The Trust Company (Australia) Limited as trustee of the Kyle Williams Home Trust v Attorney-General of New South Wales

Judgment 1HIS HONOUR: This proceeding concerns a trust established by the will of Carolyn Milne Williams who died on 5 January 1939. The plaintiff is the trustee of the trust. By her will the deceased directed that her trustee hold her property situated at Kyle Bay, Georges River, together with five acres, or thereabouts, of land attached thereto and known as The Retreat, on trust, and convert the same into a convalescent home for children. On 18 March 2011 I declared that the gift constituted a valid charitable trust. I declared that the trust purposes had failed or ceased to provide a suitable and effective method of using the trust property, having regard to the spirit of the trust. I ordered that the trust property be applied cy-pres and that a scheme be settled for that purpose (The Trust Company (Australia) Limited (as trustee of the Kyle Williams Home Trust) v Attorney-General of New South Wales [2011] NSWSC 323). 2In my reasons for judgment I said that the provision of care, support and rehabilitation to children suffering from an illness or disability was within the spirit of the trust. I said that the evidence did not establish that the plaintiff's proposal for the trust property to be sold and for the income from the proceeds of sale to be provided to charitable entities that provided such services was necessarily the best way of settling the trust property. I directed that there be further advertisement to elicit a response as to whether or not some entity could use the land and buildings for a purpose within the spirit of the trust, as distinct from the specific purpose of being a convalescent home for children. 3I approved the publication of an advertisement inviting proposals from any person or organisation who was interested in using the land, or the funds realised from the sale of the property and other funds of the trust for the purpose of providing care, support and rehabilitation for children suffering from any illness or from any physical or intellectual disability (including any psychiatric or psychological condition). 4Following the publication of this further advertisement, various proposals were received by the plaintiff and the Attorney-General. The plaintiff administered a questionnaire to each applicant. Nine organisations initially expressed an interest in the use of the home or the trust property upon any sale of the home. A further nine organisations also expressed an interest in the proceeds of sale if the trust property were sold. Only four applicants persisted with an application involving the use of the property. They were Nardi House, St. George Family Support Services, The Estia Foundation ("Estia") and The Uniting Church in Australia Property Trust through its parish mission known as the Wesley Mission ("Wesley"). 5The plaintiff adhered to its original position that the property should be sold and it should apply the income from the investment of the proceeds of sale to entities that provided such care, support or rehabilitation for children suffering from illness or disability. I do not agree. Subject to its being practicable, a scheme should adhere as closely as possible to the particular manner in which the deceased sought to achieve her general charitable intention (Phillips v Roberts [1975] 2 NSWLR 207 at 214, 217). In my reasons of 18 March 2011 I said that the testatrix's intention was not only to provide for the convalescence of sick children, but to do so through the use of the property. That intention is manifest by various clauses of the will. By clause 8, the testatrix directed that her trustee hold the property known as The Retreat on trust to be converted into a convalescent home for children. She made a gift of furniture, linen, cutlery, plates, statues, statuettes, piano, pictures and a gramophone, or such as the trustee might deem suitable, for the benefit of the Home. She authorised the trustee to expend money in the beautification of the grounds and in the construction of playgrounds, baths or other similar aids to satisfactory convalescence. She authorised the trustee to decide and determine from time to time how many children could be satisfactorily accommodated in the Home and how it should be maintained. She empowered the trustee to settle a scheme for the admission of children to the Home. She made provision for the trustee to delegate to a committee, a manager or a matron the management and control of the Home. She directed the trustee to sell and convert other parts of her real and personal estate not otherwise dealt with by the terms of the will and to apply the proceeds of sale after payment of debts, funeral and testamentary expenses and pecuniary legacies to be used for the equipment, renovation, alteration or extension of the Home. She directed that the income from investments be applied for the maintenance and upkeep of the home in accordance with any scheme settled by the trustee. 6The plaintiff does not propose that the proceeds of sale of the home would be applied only for the convalescence of children. As was said by Father Angelo Aliferakis of Estia, the need for charities to deal with ill and convalescent children has, since the testatrix's death in 1939, effectively been subsumed by hospitals, treating medical practitioners, rehabilitation experts and the healthcare system generally, along with specialist treatment and facilities. The plaintiff's proposal is that the income from the proceeds arising from the sale of the home would be applied in the spirit of the trust, that is, to organisations that provide care, support and rehabilitation for children suffering from illness or disability. But the property can be used in a way that conforms with the spirit of the trust. The plaintiff's proposal would involve a greater departure from the testatrix's intentions than would the use of the property as proposed either by Estia or Wesley. 7The Attorney-General did not support proposals made by Nardi House or St. George Family Support Services. The Attorney-General submitted that the primary focus of the proposal by Nardi House was the use of the Home as a temporary accommodation facility for rural families and carers of children with profound physical disabilities when they were visiting Sydney for medical/therapeutic reasons. There was no program for the delivery of services associated with the proposal and the proposal was very rudimentary. I accept that submission. In the case of St. George Family Support Services the Attorney-General submitted that the purpose pursued by that organisation was the provision of care, support and rehabilitation for children and families experiencing domestic violence, displacement or other child protection issues. I agree with the submission of the Attorney-General and of counsel for Estia and Wesley that this proposal departed further from the testatrix's intentions than the proposal of either Estia or Wesley. In particular, it did not provide for residential accommodation to be provided at the home which would be an essential element in the notion of convalescence. 8Both Wesley and Estia advanced well-developed proposals for the use of the property. These proposals both involved the construction of residential accommodation and the use of the property to provide respite care for children with disabilities. Both proposals were within the spirit of the trust. Ultimately, the Attorney-General did not express a preference for one proposal over the other. In many ways there is little to choose between them. Both parties have gone to considerable lengths in developing the proposals and satisfying themselves and the court that the proposals could be carried out. Both organisations are well credentialed and carry out vital work with children and young adults with disabilities and their families. Both have the financial and management capacity to implement what is proposed. 9The existing house is heritage listed. The Wesley proposal involves modification to the existing house by installing a commercial kitchen and creating large living areas by removing temporary dividing walls. It involves the demolition of ad hoc additions to the house and the construction of an activity room and accommodation for 20 children. The property is on the banks of the Georges River. The Wesley proposal provides for the construction of an additional riverside complex to provide respite accommodation for the families of children to be accommodated on the site. It also provides for the rebuilding of the jetty and surrounds to provide access to and use of the waterside area, the landscaping of the grounds and the construction of a separate indoor pool and recreation area. 10The estimated capital cost of these works is $5.25 million. Most of that cost is associated with the building of specialised accommodation and facilities for disabled children. It is anticipated that there will be about $1 million of trust investments that will be available to assist in the funding of these works. The balance of the funds will be contributed by Wesley. It has undoubted financial resources with which to meet those costs. Its proposal involves landscaping of the property to allow for recreational pursuits such as rock-climbing, abseiling, bushwalking and horse-riding. The property itself consists of about five acres and abuts bushland which is Crown land. Wesley's proposal is that it would use the knowledge of its staff of its recreational facility at Vision Valley to design and manage the recreational pursuits which, in addition to those mentioned, would include canoeing or kayaking and hydrotherapy. 11Wesley proposes that it would implement eight separate programs for the site. Six of these would be day programs for children and two overnight programs. Overnight programs are not proposed to be for only one night, but depending upon the needs of each child, the stays might be between one night and three months. This would be respite care. Mr Knight, the senior business manager employed by Wesley described the respite care currently provided by Wesley Mission at existing facilities as follows: "10. The respite care that is provided by Wesley Mission for children at [sic] with a physical and intellectual disability at existing Wesley facilities depends on the need of each particular child and it is anticipated that the same pattern would apply should Wesley be approved to provide care using Kyle Williams House. I now go on to describe, from my own knowledge, the way in which respite care is administered at existing Wesley facilities, as Wesley proposes that respite care would be administered in a like fashion at Kyle Williams house, should Wesley be chosen to do so. 11. The majority of these children (that is, those who presently receive respite care from Wesley Mission) are living with their families. Some are living in families where there are other children in the family who do not suffer from physical or intellectual disabilities and some with parents who also do not suffer from any such disabilities. Others are from homes where the parents and/or other children may also suffer from physical and intellectual disabilities. For these families to work as best as possible, the children with disabilities need to have periods of respite, depending on their individual needs, and also for their siblings and parents to have a break from the demands of providing care. 12. Accordingly, some of the children for whom Wesley Mission already provides respite care for one, two, or sometimes three nights per week Monday to Friday during school term. Staff of Wesley Mission take them to and from school, take them to activities, provide therapy and assist them with homework. Some of these children require specialist 24 hour nursing care to assist with tube feeding, [catheterisation] and epilepsy and like conditions. The Wesley Mission respite care provides qualified staff to care for these children during the periods that they stay in the respite homes and this gives their families some time out from having the responsibility of caring for them. 13. Some of the children have respite care in a Wesley Mission home overnight on a Friday and Saturday and will return to their family homes on a Sunday during school term. These children typically stay for about two nights so that they will have respite from living in the family environment as will their families have respite from having to care for them. 14. Other children have respite care with Wesley Mission at existing facilities from Monday to Friday during their school holidays. This enables some respite for them away from their families and for their families to be relieved of the obligation of caring for them during the week. It enables their parents to attend work. It also gives other siblings who may not be suffering from any physical or intellectual disabilities to have timeout away and to receive more of their parent's [sic] attention during periods when the children with needs are in respite care with Wesley Mission." 12The estimated capital costs associated with the overnight programs is $3,850,000 with the bulk of the cost being associated with the construction of specialised accommodation. Wesley's proposal stated that: "The development of overnight programs would be dependent on additional support being agreed with funding bodies and presentation of a business case to Wesley Mission's senior management." 13Mr Mitchell, the general manager of employment, residential training and health of Wesley Mission stated: "Wesley Mission has outlined building and renovation works to be carried out on the site, which we are well able to manage. Wesley Mission's Corporate Property Department has managed a large number of significant property development projects in-house over the last 30 years. We have qualified project managers on staff who are very experienced in building and contract work. The building development components of this project would be managed by the Corporate Property Manager. Projects have included retirement villages, hospitals, hostels, conference centres and various administration building projects. We are currently in the final stages of the construction of a $21M residential aged care facility in Carlingford and two clinical training buildings at our mental health hospitals at Kogarah and Ashfield for $5.6M. Over the years, Wesley Mission has developed strategic partnerships with high quality consultants and building contractors, allowing us to deliver our projects to a very high standard that our clients are extremely happy with. Wesley Mission's broad service base will enable the Kyle Williams House & estate reaches it full potential [sic]. Other Wesley services that will contribute to programming include: Vision Valley - a youth and recreation facility at Arcadia. This activity provides Wesley Mission with extensive experience in operating outdoor activities and will be leveraged in the design of accommodation and outdoor activities planned for Kyle Williams House. Out of Home Care, Youth and Family services and Wesley Disability Services employ specialist staff who will engage with activities on the property. Wesley Hospitals have a range of mental health clinicians with knowledge and experience that will be applied to programs at Kyle Williams House. Wesley's Disability Services has a broad referral base and we anticipate that the trust will benefit many young people from a wide range of backgrounds in the Australian community." 14There is no evidence that the Wesley Mission has yet approved the capital expenditure that would be required for the proposed overnight program. Counsel for Wesley submitted that its proposal "does emanate from the whole Wesley hierarchy if I can put it that way. One supposes that the actual internal processes of Wesley as things move forward have to be complied with in the ordinary course, but the proposal is authorised." 15The day programs proposed by Wesley are first, a program one day per week for one child at a time for specialist mental health counselling. 16The second day program would be an early intervention mental health day program for children whose parents are admitted for psychiatric care. When a parent is admitted for specialised treatment, their children are often cared for by other family members or friends. The program would give an option for the enrolment of children in a program to be run at the facility. The home is proximate to Wesley Hospital at Kogarah, which is an acute private psychiatric hospital. The house would be an ideal venue to accommodate children whilst their parents were receiving treatment. 17Thirdly, Wesley proposes a program of playgroups for children with physical and intellectual disabilities. There would be up to 15 children per day in the program which would be run two days each week. This would be for children aged up to three. The programs would run for two hours. It is anticipated that the average length of attendance in the program would be 45 days or about 22-23 weeks on the basis that the program would be run two days per week. Part of the program would be that the parents or carers would meet with a counsellor or psychologist and join a support group for parents in a separate space. 18Fourthly, there would be a specialist disability long day-care program providing transition to school. Parents would drop their child off in the morning to help the child to be able to separate from his or her parents and experience regular life patterns. The program would assist families to find a suitable school for the children with disabilities and make a good match between child and school. The program would operate from 7am to 6pm. It is proposed that the program would cater for three children per day for three days per week. It is anticipated that the average length of the program would be 45 days, that is, 15 weeks. 19The fifth proposed day program is the provision of before and after school care for children with physical and intellectual disabilities. This program would run five days per week with five children per day in the program. The children would be those attending local special needs schools, of which five in the area have been identified. 20The sixth day program would be the provision of vacation respite, that is, vacation day respite programs in school holidays. This would be provided for eight children. 21The two overnight programs would be an early intervention mental health camp for children whose parents had been admitted for psychiatric care or who were vulnerable to mental illness due to difficult family circumstances. The program provided to children during school vacation would be extended to overnight stays. This would cater for 10 children aged six to 18. The other program would be respite for children with stays of one to 30 days and on average 21 days. Twenty children per day would be accommodated once the facilities were built. 22The Attorney-General's initial position was that Wesley's program did not have a significant component of the Home being used for residential care. However, this was based on a misunderstanding of Wesley's description of its program as being an "overnight" program. The program does not envisage simply one night care, but residential care for up to 30 days. 23Counsel for Wesley submitted that perhaps the greater strength of its proposal was the Wesley organisation itself and the breadth and variety of the resources and services on which it could draw to assist in the provision of services at the proposed Kyle Williams House. The Wesley Mission under different names has established homes for children in need since 1893. It provides many community services, including child and family services, disability services and mental health services. It is credited as a designated agency in relation to both foster care and residential care under the Children and Young Persons (Care and Protection) Act 1998 (NSW). Its 2010/2011 annual report stated that, in that year, 899 people were provided with disability respite accommodation for a total of 3,498 days. The majority of respite care provided by Wesley Mission is for a number of nights each week. Some of the children with disabilities such as are proposed to be accommodated at the Kyle Williams House (if the option for overnight accommodation proceeds) would need specialist 24-hour nursing care. The Wesley Mission has qualified staff employed at its existing facilities. It already provides specialist respite care at four properties in Sydney. Those services have extensive waiting lists of families wanting care for their children who would be considered for places at Kyle Williams House. Because it is an existing provider of respite services, it would be well placed to match children for whom services are provided with the facilities that would be available at Kyle Williams House. 24Wesley Mission has connections with the Uniting Church. The Estia Foundation was established by the Greek Orthodox Archdiocese of Australia. Estia is a much smaller organisation than Wesley Mission. It was established on 13 July 1995. 25Estia provides respite care for young people with disabilities and also provides a group home for young adults with severe intellectual and physical disabilities on a permanent basis where the family can no longer care for them, or where their primary carer has died. It also conducts weekend activity programs for children and young adults with disabilities. As the result of donations and funding through the Greek Orthodox Archdiocese of Australia and revenue from other sources, it has acquired two properties, one at Ryde called Lixouri House and another at Roselands called Elpida House. It also occupies properties owned by the Greek Orthodox Archdiocese of Australia in Wharf Road and Pearson Street, Gladesville, for nominal rent. It provides respite houses at "Elpida" and "St Andrews" in Gladesville. "Lixouri" is a group home for permanent residents. St Andrews House in Wharf Road, Gladesville was opened in 1997 and currently services 52 children. Six staff are employed. It was the first of the centres to be opened. Elpida House services 48 children and also employs six staff. On average, each child receives 36 days of respite care per year. Father Angelo Aliferakis deposed that throughout the early 2000s as the children who were in the care of Estia were ageing, it became apparent that Estia needed to operate an ancillary transitional program to allow the children as they became older to undergo an easier transition into permanent accommodation. Some children as they got older required permanent accommodation because their parents or carers needed to be confident that as they became no longer able to care for them, they could confidently relinquish their care. As a result, Estia established and built Lixouri House to allow a transition from respite programs into the permanent living arrangements. Lixouri House provides a permanent residence for four people with physical and intellectual disabilities. It is staffed 24 hours per day, seven days per week. The Pearson Street, Gladesville property is used to provide weekend activity flexible respite services and day care leisure-based activities. In total, Estia provides respite care for 104 disabled clients, weekend flexible respite care for 20 and group homes for four, and has approximately 25 emergency beds. 26The Estia proposal is to restore the Kyle Williams Home to its original exterior, but make internal changes to accommodate wheelchairs, ramps and to modify bathrooms for use by children with disabilities. The Estia proposal is for the construction of two respite cottages, each of five beds, to provide respite care for children, and two group homes, each of five beds. Both the Wesley proposal and the Estia proposal are for the construction of 20-bed accommodation. The principal difference from the Wesley proposal so far as it concerns the physical construction to take place on the site is that the Wesley proposal provides for the construction of a riverside complex. The riverside accommodation proposed by Wesley is for the accommodation of the families of the children who will be accommodated on the site. That is not directly within the purposes of the trust, but is ancillary to it. 27The estimated capital cost of the works proposed to be undertaken by the Estia Foundation is $4,870,000. Estia has retained the services of an architect and identified the builder who would be contracted to undertake the necessary renovation, repairs and construction. Only a small percentage of the necessary funds for construction would be available either to Wesley or to Estia from the investments held by the plaintiff. The balance of the funds for construction and the funding for the operations would have to be provided by the charitable institution itself. Estia does not have anything like the financial resources of Wesley. Nonetheless, it has significant financial resources in its own right. As at 30 June 2011 it had net assets of a little under $3.5 million, which included cash and cash equivalents of approximately $2.5 million. Significantly, the board of the Greek Orthodox Archdiocese of Australia Consolidated Trust has agreed to provide necessary funding to renovate, construct and maintain the facilities on the site. It has ample resources for that task. Ongoing funding for the operation of the site would be provided partly through Government funding, partly by revenue from Estia's investments, partly from fundraising activities such as through church groups or other donations and, to some extent, from corporate sponsorship. Father Aliferakis deposed that although Government support, voluntary donations and assistance would be sought, the overall funding for the project was available through Estia and the Greek Orthodox Archdiocese of Australia. 28Estia's preferred proposal for the use of the site is for the construction of accommodation that would provide beds and other necessary facilities for ten disabled children (with two extra emergency beds) for the provision of respite care. Respite care would be provided in blocks of a minimum of three nights' stay or a maximum of five nights' stay per block. This part of Estia's proposal is essentially the same as Wesley Mission's proposal for use of the site. Estia proposes to use the separate accommodation to be built for ten individuals to provide not respite care, but permanent accommodation for ten young disabled adults. The proposal was described by Father Aliferakis as follows: "41. The Estia proposal includes a component of group home accommodation. 42. This part of Estia's proposal would not be limited to accommodating only persons who are under the age of 18 and therefore still legally children. 43. The group homes will provide permanent accommodation for 10 individuals. 44. The group home component of the proposal will enable housing and care for persons who are also physically and intellectually disabled as to require ongoing permanent housing and care in situations where home care family environment or an independent living environment is not feasible or is not otherwise a practicable alternative. 45. The benefits of such a group home facility would allow the recipients of such group home care and housing a smooth transition from childhood or adolescence into adulthood in a familiar environment for such profound or disabled persons who would not otherwise be able to live at home. This would allow disabled children clients who have become adult but, for whatever reason (for example, the age and infirmity [or] death of a parent; family breakdown; abandonment) were no longer able to be adequately cared for at home, but are so disabled as not to be suitable for independent assisted living. The likely alternative is that such disabled adults would be placed in our institutions. 46. The group home would allow a continuation of the process whereby Estia meets the needs of such disabled young persons. 47. Without a group home component, such disabled adults would otherwise have difficulty in transitioning to other permanent accommodation with the trauma of being placed elsewhere out of surroundings of familiarity of contact, persons and associations. 48. The provision of a group home facility would therefore be a necessary modification to the trust to such that group homes would be able to provide a facility for use by young and other adults who wouldn't be able to be cared for in a home environment or otherwise meets their own needs in an independent environment." 29Although the proposed group home accommodation is described as permanent, it is intended to be a transitional facility for young disabled adults until they can find suitable permanent accommodation elsewhere. Father Aliferakis described this in a further affidavit as follows: "13. The preferred proposal by Estia is that the adult disabled group home accommodation would only house adults but would allow a smooth transition for young adults or adolescents into adulthood in familiar environments. As stated in paragraph 45 of my April affidavit this would allow disabled clients who have become adult but whose parents are no longer able to care for them due to age or infirmity or otherwise disabled clients who have become adult who were not able to live outside a sheltered environment but are so disabled as not to be suitable for independent assisted living. These people who have grown up as children in the Estia environment would require and have the benefit and the security and comfort of a known environment on a continuing basis. The alternative is that such disabled adults will be placed in an institution. Alternatively the disabled adults in our care would be accommodated and accord with paragraphs 16 and 17 below. 14. In the event that the preferred Estia proposal is successful, there will be no children living within the disabled adult group home, children being defined as being under the age of 18 years of age. Such children would be separately accommodated in the overnight respite centres as referred to in paragraphs 6 and 8 above. 15. The disabled adult group home component of the Estia proposal is an adjunct to cater for our disabled clients as they get older and transit from childhood to adolescence and then to adulthood but who do not have any suitable alternative home or are at risk due to their disability. The residents of the adult group home would remain constant in number. The transition from this disabled adult group home as residents got older could take time dependent upon the availability of suitable accommodation in other facilities after the child turns 18. There may be a delay in some cases, an extended delay, whilst other accommodation with required facilities for that person is located. For example, a severely disabled young adult might require a facility with a lifter machine to transfer from bed to wheelchair or wheelchair to bath. This may not be readily available." 30Estia's position was that if the court were not prepared to treat the disabled adult group home for the transitioning of disabled adults as being within or ancillary to the purposes of the trust as resettled by the cy-pres scheme, then it would excise the disabled adult group home from its proposal, but use the accommodation to be constructed to double the number of places available to provide respite care for children. 31A third use to which the Estia Foundation would put the property would be to provide weekend accommodation for children with disabilities from regional or rural Australia including aboriginal and Torres Strait islander children with disabilities. 32A fourth use would be to provide a program for approximately 30 younger children of school age to provide teaching of "life skills" during school hours from 9am to 3pm.