Wilson's Grant; Fidelity Trustee Co Ltd v. Johnson
[1960] VR 514(Judgment by: Hudson, J)
Re Wilson's Grant; Fidelity Trustee Co Ltd
v. Johnson - [1960] VR 514
Judge:
Hudson J
Subject References:
Trusts
'Girls' Friendly Society'
Gift of land on trust for
Whether charitable trust
Whether gift to individual members.
Judgment date: 17 July 1959
Judgment by:
Hudson, J
The gift which it is recited the grantor had agreed to make is a gift of the land he was transferring and the buildings and erections thereon to the society 'to be used, occupied and enjoyed solely and exclusively for the purposes and objects for which the said society was formed and exists and for no other purposes whatsoever'. The first condition upon which it is recited the land transferred is to be held for the society, is in the same terms as the recital, save that the word 'possess' is introduced along with the words 'use, occupy and enjoy', and the reference to buildings is expanded to include all buildings which might thereafter be erected and built on the land. Obviously, it is necessary to determine the nature of the society and the purposes and objects for which it existed in 1914.
According to the evidence before me, the Girls' Friendly Society is an unincorporated body formed within the Church of England. It was originally established in England and has now active branches in all parts of the Anglican Communion throughout the world. The society has been operating in Victoria since 1882 and in the Diocese of Ballarat since 1884. A branch of the society is to be found in most parishes of the Church of England in Australia. There is a branch in many parishes in the Diocese of Ballarat. According to a report issued in 1956, there were 16. How many branches there were in the diocese in 1914 does not appear. If the expression used in the deed 'Girls' Friendly Society at Ballarat' should be interpreted as including all the branches of the society within the Diocese of Ballarat, as the defendant Johnson has apparently assumed--an assumption that may well be justified and was not challenged by any of the other parties--there will be no ambiguity and the question whether there were more branches than one in 1914 can be ignored.
The society is now organized on a Commonwealth-wide basis, but as this did not occur until 1946 this can be treated as irrelevant. Its organization for present purposes is to be ascertained from a document put in evidence and described as the constitution of the Girls' Friendly Society for Victoria. After stating the name, central rule and objects of the society and the conditions of membership, this document provides that the society shall be organized within Victoria by the constitution of a provincial council; a council for each diocese within the province; branches within each diocese; and associates and other members of the society. Provision is made for the constitution of the provincial council and that its members shall include representatives from each diocesan council. The functions of the council are stated to include the coordination and superintendence of the work of the society within the 'Province', which apparently refers to the State of Victoria.
The constitution then provides that there shall be a diocesan council for each diocese in the province, and the membership of that council is prescribed. Its members include ordinary members of the society within the diocese elected in a manner therein described. The functions of this council include the organization of the conduct of the work of the society within the diocese.
The constitution then provides that branches of the society, consisting of members of the society, may be formed within each diocese. Each branch may have its own rules but such rules and any alterations or additions thereto must be submitted to and approved by the council of the diocese within which the branch is to function, before being adopted by the branch. Subject to the constitution and to the central rule, each branch is entitled to organize its own work, manage its own funds and make its own rules.
The constitution provides that membership of the society shall be open to girls of the age of 12 years and upwards and to women, but girls between the ages of seven and 11 years may be enrolled as juniors. All persons holding office in the society and all working associates must be communicant members of the Church of England, but apparently this is not a condition of ordinary membership.
The financial provisions contained in the document require that each member shall pay a specified minimum annual subscription the amount whereof varies with the class of members to which she belongs. This subscription is, in the first place, payable by the member to her branch, but out of each subscription a certain specified minimum is payable by the branch to the funds of the diocesan council within which the branch functions. The remainder of the subscriptions is retained by the branch. Out of the funds of the diocese there has to be paid each year into the funds of the provincial council a proportion, fixed by that council, of each member's annual contribution.
I return now to certain of the earlier rules in the constitution which may be considered to throw some light upon the purposes for which the society exists. R2 is in these terms: 'The Girls' Friendly Society is a society of girls and women who accept the Christian faith and seek in the fellowship of worship, study, work and play to serve God and extend His Kingdom.'
R3 under the heading 'Objects' reads as follows: 'The objects of the Society shall be--(a) To unite girls and women in a fellowship of prayer, service and purity of life for the glory of God; (b) to offer to its members friendly comradeship and opportunities of service to others and arrange introductions from branch to branch and from one country to another; (c) to encourage its members in loyalty, faithfulness in work and home life, and self-control in all things.'
R5 states: 'All members of the society shall be governed by the following central rule: "All who join the Girls' Friendly Society pledge themselves, God helping them, to uphold the Christian standard of purity in heart and life".'
R13 requires that at all meetings of members of the society a prayer, in a form set out, shall be used.
In addition to the provincial or Victorian constitution, to which I have been referring, there was put in evidence a copy of the constitution of the Ballarat diocesan council of the Girls' Friendly Society. It merely makes provision as to the persons who shall constitute the members of the council and as to the appointment of a president and other office bearers and the holding of meetings. The council is to include up to 12 elected members from within the diocese and the election is to be at an annual meeting of all members of the society over the age of 12 years. This provision as to the election of members of the council appears to be at variance with the provincial constitution (see rule 28), but this does not appear to be material.
In the first of two affidavits sworn by her, Mrs. Johnson made no reference to the purposes of the society beyond stating that it maintains in various towns in Australia hostels where girls and young women may reside and that when the property in question was made available to the society, it was used as a hostel where girls and young women whose homes were not in Ballarat but who were earning their living there, resided under supervision and paid small fees for board and residence. It does not appear whether those eligible had to be members of the society or whether any means test was imposed.
However, in a second affidavit sworn by her, Mrs. Johnson described the objects of the society in terms of sub-paragraph (a) of r3 of the constitution which I have set out above, and then deposed that 'the main work of the society is character building to enable our young women and growing girls to fit themselves to take their proper place in the world and to provide fellowship within the Church. This necessitates training on a fourfold basis--the spiritual, moral, mental and physical aspects of their nature, and brings into play the fourfold plan of the GFS itself --worship, study, work and play'. She then referred to a publication entitled 'Hand-book for Australian GFS Leaders' which, she said, contained further particulars about the society. This book is obviously a recent publication, but Mrs. Johnson has deposed that the activities of the society have always been on a similar line and that to the best of her knowledge and belief there has been no change in principle in the constitution of the society in Victoria or in the Diocese of Ballarat since the commencement of the society. The book was, therefore, put in evidence and extensively referred to as providing evidence as to the activities of the society and the purposes for which it existed in 1914. It was from p. 4 thereof that the description contained in Mrs. Johnson's affidavit of the main work of the society was taken.
I do not propose to refer to all the passages in the hand-book that were relied on, but would draw attention only to some that I think are particularly significant. In dealing with the relation of branches to the society as a whole, reference is made to the arrangement for members of corporate services, conferences, work exhibitions, gymnasium, basketball and sports competitions, and to courses and holiday camps for leader training (p. 21). Under the heading of 'Programme planning' and the sub-heading of 'Aims and fundamentals' there appears (at p. 52) the following:--
'Our aim is to do a special job--to play a part in the work of the Church by helping our girls and young women to find and walk in the finest paths in life. Our programmes should be planned--(i) to teach those things which help the growth of body, mind and spirit; (ii) to give fellowship within the Church to our girls and their friends and to co-operate in providing opportunities for wholesome social life for the young people of the parish; (iii) to provide avenues for self-expression and for service to others; (iv) to give opportunities for healthy recreation. Thus, in our programmes, the proportion of time allotted to worship, study, work and play should be property balanced,'
A sample syllabus is given at pp. 57-8 and hints are given in some detail to assist in the arrangement of programmes for junior groups and for intermediate groups (pp. 58-62).
Mr. Aickin argued that the gift in favour of the society should be held to be a charitable gift because, from the materials before the Court, it appears that the society exists for the purpose of the advancement of religion, or, alternatively, because the gift is one that falls within the fourth class of charitable gifts described by Lord Macnaghten in Pemsel's Case, [1891] AC 531, at p. 583: 'trusts for other purposes beneficial to the community, not falling under any of the preceding heads'. He expressly stated that he placed no reliance upon s131 of the Property Law Act. In support of the first of his arguments, he contended that the proper view of the society's objects and activities is that they are directed to the teaching and spreading of Christian principles and the training and encouragement of young people in the application of those principles in the course of their daily lives. Mr. Newton, on the other hand, contended that the society is more properly described as a private society, membership of which extends to adult women as well as to girls, and the purposes of which, though they have some religious and educational features, include the provision of social and recreational benefits to the members. The provision of these benefits was, he said, probably the principal activity of the society and was certainly not something merely subsidiary or incidental to religious or educational purposes and, as to the significance of this, he referred to the case of Inland Revenue Commissioners v City of Glasgow Police Athletic Association, [1953] AC 380, at pp. 395-6, 399, 402 and 405; [1953] 1 All ER 747.
In the view I take as to the objects and purposes of the society as disclosed by the material before me, my decision on both alternatives of Mr. Aickin's argument is governed by the decision of the House of Lords in the case of Inland Revenue Commissioners v Baddeley, [1955] AC 572; [1955] 1 All ER 525.
I accept Mr. Newton's description of the nature of the society and its purposes as being fairly correct. Though I think that what Mr. Aickin claims for the society may be true, its direct objects and immediate activities go a great deal further than the teaching and application of Christian principles. It seeks not only to do this and to widen and improve the mental outlook of its members, but it also seeks, and in my view not merely incidentally, to promote the moral, social and physical development of its members, and to improve them in these respects, and to these ends provides them with opportunities of friendly association and healthy recreation and with interests and occupations that will be not only of practical use to them, but will assist in the development of character. All of this is admirable and, indeed, praiseworthy but, unfortunately, it has been held by the highest authority that purposes such as these are not charitable in the eye of the law. The purposes of the society in the view I take of them have a very great deal in common with the purposes attributed to the grantor in Baddeley's Case, supra, where gifts to serve these purposes were held not to be charitable, and failed. In that case, two conveyances of property had been made upon trust to confer certain benefits upon members or potential members of the Methodist Church resident in certain named boroughs. In the Court of Appeal (Baddeley v Inland Revenue Commissioners, [1953] 1 CH 504; [1953] 2 All ER 233, Jenkins, LJ, who delivered the leading judgment, interpreted the purposes of the trust constituted under the first of the conveyances as the promotion of the religious, social and physical well-being of the residents referred to. Promotion of well-being, he said, denoted improvement, and, therefore, he said ([1953] 1 CH 504, at p. 523) 'The object of the trust can thus be re-stated as the religious, social and physical improvement of persons resident in the two county boroughs. In other words, the object may be said to be to make persons resident in the two boroughs better people than they were before in their religious beliefs and observances, in their social relations, and in their bodily health'. The object of the trust constituted under the second conveyance was 'the promotion of the moral, social and physical well-being' of the class of beneficiaries therein described, 'moral' thus taking the place of the word 'religious' in the first conveyance. 'This', the learned Lord Justice said (at p. 525), 'makes the trust declared by the second conveyance a trust for moral, social and physical improvement. Moral improvement would, I think, undoubtedly include religious improvement, but it is a wider term, and would also extend to the inculcation of a desirable code of secular ethics; for example the secular (though also Christian) virtues of honesty, fair play, unselfishness and so on'. Further ([1953] 1 CH 504, at p. 533), he said: 'My view as to the object of the trust in the first conveyance may be summed up by saying that the object is to make the people to whose benefit it is directed better Christians, better citizens, and better physical specimens; and as to the second conveyance, by saying that the object is to make such people morally better, or, in other words, more virtuous persons, better citizens, and better physical specimens.' I have quoted at some length from the learned Lord Justice's analysis of the trusts in the case before him because it seems to me that, though of course the language he was construing was different, the objects and purposes of the trusts which he found in that case are, in my view, very similar to those of the society with which I am concerned in material respects. The latter are certainly no more confined to charitable purposes; indeed from what appears in the hand-book, I should think the emphasis upon the provision of social and recreational activities is greater. But in both the Court of Appeal and the House of Lords, the claim that the trusts in Baddeley's Case were charitable, as having been established for religious or educational purposes, or for a combination of both, was rejected. Dealing with these aspects of the matter (after having rejected a rather faint argument that the trusts might be upheld as being in relief of poverty), Jenkins, LJ ([1953] 1 CH 504, at p. 528), said: 'Secondly, is either trust for the advancement of education? The answer here must, I think, be "No", though the object in each case is akin to the advancement of education in the sense that "religious social and physical improvement" or "moral social and physical improvement" may be said to form part of any liberal scheme of education and, indeed, to comprise some of the essential purposes of any education worthy of the name. Thirdly, is either trust for the advancement of religion? The answer here, as regards the first conveyance, must be "partly, but not exclusively"; for religious improvement is only one of the three ingredients in the tripartite object. As regards the second conveyance, the answer must be: "at best no more than partly so, and only partly so in the sense that moral improvement may be said to include religious improvement".' All that was said by the learned Lord Justice, in my view, applies to the purposes of the society in the present case and leads to the rejection of the claim that its purposes are charitable because directed to the advancement of education or religion.
But the Court of Appeal in Baddeley's Case upheld the claim that the trusts were charitable, on the ground that though not within any of the specific heads of charity, they were trusts for some exclusively charitable purpose beneficial to the community and thus qualified to be treated as charitable gifts under the fourth head of Lord Macnaghten's classification. On appeal to the House of Lords, however, this view was rejected and the decision of the Court of Appeal reversed. The claim based on the fourth head appears to have been the only one seriously entertained and the judgments are devoted almost exclusively to this. Viscount Simonds, dealing with the contention that the trust was of a charitable nature within the intendment of the preamble to the Statute of Elizabeth, said ([1955] AC 572, at p. 586): 'Let it be assumed that, in the words of the learned Lord Just ice [Jenkins, LJ], the object of the trust is the religious, social, and physical improvement of the persons resident in the two boroughs: and let it be further assumed that this is the end desired for each of such persons.... Yet in the end, the question is for what purposes may the trust property be used without trespassing beyond the language of the deed. I find that it may be used for promoting and encouraging all forms of such activities, i.e. the provision of facilities for, inter alia, social and physical training and recreation "as are calculated to contribute to the health and well-being of such persons". My Lords, I do not think it would be possible to use language more comprehensive and more vague. I must dissent from the suggestion that a narrow meaning must be ascribed to the word "social": on the contrary, I find in its use confirmation of the impression that the whole provision makes upon me, that its purpose is to establish what is well enough called a community centre in which social intercourse and discreet festivity may go hand in hand with religious observance and instruction. No one will gainsay that this is a worthy object of benevolence, but it is another question whether it is a legal charity, and it appears to me that authority which is binding upon your Lordships puts it beyond doubt that it is not. Here we are not concerned to consider whether a particular use to which the trust property may be put is a charitable use: that is a question upon which different minds might well come to different conclusions. On the contrary, we must ask whether the whole range of prescribed facilities or activities (call them what you will) is such as to permit uses which are not charitable; if it is, it is not such a trust as the court can execute and it must fail'. Viscount Simonds then referred to a number of earlier authorities, including Williams' Trustees v Inland Revenue Commissioners, [1947] AC 447; [1947] 1 All ER 513, and could find no valid ground for distinguishing that case. He also referred to the decision of the Court of Appeal of Northern Ireland in Londonderry Presbyterian Church House Trustees v Inland Revenue Commissioners, [1946] NI 178--also a case in which purposes very like the present were held not charitable--and said he was in complete agreement with it. His conclusion is stated in the following terms ([1955] AC 572, at p. 589): 'Once more I submit to your Lordships that this trust must fail by reason of its vagueness and generality. The moral, social and physical well-being of the community or any part of it is a laudable object of benevolence and philanthropy, but its ambit is far too wide to include only purposes which the law regards as charitable. I need not repeat what I have said in regard to the promotion of religious, social and physical well-being, except to emphasize that to hold the one a valid and the other an invalid trust would be to introduce the sort of refinement which I deplore.'
His Lordship then proceeded to deal with the other aspect of the question whether the trust, if otherwise a valid charitable trust, ceased to be so because it was confined to members of a particular church within a limited geographical area. This raised the question whether a trust so restricted can be considered to be of 'general public utility', as required for the validity of a trust claimed to fall within the fourth head. After an examination of the relevant authorities he came to the conclusion that because of the restriction of its benefits to members and potential members of the Methodist Church, it lacked the necessary element of public benefit and for this reason also the trusts were not charitable. Lord Porter, Lord Tucker and Lord Somervell agreed with Viscount Simonds in his conclusion that the trusts could not be upheld as charitable under the fourth head, but their agreement appears to have been based on the nature of the purposes to which the trust property was authorized to be applied. Lord Porter and Lord Tucker expressly reserved their opinion on the question whether the beneficiaries constituted a sufficient class or section of the public for the purposes of the rule; Lord Reid dissented from both grounds upon which Viscount Simonds rested his conclusion.
If the necessary element of public utility was lacking in Baddeley's Case, as Viscount Simonds held it was, then it is undoubtedly lacking in the present case, where the benefits of carrying into effect the purposes of the society are restricted to members of the society belonging to branches in the Diocese of Ballarat. On the other hand, if the view expressed by Lord Reid be accepted, the section of the public benefited would probably be sufficiently large and of such a character as to enable it to be said that the element of public benefit was present. However, the present case can be decided without the necessity of choosing between the two conflicting views on this aspect of the matter, for I regard the case as excluded from the fourth head on the same ground as that on which the majority of the House of Lords in Baddeley's Case were in agreement; namely, that the purposes of the society to which the gift might be applied extend beyond the purposes which are regarded by the law as charitable.
I turn now to the alternative ground upon which Mr. Aickin sought to uphold the initial validity of the gift--that, upon the proper construction of the deed, what the grantor intended was an absolute and immediate gift to all the members of the Girls' Friendly Society in the Diocese of Ballarat at the date of the deed, to be held by them beneficially as joint tenants, but subject to any contract which might exist between them in the rules of the unincorporated body of which they were members, governing the application or disposition of their respective interests. If there was a number of branches in the diocese in 1914, presumably reference would have to be made to the rules of each branch. If, as one might surmise, these contained no reference to property appropriate to deal with the situation, it would seem to follow that all the members of the branch including the juniors aged from seven to 11 would be entitled to an equal share of the property.
Mr. Aickin supported his contention by reference to such cases as Re Drummond, [1914] 2 CH 90, and, at the time when the case was argued, was able to rely upon the view taken by the majority of the High Court in Attorney-General (NSW) v Donnelly, [1958] ALR 257; 98 CLR 538. However, since the argument judgment has been delivered by the Privy Council on appeal in the last-mentioned case and on the point relevant to that now under consideration the view of the minority, Dixon, CJ and McTiernan, J has been adopted. The effect of gifts to unincorporated bodies which are not for charitable purposes has been dealt with at length by the Privy Council in its judgment (reported as Leahy v Attorney-General for New South Wales, [1959] AC 457; [1959] 2 All ER 300), and it is unnecessary, I think, to refer to any of the earlier authorities cited to me in argument. Viscount Simonds, delivering the judgment of the Board, referred to the conflicting views in the High Court, and quoted, apparently with approval, the minority view, and after an examination of the leading authorities bearing upon the point, including the decision of the House of Lords in Re Macaulay's Estate; Macaulay v O'Donnell, [1943] 1 CH 435 n, cited a passage from the judgment of Lord Hanworth, MR, in that case, which he said went to the root of the matter (at pp. 483-4). This passage is as follows: 'The problem may be stated in this way. If the gift is in trust to the present members of the society described by their society name so that they have the beneficial use of the property and can, if they please, alienate and put the proceeds in their own pocket, then there is a present gift to individuals which is good: but if the gift is intended for the good not only of the present but of future members so that the present members are in the position of trustees and have no right to appropriate the property or its proceeds for their personal benefit then the gift is invalid.' His Lordship then referred to the indications present in the case then under consideration which were regarded as sufficient to displace the prima facie conclusion that the gift was to the individual members of the selected order at the date of the testator's death so that they could together dispose of it as they thought fit. Among those indications were the nature and constitution of the order and the nature of the property the subject-matter of the gift.
In the present case, when the terms of the gift and the conditions upon which it was made are looked at, and when regard is had to the nature of the society and its constitution, organization and membership, it is obvious, in my opinion, that the grantor did not intend that all the individual members of the society in the Diocese of Ballarat should become the beneficial owners of the property. What he intended was to create a trust which was to operate for the furtherance of the purposes of the society by ensuring to it the use for those purposes for a period of indefinite duration of the property in question. In my opinion, therefore, the validity of the gift cannot be upheld on this ground.
It follows from my conclusions that the gift was neither charitable nor one made to the individual members of the society that it never at any time took effect as a disposition in favour of the society or its members. Accordingly, the plaintiff held the legal title to the property in trust for the grantor whilst he was alive and now holds it in trust for his legal personal representatives.
Questions answered.
JJ Hedigan, for the plaintiff.
Aickin, QC, and D Dawson, for the defendant, Dymphna Johnson.
HR Newton, for the defendant, JF Wilson.
FM Bradshaw, for the Attorney-General for the State of Victoria.
Solicitors for the plaintiff: Cuthbert, Morrow, Must and Shaw, of Ballarat.
Solicitors for the defendant, Johnson: Best, Hooper, Rintoul and Shallard.
Solicitors for the defendant, Wilson: Moule, Hamilton and Derham.
Solicitor for the Attorney-General: Thomas F Mornane, Crown Solicitor.
ERIC E. HEWITT