Monds v Stackhouse
(1948) 77 CLR 232(Decision by: Latham CJ)
Between: Monds
And: Stackhouse
Judges:
Latham CJDixon J
McTiernan J
Subject References:
Charities
Judgment date: 23 December 1948
Melbourne
Decision by:
Latham CJ
This is an appeal from a decision of the Supreme Court of Tasmania (Morris C.J.) in proceedings by originating summons in which it was held that the following disposition contained in the will of the late Albert William Monds was a good charitable gift: -
"I give devise and bequeath all the residue of my real and personal estate whatsoever and wheresoever to my trustees upon trust to convert the same into money and to pay thereout my just debts funeral and testamentary expenses and the deceased persons estate duties both State and Federal on the whole of my estate to the exoneration of the gifts hereinbefore made by me and after payment thereof to pay the net residue of the proceeds of such conversion to the Corporation of the City of Launceston to be held by the said Corporation 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 and for the production of drama entertainments and the holdings of meetings of a cultural or educational value and I direct that the Corporation of the said City of Launceston in disposing of the said moneys shall be the sole judge as to whether the objects to which they are applying this bequest are within the terms of the gift I being confident that the Corporation will use this money to the best advantage and apply the same in accordance with my wishes so far as the circumstances at the time enable them and I further declare that in my opinion the best place for the erection of such a hall or theatre is the King's Park Paterson Street Launceston aforesaid and it is my desire without fettering the discretion of the Corporation that any such theatre or hall should be erected thereon."
(at p237)
2. The following answer was given to the second question asked in the summons: -
"The Corporation may apply the property, the subject of the gift, forthwith to the provision of such a hall or theatre as may be obtained for the amount of the gift, or it may hold the same as a nucleus of a fund to provide a more costly one. The Corporation may at any future time decide that the then amount of the fund is sufficient for the provision of a hall or theatre and may thereupon apply the fund for the purpose. In doing so, the Corporation shall be the sole judge as to the suitability of the hall or theatre for the testator's purposes from the point of view of location, design, cost, size, the material of which it is to be built and any other matters of a similar character."
(at p238)
3. The learned Chief Justice held that there was only one object to which the bequest was to be applied, namely, the provision of a hall or theatre, and that the direction that the corporation should be the sole judge as to whether the objects to which it was applying the bequest were within the terms of the gift had only the effect of enabling the corporation to determine the question of the comparative suitability of halls or theatres of different types or locations. His Honour rejected the contention that the gift was an absolute gift to the corporation, holding that it was upon trust and for the object stated. He held that the gift was an immediate gift and was not rendered void by the rule against perpetuities, rejecting an argument based upon the word "nucleus" to the effect that as the fund was to be held as a nucleus it could not be applied in accordance with the terms of the trust until additions had been made to it which were sufficiently large to enable a hall to be erected, and that such additions might not be made within the period limited by the rule. His Honour pointed out that the residue was worth between 15,000 pounds and 20,000 pounds, and that it was a sufficient sum to provide a hall for the purpose which the testator specified in his will. Accordingly his Honour did not order any inquiry as to the possibility of carrying out the trust. His Honour also was of opinion that what the testator wanted to secure were the concerts, the drama, entertainments and the meetings in Launceston to which he refers in his gift.
It was held that the encouragement of music and drama and educational meetings were educational purposes, and that for this reason the gift was a charitable gift. It was also held that the gift was a good charitable gift as falling within the fourth class of charitable gifts described by Lord Macnaghten in Income Tax Special Purposes Commissioner v. Pemsel [1891] AC 531 . In that case (1891) AC, at p 583 Lord Macnaghten specified four classes of charitable trusts - trusts for the relief of poverty, trusts for the advancement of education, trusts for the advancement of religion, and trusts for other purposes beneficial to the community not falling under any of the preceding heads. His Honour held that the trust was a trust for a purpose beneficial to the community, citing Royal Choral Society v. Inland Revenue Commissioners [1943] 2 All ER 101 , a trust for the encouragement and advancement of choral singing and improving the appreciation of music by the general public; and In re Shakespeare Memorial Trust; Lytton v. Attorney-General (1923) 2 Ch 398, a trust for the object of performing Shakespeare's plays, reviving English classical drama, and stimulating the art of acting. (at p239)
4. The appellant is the son of the testator, and he and his sister are the testator's next of kin. The son appeals from the decision, contending that it was wrongly held that the gift was a charitable trust, that there should have been a declaration that the gift was void, so that the amount of the residue would not be disposed of by the will and would go as upon an intestacy. (at p239)
5. The gift is a gift for the purpose of providing a hall. It was not, in my opinion, the intention of the testator to provide money for the holding of concerts, drama, entertainments and meetings. The provisions of the will are in my opinion quite precise and particular in this respect. The residue is to be paid to the corporation of the City of Launceston to be held by the corporation as the nucleus of a fund to provide a hall or theatre and for no other purpose. That hall or theatre is to be suitable for the holding of concerts & c. There is a direction purporting to give the corporation power to determine whether the objects to which the corporation is applying the bequest are within the terms of the gift, and there is a declaration as to the place which in the opinion of the testator is the best place for the erection of such a hall or theatre as he desires. These provisions show in the first place that the gift is not a gift to the corporation to be used as the corporation chooses. It is a gift to enable the corporation to provide a hall and for no other purpose. They show, secondly, that the purpose is the provision of a hall, and not the provision of concerts & c. The attempt of the testator to enable the corporation to determine whether any particular application of the moneys is within the terms of the gift is, in my opinion, more than a declaration that the corporation is to judge of the comparative suitability of different proposed halls. It purports to enable the corporation to interpret the will and to prevent any claimants against the corporation (e.g., the next of kin) from challenging the acts of the corporation. In my opinion such a provision is invalid on the ground of repugnancy to the words of the gift and also as ousting the jurisdiction of the court and so being contrary to public policy: In re Raven; Spencer v. National Association for the Prevention of Consumption (1915) 1 Ch 673. I would therefore omit the concluding sentence of the reply to the second question in the summons. (at p240)
6. It was strongly contended for the appellant that the gift was not a gift for educational purposes. As I have said, in my opinion the gift is a gift for the purpose of a hall or theatre suitable for certain uses and not for the promotion of concerts & c. If those uses were educational the gift of a hall in order to accomplish those purposes and only those purposes would fall under the head of educational charitable trusts. But if, contrary to my opinion, the objects of the gift are to be found in the purposes for which, in accordance with the terms of the will, the hall will be suitable, I am of the opinion that the gift should not be held to be a gift for educational purposes. There are concerts which are educational, but concerts as such are not educational. Drama and entertainments may be of an educational character, but there is here no requirement that the drama and entertainments for which the hall may be used are to be of that nature. The meetings referred to in the will are meetings "of a cultural or educational value." If these words are interpreted in a strict disjunctive sense so as to refer to classes which are mutually exclusive, then it is clear that not all the meetings would be educational.
If, on the other hand, the word "cultural" is regarded as merely the equivalent of "educational," so that there is no disjunction, this difficulty, it is true, disappears, but only in respect of meetings. But, in addition to these considerations, it should be remembered that the bequest is for the provision of a hall "suitable" for the concerts & c. mentioned. There is no provision in the will that the use of the hall is to be limited to the purposes mentioned. If the hall were suitable, for example, for holding educational meetings, the trust would be performed, and there would be no breach of trust in permitting the hall to be used for meetings which could not be described as educational. Thus if the purposes for which the hall can be legitimately used are to afford the criteria for determining whether this is a charitable trust, those purposes include non-educational purposes and therefore the trust cannot be upheld as a charitable educational trust. Upon the view which I have expressed, namely that the trust is simply a trust to provide a hall or theatre suitable for certain purposes, these considerations become irrelevant. Accordingly, in considering the validity of the bequest I leave out of account the purposes for which the hall is to be used. (at p241)
7. In my opinion this gift falls within Lord Macnaghten's fourth class - "purposes beneficial to the community not being the relief of poverty or the advancement of education or religion" (1891) AC, at p 583. (at p241)
8. Under this head many purposes of widely different character have been held to be charitable, and it has proved impossible to establish any definition which would comprehend all of them. This is apparent from the conclusion of the judgment of Lord Simonds in Williams' Trustees v. Inland Revenue Commissioners [1947] AC 447 . In that case, however, it was emphasized that the mere fact that a trust related to an object of public general utility did not in itself show that it was a charitable trust: -
"a trust is not charitable and entitled to the privileges which charity confers, unless it is within the spirit and intendment of the preamble to the statute of Elizabeth (43 Eliz. c. 4)"
(1947) AC, at p 455.
I go therefore to the preamble of this statute. The preamble sets out certain objects which have ever since been held to be charitable. (at p241)
9. They are as follows: -
- "(1.)
- The relief of aged, impotent and poor people.
- (2.)
- The maintenance of sick and maimed soldiers and mariners.
- (3.)
- The maintenance of schools of learning, free schools, and scholars in universities.
- (4.)
- The repair of bridges, ports, havens, causeways, churches, sea-banks, and highways.
- (5.)
- The education and preferment of orphans.
- (6.)
- The relief, stock, or maintenance for houses of correction.
- (7.)
- Marriages of poor maids.
- (8.)
- The supportation, aid, and help of young tradesmen, handicraftsmen, and persons decayed.
- (9.)
- The relief or redemption of prisoners or captives.
- (10.)
- The aid or ease of any poor inhabitants concerning payment of fifteens, setting out of soldiers, and other taxes."
Heads (1), (2), (5), (6), (7), (8), (9) and (10) relate to relief of or assistance to poor or otherwise relatively helpless persons, by reason of age, sickness, childhood, or imprisonment. Heads (3) and (5) and possibly (8) relate to education. Head (4) in part relates to churches and therefore to religion. (at p241)
10. In my opinion heads (4) and (10) afford assistance in determining the present case. Head (10) expressly relates to relief from the burdens of taxation. It has been held that gifts in aid of rates or taxes, though they benefit rich as well as poor, are charitable: In re St. Botolph without Bishopsgate Parish Estates (1887) 35 Ch D 142; Attorney-General v. Bushby (1857) 24 Beav 299 (53 ER 373). Head (4) relates to the repair of bridges, ports, havens, highways & c., charges in respect of which would normally fall upon the public. Accordingly if a gift is made for a public purpose analogous to any of these purposes so that it is not a gift for the benefit of a limited number of individuals, but is really in relief of the public, it is prima facie a good charitable gift. The provision of a public hall is such a purpose. Such a hall, maintained under public management, such as that of a municipality, is available for the general use of the community, and, if it is provided by private benevolence, brings about a reduction of the burden of rates and taxes on the community. In In re Spence; Barclays Bank Ltd. v. Mayor, & c. of Stockton-on-Tees (1938) Ch 96 a gift upon trust to apply moneys in the purchase of a suitable site in a certain town and "in or towards" the erection on such site of a public hall, the hall to be vested in the corporation, was held to be a valid charitable trust. In Murray v. Thomas [1937] 4 All ER 545 a fund was formed for a soldiers' memorial which was to be "of a useful character possibly in the nature of a memorial hall." Here the object was held to be the public betterment and a good charitable object. See also In re Jones; Williams v. Rowlands [1947] 2 All ER 716 . (at p242)
11. In the present case there are special features which, independently of such decisions as those last cited, can be relied upon to support the gift. The gift is to the municipal corporation of Launceston. Under the Launceston Corporation Act 1941 (Tas.) the corporation has power to take and hold real and personal property (s. 4). The municipal fund may be applied to (inter alia) erecting, purchasing and maintaining buildings belonging to the corporation, the construction, maintenance and management of halls (s. 91 (v) and (x)). Accordingly, the gift in this case is a gift to a municipal corporation for a public purpose which is specifically declared by statute to be one of the purposes in relation to which the corporation may act and expend money. These provisions in my opinion make it clear that the gift in this case is a gift for a beneficial public purpose which is of the same type as the trusts with respect to bridges, ports, havens, highways & c., mentioned in the preamble to 43 Eliz. c. 4. Accordingly, on this ground also I am of opinion that the gift falls within head (4) of Lord Macnaghten's classification (1891) AC, at p 583. (at p242)
12. It is objected, however, that the gift is a gift of the residue only as the "nucleus" of a fund to provide a hall, and that accordingly it cannot take effect in the actual provision of a hall unless an addition is made to the fund provided by the testator, so that there is no longer merely a "nucleus." Such an addition might not be made within the period prescribed by the rule against perpetuities - lives in being and twenty-one years. Accordingly, it is said that the trust might not attach to the residue of the estate until after the expiration of the period prescribed by the rule, so that the trust would be void: Chamberlayne v. Brockett (1872) 8 Ch App 206; In re Lord Stratheden & Campbell; Alt v. Lord Stratheden & Campbell (1894) 3 Ch 265. Where there is a good charitable gift the money may be held in perpetuity for charitable purposes, but the gift itself must satisfy, in relation to the time of its inception, the rule against perpetuities. Thus in the case of In re Dyer; Dyer v. Trustees, Executors & Agency Co. Ltd. (1935) VLR 273 a gift of 10,000 pounds was made upon trust to apply the income in or towards the maintenance of a metropolitan permanent orchestra. There was no such orchestra and the income of 10,000 pounds was insufficient to provide it, and it was held that the gift was not an immediate gift, but was subject to a condition precedent which might not be fulfilled, if at all, until a time beyond the period prescribed by the rule against perpetuities.
Accordingly, it was held that the trust was not a good charitable trust. In the present case, however, the gift is in my opinion an immediate gift to the corporation. There is nothing to show that it is not sufficient in amount to achieve the purpose desired by the testator as soon as a hall can be built. But, further, the fact that the gift is referred to as intended to constitute the nucleus of a fund does not show that the gift is not an immediate contribution to a fund. It is not necessary, in order that a gift should be a good charitable gift, to show that it will in itself immediately and completely accomplish the purpose to which it is to be devoted. It may be observed that in the case of In re Spence; Barclays Bank Ltd. v. Mayor, & c., of Stockton-on-Tees (1938) Ch 96 the gift was a gift of moneys to be applied "in or towards the erection" of a public hall. It was not suggested in that case that the gift was invalid because it was not shown that the moneys bequeathed by the testator were sufficient in themselves to provide the hall and because he expressly contemplated that other moneys might be added to them. See also Sinnett v. Herbert (1872) 7 Ch App 232 where the gift held to be valid was a gift of the residue of an estate to be directed or applied "in aid of" erecting or endowing an additional church. (at p243)
13. In Mayor of Lyons v. East India Co. (1836) 1 Moo PC 175, at p 295 (12 ER 782, at p 826) Lord Brougham said with respect to a gift to establish a bishop in His Majesty's Dominions in America: -
"The case of Attorney-General v. Bishop of Chester (1785) 1 BroCC 444 (28 ER 1229) furnishes a direct authority for not declaring a legacy void because it was for an object which could not at the time be accomplished, and for retaining the fund in court until it should be possible to apply it. No doubt if, in that case, some years had elapsed, and no prospect appeared of an Episcopal establishment in Canada, the court would then have declared the legacy void, and distributed the fund to the parties entitled. So here, if it shall be found, either at first that there can be no application of the fund in the manner directed by the will, or that the trustees, after making the attempt, fail in it, the court will then direct the same application to be made of it, which they would have done had the bequest been at first declared void."
If it should hereafter be shown that the residue of the estate is insufficient for the erection of a hall or theatre suitable for the purposes mentioned in the will or if it is more than sufficient, the next of kin may apply for a declaration in the former alternative that the gift had failed as it would be shown to be a gift for a particular purpose which cannot be administered cy-pres , so that they would take the whole of the residue, and in the latter alternative for a declaration that they are entitled to the unexpended surplus of the residue. (at p244)
14. I am of opinion that the decision of the learned judge was right and should be affirmed, but that the answer to the second question should be varied by omitting the concluding sentence therein and that the rights of the next of kin to which I have just referred should be protected by a suitable variation in the order. A consequence of this view is that the residue should not now be paid to the corporation but that it should be retained by the trustees, with liberty to all parties to apply: see Sinnett v. Herbert (1872) 7 Ch App 232, at pp 240, 241. The Supreme Court will thus be able to superintend the administration of the fund. The answer to the fifth question in the originating summons stated that "the trustees are bound to transfer the property the subject of the gift to the corporation." This answer should be amended so as to declare that the trustees are neither bound nor entitled so to pay or transfer the property until further order. (at p244)
15. The proceedings were brought about by the manner in which the testator expressed his intentions. The appellant has succeeded in obtaining a not insubstantial variation of the order of the Supreme Court. In the circumstances of this particular case it is reasonable to order that the costs of all parties of the appeal should be paid out of the residue, those of the trustees as between solicitor and client. (at p244)