The Reverend Father Simon Ckuj as trustee of the Jaroslaw Andrew Oryszkiewycz Halyckyj Permanent Charitable Fund v The Attorney-General in and for the State of New South Wales
The plaintiffs are the trustees of a charitable trust established by Mr Javoslaw Halyckyj in 1995. The trust was established by a Declaration of Trust instrument dated 23 July 1995 ("the trust deed"). An amendment was made to clause 9 of the trust deed in 1998 by way of a Supplement to the Declaration of Trust. The property of the trust consists of moneys held on various deposits with banks, which total in excess of $600,000.
By a summons filed on 17 September 2014, the plaintiffs, for whom Mr Knoll of counsel appears, seek an order for the settlement of an administrative scheme in respect of the trust. Commencement of the proceedings, which are charitable trust proceedings within the meaning of the Charitable Trusts Act 1993 (NSW), has been authorised by the Attorney-General (through his delegate the Solicitor-General) as required by s 6 of that Act. The Attorney-General, for whom Ms Davidson of counsel appears, is the defendant to the summons. Subject to one qualification, the Attorney-General regards the scheme proposed by the plaintiffs to be appropriate.
The application, which is supported by affidavits sworn by each of the trustees, is brought under either the inherent jurisdiction of the Court in respect of charitable trusts, or else under the Charitable Trusts Act, s 13(2) of which provides for the Court to direct that a scheme for the administration of a charitable trust be established and refer the matter to the Attorney-General to establish the scheme in accordance with any directions of the Court.
The circumstances in which the Court may settle an administrative scheme in respect of a charitable trust include a case where the stipulated means for the achievement or pursuit of the charitable objects are not sufficient for the practical application of the trust property for those purposes and it is necessary to provide further and detailed machinery (see, for example, Phillips v Roberts [1975] 2 NSWLR 207 at 222-223 per Mahoney JA). As explained by Campbell J (as his Honour then was) in Corish v Attorney-General's Department of NSW [2006] NSWSC 1219 at [9], an administrative scheme supplements and/or clarifies any provisions the settlor has stipulated concerning the manner in which the objects of the trust are to be pursued when practical circumstances show that the settlor's stipulation of the means is inadequate or impractical. As his Honour noted, an administrative scheme is unlike a cy-près scheme, which can be directed when it is impossible or impractical to carry out the objects of the trust in all the details the settlor stipulated.
In recital A to the trust deed it is recited that the founder Mr Javoslaw Halyckyj "desires to establish a charity to provide for the religious purposes set out in this Deed of St Andrews Ukrainian Catholic Church presently situated at Lidcombe, Sydney ("St Andrews")". Clause 3 of the trust deed provides, subject to certain provisos, that the trustees are to hold the trust fund and the income thereof "upon trust to pay the net income of the trust fund to the resident head priest for the time being of St Andrews in quarterly instalments for such of the following objects set out in clause 4 of this deed as shall be exclusively charitable". Clause 4 then provides:
"The objects of the Charity are the benefit, upkeep and maintenance of St Andrews, including the keep of any priest or priests resident at St Andrews."
Clause 5 confers certain powers upon the trustees. Clause 6 is concerned with the manner of investment of the trust funds, and clause 7 concerns the appointment of new trustees. Clause 9, as amended, makes provision in the event of failure of the trusts.
The scheme proposed by the plaintiffs involves a number of elements. In essence, the proposed scheme provides for the trust deed to be treated as varied in a number of respects. These "variations" fall into five categories. These are:
1. provisions designed to satisfy the requirements of the Australian Taxation Office concerning taxation concessions available to charities, and thus enable the trust to maintain its Tax Concession Charity status. These provisions consist of new clauses 3.5, 3.9, 3.10 and 5.4, and an altered clause 9;
2. provisions designed to provide a mechanism for the trust to receive gifts. These provisions consist of new clauses 3.7 and 3.8;
3. a provision, being new clause 5.5, designed to clarify that the trustees are bound to comply with the trust deed even if there is a conflict between the trust deed and relevant church statutes;
4. provisions designed to clarify that only priests duly appointed by the church Eparch are to be capable of benefitting from the trust through the provision of their keep. These provisions consist of changes to clause 4, the objects clause; and
5. other provisions, consisting of new clauses 3.4 and 3.6, designed to clarify that any money, whether capital or income, paid out of the trust funds must be applied towards the objects set out in clause 4, and that the trustees must keep the trust funds in bank accounts that are separate from other bank accounts held by the trustees.
As noted earlier, the Attorney-General regards the proposed scheme as appropriate, subject to one qualification. That qualification concerns category 4 referred to above, namely, the proposed changes to the objects clause. In particular, the concern expressed by the Attorney-General is that the insertion of the words "or in the Parish of" may be a change that goes beyond the permissible scope of an administrative scheme and may alter the objects of the trust such that issues relating to cy-près schemes may arise. I will put this matter aside for the moment and deal with the other aspects of the proposed scheme.
These aspects are not contentious as between the parties. Having read the evidence adduced in support of the application and considered the matter, I have concluded that, subject to the resolution of a drafting issue, an administrative scheme incorporating those provisions is appropriate. Such a scheme would augment and clarify the existing provisions of the trust that concern its administration, which are in various ways and in varying degrees somewhat inadequate or insufficient. It would facilitate the pursuit of the objects of the trust consistently with the settlor's intentions.
I note that in Corish v Attorney-General's Department of NSW (supra), to which I have already made reference, Campbell J expressed the view at [18] that achieving tax exempt status for the trust then under consideration was "something which is of high importance for the practical operation of the fund" and it was within the scope of an administrative scheme to restrict the activities of the trustees so that the trust could obtain tax-exempt status (see also at [35] as to the administrative character of a winding-up clause in a charitable trust.) So, here, I think that it is within the proper scope of an administrative scheme to include provisions that will oblige the trustees to seek to maintain Tax Concession Charity status for the trust, and provisions (including a change to the winding-up clause) that will facilitate that endeavour. I consider the provisions to be appropriate.
The addition of a mechanism to receive gifts, which is presently lacking, is also appropriate in my view. I take the same view in relation to the provisions concerning the primacy of the trust deed as the source of obligation upon the trustees, the requirement to only apply income towards the objects of the trust, and the requirement to maintain separate bank accounts. These provisions, which are largely descriptive of obligations which in any event fall upon the trustees, at least provide explicit clarity where it is currently lacking.
The drafting issue I referred to concerns the definition of the term "Resident Head Priest", which term appears in clause 3. After discussion with Mr Knoll, it was agreed that the concluding words of the definition which follow "temporary basis" may be problematic and hence should be deleted.
Returning to the matter about which there was some contention, I am satisfied, after considering the submissions of counsel, including a supplementary written submission provided by Mr Knoll, that the insertion of the words "or in the Parish of" is a change which does not alter the scope of the objects of the trust and is one which falls within the permissible scope of an administrative scheme. It seems to me, particularly bearing in mind recital A to the trust deed, which refers to St Andrews Ukrainian Catholic Church presently situated at Lidcombe, Sydney ("St Andrews"), that the objects clause would not be construed as being restricted to the provision of keep to priests physically resident at Lidcombe. Further, the proposed alteration, which makes it clear that provision may be made for the keep of priests resident anywhere within the Parish (a term that is now to be defined) may be seen as a clarification that would be of assistance to the trustees, in circumstances where the relevant provisions of the church statutes (which I was informed by Mr Knoll were not in existence when the trust deed was made) contemplate that priests appointed to St Andrews might not necessarily be housed in the presbytery at Lidcombe. I note in this context that the proposed definition of "Parish" needs to be changed. Mr Knoll accepted that the reference to "the Illawarra" was incorrect and the words "the Hunter" should be substituted for them.
The proposed amendments to clause 4 also involve use of the term "Priest", which is to be a defined term. After discussion with counsel, it was agreed that it would be desirable to change the proposed definition to make it clear that a Priest had to be duly appointed to St Andrews by the Eparch. That change will be made. Clause 4 should, as also agreed by Mr Knoll, employ the word "Priest", not "Priests" as originally proposed.
The Court orders:
1. That an administrative scheme be prescribed for the Jaroslaw Andrew Oryszkiewycz Halyckyj Permanent Charitable Fund in accordance with the attached document, which is a copy of the amended schedule to summons filed on 10 December 2014, as amended in handwriting, initialled and dated today's date.
2. The costs of the parties of the proceedings are to be paid out of the said fund.
[2]
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Decision last updated: 09 February 2015
Parties
Applicant/Plaintiff:
The Reverend Father Simon Ckuj as trustee of the Jaroslaw Andrew Oryszkiewycz Halyckyj Permanent Charitable Fund
Respondent/Defendant:
The Attorney-General in and for the State of New South Wales