Monds v Stackhouse
(1948) 77 CLR 232(Judgment by: Dixon J)
Between: Monds
And: Stackhouse
Judges:
Latham CJ
Dixon JMcTiernan J
Subject References:
Charities
Judgment date: 23 December 1948
Melbourne
Judgment by:
Dixon J
This appeal is concerned with the validity of a residuary bequest to the Corporation of the City of Launceston. The testator, who had been a mayor of the city, devised and bequeathed his residuary real and personal property to trustees upon trust for conversion. The trustees were directed to hold the net residue of the proceeds upon trust to pay them to the corporation to be held by it as a nucleus of a fund to provide a suitable hall or theatre for the holding of concerts to provide music for the citizens of the city for the production of drama (sic), entertainments and the holding of meetings of a cultural or educational value. The will proceeded to direct that the corporation in disposing of the moneys should be the sole judge as to whether the objects to which they are applying the bequest are within the terms of the gift. This is followed by an expression of the testator's confidence in their judgment and an indication of the testator's own views as to the most eligible site. (at p245)
2. I think that the trust should be read as meaning that the hall or theatre shall be suitable for the holding of concerts & c. It should not be read as intending not only to state for what purposes the hall is to be suitable, but also to describe the purposes to which its use must be confined. The trust is concerned with the description of "hall." It must be of a description lending itself to the holding of concerts, the purpose of which is to provide music for the citizens, and to the production of dramatic entertainments and to the holding of meetings of a cultural or educational value. The trust does not assume to impose a duty on the corporation to hold such concerts, entertainments or meetings. It does not assume to fetter the power of the corporation to control, deal with, or even dispose of the hall, once it is provided. The purpose of the trust is to make a subvention to a fund enabling the council, in the exercise of its functions, to provide a hall or theatre of a particular description, or perhaps it would be better to say, adapted for particular purposes. (at p245)
3. The clause making the corporation the sole judge as to whether the objects to which they are applying the bequest are within the terms of the will, may enlarge its discretion in deciding whether a building will be or is adapted to the designated purposes but if it is pressed to the full extent of excluding an examination of the manner in which the money is spent the clause is repugnant and void: see In re Raven; Spencer v. The National Association for the Prevention of Consumption (1915) 1 Ch 673; cf. Wallace v. Wallace (1898) 24 VLR 859 . The gift is not to the corporation for its general purposes accompanied by an indication only of the testator's desires. The corporation must apply it as part of a fund in providing a hall or theatre. But the provision of a hall (and after all a theatre is only a type of hall) is a function of a municipal corporation. There is no restriction on the materials of which the hall is to be built, on its size, or on the course taken to provide it, i.e. by building, acquiring an existing hall or even leasing one. The residue is said to amount to some 15,000 pounds. It is evident that the corporation would, if the gift is valid, possess a wide discretion as to how it will proceed, with such a sum of money in hand. (at p246)
4. Trusts for the public improvement of a town or locality for the benefit of the inhabitants at large have long been considered charitable. In In re Mann; Hardy v. Attorney-General (1903) 1 Ch 232 Farwell J. applied this principle in upholding as charitable a gift to the Mann Institute, which consisted in a building provided in her lifetime by the testatrix, containing a reading room, billiard room and a hall for concerts, lectures and religious and other meetings. His Lordship said that he thought the gift was for the purpose for which the Mann Institute was founded, namely the benefit of the inhabitants.
In Murray v. Thomas [1937] 4 All ER 545 Clauson J. held that a fund collected for a war memorial, in a particular district, intended to be of a useful character, possibly in the nature of a memorial hall, was held upon a charitable trust. In In re Spence; Barclays Bank Ltd. v. Mayor, & c., of Stockton-on-Tees (1938) Ch 96 Luxmoore J. held charitable a bequest to be applied in the purchase of a site at Stockton-on-Tees and in or towards the erection thereon of a public hall to be presented to the corporation and used by it for such purposes as it might think desirable. In re Jones; Williams v. Rowlands [1947] 2 All ER 716 is to the like effect. (at p246)
5. A bequest to a municipal corporation for the purpose of enabling it to provide a hall or towards doing so is clearly charitable. Indeed any bequest to be applied in the improvement of a city in accordance with the powers of the municipal corporation for the benefit of the inhabitants appears to be charitable: see In re Bones; Goltz v. Ballarat Trustees Executors & Agency Co. Ltd. (1930) VLR 346. Here the bequest is to the municipal corporation itself, and it is made in reliance upon the exercise of appropriate powers by that authority. The City of Launceston is in fact armed with sufficient power. The Launceston Corporation Act 1941 (4 and 5 Geo. VI., No. 91) governs the capacity of the Mayor, Alderman and Citizens of the City of Launceston, which is the full name of the corporate body mentioned in the will. It has power to take, purchase, hold, demise and dispose of real and personal property, and generally to do and suffer all such things as bodies corporate may by law do and suffer (s. 4). Among the descriptions of money which are to form part of the municipal fund are "endowments and gifts of money" (s. 90 (1) (xv)). The purposes to which moneys may be applied include erecting, purchasing and maintaining buildings belonging to the corporation and the construction, maintenance and management of halls (s. 91 (v) and (x)). As might be expected, the corporate powers are expressed to cover the establishment, maintenance, improvement and extension of halls (ss. 297 and 299 (1) (I)). The powers of purchase and of compulsory acquisition of land include such purposes (s. 313). Under the construction which I place upon the gift in the will the corporation is to take the residue as a nucleus of a fund to be applied by it to provide a hall of the required description. (at p247)
6. For the reasons I have given, the provision of such a hall is a charitable purpose, and it is within the corporate powers of the body to carry it into execution. But the question remains whether the use of the word "nucleus" does not import into the gift a condition to the effect that before the trust for the charitable object takes effect the nucleus shall have been augumented to some undefined extent by additions of moneys from other sources and if so whether that makes the gift bad for remoteness of limitation. If there is a gift for a charitable purpose to arise only on a future contingent event which may or may not occur within the period allowed by the rule against perpetuities and the subject of the gift is not impressed with an immediate trust for charity, the gift is void for remoteness. (at p247)
7. There is therefore a question whether in the use of the word "nucleus" there is to be discovered an intention to make the charitable purpose depend upon a contingency or condition that before the trust attaches there must arise by additions to the moneys paid by the trustees of the will to the corporation a larger fund sufficient for the purpose. If the true meaning of the will is that the gift to charity is to be suspended until the happening of such a contingency or the fulfilment of such a condition without any restriction of time, so that there is a condition precedent to the gift which may occur at any time in the indefinite future, in that case doubtless the gift would be void. But even if there is a condition of like character but the intention is that unless the event occurs within a reasonable time the gift shall not take effect that might be enough to save its validity. To say this assumes, of course, that a reasonable time could not exceed the period of twentyone years limited by the rule against perpetuities. (at p248)
8. If it were implied that the "nucleus" must grow into a sufficient fund within a reasonable time the effect would be in substance to impose a condition that if after a reasonable time had elapsed the fund was still insufficient the gift should fail and there should be a resulting trust to the trustees of the will of the moneys in the hands of the corporation. But apart altogether from the possibility of making such an implication I think that there is no sound foundation for the contention that the gift offends the rule against perpetuities. (at p248)
9. The principle by which the question is governed involves what may seem to be a refined distinction, but it is a clear distinction. (at p248)
10. If there is a gift impressed with an immediate trust for a charitable purpose it is good, notwithstanding that the actual application of the fund in carrying the purpose into execution must await an event that may or may not happen within the period prescribed by the rule against perpetuities. But if such an event is made the occasion, not of the application or expenditure of the fund, but of the subjection of the fund to the charitable trust itself, that is another matter. A trust which only arises or becomes operative upon a condition which may not occur within the period allowed by the rule against perpetuities is bad for remoteness notwithstanding that it is a charitable trust. Where the trust has a particular charitable object in view, to which the fund cannot be applied until the happening of a future contingent event, it may appear that the gift to charity is subject to a condition precedent, so that if it is capable of fulfilment outside the period allowed by the rule the trust will be void. But consistently with the selection of a particular charitable object as a means of effecting his charitable aims, a testator may manifest a more general charitable intention: cf. Attorney-General (N.S.W.) v. Perpetual Trustee Co. Ltd. (1940) 63 CLR 209 , at pp 219, 223-225. If the general charitable intention is impressed upon the fund from the beginning it is immaterial that the particular means chosen for effectuating the intention may await an uncertain event capable of occurring outside the prescribed period. For there is a gift to charity operative at once and only the particular application is suspended. (at p248)
11. I shall not discuss the authorities which support the foregoing statement. It is enough, I think, to give the following references: Sinnett v. Herbert (1872) 7 Ch App 232; Chamberlayne v. Brockett (1872) 8 Ch App 206; In re Lord Stratheden & Campbell; Alt v. Lord Stratheden & Campbell (1894) 3 Ch 265; In re Gyde; Ward v. Little before North J. (1898) 78 LT 449, and in the Court of Appeal (1898) 79 LT 261 (adopting a different view of the will); In re Swain; Monckton v. Hands (1905) 1 Ch 669; In re Finkelstein; National Trustees Executors & Agency Co. of Australasia Ltd. v. Michael (1926) VLR 240; In re Monk; Giffen v. Wedd (1927) 2 Ch 197; In re Dyer; Dyer v. Trustees, Executors & Agency Co. Ltd. (1935) VLR 273 and the discussion in Tyssen, Charitable Bequests, 2nd ed. (1921), p. 154, et seq. The decided cases show that before adopting a construction which makes the gift to charity depend upon a condition precedent consisting in an uncertain future event, it is necessary to be satisfied that such is the true meaning of the will. If no overriding and more general intention in favour of charity operating from the beginning is discoverable, it may be found that what looks like a condition precedent is in truth a condition subsequent. In some cases it has been tacitly assumed, as it would seem, that the given trust is such that either it must be carried into execution or its failure must appear within the period allowed. (at p249)
12. In the present case I do not think that a more general charitable intention than to provide, or assist in providing, a public hall in Launceston can be ascribed to the testator. But I do not think the use of the word "nucleus" ought to be treated as importing into the gift a condition precedent suspending the operation of the gift indefinitely. It means no more than the words "as a contribution towards" would have meant if the will had been written "as a contribution towards the provision of a suitable hall." (at p249)
13. The corporation is chosen as the donee because it is the authority whose responsibility it would be to build such a hall. It might do so out of funds it decided to raise for the purpose. If the corporation accepts the gift, the questions must be determined by the corporation what kind of hall it will erect or provide and where. I do not think that the will means that the corporation may simply invest the money until at some future date, if ever, that body is minded to build a hall. No positive duty to proceed in the matter is laid upon the corporation, at all events expressly. But an abandonment of the project for which the testator gave his money would mean a failure of the purpose of the gift and a consequent resulting trust to the trustees of the will. To relinquish all consideration of the question, take no active steps and simply invest the money, would be to authorize the court to conclude that the purpose of the gift has failed. The gift is to an administrative body in aid of the exercise of one of its powers for the public benefit. It is for the donee to decide whether and when and how it will exercise its power. The only event upon which the application of the money in providing a hall depends is the exercise of the donee's authority or discretion. There is no external contingency but only the action of the donee-trustee itself. The case is peculiar because the power it must exercise is a public administrative authority and not one conferred by the trust. It is moreover a power involving or possibly involving it in a liability, as for instance if it uses its borrowing powers. But from the beginning the money is in its hands impressed with a trust for a public purpose. A trust for the building of a public municipal hall is charitable. But I think it is possible to go further and say that a trust to enable or help a public authority to build or otherwise provide such a hall is charitable. To contribute to the funds of a municipal corporation for the purpose is to impress a fund immediately with a charitable trust taking effect at once. If the corporation fails to exercise its powers the gift fails. But otherwise it is a good charitable bequest. (at p250)
14. In my opinion the residuary bequest in the present case is not bad for remoteness of limitation. (at p250)
15. The appeal, I think, fails in substance. But I think that the appellant is right in his complaint that the actual order made on the originating summons may operate to his prejudice if it should turn out that the testator's purpose is impracticable and for that reason the trust fails, or if, at the other extreme, a surplus remains after the purpose is fulfilled. To prevent this I think that it is desirable to vary the order. It might be enough to substitute for the answer "Yes" to the first question the answer "It is a valid charitable gift," and to substitute for the answer "No" to the sixth question the answer "Not unless it is found impracticable to carry into execution the trust expressed in the gift mentioned in question 1, or unless it is found that a surplus of such proceeds remains in the hands of the said corporation after such trust has been fully executed." (at p250)
16. But as a matter of administration the Court may go further in protecting the fund, and I see no objection to the order proposed. (at p250)
17. Subject to this variation I think that the appeal should be dismissed. (at p250)