Royal North Shore Hospital of Sydney v. Attorney-general (NSW)60 CLR 396
(Judgment by: LATHAM CJ)
Between: ROYAL NORTH SHORE HOSPITAL OF SYDNEY
And: ATTORNEY-GENERAL (NSW)
Extension of technical education in State schools
Bequest for essay
Failure of bequest
Judgment date: 19 August 1938
This is an appeal from a decretal order of Nicholas J. whereby it was declared that "The Philip Muskett Biennial Bequest," a trust contained in the will of Dr. Philip Muskett, was a valid charitable trust, and that the trust had not failed by reason of the refusal of the Sydney Mechanics School of Arts to administer the bequest. The order referred the matter to the Master in Equity to settle a scheme for the regulation and management of the trust. The appellant contends that the trust is not a good charitable trust and that it is void as infringing the rule against perpetuities; and, alternatively, that the trust, as particularly declared in the will, has failed by reason of the refusal of the Sydney Mechanics School of Arts to administer the trust, that no general charitable intention appears in the will, and that therefore there is no power to direct the administration of the trust cy-pr? with the result that the residuary estate, the subject matter of the trust, goes as upon intestacy.
By the will the testator provided that his sister Alice Muskett should receive the net income of his estate during her life, and, after making provision for certain gifts to charities, the testator then made provision for "The Philip Muskett Biennial Bequest." The will provided that what was called a notification fund should be established for the purpose of advertising the purpose and conditions of the bequest, the notifications to be controlled by the committee of the Sydney Mechanics School of Arts. The residue of the trust estate was left upon trust "to invest the same and apply the income in manner hereinafter mentioned for the perpetuation of an award to be termed `The Philip Muskett Biennial Bequest.' " The testator declared that certain conditions "shall be observed" with respect to the conduct and management of the said award. Then followed a series of provisions for biennial essay competitions. Clause 3 of this part of the will contained the following provision:
"The objects of `The Philip Muskett Biennial Bequest' and the purpose of the essay shall be to popularize and promote the principles which I have always advocated in my published works writings or lectures namely:
- The adoption of measures to prevent the deaths of so many Australian infants.
- The improvement of the Australian national food habits.
- The extension of the teaching of technical education in State schools."
This provision was followed by a set of detailed provisions for essay competitions. The committee for the time being of the Sydney Mechanics School of Arts was charged with the carrying out of these conditions and with making awards of prizes. The essay was to be printed and was to be read in public by the writer of the prize essay. Clause 6 of the will was as follows:
"In making their award the committee shall have paramount regard to the object of the establishment of `The Philip Muskett Biennial Bequest' and subject to this primary desideratum, consideration shall be given to merit as shown in the following order of precedence:
- Literary excellence and style.
- Confirmatory testimony of views held by bequestor.
- Evidence of historical research into the causes which bring about national prosperity.
- General proof of extensive reading."
The committee of the Sydney Mechanics School of Arts has refused to undertake the administration of the trust.
It was not contended upon the appeal that the fact that the trust moneys were to be applied in providing prizes for essays prevented the trust from being of a charitable character (See Chesterman v Federal Commissioner of Taxation, [F1] at pp. 369, 371 and other cases cited by Nicholas J.). Nor was it contended that the fact that the prizes were to be given for the purpose of promoting principles held by a single person was fatal to the trust as a charitable trust (Thompson v Thompson [F2] - where the court upheld as valid the gift of an annual sum for "the best essays in statistics, politics or government, criticism and moral philosophy, etc, with reference to the doctrines mentioned in my writings on those subjects"). It was contended, however, that one of the objects of the trust, namely, No. 3, "the extension of the teaching of technical education in State schools," was non-charitable. If this were so then the gift would be void, because the trustees would be at liberty to apply the moneys towards the promotion of a non-charitable object, and in the absence of such a provision as that which is contained in s. 131 of the Property Law Act 1928 of Victoria (as to which see Roman Catholic Archbishop of Melbourne v Lawlor [F3] ), the whole gift would be void (Attorney-General for New South Wales v Adams; [F4] In re Tetley [F5] ).
This objection was based upon an argument that object No. 3 was essentially and necessarily political. It was contended that it was intended to promote, in the form of essays, propaganda for the extension of technical teaching in schools which are controlled by the State, and that therefore the execution of the trust would necessarily involve political propaganda for the purpose of changing, in the direction of extension, the policy of the Government of the State with respect to such teaching. Reference was made to the case of Bowman v Secular Society Ltd [F6] (quoted by Dixon J. in Roman Catholic Archbishop of Melbourne v Lawlor [F7] ):
"The abolition of religious tests, the disestablishment of the Church, the secularization of education, the alteration of the law touching religion or marriage, or the observation of the Sabbath, are purely political objects. Equity has always refused to recognize such objects as charitable ... a trust for the attainment of political objects has always been held invalid, not because it is illegal, for every one is at liberty to advocate or promote by any lawful means a change in the law, but because the court has no means of judging whether a proposed change in the law will or will not be for the public benefit, and therefore cannot say that a gift to secure the change is a charitable gift."
Reliance was also based upon Inland Revenue Commissioners v Temperance Council of Christian Churches of England and Wales, [F8] where a trust which could be supported, if at all, only as a charitable trust was held to be invalid because it was instituted in the main for the direct purpose of effecting changes in the law and therefore for a political purpose (See also Bonar Law Memorial Trust v Inland Revenue Commissioners [F9] ).
On the other hand, the respondent referred to Re Villers-Wilkes; Bower v Goodman, [F10] where a trust to promote a bill to establish a new bishopric was held to be a good charitable trust. Reference was also made to the comments upon the dictum of Lord Parker [F11] and upon Inland Revenue Commissioners v Temperance Council of Christian Churches of England and Wales [F12] to be found in Tudor on Charities and Mortmain, 5th ed. (1929), p. 41, and to Thompson v Thompson [F13] and Farrer v St. Catharine's College, Cambridge, [F14] which were cases relating to the promotion, by means of the writing of essays, of educational activities in relation to subjects which had a political aspect. In re Hood [F15] was relied upon as showing that Inland Revenue Commissioners v Temperance Council of Christian Churches of England and Wales [F16] was based, not upon the fact that the object of the trust was the promotion of temperance (that being an object which could be promoted by political activity), but upon the fact that the trust was "for the promotion of temperance mainly by political means, and therefore taken out of the class of charitable objects". [F17] (See a note upon the subject in the Canadian Bar Review, vol. 15, p. 566.)
In my opinion it is impossible to draw the strict line of demarcation for which the appellant contends. There are many objects, undoubtedly of a charitable character, which have or may have political aspects. For example, there are laws dealing with the establishment, maintenance and control of public hospitals for the sick poor. From one point of view any proposal for an extension of such hospital facilities may have a political aspect. The consent of the government or of a State official might be required before any such hospital could be extended or before a new hospital could be established, and possibly different officers might have different views as to the wisdom of a particular extension or establishment proposed.
But it can hardly be suggested that, because the subject of public hospitals is a matter which is dealt with by legislation and in respect of which a State government will normally have a policy, any trust for the benefit of such a hospital or for adding to the number of such hospitals or for increasing their activities is non-charitable for the reason that it is directed towards political activity. A trust for the purpose of political agitation would be invalid as a charitable trust. It is not difficult to suggest reasons of public policy which would prevent recognition by the law of the establishment in perpetuity of a trust for the promotion of a particular political object as such, or for the maintenance and advocacy during the indefinite future of the principles of a particular political party. Such trusts might become a public danger. But the words of Lord Sumner in Bowman v Secular Society Ltd [F18] should not be regarded as making it impossible to establish a trust as a charitable trust merely because the subject matter of the trust might be associated with political activity. In view of the great scope and extent of modern legislation, it is difficult, if not impossible, to suggest any subject which might not at one time or another become a subject of political propaganda.
In Commissioners for Special Purposes of Income Tax v Pemsel, [F19] at p. 583 the principal objects of charitable trusts were arranged in classes: (a) the relief of poverty, (b) education, (c) advancement of religion, together with a fourth head including a miscellaneous class described as "purposes beneficial to the community, not falling under any of the preceding heads." The relief of poverty is one of the commonest subjects with respect to which political activity is exercised. So also is education, and it needs but little acquaintance with history to be convinced that what has been regarded from time to time as the advancement of religion is a subject with regard to which acute and active political propaganda may take place. But these considerations have never prevented trusts falling within the three classes mentioned from being regarded as charitable trusts.
In this case one of the objects of the trust is to popularize and promote the principles which the testator has always advocated in his published works including - "the extension of the teaching of technical education in State schools." This is a trust for purposes of education and of extension of education. It falls within a well-recognized head of charitable trusts, and it cannot, in my opinion, be regarded as a trust to promote a particular object by political propaganda.
The next question arises out of the refusal of the committee of the Sydney Mechanics School of Arts to undertake the administration of the trust. It cannot be held that the refusal of the School of Arts to administer the trust has in itself the result of causing the trust to fail, unless, indeed, the management of an essay scheme by the School of Arts was an essential part of the charitable intention of the testator. This principle was applied in the leading case of Moggridge v Thackwell; [F20] see also In re Willis; [F21] In re Wilson Barkworth; [F22] Re Lawton. [F23]
But it is argued for the appellant that the whole scheme is so bound up with its administration by the School of Arts that it should therefore be held that the trust fails. There is, it is said, no general charitable intention disclosed in the will, but only a particular charitable intention to be carried out by means of the School of Arts and not otherwise, with the result that the trust cannot be administered cy-pr? If the trust should fail on this ground the residuary estate of the testator would pass as upon an intestacy to the hospital, which is the residuary beneficiary of the testator's sister, who was his sole next of kin.
The principle which is to be applied in resolving such a question was very clearly stated in Re Taylor; Martin v Freeman, [F24] at p. 543 (quoted by Isaacs J. in Attorney-General for New South Wales v Adams [F25] ):
"If upon the whole scope and intent of the will you discern the paramount object of the testator was to benefit not a particular institution, but to effect a particular form of charity independently of any special institution or mode, then, although he may have indicated the mode in which he desires that to be carried out, you are to regard the primary paramount intention chiefly, and if the particular mode for any reason fails, the court, if it sees a sufficient expression of a general intention of charity, will, to use the phrase familiar to us, execute that cy-pr? that is, carry out the general paramount intention in some way as nearly as possible the same as that which the testator has particularly indicated without which his intention itself cannot be effectuated.' (See also Barby v Perpetual Trustee Co (Ltd) [F26] and cases there cited.)
In the present case I agree with the view of Nicholas J. that the paramount object of the testator was not to benefit the Sydney Mechanics School of Arts, but to provide for the popularization and promotion of certain principles. The testator provides in clause 10 of the will that, in the event of public dissatisfaction manifested in the press with the administration of the scheme by the School of Arts, his trustee may request the President of the Chamber of Commerce and other representative public men to administer the scheme. This provision answers, or goes far to answer, the contention that the intention of the testator was really an intention to benefit the School of Arts (See In re Stanford; Cambridge University v Attorney-General [F27] ).
The will states in express terms that the objects of the trust and the purpose of the essay shall be "to popularize and promote" three principles. These are "general prefatory words" which indicate a general charitable intention (Cf. In re Monk [F28] ). The essay competition under the control of the Sydney Mechanics School of Arts is a means adopted by the testator for the popularization and promotion of these principles. Later in the will these principles are expressly referred to as paramount and primary. I have already quoted the provision of clause 6 which requires the committee in making its award to have "paramount" regard to the object of the trust, and subject to this "primary" desideratum to give consideration to certain features which are referred to as going to the merit of essays. It will be observed that the words "primary" and "paramount" appear in the words of Kay J. in Re Taylor; Martin v Freeman. [F29]
Therefore it appears to me that the testator has expressly stated that he has a general intention of establishing a fund for the purpose of promoting certain principles, and has then gone on to provide a particular means of achieving this object. The means is not of the essence of the trust. If the particular means is impracticable, it is open to the court to frame a scheme cy-pr?for the attainment of the general objects mentioned in the will, namely, the promotion of the three principles mentioned. I am, therefore, of opinion that upon this part of the case the judgment of the learned judge was right, though the order should be varied to make it clear that the cy-pr?scheme to be settled should be directed towards the attainment of the objects mentioned and not necessarily to the attainment of those objects through a scheme of prizes for essays.
The appellant further contends that, even if the general provisions with respect to the bequest were valid, two particular provisions were invalid. The first of these provisions is contained in clause 8(1) of the provisions relating to the bequest. It provides that the money available for the bequest shall (in part) be apportioned in the following manner:
"To the Sydney Mechanics School of Arts the sum of ten pounds half of which shall be devoted to the purchase of works of special utility for the reference library of the institution and the other half for the general purposes of the institution."
The School of Arts is not a charity. If this gift were an independent gift not associated in any way with the "bequest", the School of Arts might be entitled to receive the capital sum representing the PD5 payable every two years for the general purposes of the institution (Bowman v Secular Society Ltd; [F30] Halsbury's Laws of England, 2nd ed., vol. 25, p. 83; Elton v Sheppard; [F31] In re Lawes-Wittewronge; Maurice v Bennett [F32] ), the School of Arts not being a charitable corporation (Re Wright; Westley v Melbourne Hospital [F33] ). But the gift of the other PD5 every two years would be void as being non-charitable in character but involving the keeping of the corpus intact for an indefinite period (Thomson v Shakespear [F34] ), and the subject of the gift would fall into the charitable fund, not passing to the next of kin as upon an intestacy (In re Rogerson; Bird v Lee [F35] ). But the biennial gift of the PD10 is, I think, essentially associated with the machinery devised by the testator for the management of the whole fund by the School of Arts. The money given is itself part of the "bequest." The gift cannot be regarded as a gift to the School of Arts independently of whether or not the school accepts the responsibility of managing the bequest. As the School of Arts has declined this responsibility the gift fails, its subject matter remains part of the charitable fund, and should be dealt with in the same way as the rest of the fund.
The second provision which is attacked is the following direction: -
"I direct my trustee to accumulate one-third of the annual income arising from my residuary trust fund at compound interest to the intent that such accumulations shall be added to the corpus of my residuary trust fund and become part thereof."
This provision is followed by a direction that the other two-thirds of the annual income shall be devoted to the purposes of the bequest in providing prizes, etc It is clear that this direction for indefinite accumulation is contrary to the Thelluson Act (Conveyancing Act 1919 (N.S.W.), s. 31). Such an accumulation could only be effective for a period of twenty-one years after the death of the testator (See s. 31 (1) (a) (ii)). The testator died on 25th August 1909 and, accordingly, no accumulation could be made after 25th August 1930. The life tenant was alive during the whole of this period and therefore no accumulations have been made at all. The result is that the direction to accumulate is completely inoperative. Where, in the case of a charitable trust, such a direction fails for any reason, the result is not that the moneys directed to be accumulated pass as upon an intestacy. They are applied for the purpose of the charity and, if necessary (as in this case), a cy-pr?scheme will be settled (Martin v Maugham; [F36] and see In re Swain [F37] ).
The decretal order made by the learned judge should, in my opinion, be amended by altering the declaration that "a general charitable intention" is contained in the said will so as to declare that there is a
"general charitable intention, namely, an intention to popularize and promote the following principles:
- The adoption of measures to prevent the deaths of so many Australian infants.
- The improvement of the Australian national food habits.
- The extension of the teaching of technical education in State schools."
The parties agreed that it is not necessary in this case to have any inquiry as to whether the nature of the principles referred to in the will can be ascertained from the published works or lectures of the testator or whether his works are contrary to public policy or morals, and the part of the order which directs such an inquiry should be struck out. (It may usefully be observed that the principles for the promotion of which the charitable trust is founded are the three principles mentioned, and not any particular form of those principles advocated in the testator's works. The terms of clause 3 in the will make this clear.) The order should also be amended to make it clear that the reference to the Master is not for the purpose merely of appointing a manager of the trust in substitution for the School of Arts, and accordingly the "charitable trust" mentioned in the portion of the order relating to the settlement of a scheme should be referred to as "the charitable trust hereinbefore described." There should be a declaration that the direction to pay moneys to the Sydney Mechanics School of Arts for the purchase of books is void.
The parties have agreed that the costs of all parties should be paid out of the estate, those of the trustee of the estate as between solicitor and client, and there is no objection to making such an order in the present case.
Subject to the variations mentioned, the appeal should be dismissed and the judgment of Nicholas J. affirmed.