BETWEEN : THE TRUSTEES OF THE CHRISTIAN BROTHERS IN WESTERN AUSTRALIA (INC)

Practice and procedure - Testamentary charitable trust - Directive and precatory words - Delayed proceedings to approve variation - Application for leave to intervene - Whether scheme as near as possible to the trust - Whether scheme discharges duty to proposed beneficiaries of the trust

Charitable Trusts Act 1962 (WA), s 7, s 10(2), s 15

(11 former residents of Bindoon Boys' Town) : Mr J C Curthoys

(11 former residents of Bindoon Boys' Town) : Vertannes Georgiou

McPhail v Doulton [1970] UKHL 1; [1971] AC 424

Penny v Cancer and Pathalogical [sic] Research Institute of Western Australia (1994) 13 WAR 314

Phillips v Roberts [1975] 2 NSWLR 207

Re Prison Charities (1873) LR 16 Eq 129

Re Twigger [1989] 3 NZLR 329

Re Weir Hospital [1910] 2 Ch 124

The Attorney General for New South Wales v The Perpetual Trustee Company (Limited) [1940] HCA 12; (1940) 63 CLR 209

The Attorney General v The Ironmongers' Company [1844] EngR 626; (1844) 10 Cl & F 908

Watts v Davis & Westralian Farmers' Co-operative Ltd [1965] WAR 25

Dingle v Turner [1972] UKHL 2; [1972] 1 All ER 878

McCormack v Stevens [1978] 2 NSWLR 517

National Anti-Vivisection Society v Inland Revenue Commissioners [1947] UKHL 4; [1947] 2 All ER 217

Re Coulthurst [1951] Ch 661

Re Faraker [1912] 2 Ch 488

Re Goldwater [1967] NZLR 754

Re Scarisbrick [1951] Ch 622

1 TEMPLEMAN J: The applicants, who seek to intervene in these proceedings, are 11 former residents of what was once known as the Bindoon Boys' Town but is now known as the Catholic Agricultural College, Bindoon ("the College"). The applicants object to a proposed scheme to vary, pursuant to s 7 and s 10(2) of the Charitable Trusts Act 1962 (WA), a trust established under the Will dated 21 April 1947 of Catherine Musk ("the testatrix") for the benefit of a class of persons which included the applicants. The testatrix died on 26 November 1949.

2 Proceedings to approve a variation of the trust were commenced in 2005. The first plaintiffs are the trustees of the Christian Brothers in Western Australia (Inc), the governing body of the College. The second plaintiff is Kevin Philip Ryan, the Province Leader of the Congregation of Christian Brothers Holy Spirit Province. The third plaintiff is the present principal of the College. The Attorney General for the State of Western Australia is joined in the proceedings as the defendant.

3 This application is concerned only with the question whether the applicants should be given leave to intervene in the proceedings.

4 In considering that question, it is relevant to have regard to certain aspects of the history of the College. This is set out in the affidavit of Brother Ryan, sworn on 4 April 2005 in related proceedings (CIV 2214 of 2005). For present purposes, it is sufficient to note that the College is situated on land at Bindoon given to the Christian Brothers by the testatrix in 1936; that educational activities commenced there in 1937; and that during the 1940s and 1950s, the College accommodated and trained "child migrants from Britain, along with some Australian boys, mainly with delinquent background ... who had completed their primary education but had neither interest in nor ability for secondary education as understood at that time".

5 The testatrix directed that her residuary estate (amounting to some £40,000) be held in accordance with the trust set out in cl 4(b) of her Will. The first part of this clause is in the following terms:

"(i) In settling boys from Roman Catholic Orphanage or Farming school in the State of Western Australia under the control of such Principal on farms of their own.

(ii) Advancing moneys on either freehold or leasehold farms to such boys and taking security for the repayment thereof with or without interest.

(iii) Advancing moneys to such boys to enable them to carry on farming operations on their own farms or on farms let or leased by them;

(iv) Advancing moneys to such boys for the purchase of plant and/or stock to enable them to carry on farming operations and to take security by Bill of Sale or otherwise over such plant and/or stock.

(v) To let or hire to such boys any plant and/or stock and/or equipment considered necessary or advisable to enable them to carry on farming operations.

(vi) In his unfettered discretion to forego in whole or in part any moneys so advanced or his ownership of or claim to any such plant and stock as aforesaid."

6 In my view, the construction of this part of the Will is clear. The six specified objects were intended for the advancement in life of boys who had completed their training at the College and who wished to establish themselves on the land. The applicants, who were all resident at the College in the late 1940s and 1950s, are therefore members of the class who would have been eligible to be considered as recipients of trust moneys.

7 It is to be noted that the trust does not contemplate the purchase of land for boys, but that the boys should be established on land which they had already acquired, either by purchase or lease. The reason for this approach appears from exhibit KPR 25 to Brother Ryan's affidavit: a pamphlet apparently printed in about 1948 which was used by the College in its fundraising activities. The pamphlet contains the following passage:

"Of the 17,000 acres of Bindoon it is proposed to retain sufficient acres for the Farm and Trades' School and to divide the remaining area into 125 - acre blocks. This area, after provision has been made for roughage and communal timber reserves, will provide for the settlement of 45 to 50 boy settlers."

"To establish each boy would cost £500 cash, plus the value of the land, construction of the buildings, clearing and planting of the orchard, vineyard and hay crop."

8 In my view, there is little doubt that the objects specified in that part of cl 4(b) of the Will set out above, were charitable. Although there have been many attempts to define the ambits of a charitable purpose, a purpose which falls "within the spirit and intendment of the Statute of Elizabeth of 1601" will qualify: see Watts v Davis & Westralian Farmers' Co-operative Ltd [1965] WAR 25 at 28.

9 The relevant part of the statute, which is known properly as the Charitable Uses Act 1601 (UK) is the preamble. The purposes set out in the preamble include:

"... the relief of ... poor people; ... the education and preferment of orphans; ... aid and help of young tradesmen, handicrafts men and persons decayed."

See Picarda on the Law and Practice Relating to Charities, 2nd ed; page 7.

10 I return to cl 4(b) of the Will. It continues in the following way:

"AND IT IS MY WISH that no part of the said moneys shall be expended in the erection of buildings but shall be devoted towards the objects set out in clause 4(b) of this my Will and in developing the property known as 'Boys' Town' Mt Pleasant at Bindoon by ways of pasture improvement/growing of crops/purchase of stock and plant and general agricultural operations and if considered necessary the employment and payment of salary to a manager."

11 In my view, two points emerge from this part of the clause. First, the introductory words "AND IT IS MY WISH" are precatory words. That is, they express a wish or a hope, rather than establishing a trust. I acknowledge that in some cases, what might appear to be precatory words have been held to impose trust obligations. However, each case must turn on its unique construction; and where, as here, a clear distinction appears to be drawn between the disposition of the testratrix' residuary estate "upon trust", followed by precatory words, I consider that the distinction must have been intended.

12 Further, the wish that no part of the trust money should be expended on the erection of buildings, could hardly be said to create a trust. The inclusion of that provision merely emphasises that the purpose of the trust was to promote the farming activities of the boys selected for the project. The intention of the testatrix in relation to that provision is explained by Peter Laurence Jones, a former bursar and principal of the College in an affidavit sworn on 14 October 2005 in the related proceedings. Mr Jones deposes to the fact that the principal of the College when the testatrix made her Will, was Brother F P Keaney who, Mr Jones says "was an avid builder and it likely that he would have sunk the funds straight into buildings".

13 The second point is that if, contrary to my view, the latter part of cl 4(b) did create a trust for the purpose of developing the property by ways of pasture improvements (etc) and if considered necessary, the appointment of a manager, that may well not be a charitable trust. I think it arguable that it would be a purpose trust which would need to be severed from the first part of cl 4(b) if the charitable status of the trust was to be maintained: see Jacobs' Law of Trusts in Australia, 7th ed, par 1103 and the authorities there cited.

14 I do not wish to express a concluded view on this point, which has not been raised before me. I therefore restrict my decision to the finding that, as a matter of construction, the second part of cl 4(b), which opens with the precatory words "AND IT IS MY WISH", does not create a trust.

15 There is evidence that in 1948, before the death of the testatrix, one of the boys was assisted to settle on a parcel of land at the College, albeit in the way envisaged by the Will. The newspaper "The Record" published in Perth on 18 November 1948 referred to a function at Bindoon the previous week:

"... which marked the setting up of the first young man on his own property."

This was said to be an event of some importance, representing the culmination of a long-range plan conceived by the Christian Brothers. The aim of the plan was said to be:

"to settle suitable young men on their own properties which, according to the ideals of the National Catholic Rural Movement, would be developed along the lines of diversified, rather than specialised farming."

16 Unfortunately, the venture was not a success. The evidence is that by 1949 the young man in question and his wife, had vacated the block because it was of insufficient area to support a family; there was no employment available nearby and he had no capital.

17 It is Brother Ryan's evidence that money from the trust was never used to settle boys on the land. That, I think, is common ground. It should therefore have become apparent, by (or at least soon after) the death of the testatrix, that the trust established by cl 4(b) of her Will, could not be carried into effect.

18 In those circumstances, the question whether the testatrix had a "general intention of charity" should have arisen. That is, as Dixon and Evatt JJ said in The Attorney General for New South Wales v The Perpetual Trustee Company (Limited) [1940] HCA 12; (1940) 63 CLR 209 at 225:

"... an intention which, while not going beyond the bounds of the legal conception of charity, is more general than a bare intention that the impracticable direction be carried into execution as an indispensable part of the trust declared."

19 In the present case, in my view, this question should have been answered in the affirmative. That being so, it would have been appropriate for an application to have been made in the early 1950s for the very considerable trust fund to be applied cy-près. The Charitable Trusts Act 1962, by s 7, removed the requirement to identify a general charitable intention. The point is, however, that a successful cy-près application could and should have been made under the general law before the Act came into force.

20 It is regrettable that it took over 50 years for that step to be taken, and that the fund, which by present day standards would have been worth well over a million dollars, now stands at only some $190,000. In my view, for reasons which follow, those are matters of some importance in this application.

21 The principle which the courts apply in considering whether to approve a scheme for the variation of a charitable trust, is that it must be cy-près to the original trust. Thus, in the English translation of that Norman French term, the scheme must be "as near as possible" to the original purpose.

22 The application of the principle is discussed in some detail by Picarda (supra) at pages 371 - 376, where that very learned author reviews English and Australian authorities. The proposition to be extracted from those authorities was stated succinctly by Anderson J in Penny v Cancer and Pathalogical [sic] Research Institute of Western Australia (1994) 13 WAR 314 at 318, following the decision of Tipping J in Re Twigger [1989] 3 NZLR 329. Anderson J held:

"In Twigger's case, Tipping J expressed the view that in deciding whether to approve a scheme, the court owes a duty to the testatrix to dispose of the fund as nearly as possible in accordance with the intention of the testatrix and a duty to those proposed to be benefited by the trust and to the public generally to dispose of the fund as nearly as possible in accordance with the charitable purposes of the trust and in such a way as will best serve the interest of those intended to be benefited.

...

In other words, if it is reasonably possible to devise a scheme having a close resemblance to the old trust, the trustee should do so and the court would not readily approve a scheme which did not have that degree of resemblance, even although a cy-près approach is not mandatory."

23 The specified purposes of the scheme proposed by the plaintiffs pursuant to s 7 of the Charitable Trusts Act 1962, are:

"To provide financial assistance to students of limited means attending or wishing to attend the College by the provision of Scholarships or other forms of financial assistance including but not limited to book grants, equipment grants and clothing allowances.

To provide financial assistance to secondary students of limited means in the field of agriculture."

24 In my view, adopting the words of Anderson J in Penny's case (supra), the proposed scheme does not have "a close resemblance to the old trust". Nor does it discharge the duty to those proposed to be benefited by the trust. I take that view because the evidence suggests that the testatrix intended to benefit the Bindoon boys who were resident at the College at the date of her death or those in similar circumstances who would progress through the College subsequently. The testatrix had given land to the College. It was intended that the land would be subdivided and given to suitable boys; and that the trust fund would then be available to provide those fledgling farmers with the means to support themselves and their families on the land. In that way, they would advance themselves in life.

25 An alternative view, as acknowledged in a letter dated 31 May 2004 from the Attorney General's solicitors to the applicants' solicitors is that "The purpose of the original gift was the alleviation of poverty". That is, I think, a correct interpretation, and one which should now be followed. In The Attorney General v The Ironmongers' Company [1844] EngR 626; (1844) 10 Cl & F 908 (8 ER 983) as in this case, the Court was concerned with circumstances different from those contemplated by the testator. The Lord Chancellor said (at 924, ER 989):

"It is clear that he did not contemplate this state of things; how therefore can you collect his intention at the time? How can you tell what would have been his intention if he had foreseen this state of things? We may look at his disposition in the will to see what his charitable inclinations were, and having ascertained them, then we must provide something corresponding with our opinion of those charitable inclinations. You cannot talk of his intention with respect to something that he never contemplated. The true mode is to consider what he did, and from what he did to collect what were his inclinations with regard to charity."

Although the Lord Chancellor's observation was made in the course of argument, the passage was applied by Bacon V-C in Re Prison Charities (1873) LR 16 Eq 129 at 147. A similar approach was adopted by Mahoney JA in Phillips v Roberts [1975] 2 NSWLR 207 at 221 - 222.

26 If in the present case, a cy-près scheme had been proposed in the early 1950s, there is little doubt that some other means would have been found to advance the boys in accordance with the presumed "inclination" of the testatrix, and thereby to alleviate their poverty. But now that the circumstances have changed it is necessary to respond in a different way.

27 In attempting to divine the intentions of the testatrix, it is relevant to note that she intended to benefit boys who had completed their education at the College and who were therefore in need of support to facilitate their advancement into the next stage of their lives. The testatrix was not concerned with education. I discern nothing in cl 4(b) of the Will which suggests that the testatrix intended to benefit boys attending or wishing to attend the College; or secondary students of limited means in the field of agriculture. However, the proposed scheme is directed to the education of students, albeit of limited means. I therefore consider that there is no resemblance between the scheme now proposed and the original trust. It is not to the point that the proposed scheme is charitable and beneficial to the community: see Re Weir Hospital [1910] 2 Ch 124, at 135 per Farwell LJ.

28 The case has some similarities with Re Prison Charities (supra) where charitable trusts established for the benefit of poor prisoners in the City of London failed because of the abolition of imprisonment for debt. A scheme was proposed whereby the trust funds should be treated as one charity and applied to the building, establishment and maintenance of a school for children of persons convicted of crime and undergoing sentence. Bacon V-C construed the intention of the original trust as being for the relief of poverty among adults. His Lordship found no intention to relieve children or to assist education: (1873) LR 16 Eq at 149. On that, among other grounds, the scheme was not approved. It was not sufficiently close to the charitable intentions of the original donor.

29 In this application, I am not required to determine whether the proposed scheme should be approved pursuant to s 15 of the Charitable Trusts Act. However, in deciding whether to permit the applicants to intervene, it is necessary for me to form a view about the outcome of the substantive application. My tentative view is that, for the reasons given above, it would not be proper to approve the proposed scheme. I therefore consider that it would be appropriate to permit the applicants to intervene, so that they may contribute to the formulation of a revised or different scheme which would better carry into effect the original intentions of the testatrix.

30 The applicants' proposal, as outlined in an affidavit sworn by Lionel Peter Walsh on 6 January 2006 is that the trust fund should be applied cy-près:

"to provide charitable assistance to the ex-residents of Bindoon, their spouses, families and dependants."

31 Insofar as the proposal extends to spouses, families and dependants, it may well be too wide. However, I consider that the provision of charitable assistance to the ex-residents would more closely reflect the intentions of the testatrix than the scheme proposed by the plaintiffs.

32 Of course, it is not now possible to advance persons in the applicants' class in the way envisaged by the testatrix. It may be possible only to relieve their poverty: but as I have noted above, that was, in essence, the purpose of the original trust. That is one of the consequences of the delay in bringing a cy-près application before the Court. But that is a delay for which the applicants cannot be held responsible.

33 I note from a letter dated 6 September 1993 from the Attorney General to the applicants' solicitors that only then did the Attorney become aware of the plight of former Bindoon boys, the reasons for their unfortunate circumstances, and the concern that the trust had not been carried into effect as the testatrix intended.

34 It is clear from subsequent correspondence that the applicants, through their solicitors, have consistently maintained a position which, having regard to the reasons set out above, I consider to be justified. In 1996, the first plaintiffs gave instructions to their solicitors to apply to the Court to vary the trust cy-près: but the application was not made until 2005.

35 There is a further consideration. The trust proposed by the plaintiffs would have as trustees:

• a member of the Congregation of Christian Brothers appointed by the Province Leader;

• a former student of the College at Bindoon appointed by the Province Leader.

36 The scheme proposed by the applicants would have, or include, an independent chartered accountant as a trustee.

37 One of the important duties of a newly appointed trustee is to get in the trust property. Where appropriate, this includes a duty to investigate past breaches of trust and, if necessary, to take action to obtain redress. A failure to do so may itself amount to a breach of trust. It is therefore apparent that if the plaintiffs' scheme was implemented, at least two of the proposed trustees would immediately be in a position of conflict. The applicants' proposal would avoid this difficulty.

38 I appreciate that in the related proceedings the plaintiffs and previous Principals of the College have acknowledged certain breaches of trust and seek to be relieved of liability for them. Further, the plaintiffs commissioned a report from the Chartered Accountants KPMG, who undertook an investigation into the financial history of the trust.

39 Although KPMG are independent, it is important to note that their report, dated 24 July 1997 was prepared for the purposes of the plaintiffs' applications to the Court. Further, KPMG stated:

"our sources of information have been solely restricted to the limited documentation provided to us by you [the plaintiffs' solicitors]."

40 As a result, the report was highly qualified. KPMG stated that it did not constitute either an audit or a review in accordance with the applicable Australian Auditing Standards.

41 In all the circumstances, a scheme of the kind proposed by the applicants, involving an independent accountant as a trustee, has much to commend it.

42 The plaintiffs' opposition to this application is based on a number of grounds. It is said that the applicants would need to show that they were beneficiaries of a private, as opposed to a charitable trust, established under the Will.

43 For reasons given above, I do not accept that to be the case. The applicants are clearly identifiable as members of the class the testatrix intended to benefit: McPhail v Doulton [1970] UKHL 1; [1971] AC 424.

44 It is then said that the applicants have failed to put forward any meritorious objection to the scheme proposed by the plaintiffs. Again, for the reasons given above, I do not accept this contention.

45 A further objection to the application is that the applicants' intervention would only increase the costs of the proceedings "which may result in the Trust being depleted unnecessarily". This submission appears to overlook the fact that it is the plaintiffs or their predecessors who have been responsible for the depletion of the trust fund over the past 57 years. Whether or not that situation should be remedied is a matter outside the scope of this application.

46 Although it would be regrettable if these proceedings were protracted, the more important consideration is that a proper scheme should be advanced.

47 Finally, the plaintiffs point to the fact that various services are now available to assist former Bindoon boys and child migrants. The relevant brochures are exhibited to Brother Ryan's affidavit of 10 August 2006. However, apart from the financial assistance which is available to enable migrants to be reunited with their families, the services appear to offer only counselling and support of that nature.

48 I do not doubt that these are valuable services, but I think, with respect, that they are a poor substitute for the kind of assistance for which the applicants might be eligible under a proper cy-près scheme.

49 For all the reasons given above, I conclude that the applicants have a sufficient interest in the proceedings to justify their intervention. Having regard to the present value of the trust fund, and the need to keep costs to a minimum, I think it may be appropriate now to make a representation, pursuant to O 18 r 13(2)(c) of the Rules of the Supreme Court 1971.