Roman Catholic Archbishop of Melbourne v Lawlor & Ors; His Holiness the Pope v National Trustees, Executors and Agency Co of Australiasia Ltd & Ors
51 CLR 11934 - 0523C - HCA
(Judgment by: Starke J)
Between: Roman Catholic Archbishop of Melbourne
And: Lawlor & Ors
Between: His Holiness the Pope
And: National Trustees, Executors and Agency Co of Australiasia Ltd & Ors
Judges:
Gavan Duffy CJ
Rich J
Starke JDixon J
Evatt J
McTiernan J
Subject References:
Charities
Gift to establish Catholic daily newspaper
Validity
Dependent relative gift
Taxation and revenue
Estate duty
Alteration of statutory order of application of assets
Contrary provision
Legislative References:
Property Law Act 1928 (Vic) No 3754 - s 131
Administration and Probate Act 1928 (Vic) No 3632 - s 33; s 34; s 163; Second Schedule, Part II
Estate Duty Assessment Act 1914 No 22 - s 35
Judgment date: 23 May 1934
MELBOURNE
Judgment by:
Starke J
Patrick Lawlor made the following bequests by his will:
"To the Archbishop of Melbourne and the Bishops of Ballarat, Bendigo and Sale, my shares in the Herald and Weekly Times, Australian Paper and Pulp and Gordon and Gotch, as a nucleus, to establish a Catholic daily newspaper; to the same beneficiaries, my shares in Goldsbrough Mort and Company, to found a farm, or supplement those already secured, for the training of delinquent or orphan boys, to country life; the income from those two benefactions, to be used for Catholic education, or any good object the Hierarchy may decide, until sufficient funds are in hand, to found the daily paper and secure the farm. ... If the bonds and stock reserved for probate and any liability of mine, are insufficient for the purpose, and all the cash bequests mentioned, the more readily saleable (advantageously realizable) to be sold to meet the liability; the balance, if any, and the remainder of my estate shares etc., not mentioned or bequeathed, to be realized at an opportune time, in an active market, and divided equally one half to Our Holy Father the Pope, for the propagation of the Faith, and the other half to the Hierarchy in addition to the bequest, already made, to establish a Catholic daily paper ..."
The Supreme Court of Victoria has declared the gift of shares as a nucleus to establish a Catholic daily newspaper, the gift of the income to be used for Catholic education or any good object the Hierarchy may decide, and the gift of one half of what I call the residue of the estate, to the Hierarchy, in addition to the bequest already made to establish a Catholic daily newspaper, are each and all of them invalid, and not charitable bequests. The decision involves a consideration of the Property Law Act 1928 of Victoria (No. 3754), s. 131, but for the moment I pass by that section and consider the questions raised as if it had never been enacted. In my opinion, it is not necessary to wander through what Lord Sterndale M.R. described as "the tangle of cases as to what is and what is not a charitable gift" (In re Tetley; National Provincial and Union Bank of England v Tetley, [F17] at p. 266), for the purpose of determining whether the declaration of the Supreme Court was right or wrong. It may be that a gift to establish a Catholic daily newspaper is, in a general way, conducive to the good of religion and education, but Dunne v Byrne [F18] is quite decisive that it is not a good charitable gift. (See also In re Davidson; Minty v Bourne.) [F19] The objects and purposes of a Catholic newspaper are not, and can by no means be, confined to strictly charitable purposes. The conduct of such a paper is "open to such latitude" in the advancement and propagation of the religious, education, social, political, economic and other views or policies of the Catholic Church, that no Court could control or execute the trust. It is equally clear that a gift "to be used for Catholic education, or any good object the Hierarchy may decide" is not a good charitable gift. "It is undoubtedly the law that, where a bequest is made for charitable purposes and also for an indefinite purpose"-here any good object-"not charitable and no apportionment is made by the will, so that the whole might be applied for either purpose, the whole bequest is void" (Hunter v Attorney-General, [F20] at p. 315; Attorney-General v National Provincial Bank). [F21] It was contended that the gift of one-half the balance or remainder of the testator's estate to the Hierarchy, in addition to the bequest already made to establish a Catholic newspaper, was an unconditional gift to the Hierarchy, apart from and in addition to the bequest already made to establish a Catholic newspaper. But in my opinion the gift is an addition to the former gift, and for the purpose of establishing a Catholic newspaper.
The provisions of the Property Law Act 1928, s. 131 must now be considered. The section is as follows:
- "(1)
- No trust shall be held to be invalid by reason that some non-charitable and invalid as well as some charitable purpose or purposes is or are or could be deemed to be included in any of the purposes to or for which an application of the trust funds or any part thereof is by such trust directed or allowed.
- (2)
- Any such trust shall be construed and given effect to in the same manner in all respects as if no application of the trust funds or of any part thereof to or for any such non-charitable and invalid purpose had been or should be deemed to have been so directed or allowed."
The passage already cited from Hunter v Attorney-General [F22] indicates the mischief or supposed mischief that the section was designed to remedy. But the section cannot be applied to a gift directing the application of the fund for a single purpose-e.g. establishing a Catholic daily newspaper-the charitable and non-charitable elements of which cannot be disentangled, separated or delimited. The section might have protected the gift of the income from the two benefactions to be used for Catholic education, or any good object the Hierarchy might decide, but for the fact, as the Supreme Court held and in my opinion rightly held, that the gift was not an independent gift, but a gift of income resulting from the benefactions before mentioned for founding a newspaper, and that gift failing there was no fund to provide the income.
Another question raised in this appeal is-in what manner and in what order and out of what part or parts thereof is the testator's estate applicable towards the discharge of the funeral, testamentary and administration expenses, debts, and probate, estate and succession duties and the payment of pecuniary legacies? The Supreme Court declared that the funeral, testamentary and administration expenses, debts and Victorian probate duties and the pecuniary legacies are payable out of the bonds and stock of the testator not specifically bequeathed in or by the said will. The thirty-fourth section of the Victorian Administration and Probate Act 1928 provides:
- "(2)
- Where the estate of a deceased person is solvent his real and personal estate shall subject to Rules of Court and the provisions hereinafter contained as to charges on property of the deceased and to the provisions (if any) contained in his will be applicable towards the discharge of the funeral testamentary and administration expenses debts and liabilities payable thereout in the order mentioned in Part II. of the Second Schedule to this Act.
- (3)
- Nothing in this Part shall affect or be construed as affecting the provisions of section one hundred and sixty-two and one hundred and sixty-three relating to the payment of duty under Part VI. of this Act."
The Second Schedule, Part II., prescribes the order of application of assets where the estate is solvent, as follows: "1. Property of the deceased undisposed of by will, subject to the retention thereout of a fund sufficient to meet pecuniary legacies." It is unnecessary for the purposes of this case to set out further the order of the application of assets, but clause 8 of Part II. provides that the order of application may be varied by the will of the deceased.
These provisions correspond with English legislation, the Administration of Estates Act 1925 (15 Geo. V. c. 23), which has been the subject of consideration and decision by several learned Judges and by the Court of Appeal. It has been held that "property of the deceased undisposed of by will" is not confined to property of which no disposition has been made by the will of the deceased-that is, property in respect of which the deceased dies intestate-but includes lapsed or void gifts; for example, a lapsed share of residue is "properly described as property undisposed of by will" (In re Lamb; [F23] In re Tong; Hilton v Bradbury; [F24] In re Worthington; Nichols v Hart). [F25] Again, it has been held that the order of application prescribed by the Administration of Estates Act, subject to variation by the provisions of the will, is that debts, funeral and testamentary expenses and legacies are primarily payable out of the property of the deceased undisposed of by will (In re Lamb; [F26] In re Worthington). [F27] This Court is not bound by these decisions, but it seems desirable that we should treat them as an authoritative construction of the Victorian Act (cf. Sexton v Horton, [F28] at p. 244; Trimble v Hill). [F29] Unless this statutory order is varied by the will of the deceased, or by statute, the answer to the question above mentioned would be: Primarily out of the property of the deceased undisposed of by his will. But the learned Judges of the Supreme Court were of opinion that the will had varied the order of the application of the assets. This variation they found in the words "if the bonds and stock reserved for probate and any liability of mine, are insufficient for the purpose, and all the cash bequests mentioned, the more readily saleable (advantageously realizable) to be sold to meet the liability; the balance, if any, and the remainder of my estate shares etc., not mentioned or bequeathed, to be realized at an opportune time, in an active market, and divided equally." In re Kempthorne; Charles v Kempthorne [F30] was relied upon, but in that case the residuary gift was "subject to and after payment of my funeral and testamentary expenses and debts and the legacies bequeathed by this my will." In In re Tong; Hilton v Bradbury [F31] the words of the will were: "I direct my executors to collect the income from the remainder of my estate and to pay" as therein directed, and it was insisted that the word "remainder" must mean what was left after the funeral and testamentary expenses, debts and legacies had been paid. Romer L.J. [F32] thus dealt with the matter:
"There is nothing in this Act which prevents or is intended to prevent executors from paying expenses, debts and liabilities out of the first assets coming to their hands available for the purpose; and Part II. of the ... Schedule really only deals with the ultimate adjustment of the burden as between the parties becoming entitled to the testator's estate. Therefore the use of such a word as 'remainder' does not seem to me to make any difference. Such words throw no light on how as between the persons having beneficial interests in the remainder the liability for expenses and debts is to be apportioned."
In the present case, the testator equally fails to indicate any intention that the funeral and testamentary expenses etc shall be paid in any other mode than that prescribed. The will indicates the most convenient order of realizing his property for payment of his funeral and testamentary expenses etc, but there is nothing to suggest that such expenses are thrown on any fund or property in exoneration of the residue, and no direction altering the order of the application of the assets of the deceased for the payment of such expenses. The duty upon the estate of deceased persons payable under the Victorian law is specially dealt with by the Administration and Probate Act 1928, ss. 34 (3), 162, and 163. It is stated in the affidavits that duties on the estate and assets of the deceased are also payable under the laws of the Commonwealth and the States of New South Wales and Queensland. But these duties are not referred to in the order of the Supreme Court, and neither in that Court nor in this was any argument directed to the matter. It is unwise, I think, to express opinions and make declarations with respect to these duties without argument, and I prefer not to do so. The parties, in case any doubt or difficulty arises, can go back to the Supreme Court under the order of that Court, which reserves liberty to apply.
The result is that the order of the Supreme Court in answer to questions 1, 2, and 3 of the originating summons should be affirmed, but reversed as to question 10 and the following order substituted:
- (1)
- The funeral, testamentary and administration expenses and debts (other than as hereinafter mentioned) should be discharged in accordance with the order of application of assets set out in Part II. of the second schedule of the Administration and Probate Act 1928, and primarily out of the property undisposed of by the will of the deceased.
- (2)
- The duty payable under the Administration and Probate Act 1928 of Victoria upon the estates of deceased persons should be paid according to the provisions contained in s. 163 of that Act.
- (3)
- As to any other duties on the estate or assets of the testator payable under the laws of the Commonwealth, Victoria, New South Wales, or Queensland, the question is reserved.