(G) Fourth Class

Trusts for other purposes beneficial to the community within the spirit and intendment of the Statute of Elizabeth

William’s Trustees v IRC
Facts: Fund given to establish in London a place for the promotion of the “moral, social, spiritual and educational welfare” of Welsh people.

Held: No charitable purpose. Trusts for mere recreation, hospitality and entertainment are not enforceable.
To be valid, a charitable trust must be both:
(a)    for the benefit of the community and
(b)    beneficial in a way which the law regards as charitable

Downing v FCT
Walsh J: “I do not doubt that there may be gifts for the benfit of a class of ex-serviemen which are not good charitable gifts. For example the object of a gift may be merely of a social or of a sporting character or of some other character such that the purpose could not be classed as one which the law would recognise as charitable. But… valid charitable trusts may be created for purposes relating to the welfare and to the assistance of ex-servicemen or of their dependants…if the purposes can reasonably be considered to advance the safety and security of the country…A trust may be considered to tend towards that result by means of providing aid comfort and encouragement to the armed forces or a section of them, notwithstanding that those who will directly benefit from the trust are those who have ceased to serve or their dependants.”

Incorporated Council of Law Reporting v FCT
Facts: Trust set up for the law reporting of QLD SC cases; council was a non-profit organisation.

Held (Windeyer J): “In any country governed by the common law, the publication of the reports of decisions of the superior courts is essential for the continuance of the rule of law. The continuity of the common law and its characteristic capacity for development and change depend upon those who are concerned with its administration having a means of knowing the current course of precedents…Their publication has always been for the public benefit; but in time past it was not a charitable undertaking because it was done for private profit. The purpose that the council serves is a purpose of public utility, the advancement of legal learning by publishing reports. This combination of objects and purposes suffices to make it a charitable institution.”

(H) Schemes

•    What if:
-    The terms of the charitable gift are not clear?
-    The recipient of a gift in a will doesn’t exist at the date of T’s death?
-    A charitable institution ceases to exist after receiving a gift?
-    A charitable institution refuses to accept a gift on the present terms but will if they are removed?

General vs Particular Charitable Intention
-    Particular: if T’s intention is construed to be to benefit a particular institution or purpose only, then the gift will fail if the institution doesn’t exist or refuses to accept the gift. This means the gift will result back to wherever it has come from.
-    General: If T’s intention exhibits a general charitable intention – the gift may be applied to other comparable charitable purposes.

•    Charitable Trusts Act 1993 NSW, s10: A general intention is presumed unless “there is evidence to the contrary in the instrument establishing the charitable trust.”

General Scheme vs cy-pres scheme

General Scheme

•    The problem: intention is vague but clearly charitable. The testator has a genral charitable intention, but has failed to specify a particular purpose, or, the machinery for carrying out the purpose fails.
•    The issue is one of interpretation: what did the T really mean for this gift?

Cy-Pres Scheme

•    The issue is the court consciously substitutes another charitable purpose BUT

•    There must be a general charitable intention AND
-    Initial impossibility or impracticality
-    Supervening impossibility or impracticality
-    Surplus funds after effecting the intended charitable purpose.

Re Lysaght Deed
Facts: Gift to the Royal College of Surgeons to provide scholarships for British born students “not of Jewish or Roman Catholic faith.” The college refuses to accept the gift on these discriminating terms.
Held: The gift was varied because: “The impracticability of giving effect to some inessential part of the testatrix’s intention cannot…be allowed to defeat her paramount charitable intention.”
-    Court found that the testator wasn’t really a “bigot”. They also held that there was a supervening impossibility or impracticality. The testator really wanted the College to decide the scholarship.
-    This meant the court could institute a cy pres scheme by removing the restrictive provision to ensure that the College could still get the money.

Phillips v Roberts
Facts: Testatrix leaves property to “improve biblical knowledge” by establishing a new church.
Held: Giving effect to the intentions of the testator was clearly impractical, but the Court held that the gift was generally charitable (looking at the will primarily). Problem as to how to apply the principle. The intentions of the testator were clearly to establish a new church as she was very unhappy with the current faiths. There were two schemes suggested. Trustees suggested the money should benefit the Institute of Archaeology. The AG wanted the fund to be divided among seminaries. Hutley J was prepared to assess evidence from testatrix’s associates to infer what her reactions would have been to the way her property was disseminated.
Evidence from friend of testatrix disclosed that she would not have wanted money to go to seminaries. Money can go to the Institute of Archaeology.

(I) Mixed Purposes

Three types of case:
1.    Charitable purposes mixed with other indefinite, non-charitable purposes and the trustees are given no discretion to choose among them: eg Morice case
2.    Trustees have discretion to apportion between charitable purposes and sufficiently certain non-charitable objects.
3.    Clear overriding intention to create a trust for charitable purposes, however some of the purposes stated are not strictly charitable, or the trustees could use their discretion to choose non-charitable purposes (i.e. alternative ways of applying the property which are not charitable).

Under the general law, 1 and 3 would fail because
•    In 1, the trustees would be obliged to distribute to non-charitable purposes
•    In 3, the trustees would be at liberty to distribute to non-charitable purposes

However, 2 would be valid, and the trustees would be required to apportion the fund between the valid charitable purposes and the certain objects.

Under the Charitable Trusts Act 1993 NSW s23, category 3 would be rendered valid by constructing the trust to exclude any non-charitable purpose. (Note: The statute will not be used to render valid a vague and uncertain gift which is not clearly charitable.)
Effect of s23 can be to save the charitable purpose and treat it as the sole purpose (i.e. sever the non-charitable purpose)

Leahy v AG NSW
Facts: A gift ‘upon trust for such order of nuns of the Catholic Church or the Christian Brothers as my executors and trustees shall select. This allowed trustees to select a purely contemplative order (of the kind held non-charitable in Gilmour v Coates) or comply with the trust in a charitable way and select an ‘active’ order of nuns.

Held: The trust, involving a ‘composite expression’ can be saved by construing it as applying purely for a charitable purpose (i.e. property goes to non-contemplative order) and not the non-charitable purpose, under predecessor to s23.