TAYLOR -v- PRINCESS MARGARET HOSPITAL FOR CHILDREN FOUNDATION INC [2012] WASC 83 (14 March 2012)

2 Mr Desmond Henry Taylor died on 4 July 2008. His estate is estimated to be worth in excess of $3.7 million. The deceased's will (the Will) purported to leave his entire estate to 'Princess Margaret Hospital' and the 'National Diabetes Services Scheme of Australia'. The only exception to this was a small gift for the care of his dog, Bonny. That gift perhaps falls within the category of purpose trust where 'Homer nodded': see Re Endacott [1960] Ch 232, 250 (Harman LJ). It is not an issue in these proceedings.

3 There are no legal entities which match precisely the descriptions in the Will of 'Princess Margaret Hospital' and the 'National Diabetes Services Scheme of Australia'.

4 The first question which arises in this originating summons is one of construction, or interpretation, of the Will. The executor (plaintiff) submits that the reference to 'Princess Margaret Hospital' should be construed as meaning the Princess Margaret Hospital for Children Foundation Inc (the Foundation). This submission is supported by the Foundation.

5 The executor also submits that the reference to the 'National Diabetes Services Scheme of Australia' should be construed as meaning Diabetes Association of Western Australia (Inc) (Diabetes WA). This submission is supported by Diabetes (WA) and also by Diabetes Australia.

6 These submissions should be accepted. Construed in their context, the words used in the Will have these meanings.

7 The executor made an alternative submission in the event that the exercise of construction led to the conclusion that Mr Desmond Taylor has left his estate to a nonexistent or unidentifiable legal entity. If that had been the case, it was said that a second question would arise. That second question was said to be whether the gift can be applied cyprès (Norman French for 'as near as possible').

8 Because the answer to the construction issue is clear, it is not necessary to address this second question in these reasons, save for one matter. The executor submitted that this second question could be answered by application of the equitable principles of cyprès; he said that he did not seek to rely upon a scheme under pt III of the Charitable Trusts Act 1962 (WA). Nor did he initially seek to join the Attorney General to these proceedings. But, following a directions hearing, the Attorney General was contacted. The Attorney General was subsequently joined as a party. Counsel for the Attorney General provided very detailed, and extremely helpful, submissions concerning the relationship between the doctrine of cyprès and the statutory regime.

9 The consequence of my conclusion on this additional matter is that joinder of the Attorney General should always occur in cases where a submission is made which is akin to that of the executor's alternative submission in this case. The reason is that in Western Australia there is no longer an equitable doctrine of cyprès. The doctrine of cyprès has been replaced in exhaustive terms by pt III of the Charitable Trusts Act 1962.

10 The Will is a proforma typed document which includes instructions for how to complete it and spaces for a person to insert their desired gifts. The Will appoints Lionel Malcolm Taylor as executor. The relevant clause of the Will begins with the following typed words:

3. UPON MY DEATH and after payment of any requests or special gifts listed in clause 2 and payment of all my debts, funeral and testamentary expenses I GIVE the rest of my estate as follows:

11 The following words in handwriting are inserted (in capitals in the Will but otherwise reproduced below, including with original spelling):

All my assets and property to be sold, after all the cost are finalised, the moneys left to be divided equaly between Princess Margaret Hospital and National Diabetes Services Scheme of Australia.

12 The Will is dated, in handwriting, the '6th day of May 2005'.

13 As with interpretation of contracts or trusts, the construction of the intention of a testator manifested in the words of a will generally proceeds by principles of interpretation of words: Wilson v Anderson [2002] HCA 29; (2002) 213 CLR 401, 418 [8] (Gleeson CJ).

14 A will is to be construed as if it has been executed immediately before the death of the testator: Wills Act 1970 (WA), s 26(1)(a).

15 Extrinsic evidence is admissible to the extent that language in the Will is ambiguous on the face of the will (patent ambiguity) or ambiguous in the light of the surrounding circumstances (latent ambiguity): Wills Act 1970, s 28A(1)(b),(c); Hood as executor of the Estate of Inez Irene Barbetti (Dec) v The Attorney General for Western Australia [2006] WASC 157 [27] [28] (Hasluck J).

16 As I have explained, there are no legal entities which match precisely the descriptions in the Will of 'Princess Margaret Hospital' and the 'National Diabetes Services Scheme of Australia'. The words have latent ambiguity.

The construction of the words in the Will The factual matrix of the Will

17 In the grant of probate by this court, on 31 July 2008, Mr Lionel Taylor was appointed as the executor of the Will of his deceased brother. Mr Lionel Taylor has sworn two affidavits in this proceeding dated 7 November 2011 (Taylor 1) and 17 February 2012 (Taylor 2).

18 In Taylor 1, Mr Lionel Taylor explains the following:

(1) Mr Desmond Taylor was single and had no children.

(2) Mr Desmond Taylor's mother and his father both predeceased him.

(3) Mr Desmond Taylor was survived by six siblings: Mr Ian Taylor, Mr Cliff Taylor, Mr Lionel Taylor, Ms Sandra Innis, Ms Vera Willis, and Ms Elaine Taylor.

(4) A statement of assets and liabilities of the estate values the estate at approximately $3.7 million.

(5) Mr Desmond Taylor drafted his own Will, which as I have explained, is a proforma, standard form, with handwriting inserted in blank spaces under typed sections.

19 In Taylor 2, Mr Lionel Taylor refers to a conversation he had with Mr Desmond Taylor, in which they had discussed Mr Desmond Taylor's will. Mr Lionel Taylor told the deceased that if one niece or nephew received more than another under the deceased's will then this 'may lead to strife'. Mr Lionel Taylor, whose son is totally blind, said words to the effect 'If you want to help your nieces and nephews; they will have kids and if the kids get sick they will go to Princess Margaret Hospital': Taylor 2, pars 6 7.

20 In Taylor 2, Mr Lionel Taylor also explains that the deceased suffered from diabetes and required selfinjections: Taylor 2, par 9. There is also a reference to Mr Desmond Taylor's type 2 diabetes on his death certificate: Taylor 1, LMT 2, page 8.

21 In interpreting the words in the Will, an important contextual matter is that the relevant words were drafted by a layperson, not a lawyer. It has been said that the words of a testator who makes his or her own will may be considered 'less strictly than in a case where [a will is drawn by a skilled lawyer]': Re Taylor; Taylor v Tweedie [1923] 1 Ch 99, 105 (Lord Sterndale MR); Faithfull v Pine [2012] WASC 75 [11] (Sanderson M). In other words, a reasonable person would construe a will which has been drafted without professional assistance with the understanding that the words in the will are unlikely to have been used in a precise or technical manner.

The interpretation of the words 'Princess Margaret Hospital'

22 A search of the entities which are close to the words 'Princess Margaret Hospital' was conducted on behalf of the executor: see the affidavit of Ms Jade Winterton sworn on 9 November 2011 (Winterton) par 3.

23 There are three legal entities whose names are closely related to 'Princess Margaret Hospital':

(1) The first defendant which is an incorporated association called Princess Margaret Hospital for Children Foundation Inc (the Foundation) acting as trustee for the purpose of providing money and other benefits to the hospital known as King Edward Memorial Hospital/Princess Margaret Hospital;

(2) The Minister for Health incorporated as the Board of Princess Margaret Hospital under s 7(2) of the Hospitals and Health Services Act 1927 (WA) (the Minister); and

(3) Princess Margaret Hospital Volunteers (the Volunteers).

24 The ambiguous words 'Princess Margaret Hospital' must be interpreted by reference to the meaning which they would convey to a reasonable person, having regard to the circumstances surrounding the Will, including the genesis of the Will and its objective aim. There are four reasons which establish that the meaning is (1), the Foundation, which is the first defendant.

25 First, it is the Foundation which is the principal fundraising body for Princess Margaret Hospital. The Foundation takes active steps to solicit donations, bequests, gifts, grants and subscriptions. The Foundation is advertised as the entity to which donations, gifts or bequests be made where the donor wishes to benefit Princess Margaret Hospital: see the affidavit of Mr Clive Phillip Boyle, sworn 24 February 2012 (Boyle) pars 17 19, 23 24. Mr Boyle is the head of finance and administration of the Foundation.

26 All money donated to the Foundation is, and will be, paid for the exclusive benefit, advancement and support of Princess Margaret Hospital: Boyle, pars 20 22.

27 In contrast, the Volunteers (about which there was only a little evidence) appears to be an unincorporated association of persons providing their services to Princess Margaret Hospital, with their fundraising for the hospital limited to profits from a small kiosk. The President of the Volunteers emailed the solicitors for the executor and explained that the Foundation is better equipped to deal with bequests: Winterton, SMW 10, page 25.

28 Secondly, from a date sometime between 1983 and 1994, the Princess Margaret Hospital for Children has been operated and managed by the Department of Health. A gift to the Minister, incorporated as the Board of Princess Margaret Hospital, would be a gift to the consolidated revenue of the State Government. In light of the conversation between the deceased and Mr Lionel Taylor described above at [19], a reasonable person construing the Will would be more likely to construe the words used as involving a gift to the hospital's fundraising arm rather than to the State's consolidated revenue.

29 In a letter to the solicitors for the executor on 13 February 2012, the Deputy Premier and Minister for Health for Western Australia said that he did not intend to seek to become a party to the proceedings. The Minister explained that he considered that a gift to the Foundation best achieves the intention of the bequest: see Boyle, CPB 11, page 166.

30 In The Public Trustee of Queensland as Executor of the Estate of Mary Agnes Ball (decd) v State of Queensland [2009] QSC 174, a bequest was made to 'the North Brisbane Hospitals Board ... for the purposes of buying equipment for the Royal Brisbane Children's Hospital'. The Board no longer existed when the testator died. But the hospital was still functioning. It was run by the Queensland Government. Byrne SJA explained that the manifest intention disclosed by the words used, in the circumstances, required the will to be construed as a gift to the fundraising arm of the hospital, an incorporated association called the Royal Children's Hospital Foundation. His Honour noted at [14] that noone had suggested that the testator's objective might be better accomplished if the money were paid to the Queensland Government.

31 Thirdly, as a purely semantic matter, the title of the Foundation is close to the words used by the testator. The Foundation includes the words 'Princess Margaret Hospital' in its title. Indeed, until 29 November 2004 the Foundation was simply known as 'Princess Margaret Hospital for Children (Inc)': see Boyle, pars 11 16.

32 Fourthly, and related to the third point, a search of the online Charity Directory for 'Princess Margaret Hospital' provides a hit only for the Foundation. Other searches provide hits to a government hosted page for the hospital (a Google search) and the Volunteers (an ASIC search). But in each case the Foundation is also a search hit: Winterton, pars 1 11.

33 For these reasons, the reference in the Will to the Princess Margaret Hospital should be construed as meaning the Foundation (ie Princess Margaret Hospital for Children Foundation Inc).

The interpretation of National Diabetes Service Scheme of Australia

34 The National Diabetes Services Scheme of Australia is not a legal entity. A search of the entities which are close to the testator's description was conducted on behalf of the executor: Winterton, par 3.

35 There are two legal entities which are related to the 'National Diabetes Service Scheme of Australia' (NDSS):

(1) An incorporated association called Diabetes Association of Western Australia (Inc) (defined above as Diabetes WA); and

These two entities are, respectively, the first and second named second defendants. Both of these defendants, and the executor, submit that the testamentary gift to the NDSS means Diabetes WA.

36 The NDSS is a funding program initiated by the Commonwealth Government in 1987 with the objective of improving health outcomes for people across Australia with diabetes. It is developed and implemented through an agreement between the Commonwealth and Diabetes Australia: see affidavit of Mr Andrew Wagstaff, Chief Executive Officer of Diabetes WA, sworn 28 February 2012 (Wagstaff) pars 19 21.

37 Diabetes Australia has objects which include supporting its member organisations: Wagstaff, ATW 2, page 25. One of its seven member organisations is Diabetes WA: Wagstaff, par 16.

38 Diabetes Australia directs people with diabetes to become a member of their State organisation. For Western Australian residents, this is Diabetes WA: Wagstaff, par 18.

39 As I have explained, the late Mr Desmond Taylor had diabetes. He was registered on the NDSS database from 2 June 1993 until his death. That database is maintained from information received from State agents of Diabetes Australia, including Diabetes WA: Wagstaff, pars 42 43.

40 As a resident in Western Australia, the late Mr Desmond Taylor's involvement with the NDSS would have occurred through Diabetes WA. In particular:

(1) By a State and Territory Agency Agreement, Diabetes WA administers the NDSS in Western Australia as the agent of Diabetes Australia: Wagstaff, par 25.

(2) Diabetes WA is the sole agent for the NDSS in Western Australia, and has been since 1987: Wagstaff, par 26.

(3) Diabetes WA manages the registration of Western Australians to the NDSS: Wagstaff, par 27(a).

(4) Diabetes WA develops and manages 500 Access Points (mainly community pharmacies) across Western Australia: Wagstaff, pars 27(b), 34 35.

(5) Diabetes WA supplies and delivers NDSS products to registrants via the access point network in Western Australia: Wagstaff, par 27(c).

(6) Diabetes WA provides NDSS education programs to registrants to manage their diabetes, as well as national development programmes: Wagstaff, pars 27(d), 37.

(7) Registrants in Western Australia can only obtain NDSS products and information from Access Points or from Diabetes WA directly: Wagstaff, par 30.

(8) A national diabetes information and advice 'infoline' provides a number which, when dialled within Western Australia, is forwarded to Diabetes WA's telephone system: Wagstaff, par 33.

(9) Diabetes WA undertakes all NDSS marketing in WA and when NDSS is promoted in WA, the logo of Diabetes WA is displayed on marketing and information material: Wagstaff, par 38.

(10) Communications with registrants, including Mr Desmond Taylor, show the logos of the NDSS, and Diabetes Australia but the name and address provided on the communications is Diabetes WA and its postal address: Wagstaff, ATW 7, page 175; ATW 9, page 177.

(11) Invoices include electronic funds transfer details for Diabetes WA: Wagstaff, ATW 9, page 178.

41 Finally, the NDSS transaction history specifically for Mr Desmond Taylor shows 34 transactions. All of them occurred in Western Australia: Wagstaff, par 44 and ATW 12, page 189.

42 In light of these circumstances, the reference in the Will by the late Mr Desmond Taylor to the 'National Diabetes Services Scheme of Australia' refers to the first named second defendant, Diabetes WA.

The alternative submission: an application cyprès (as near as possible) The joinder of the Attorney General

43 The alternative submission of the executor and the first and second defendants concerned the circumstance in which the Will could not be interpreted in the manner which I have found. That alternative submission was that the gift should not fail because the purported gift in the Will should be applied cyprès (as near as possible).

44 Because of the conclusion I have reached concerning the construction of the Will, it is not necessary for me to deal with this issue of cyprès, with the exception of one matter. The exception concerns the basis for the joinder of the Attorney General as a party to these proceedings.

45 At the initial directions hearing before me, the executor initially sought to rely upon the doctrine of cyprès, without joining the Attorney General. It may have been thought that this course was permissible because the executor sought only to rely upon cyprès as an equitable doctrine.

46 In contrast, counsel for the Attorney General and for the first defendant made detailed submissions concerning the operation and effect of a distribution under pt III of the Charitable Trusts Act 1962. The Attorney General's submissions raised directly the issue of whether there remains any possibility for a cyprès distribution in equity. This point has not been the subject of any detailed consideration in this jurisdiction. The discussion below is directed to explain why the Attorney General is a necessary party in any case where a party seeks orders based upon what would formerly have been a cyprès distribution.

47 In summary, there is no longer a general equitable doctrine of cyprès in this jurisdiction. The doctrine has been replaced by a statutory regime. Even the label 'cyprès' is not an accurate description of the statutory scheme.

The equitable doctrine of cyprès (as near as possible) and the statutory scheme

48 The equitable doctrine of cyprès, as developed over hundreds of years, broadly permitted a court to save a trust or testamentary gift which would otherwise fail provided that the proposed gift involved a general charitable intent. The court could do so by giving effect to testamentary words or words of trust as if they meant something else. The new meaning ascribed by the court was required to be 'as near as possible' to the objectively intended meaning.

49 The doctrine was never uncontroversial. In Attorney General v Lady Downing [1767] EngR 25; (1767) Wilm 1, 32; [1767] EngR 25; (1767) 97 ER 1, 13, the Lord Chief Justice, expressing the opinion of himself, and the Lord Chancellor and the Master of the Rolls, explained why, as a matter of legal principle, the doctrine is difficult to justify: 'the testator is made to disinherit [the heir at law] for a charity he never thought of; perhaps for a charity repugnant to the testator's intention, and which directly opposes and encounters the charity he meant to establish'.

50 A controversial example referred to by the Lord Chief Justice was Da Costa v De Paz [1754] EngR 10; (1754) Amb 228; (1754) 27 ER 150 (and the full Swanston report at 2 Swanston 532[1818] EngR 21; , 36 ER 715). In that case, Lord Hardwicke C applied cyprès a bequest for a house of Jewish study to the funding of a home to bring up children in the Christian faith: see, further, the discussion in J Getzler 'Morice v Bishop of Durham', in Mitchell and Mitchell (eds), Landmark Cases in Equity (forthcoming).

51 In Attorney General v Andrew (1798) 3 Ves Jun 633, 649; [1798] EngR 110; (1798) 30 ER 1194, 1202, the Lord Chancellor referred to older cases which had suggested that the doctrine 'ought never again to be mentioned in this court'. But the doctrine of cyprès had deep roots and could not be abolished.

52 As the Lord Chief Justice noted in Attorney General v Lady Downing (33) (13), quoting the great Roman jurist Modestinus, something similar existed in Roman law. Cyprès is also discussed in the works by Littleton and Fitzherbert. It was too deeply established even by the 18th century to be judicially abolished.

53 With this history, it is unsurprising that it has been observed by commentators that courts have struggled with the operation and limits of this doctrine for at least 350 years: R Mulheron, The Modern Cyprès Doctrine (2006) 9. In the Report of the Committee on the Law and Practice relating to Charitable Trusts (1952) (the Nathan Report), Lord Nathan described the law of charitable trusts as an 'impenetrable jungle' [108].

54 Against this background of confusion concerning the operation and boundaries of the doctrine, New Zealand first enacted legislation conferring the power to vary a charitable trust in the Charitable Trusts Extension Act 1886 (NZ). That Act was amended, and reenacted, amended, and recast, before becoming the Charitable Trusts Act 1957 (NZ). As I explain below, the relevant Western Australian provisions were copied from that Act, and considered the recommendations of the Nathan Committee in England.

55 In Re Palmerston North Halls Trust Board [1976] 2 NZLR 161, Wild CJ considered s 32(1) of the Charitable Trusts Act 1957 (NZ). That section is nearly identical to s 7 of the Charitable Trusts Act 1962. It provides that:

Subject to the provisions of subsection three of this section, in any case where any property or income is given or held upon trust, or is to be applied, for any charitable purpose, and it is impossible or impracticable or inexpedient to carry out the purpose, or the amount available is inadequate to carry out the purpose, or that purpose has been effected already, or the purpose is illegal or useless or uncertain, then (whether or not there is any general charitable intention) the property and income or any part or residue thereof or the proceeds shall be disposed of for some other charitable purpose, or a combination of such purposes, in the manner and subject to the provisions hereafter contained in this Part of this Act. (emphasis added).

Speaking of the words I have italicised, where an earlier amendment had substituted the word 'shall' for 'may', the Chief Justice of New Zealand said that 'I can see no other reason than a desire to express a legislative intention that in any case falling within s 32(1) the property must be disposed of in accordance with part III of the Act' (165). This was followed by Tipping J (then of the High Court) in Re Twigger [1989] 3 NZLR 329, 340.

56 Subsequently, in In the matter of Gift for Life Trust (Unreported, NZHC, 9 November 2000) Hammond J (as Sir Grant Hammond was then) explained that s 32 of the Charitable Trusts Act 1957 (NZ) had 'supersede[d] the common law doctrine of cyprès' [9].

57 In Western Australia, the Charitable Trusts Act 1962 was enacted against the background of the New Zealand legislation and the Nathan Report. In the second reading speech of the bill which became the Charitable Trusts Act 1962, the Hon Mr Guthrie, Member for Subiaco, said (see Hansard, Legislative Assembly, 1 November 1962, 2306):

The doctrine [of cyprès] developed by the Courts of Equity has always been with us.

The purpose of this measure [the Charitable Trusts Act] is to put it into some statutory form ... [The Nathan Committee] recommended a new cypres doctrine to be superimposed upon the orthodox doctrine ... Whilst we agree with the Nathan Committee in its comments in the need for reform we are not able to agree to a solution that would result in two cypres doctrines in place of one. In our opinion this would add unnecessarily to the complexity of the law of this subject. Instead we recommend the adoption of the relevant sections of the New Zealand Charitable Trusts Act 1957.

58 Where property is given on trust or to be applied for a charitable purpose, the Charitable Trusts Act 1962 removes the requirement for a general charitable intention (see s 7(1)). And the Charitable Trusts Act 1962 does not mention the previous equitable requirement that an application be 'as near as possible' to the charitable purposes of the bequest or trust. Instead it speaks of a disposition 'for some other charitable purpose' (s 7(1)). Nevertheless, it might be that 'a court would not readily approve a scheme which did not have that degree of resemblance, even though a cyprès approach is not mandatory': Penny (as Executrix and Trustee of the Estate of Agnes Ann Wait Gaunce deceased) v Cancer and Pathalogical (Sic) Research Institute of Western Australia (1994) 13 WAR 314, 318 (Anderson J).

59 It may be that the different wording of charities legislation in other States of Australia means that the equitable doctrine has been preserved to operate concurrently with the legislation: see the discussion in G dal Pont Law of Charity (2010) 379380 [15.2]. But in Western Australia an executor or trustee cannot circumvent the requirements for a scheme under pt III of the Charitable Trusts Act 1962 by seeking to invoke the equitable doctrine of cyprès. The Attorney General has a pivotal role to play in relation to schemes under pt III and was properly (albeit belatedly) contacted by the executor in this case.

60 Prior to trial of this issue, no pt III scheme had been formally approved in this case. Nor had the process set out in the Charitable Trusts Act 1962 formally been commenced. There is a power under s 17 of that Act for the court to make orders under pt III notwithstanding a failure to comply with a procedural requirement. But because of the conclusion I have reached concerning the construction of the words in the Will it is not necessary to consider whether requirements such as advertising or laying the scheme before the Attorney General are procedural or substantive. Nor is it necessary to consider whether these requirements were met in these proceedings by written and oral submissions relating to a scheme.

61 The conclusions I have reached, and the declarations I will make, are as follows:

(1) the testamentary words 'Princess Margaret Hospital' mean the first defendant, the Princess Margaret Hospital for Children Foundation Inc.

(2) The testamentary words 'National Diabetes Services Scheme of Australia' mean the first named second defendant, the Diabetes Association of Western Australia (Inc).

62 I am conscious that there was no contradictor on either of these issues. Mr Desmond Taylor's siblings were all contacted, except Ms Vera Kaye Willis, who could not be located and whose whereabouts was unknown to her siblings: see affidavits of Dominique Engelter, sworn 7 December 2011 and 17 February 2012.

63 These affidavits filed on behalf of the executor also show that apart from the executor (whose involvement was limited only to his capacity as executor), three other siblings indicated a desire to avoid an intestacy for the testator's wishes to be met. None of the siblings chose to be joined as a party.