club.
46 As I take the view that this is a trust for purposes and not for individuals, it is not necessary to enter into the difficulties of which club or clubs might have been intended by the settlors to benefit, whether the class of beneficiaries is sufficiently certain, and what is meant, for example, by a polo club which "shall exist at Strathalbyn" (Clause 2).
47 Nevertheless, the 5th and 6th defendants place some reliance on Re Denley's Trust Deed; Holman v H H Martyn & Co Ltd [1969] 1 Ch. 373. In that case, certain land and money were left on trust for trustees to maintain a sports ground "primarily for the benefit of employees of the company and secondarily for the benefit of such other person or persons (if any) as the trustees may allow to use the same....". The purpose was not charitable, and it seems that Goff J concluded that there were some purpose trusts which would not violate the beneficiary principle. His Lordship distinguished between a purpose trust which is for an abstract or impersonal use and one which, while primarily for a purpose, can be enforced by individuals. He said (at 382 - 383):
"I think there may be a purpose or object trust, the carrying out of which would benefit an individual or individuals, where that benefit is so indirect or intangible or which is otherwise so framed as not to give those persons any locus standi to apply to the court to enforce the trust, in which case the beneficiary principle would, as it seems to me, apply to invalidate the trust, quite apart from any question of uncertainty or perpetuity. Such cases can be considered if and when they arise. The present is not, in my judgment, of that character, and it will be seen that clause 2(d) of the trust deed expressly states that, subject to any rules and regulations made by the trustees, the employees of the company shall be entitled to the use and enjoyment of the land. Apart from this possible exception, in my judgment the beneficiary principle of In re Astor's Settlement Trusts, [1952] Ch. 534; [1952] 1 T.L.R. 1003; [1952] 1 All E.R. 1067 which was approved in In re Endacott, decd. [1959] EWCA Civ 5; [1960] Ch. 232; [1959] 3 W.L.R. 799; [1959] 3 All E.R. 562, C.A. - see particularly by Harman L.J. [1960] Ch. 232, 250 - is confined to purpose or object trusts which are abstract or impersonal. The objection is not that the trust is for a purpose or object per se, but that there is no beneficiary or cestui que trust."
"Where, then, the trust, though expressed as a purpose, is directly or indirectly for the benefit of an individual or individuals, it seems to me that it is in general outside the mischief of the beneficiary principle."
49 It is difficult to avoid the conclusion that Goff J was sanctioning the creation of a non-charitable purpose trust. In doing so, the case has not escaped criticism: see Tidex v Trustees Executors and Agency Co Ltd [1971] 2 NSWLR 453 at 465. Similarly, Gummow J has warned against the use of the expression "purpose" as heralding a new era for the non-charitable purpose trust: Re Australian Elizabethan Theatre Trust; Lord v Commonwealth Bank of Australia [1991] FCA 344; (1991) 30 FCR 491 at 502. It would seem difficult to reconcile Re Denley with Leahy's Case and Bacon v Pianta, a view shared by Evans: "Purpose Trusts - Further Refinements" (1969) 32 MLR 96 at 97 - 99 and by the authors of Jacobs "Law of Trusts in Australia" (6th Edition) at [1008] fn 46(3). Furthermore, a number of problems in its application are referred to by Ford and Lee: "Principles of the Law of Trusts" at [5250].
50 However, even if Re Denley can properly be said to be a broad application of the beneficiary principle, it is clear that there must still be an identifiable class of persons who would have standing to enforce the trust. Such a group was capable of ascertainment at any given time in that case. That cannot be said of this case. It is, for reasons I have already given, more obviously a "purpose" trust. If there is a class of beneficiaries it is vague and indefinite - "any polo club" - and the Trust Deed quite clearly contemplates that there will be periods in the future, as has happened, when there will be no relevant polo club in existence and no-one available to enforce the trusts. As Kitto J said in Attorney-General (NSW) v Donnelly [1958] HCA 1; (1958) 98 CLR 538 at 579, there is a "general principle that a trust must fail unless there is 'somebody in whose favour the court can decree specific performance': Morice v Bishop of Durham (1805) 10 Ves 521; 32 ER 947."
51 I note that whilst Re Denley has been approved by Oliver J in Re Lipinski's Will Trusts [1976] 1 Ch. 235 at 247 - 248, the view was nevertheless taken that the trust in Re Denley was "directly or indirectly for the benefit of an individual or individuals" and was valid "provided that those individuals were ascertainable at any one time and the trust was not otherwise void for uncertainty". In my opinion these criteria are not met in this case.
52 Mr Roder cited Sacks v Gridiger (1991) 22 NSWLR 502 as an application of the Denley principle in Australia. The relevant disposition in question was a direction to use the income of a fund "to pay the school tuition fees for the children of Dr Marcus L Sacks.... while both or either of them remain at school...." It was, in my respectful opinion, properly, held that the trust did not lack human beneficiaries. They were the children of Dr Sacks and the trust was enforceable by them, notwithstanding that Dr Sacks himself might have obtained some practical benefit from the existence of the fund. Upon its proper construction, the trust in this case cannot be said to confer a beneficial interest on individuals or clubs. To the extent that it may do, their continued existence is plainly intermittent and uncertain.
53 It follows that, as this is a purpose trust, the vesting order sought by the 5th and 6th defendants in their counterclaim must be refused.
Whether the "polo" purposes are charitable - the terms of the Deed
54 Before embarking on a consideration of this question, it is necessary to make some further analysis of the purposes of the trust as set forth in the Trust Deed.
55 The purposes stated in clause 1 fall into two convenient limbs. The first limb is to permit the land to be used "as a polo ground". The second is to permit it to be used "as a recreation ground or by any society as a show ground or for the purposes of any sport or sports or games". The use of the land for the second limb purposes is subject to its use by any polo club for the first limb purpose.
56 Some of the defendants argued that upon its proper construction, clause 1 of the Trust Deed, coupled with the clauses that followed, created a trust for the second limb purposes. As such, that was a charitable purpose. By clause 1 of the Trust Deed and those that followed, the trustees were merely to give priority to the first limb purpose as one of the purposes falling within the general charitable descriptor of the second limb.
57 No doubt it would be possible to devise a valid deed whereby land is held for general charitable purposes of sport and recreation, whilst requiring that the land be managed in such a way that the ability to play one particular sport should be retained, or that in allocating particular uses, the trustees should give some priority to a particular sport. Such a provision would not deny the ability to use the land for the wider charitable purposes.
58 However, the effect of the Trust Deed requires, in my opinion, an absolute priority to be given to the first limb purposes in such a way that, if such use is demanded, it is to be kept for the "unrestricted use and enjoyment" of a polo club, to the exclusion, if necessary, of all other uses. The trustees had in contemplation the possibility that the land, by virtue of its priority use for polo, might never be able to be used for any other purpose. In my opinion, that is the effect of the Trust Deed, particularly of clause 2 and of the proviso to clause 6.
59 As was the case in Re Koettgen's Will Trusts [1954] 1 Ch. 252, it is a question of determining, on the proper construction of the deed, the primary class of persons intended to benefit. In that case a testatrix bequeathed her residuary estate on trust "for the promotion and furtherance of commercial education....". The will provided that "The persons eligible as beneficiaries under the fund shall be persons of either sex who are British born subjects and who are desirous of educating themselves or obtaining tuition for a higher commercial career but whose means are insufficient or will not allow of their obtaining such education or tuition at their own expense...".
60 The testatrix further directed that in selecting the beneficiaries "it is my wish that the.... trustees shall give a preference to any employees of John Batt & Co. (London) Ltd. or any members of the families of such employees; failing a sufficient number of beneficiaries under such description then the persons eligible shall be any persons of British birth as the.... trustees may select Provided that the total income to be available for benefiting the preferred beneficiaries shall not in any one year be more than 75 per cent. of the total available income for that year".
61 It was conceded that the trust was for the advancement of education and that commercial education was a proper charitable purpose. It seems to have been assumed by Upjohn J that a trust for the education of the employees of the company or members of their families would lack the necessary degree of public benefit for a valid charitable trust. However, on its proper construction, the will in that case created a broad primary class of eligible persons who satisfied the requirement of public benefit. From that primary class, the trustees were directed to give preference to employees of the company and members of their families. It was therefore a valid charitable trust.
62 That is not this case. On the proper construction of the Trust Deed, the settlors' intent was that if circumstances dictate, the land should be used solely for polo, to the exclusion of other activities. It is on that basis that the provisions of the Trust Deed relating to the use of the land as a polo ground must be considered as to whether they create a valid charitable purpose.
63 A second point which needs to be noted about the terms of the Trust Deed is that the land is not merely held on trust for use by the public generally as a polo ground. The power to exclude other uses is effectively conferred upon a polo club or clubs, and the predominating use as a polo ground is restricted to use by a polo club or clubs. That power and the restriction to use by polo clubs is derived not only from clause 1 but particularly from clauses 2, 3 and the proviso to clause 6. Whilst it may be possible for members of the public to watch polo games, the predominating use of the land for the purposes of polo would appear to be confined to polo clubs and their members.
64 This is to be contrasted with the other or second limb uses to which the land may be put. There is no restriction on who may use the land as a recreation ground. The land may be used by any society as a show ground. In that case the fact that some organisation is necessary merely reflects the need for some body or society to coordinate a show in which members of the public may participate or which they may attend, to the substantial benefit of the public in a rural community. Finally, there is no restriction on who may use the land "for the purposes of any sport or sports or games".
65 These features of the Trust Deed are also important when it comes to consider whether the purposes are charitable.
66 It remains to make some observations from the material before the Court as to the organisation of the sport of polo. If polo is to be played in any meaningful form, a polo club must obtain affiliation with the Australian Polo Association Incorporated, and must maintain a minimum standard of insurance of various types prescribed, in this State, by the South Australian Polo Association Incorporated. If official tournaments are to be played, it can only be with clubs affiliated with the Australian Polo Association Incorporated. The only clubs affiliated with the South Australian Polo Association are the Strathalbyn Polo Club Inc (the 7th defendant), the Adelaide Polo Club, the Penola Polo Club and the Wentworth Polo Club. The latter, I infer, is based in New South Wales, although reasonably close to the South Australian border. The Court has no information as to the extent of membership of any of these clubs, or indeed of the 5th and 6th defendants. Whilst I have no doubt of the devotion to polo of members of the three polo clubs or associations parties to this action, there is nothing to indicate that membership of any of them or of the other polo clubs covers a significant proportion or cross-section of the public in South Australia or living in or near Strathalbyn. As will be seen, far from being open to the public, they all have substantial restrictions on membership.
67 Because I consider the first limb of the trusts, namely the "polo" purposes, to be the predominating and possibly sole use to which the land may be put, it is necessary first to consider whether that purpose, as expressed in the Trust Deed, is one which the law recognises as a charitable purpose. If it is not, the trust for that purpose will be invalid.
68 Of the four well-recognised categories of charitable trusts identified by Lord Macnaughten in Income Tax Special Purposes Commission v Pemsel [1891] UKHL 1; [1891] AC 531, namely -
(4) Trusts for other purposes beneficial to the community not falling under any of the preceding heads,
no party suggested that the provisions of the Trust Deed could be justified as a charitable trust under any but the fourth category. That category is generally limited to purposes within the spirit or intendment of the preamble to the Statute of Charitable Uses 1601 (43 Eliz I, c4): Monds v Stackhouse [1948] HCA 47; (1948) 77 CLR 232 at 241. In that case the provision of a hall or theatre for the holding of concerts and for the production of drama entertainments and the holding of meetings of a cultural or educational value was held to be charitable.
69 The general rule is that trusts for mere sport will not be charitable. This has its foundation in a decision of the Court of Appeal in Re Nottage [1895] 2 Ch. 649. The testator bequeathed a fund to the Yacht Racing Association of Great Britain and directed that out of the income the trustee should purchase a cup to be given to the most successful yacht of a certain class for the season. The testator's stated object in giving the cup was "to encourage the sport of yacht-racing". The gift was held to be void. Linley LJ said (at 655 - 656):
"It is a prize for a mere game.... Now, I should say that every healthy sport is good for the nation - cricket, football, fencing, yachting, or any other healthy exercise and recreation; but if it had been the idea of lawyers that a gift for the encouragement of such exercises is therefore charitable, we should have heard of it before now. I do not attempt to draw the line. The authorities shew that sometimes a case is a little on one side of it, sometimes a little on the other; but I deal with the present case on the broad ground that I am not aware of any authority pointing to the conclusion that a gift for the encouragement of a mere sport can be supported as charitable."
70 That decision has been followed in a number of cases. In Re Patten; Westminster Bank Ltd v Carlyon [1929] 2 Ch. 276 a bequest to the Sussex County Cricket Club on trust to pay the interest yearly to the Nursery Fund was held by Romer J to be a fund for the encouragement of the game of cricket and nothing else (at 289). Relying on Re Nottage, he held the gift to be invalid. In Peterborough Royal Foxhound Show Society v IRC [1936] 1 All ER 813 a society formed to promote the interests of foxhound breeding and to hold annually a foxhound show was held not to be established for charitable purposes, as not directly benefiting the community as a whole (at 815 - 816). Although it did not relate to sport, a trust for promoting Welsh interests, discussing all questions affecting Welsh interests, fostering the study of the Welsh language by lectures on Welsh history, literature, music and art, maintaining a library of Welsh literature and for other similar purposes to promote the "moral, social, spiritual and educational welfare of Welsh people" was held not to be of a charitable character in Williams' Trustees v IRC [1947] UKHL 1; [1947] AC 447.
71 In IRC v City of Glasgow Police Athletic Association [1953] UKHL 1; [1953] AC 380, a police athletic association providing recreation for the members was held to be non-charitable.
72 Finally, of the English cases, the House of Lords in IRC v McMullen [1980] UKHL 3; [1981] AC 1 held that a trust established by the Football Association "to organise or provide or assist in the organisation or provision of facilities which will enable and encourage pupils at schools and universities in any part of the United Kingdom to play association football or other games or sports and thereby to assist in ensuring that due attention is given to the physical education and development and occupation of their minds...." was held to be charitable as being not for sporting but for educational purposes, the House of Lords reinforcing earlier decisions that the mere playing of games or enjoyment of amusement or competition was not per se charitable, nor necessarily educational (Lord Hailsham L.C., at 15, with whom Lord Diplock, Lord Salmon and Lord Russell agreed; Lord Keith at 21).
73 Re Nottage has been applied by the High Court of Australia in Royal Agricultural and Industrial Association v Chester (1974) 48 ALJR 304; 3 ALR 486. A testator left the residue of his estate to an organisation for "improving the breeding and racing of Homer Pigeons". That did not, either by analogy or by reason of its own character, fall within the spirit and intendment of the preamble to the Charitable Uses Act 1601.
74 The reliance on Re Nottage in that decision has been criticised in a country "so ardently convinced of the public value of sport as Australia is": Ford and Lee: "Principles of the Law of Trusts" at [19510]. Nevertheless, subject to the application of s 69C of the Trustee Act 1936, to which reference is made below, Re Nottage remains the law in Australia.
75 A trust bearing obvious similarities to the present was held not to be charitable by Demack J in the Supreme Court of Queensland in Re Hoey [1994] 2 Qd. R 510 at 512 - 513. The trusts in question related to some land, the principal purpose of the trusts being:
"1. To provide the said land for the express purpose of allowing to be conducted thereon registered horseracing.
2. So far as it does not interfere or conflict with registered horseracing, to allow any other sporting body to use the said land.
3. To stand possessed of the said land to allow the same to be used for any other purpose not conflicting with the first and second purposes abovementioned."
76 Thus, if the Trust Deed in this case is regarded as merely promoting the sport of polo, it will not be a valid charitable trust.
77 On the other hand, where the trust is to encourage sport for some charitable end (as in IRC v McMullen supra) or where the trust will establish sporting or recreational facilities which will benefit the public, the position may be different. There are cases in which trusts to establish sporting grounds have been upheld as charitable.
78 In Re Hadden; Public Trustee v More [1932] 1 Ch. 133 concerned trust to establish playing fields, parks and gymnasiums for working people. Although Clauson J found support for the trust's charitable nature in various English legislation, he also expressed himself in terms of general principles (at 142):
"....I ought to add that I am of opinion that the fact that the provision of prizes and like means for the mere encouragement of sport has been held not to be a charitable purpose (see In Re Nottage [1895] 2 Ch. 649) offers no obstacle in the way of my conclusion. I see no trace in the present will of a desire to encourage mere sport; the health and welfare of the working classes is obviously the dominant object in the testator's mind."
79 Clauson J went on to conclude that the working classes were a sufficient section of the public to meet the public benefit test, to which further reference is made below. It was the "health and welfare of the working classes" that was the relevant object of the trust". That approach, so far as the playing of polo is concerned, would not assist the saving of the trust in this case. As Ford and Lee (ibid) say of trusts for recreation facilities, "if an additional charitable flavour can be detected amongst the objects, so much the better" (at [19530]).
80 Further, In Re Hadden has been taken to attend for the proposition that if a trust to establish a sporting or recreational facility can also be said to have some public benefit, it will be valid as a charitable trust. An example is a trust to provide a sporting or recreational facility for the inhabitants of a particular locality. In IRC v Baddeley [1955] UKHL 1; [1955] AC 572, certain buildings, playing fields and other land were placed on trust for ".... the promotion of the moral social and physical well-being of persons resident in the County Boroughs of West Ham and Leyton.... who for the time being are.... members or likely to become members of the Methodist Church and of insufficient means otherwise to enjoy the advantages provided by these presents and by the provision of facilities for religious social and physical training and recreation and by promoting and encouraging all forms of such activities as are calculated to contribute to the health and well-being of such persons....". A majority of the House of Lords held the trusts to be not charitable. They did not fall within the fourth category in Pemsel's Case, since they were expressed in language so vague as to permit the property to be used for purposes which the law did not regard as charitable. It had not been argued that the trusts were for the advancement of religion, and they were not for the relief of poverty or the advancement of education. The majority considered the object of the trust to be the establishment of a "community centre": e.g. Viscount Simonds at 586, and that that was not a charity. As the authors of "Tudor on Charities" (1984, 7th edition) point out at 122:
"The majority decision is no authority for the proposition that a trust to provide recreational facilities for the Methodists (or other limited classes of persons such as members of the Church or (sic) England, Roman Catholics, or Jews, or persons engaged in specified trades, businesses or callings) resident in a defined area is not charitable; and there seems to be no reported decision which establishes that proposition."
"....I think it right to say that, in my opinion, a gift of land for use as a recreation ground by the community at large or by the inhabitants of a particular geographical area may well be supported as a valid charity. But I would reserve my opinion in a case in which the beneficiaries are a class determined, for instance, by adherence to a particular religion or by employment in a particular industry or by particular employers."
"I think, however, that a trust to be valid under this head would normally be for the public or all members of the public who needed the help or facilities which the trust was to provide. The present trust is not for the public."
83 In my respectful opinion the views, although obiter, of Viscount Simonds and Lord Somervell are correct. The difficulty in each case is to determine whether there is a sufficient element of general public utility. For reasons which appear below, it appears that this would not be met if the use as a particular recreational facility is limited to a relatively small class defined by membership of a club or association.
84 In Brisbane City Council v Attorney-General for Queensland [1979] AC 411 a trust was established by the transfer of some land from a show society to the Brisbane City Council upon the following conditions:
"(a) The area to be set apart permanently for showground, park and recreation purposes;
(c) The show society to be granted the exclusive use of the ground without charge for a period of two weeks in each and every year, for the purposes of and in connection with the district annual show."
85 Argument centred on whether the trust was primarily for the promotion of agriculture, and if so, whether this made any difference to whether the trust was for a charitable purpose. The Privy Council considered that a trust for "showground purposes", as it encouraged agriculture, could properly be construed as a trust for the promotion of agriculture, and as such, as a charitable activity beneficial to the community. The "park and recreation purposes" were also charitable. Paragraph (a) of the purposes therefore constituted an exclusively charitable trust. The validity of that trust was not impaired by the terms of paragraph (c). However, it was a cautious embracing of the notion that paragraph (a), without reference to agriculture, constituted a valid trust. When speaking of some observations of Campbell J in the Full Court of the Supreme Court of Queensland, Lord Wilberforce said (at 424):
"But the judge proceeds unequivocally to hold that the purposes expressed in the whole phrase 'park, recreation or showground purposes' are beneficial to the community within the fourth category of charitable purposes - without specific reliance upon the promotion of agriculture. Their Lordships while not dissenting from this approach are of opinion that, in so far as the judgment of Hoare J (the trial judge) does place such reliance, it is on firmer ground."
86 In Re Mair (Deceased) [1964] VicRp 64; [1964] VR 529 Adam J upheld as a charitable trust a devise of land for use as a public park "to be for the use of the public generally for picnic parties, and to provide facilities for the comfort and amusement of picnickers in the said park, and in particular to provide spaces for picnic parties and for the playing of football, cricket, baseball and other games, provided that such spaces be used purely for the amusement of the public and not for organized competitions between outside bodies". Adam J discussed a number of authorities, including Re Hadden and the observation of Viscount Simonds in Baddeley's Case quoted above. He concluded (at 534):
"In the face of the authorities and the absence of any authority indicating that a trust of this nature would not be charitable, I feel bound to regard the trust, as I construe it, as a charitable trust. I am the more disposed to do so as I would think that the promotion of physical health has its analogy in relief of sickness, undoubtedly a charitable purpose: see per Jenkins, L.J., in Baddeley v. Inland Revenue Commissioners, [1953] 2 All E.R. 233."
87 In City of Burnside v Attorney-General of South Australia (1993) 61 SASR 107 Legoe J (with whom other members of the Full Court agreed on this point) held that what is now the olympic sports field at Kensington was held pursuant to a charitable trust where the expressed purpose of the trust was for a "recreation ground" (at 135). He cited Re Hadden and Re Mair in support of his conclusion. Although Re Hadden must be applied with some care, given the express finding that the trusts in that case were not for the mere encouragement of sport but for the health and welfare of the working classes, the reasonable inference from all the circumstances was that there was sufficient public benefit in a trust for a recreation ground for it to fall within the fourth category in Pemsel's Case.
88 It is possible now to summarise the effect of the cases which have been reviewed thus far:
1. At common law, a trust merely for the promotion of a sport will not be a valid charitable trust.
2. A trust for the promotion of a sport where it can be seen as but part of or as an adjunct to a broader educational purpose, or for the promotion of the general health and welfare of a sector of the community, or as an adjunct to some other charitable purpose, may be a valid charitable trust.
3. A trust for the establishment of a sports ground or recreational facilities will be charitable, provided that it is for use by the community at large or is of general public utility.
89 I have already explained why, in my opinion, it is necessary to consider the first limb of the purposes in the Trust Deed independently of the others. For reasons which I have already explained, the first limb does not confer a beneficial interest in the land on a particular polo club or clubs, although the reference to polo clubs is important. Reading the Trust Deed as a whole, it is possible to discern a trust for the advancement of the game of polo, rather than for the benefit or advancement of a particular club or clubs. That is evident from the statement of the first limb in clause 1 "to permit the same to be used as a polo ground". The proviso to clause 6 ensures the preservation of the land "for the purposes of polo" and "for the purposes of the game of polo". In particular, clause 9 enables the trustees to apply any income derived from the land "in promoting or establishing polo at Strathalbyn".
90 The significance of the reference to polo clubs is not that in some way they benefit directly from the trust, but that (a) it is the decision of a polo club which can effectively preclude the use of the land for other purposes, and (b) it indicates the class of people who may use the land for the purposes of playing polo.
91 In my opinion, the first limb of the trust is for the purposes of promoting the sport of polo and no more. That is not as an adjunct to any other charitable purpose. As such, it is not a valid charitable trust.
92 If I am wrong in that, and the trust is properly characterised as a trust for the establishment of a polo ground, it will only survive as a charitable trust if it has some general public utility. The cases to which I have referred and which require that qualification are no more than a manifestation of the requirement that, in a trust for any charitable purpose, there must be an element of public benefit.
93 It is sufficient if the public benefit is in fact for an appreciable section of the public. Oppenheim v Tobacco Securities Trust Co Ltd [1950] UKHL 2; [1951] AC 297 provides what has since been accepted as the relevant test for the scope of public benefit. Trustees were directed to apply certain income in providing for "the education of children of employees or former employees" of a British limited company or any of its subsidiary or allied companies. The number of eligible employees was over 110,000. The House of Lords (by majority) held that the nexus, being employment by particular employers, did not satisfy the test of public benefit to establish the trust as a charitable trust. Lord Simonds said (at 306):
"[T]he question is whether that class of persons can be regarded as such a 'section of the community' as to satisfy the test of public benefit. These words 'section of the community' have no special sanctity, but they conveniently indicate first, that the possible (I emphasize the word 'possible') beneficiaries must not be numerically negligible, and secondly, that the quality which distinguishes them from other members of the community, so that they form by themselves a section of it, must be a quality which does not depend on their relationship to a particular individual. It is for this reason that a trust for the education of members of a family or, as in In re Compton [1945] Ch. 123, of a number of families cannot be regarded as charitable. A group of persons may be numerous but, if the nexus between them is their personal relationship to a single propositus or to several propositi, they are neither the community nor a section of the community for charitable purposes."
94 Just as the relevant section of the public must not depend on relationship to a particular individual, such as a member of a family, so the members of a private club or association will not form a relevant section of the community to satisfy the test of public benefit. In Verge v Somerville [1924] AC 496 Lord Wrenbury said, on behalf of the Privy Council, (at 499):
"To ascertain whether a gift constitutes a valid charitable trust so as to escape being void on the ground of perpetuity, a first inquiry must be whether it is public - whether it is for the benefit of the community or of an appreciably important class of the community. The inhabitants of a parish or town, or any particular class of such inhabitants, may, for instance, be the objects of such a gift, but private individuals, or a fluctuating body of private individuals, cannot."
95 The House of Lords in Dingle v Turner [1972] UKHL 2; [1972] AC 601 considered (obiter) the distinction between personal and impersonal relationships as being unsatisfactory, as was the concept of "a fluctuating body of private individuals". Speaking on behalf of the House of Lords, Lord Cross of Chelsea, having reviewed a number of English cases, said (at 623):
"That reasoning - based on the distinction between personal and impersonal relationships - has never seemed to me very satisfactory and I have always - if I may say so - felt the force of the criticism to which my noble and learned friend Lord MacDermott subjected it in his dissenting speech in Oppenheim. For my part I would prefer to approach the problem on far broader lines. The phrase a 'section of the public' is in truth a vague phrase which may mean different things to different people. In the law of charity judges have sought to elucidate its meaning by contrasting it with another phrase: 'a fluctuating body of private individuals'. But I get little help from the supposed contrast for as I see it one and the same aggregate of persons may well be describable both as a section of the public and as a fluctuating body of private individuals. The ratepayers of the Royal Borough of Kensington and Chelsea, for example, certainly constitute a section of the public; but would it be a misuse of language to describe them as a 'fluctuating body of private individuals'? After all, every part of the public is composed of individuals and being susceptible of increase or decrease is fluctuating. So at the end of the day one is left where one started with the bare contrast between 'public' and 'private'. No doubt some classes are more naturally describable as sections of the public than as private classes while other classes are more naturally describable as private classes than as sections of the public. The blind, for example, can naturally be described as a section of the public; but what they have in common - their blindness - does not join them together in such a way that they could be called a private class. On the other hand, the descendants of Mr. Gladstone might more reasonably be described as a 'private class' than as a section of the public, and in the field of common employment the same might well be said of the employees in some fairly small firm. But if one turns to large companies employing many thousands of men and women most of whom are quite unknown to one another and to the directors the answer is by no means so clear. One might say that in such a case the distinction between a section of the public and a private class is not applicable at all or even that the employees in such concerns as I.C.I. or G.E.C. are just as much 'sections of the public' as the residents in some geographical area. In truth the question whether or not the potential beneficiaries of a trust can fairly be said to constitute a section of the public is a question of degree and cannot be by itself decisive of the question whether the trust is a charity. Much must depend on the purpose of the trust. It may well be that, on the one hand, a trust to promote some purpose, prima facie charitable, will constitute a charity even though the class of potential beneficiaries might fairly be called a private class and that, on the other hand, a trust to promote another purpose, also prima facie charitable, will not constitute a charity even though the class of potential beneficiaries might seem to some people fairly describable as a section of the public."
96 Those remarks were obiter, but they illustrate the difficulty in determining what constitutes an appropriate section of the community for the purpose of determining whether there is adequate public benefit in order to constitute a trust as a charitable trust. Courts have tended not to recognise public benefit where benefits were conferred upon a group related to or employed by one or a group of persons, perhaps as representing a privileged and closed group to which one is admitted either by birth, employment or some other privilege. On the other hand, there is an acknowledged public benefit where the beneficiaries consist of a relatively small group suffering a disability of some kind over which they have no control and which might equally be brought about by an accident of birth.
97 Public benefit is an elusive quality. It is not always open to sound reason, but is a quality often plainly recognised when it exists. In some cases the trust may confer tangible benefits on those constituting a relevant group. In other cases the benefit may be much more indirect, such as the provision of community facilities which might otherwise have to be provided out of some form of taxation. Thus, in Monds v Stackhouse [1948] HCA 47; (1948) 77 CLR 232 a bequest to the Corporation of the City of Launceston "to be held by the Corporation as a nucleus of a fund to provide a suitable hall or theatre for the holding of concerts to provide music for the citizens of the City and for the production of drama entertainments and the holding of meetings of a cultural or educational value" was held to be charitable. Latham CJ (at 242) relied particularly on the fact that the bequest was for a purpose which the Corporation was empowered to provide out of its rate revenue, likening it to trusts with respect to bridges, ports, havens, highways etc mentioned in the preamble to the Statute of Charitable Uses 1601. Dixon J expressed a similar view at 246.
98 One other case will illustrate the way in which a benefit may be conferred and whether, in a given case, it is of public benefit. It is Re Queensland State and Municipal Orchestra Endowment Fund (Unreported), 25 August 1999, Supreme Court of Queensland, Williams J; BC9905299. A fund had been created "for the purpose of forming a perpetual Endowment Fund for the benefit of a public orchestra to be called the Queensland State and Municipal Orchestra....". The income of the fund was to be applied "for the purpose of maintaining and carrying on the orchestra in manner hereinafter appearing....". The Queensland State and Municipal Orchestra had long since ceased to function. The trustee applied to the court for approval of a cy pres scheme. This could only be achieved if the original trust was held to be charitable. In one sense, the trust could be held to benefit those who were interested to join together to play orchestral music. However, the court held that there was a different public benefit, and on its proper construction the trust was a trust for the advancement of education, namely the musical education of the public. Williams J said (at [39]):
"Here there is no doubt that both the musicians comprising the orchestra and the public audience obtain pleasure and perhaps even amusement from the performance by the orchestra of orchestral and choral works. But such pleasure and amusement is but an inevitable concomitant of the purpose of raising the artistic taste and musical appreciation of the citizens of Brisbane - the public - which is a recognised educational purpose. The fact that some of the income may be used to maintain the orchestra and meet its expenses only means in the context that the income may be expended for the purpose of enabling the orchestra to carry out the purpose for which it was formed, namely the musical education of the public. The maintenance of the library is also clearly a charitable purpose being for the advancement of musical education. Its control by a public orchestra provides the necessary public element. If the clauses in the Deed referring to the use of income for purposes of maintaining the orchestra and meeting its expenses are read in that way then trust funds may not be used for a non charitable purpose. If the funds were so utilized they would only be used for a purpose which was concomitant or incidental to the main charitable purpose. That conclusion can be reached in my view without recourse to s103 of The Trusts Act. But if necessary I am also of the view that s103 could be relied on to support the conclusion I have otherwise reached. There is no doubt that musical appreciation is a form of recreation or other leisure time occupation and here the necessary public element is established."
99 Finally, for reasons which will become apparent, Thompson v Federal Commissioner of Taxation [1959] HCA 66; (1959) 102 CLR 315 is a case of some importance in the resolution of this aspect of the case. A testatrix had left portion of her residuary estate to the William Thompson Masonic Schools, Baulkham Hills. Students at the schools were restricted to the children of brethren of the Masonic Order in New South Wales who were prevented by incapacity from supporting their children, and children of deceased brethren of the Masonic Order in New South Wales. Membership of the order was gained through the election by existing members of the Order in accordance with the rules. The question was whether that portion of the estate was exempted from estate duty as being bequeathed for "public educational purposes in Australia" ((s 85) Estate Duty Assessment Act 1914). The High Court (Dixon CJ, Fullagar and Kitto JJ, McTiernan and Menzies JJ dissenting) held that the gift lacked the element of public benefit or advantage necessary to secure exemption. In the leading judgment of the majority, Dixon CJ placed significant weight on the restrictive entry to the Masonic Order. Among a number of cases referred to, he relied particularly (at 322) on what Jenkins LJ had said in Re Scarisbrick; Cockshott v Public Trustee [1951] Ch. 622 at 649:
"An aggregate of individuals ascertained by reference to some personal tie (e.g., of blood or contract), such as the relations of a particular individual, the members of a particular family, the employees of a particular firm, the members of a particular association, does not amount to the public or a section thereof for the purposes of the general rule." (Dixon CJ's italics)
100 Dixon CJ also referred with approval to Re Income Tax Acts (No. 1) (1930) VLR 211 where the Full Court of Victoria had decided that a benevolent asylum to which none other than Freemasons and their wives or the widows of Freemasons were eligible for admission was not a "public benevolent asylum".
101 The former Chief Justice was fully alive to the difficulty in applying the requirement of public benefit to different situations. He said (at 321):
"The tendency of the trust must be to benefit the public, a condition that is satisfied if it tends to the benefit of the public at large, or a class or section of the public. The trusts may be limited in their operations by reference to locality, to conditions of people, to their disabilities, defects or misfortunes and by reference to many other attributes of men and things, yet the trusts may retain their 'public' character. Not a little difficulty has been felt in defining the conception of 'public', 'public charity' or 'public benefit' which this involves but the contrast is, of course, to private advantage. It is not the occasion to enter upon the discussion of the difficulty; it is enough to refer to some of the leading modern cases dealing with it...."
He then proceeded to refer to a number of the leading cases. He concluded that the trust lacked the necessary element of public benefit or advantage, notwithstanding the large membership of the Masonic Order in New South Wales. Of some significance was the fact that it was bound together as a voluntary association to which the members were admitted by election.
102 I return to the Trust Deed and to the evidence placed before the Court. There is nothing in the material before me to indicate that the playing of polo confers a benefit on any section of the community other than the participants, and perhaps by way of entertainment for a small group of spectators. Furthermore, it cannot be said that the provision of a polo ground is typical of the public services provided by government or local government bodies for the benefit of the local or State community. Indeed, the provision of polo facilities by a local government council would probably be regarded as discriminatory and catering only to sectional interests, even if it was within the power of a local government body to provide it.
103 That leaves the relevant class of those who benefit, as being those who participate, namely the members of any polo club. There are three incorporated bodies represented in these proceedings who claim to provide facilities for the playing of polo or for the promotion of that sport. There is nothing to suggest that they are not representative of the manner in which the sport is organised and how polo clubs are constituted.
104 When the SPC, the 7th defendant, was incorporated in 1994 its membership comprised the President and his wife, the Executive Director and his wife, the Board of Directors and their wives and the National Board members and their wives. The President held office for life or until resignation or a resolution of three-fourths of the majority of the Board of Directors. The rules were not entirely clear as to the method of appointment of the Executive Director. Presumably he was appointed by the Board of Directors. The Board of Directors was appointed by the President in consultation with the existing Board members, and the National Board was appointed by the Board of Directors for a limited term. They were to be appointed "on the basis of their evident supportive attitude towards the Association" (Rule 7.2). It is difficult to imagine a more tightly closed organisation to which members of the public might aspire to join.
105 Those rules were amended in 1999, following which membership was expanded "to all persons who have been elected or shall hereafter be elected members and who continue to be members....". The rules presently provide for the committee to make and repeal By-laws, including By-laws as to the election, resignation, and expulsion of members" (Rule 19.1). The By-laws provide for ordinary members and playing members, which attract different subscription rates, but all candidates for membership must be proposed by one member, seconded by another and must be personally known to the seconder. The names of candidates must be displayed and election to membership is by ballot of the committee, with two negative votes excluding the candidate from membership (By-law 8.1). A member may be expelled by the committee in accordance with procedures laid down in By-law 12.
106 Membership of the 6th defendant, the Outback Polo Club Inc is open to "any Polo Team". However the decision granting or declining the application for membership rests with the Board of Directors (Rule 3.3). The Board of Directors is appointed by the Executive Director in consultation with existing Board members (Rule 6.1).
107 So far as the Polo Grounds Association of Strathalbyn Incorporated is concerned (the 5th defendant) Rules 3.1 and 3.2 provide:
"3.1 Membership to (sic) the Association shall be open to any polo club situated in the Township of Strathalbyn and any polo team or individual polo player usually resident in the Township of Strathalbyn.
3.2 Membership to (sic) the Association shall be made by an application in writing addressed to the Board of Directors whose decision shall be final as to the acceptance of the application for membership."
108 Membership is only for a twelve month period, but may be renewed (Rule 3.3), and the Board of Directors may resolve to expel a member on certain stated grounds (Rule 3.4).
109 Although the membership rules of each of the three clubs are quite different, they have a common feature namely that admission to membership and exclusion from membership is vested in the relatively small Board of Directors or committee of management. It is not open to any member of the public who wishes to join. Such provisions are not surprising. They are common to a great many sporting and other associations of persons who have a common interest. There is no reason to think that they are not typical of any polo club which might wish to avail itself of the privilege of playing polo on the land in question. It indicates, however, that those who may benefit from the provisions of the first limb of the Trust Deed constitute a highly restricted class, in respect of which Thompson v Federal Commissioner of Taxation (supra) is particularly relevant. It is not a class which is open to members of the public or any significant section of it. The class of persons on whom the benefit is conferred is a group or groups of individuals who have a common interest in the playing of polo and who have been admitted to membership by the controlling body of the organisation. Even if there were other less stringent restrictions on or qualifications for membership, I doubt whether the class of beneficiaries would meet the necessary public benefit test.
110 For these reasons, the first limb of the Trust Deed fails to meet the public benefit test.
111 Therefore, in my opinion, not only does the first limb fail as being a trust for the promotion of a sport, but if it were properly construed as providing facilities for the playing of polo, it fails for lack of any public benefit. It is not a trust for charitable purposes.
Section 69C, Trustee Act 1936
112 Section 69C of the Trustee Act provides as follows:
69C. (1) Any trust (whether constituted before or after the enactment of this section) to provide, or assist in the provision of, recreational facilities for the public benefit is a charitable trust.
(2) This section does not apply to recreational facilities unless -
(a) the facilities are provided with the object of improving the conditions of lift of the persons for whom they are primarily intended; and
(i) those persons have need of those facilities by reason of their youth, age, infirmity or disablement, poverty or social and economic circumstances; or
(ii) the facilities are to be available to the general public, or a substantial section of the general public."
113 This section might possibly save the trust from invalidity if its only problem were that, by means of the provision of recreational facilities, it was a trust merely for the promotion of sport or of polo in particular, and hence invalid. It is not necessary to decide that question. For reasons which I have already given, the element of public benefit necessary under s 69C, is lacking. Furthermore, there is nothing before me which would suggest that subsection (2)(b) could be complied with in respect of this limb of the trust, whatever inference might be able to be drawn in relation to subsection (2)(a).
114 The second limb is "to permit the.... land to be used as a recreational ground or by any society as a show ground or for the purposes of any sport or sports or games as the trustees....shall think fit." It is clear from Brisbane City Council v Attorney-General for Queensland (supra) that the use as a show ground and recreation ground without qualification or restriction on the use will constitute a valid public charitable trust. Re Mare (deceased) (supra) would support that view, and would also support the validity of that aspect of the second limb which allows the land to be used for the purposes of any sport or sports or games. City of Burnside v Attorney-General of South Australia (supra) would also support the validity of the recreation ground use and, to the extent that recreation use includes the playing of sports or games, the use of the land for any sport or games.
115 It seems to me that there are two ways in which the test of public benefit is satisfied in respect of the second limb of the trusts. One is the promotion of the physical health, well-being and recreation of those who participate in such activities, and in respect of these second limb activities, there is no restriction in the Trust Deed on who may so participate. The second way is the relief on the public purse by the provision of such facilities, being facilities which might otherwise have to be provided out of rate revenue by the Corporation of the Town of Strathalbyn. Whilst it is by no means decisive as to the validity of the trusts, it is to be noted that the settlors contemplated the land becoming vested in the Corporation, subject to the same trusts, as no doubt being a facility appropriate to be provided otherwise by the Corporation. In my opinion the second limb constitutes a valid charitable trust.
116 If there were any doubt about that, I would have no hesitation in applying the provisions of s 69C of the Trustee Act. The trust is plainly a trust to provide or assist in the provision of recreational facilities for the public benefit. The facilities are provided with the object of improving the conditions of life of members of the Strathalbyn community and of others who may seek to use the facilities. Whilst there is no evidence that members of the community have need of those facilities by reason of their youth, age, infirmity, or disablement, poverty or social and economic circumstances, the facilities, at least in relation to the second limb, are, under the terms of the Trust Deed, to be available to the general public. Thus, in my opinion the second limb would also constitute a charitable trust under s 69C of the Trustee Act.
117 Having upheld the validity of the second limb, I should also point out that that would not necessarily preclude the use of the land for the playing of polo as being included in "recreation" and the playing of "sports". But that cannot be to the exclusion of other second limb activities. The decision on such matters is for the trustees or their delegates.
Section 69A, Trustee Act 1936
118 Prior to the enactment of s 69A of the Trustee Act, trusts enabling the land to be applied for both valid and invalid purposes would have failed: Morice v Bishop of Durham [1804] EngR 179; (1804) 9 Ves 399 at 406; [1804] EngR 179; 32 ER 656 at 659. Section 69A of the Trustee Act provides:
"Inclusion of non-charitable and invalid purposes not to invalidate a trust
69A. (1) Where the purposes for which property is required or permitted to be applied in pursuance of a trust (whether constituted before or after the enactment of this section) are partly charitable, and partly non-charitable and invalid, the trust shall not be held to be invalid, but shall be construed as if no provision had been made requiring or permitting the application of property for purposes that are non-charitable and invalid.
(2) This section does not apply to any trust declared by the will of any testator dying before, or to any other trust declared before, the enactment of this section, if before the enactment of this section -
(a) the trust has been declared to be invalid by any order or judgment made or given in legal proceedings; or
(b) property subject to the trust or income therefrom has been paid or conveyed to, or applied for the benefit of, or set apart for, the persons entitled to that property or income by reason of the invalidity of the trust."
119 That section has been held to apply to a number of situations. It is not necessary to traverse the many situations in which the section might have application. In this case it is relatively simple. The valid and invalid purposes are severally expressed and would be readily severable by merely disregarding those parts of the Trust Deed which provide for the playing of polo and for the priority to be given to polo clubs. By virtue of s 69A, the trustees are entitled to disregard the invalid parts of the deed: Re Griffiths [1926] VicLawRp 33; [1926] VLR 212. It does not require any particular surgery to the Trust Deed. It merely has the effect of validating what would otherwise be an invalid trust, enabling the Trust Deed to be construed so as to empower the trustees to permit the land to be used only for the valid purposes: In the Estate of Cole, deceased (1980) 25 SASR 489 at 498.
120 On the application of the plaintiff there will be a declaration that the Trust Deed does not create any valid trust in favour of any ascertained or reasonably ascertainable beneficiary, a declaration that the polo playing provisions of the Trust Deed do not create any valid charitable trust either at common law or under s 69C of the Trustee Act 1936, a declaration that the provisions of the Trust Deed create a valid charitable trust to permit the land to be used as a recreation ground or by any society as a show ground or for the purposes of any sport or sports or games as the trustees or any persons acting lawfully on their behalf shall think fit, a declaration that in determining the uses to which the land may lawfully be put the trustees are not obliged to afford any preference or priority to any polo club or to the playing of polo, and a declaration that the additional land acquired in 1931 is subject to the trust and to the provisions of the Trust Deed. There will be an order that Caveat No 346531 dated 15 August 1997 registered by the 7th defendant on the titles to the land be withdrawn or removed. There will be an order that the counterclaim of the 5th and 6th defendants be dismissed. I will hear the parties further as to the precise terms of the order and as to costs.
STRATHALBYN SHOW JUMPING CLUB INC
MAYES & ORS No. SCCIV-99-929 [2001] SASC 73
(1966) 114 CLR 634
(1959) 102 CLR 315
(1980) 25 SASR 489
(1991) 22 NSWLR 502
(1993) 61 SASR 107
(1958) 98 CLR 538
(1948) 77 CLR 232
(1974) 48 ALJR 304
(1991) 30 FCR 491
(1980) 146 CLR 493
(1995) 183 CLR 552
(1998) 194 CLR 247