Royal North Shore Hospital of Sydney v. Attorney-general (NSW)60 CLR 396
(Judgment by: DIXON J)
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
The questions upon which this appeal turns are, first, the validity of the provision for what the testator calls his "biennial bequest" and, second, the existence and disclosure in his will of a charitable intention wider and more general than the execution of the particular directions which the provision gives.
The testator, a medical man who died in 1909, had, according to his will, advocated three principles in the course of his publications and lectures. One was the adoption of measures for the prevention of Australian infantile mortality. Another was the improvement of the food habits of Australians. The third was the extension of the teaching of technical education in State schools. Subject to certain gifts and to a life interest in favour of his sister, who died in 1936, the testator directed that his residuary estate should be held upon trusts for purposes in which these principles played a part. His scheme was unusual, if not strange.
He appears to have been interested in the Sydney Mechanics School of Arts, a body incorporated by statute with objects described as "the intellectual improvement of its members and the cultivation of literature, science and art." His will requires that, after his sister's death, an award called the "Philip Muskett Biennial Bequest" shall be made in every second year for an essay written by a competitor who has spent at least half his life in Australasia. He provides that the objects of the "bequest" and the purpose of the essay shall be to popularize and promote the three principles mentioned. The "bequest" is to be administered by the committee for the time being of the Sydney Mechanics School of Arts, unless his trustee forms the opinion that there is "a persistent and unmistakable demonstration of public dissatisfaction expressed in the columns of the press with the administration of the committee." In that event his trustee may, in its discretion and so far as it thinks necessary, request "representative public men" to take over the administration, But, when the trustee thinks the necessary changes in the methods or personnel of the committee have been made, the administration of the "bequest" is to be restored to it.
The testator gives particular directions as to the maximum length of the essay, which he fixes at an ample measure, and as to the subsidiary qualities that are to be regarded as meritorious. But he says that the committee is to have paramount regard to the object of the "bequest," which he describes as the "primary desideratum." He then proceeds to direct a public reading of selected parts of the winning essay in the lecture hall of the School of Arts at a time and under conditions which he specifies with some particularity.
The funds for carrying out this plan are to be provided by his residuary estate in a manner which may be briefly described as follows. To begin with his trustee is to set aside PD1,000 for what the testator calls a "notification fund." The income of this fund is to be used for notifying to the public or advertising the purpose and conditions of the "bequest," including, no doubt, the time and conditions of the biennial essay competition. The fund is to be supplemented by an annual subvention from the general residue, beginning with PD1, and increasing by PD1 a year; but it is not clear whether the amount is to be added to capital or income. The testator directs that one-third of the income of the general trust fund, i.e., the residuary estate, shall be accumulated and added to the corpus, and the remaining two-thirds of the income shall be devoted to the purposes of and incidental to the award as he sets them forth. He provides that PD10 a year shall be given to the School of Arts, half of which shall be devoted to the purchase of books for the reference library and the other half to the general purposes of the institution and then, after meeting the expenses of publishing the winning essay and the general cost of carrying out the scheme, the balance consisting of at least two-thirds of the whole sum available for the purposes of the "bequest" for the particular year is to be awarded to the winner.
The validity of these provisions was attacked upon the grounds, first, that the perpetual or indefinite accumulation of one-third of the income meant that it and a corresponding undivided part of the ever increasing corpus was devoted to no person or purpose and, second, that one of the three principles to which the essay must be directed did not involve a charitable purpose, namely, the principle of extending technical education in State schools.
The first of these grounds raises a strange problem. The actual accumulation directed is controlled by the Thellusson Act and cannot take effect. But, if there be a sufficiently general charitable purpose impressed upon the fund, this would mean only a cy-pr?application of the part of the income the accumulation of which is directed. But the ground of attack denies the foundation upon which the operation of this principle rests. For the contention is that one-third of the income of the fund must always be turned back to increase the fund so that for ever one-third of the income will not reach the charitable purpose. Considered as a mere notional proportion, one-third of the income of the fund would appear to be destined to perpetual accumulation. But, if the intended fate of the actual sum representing one-third of the income of any given year is considered, it will be found that two-thirds of the income it produces in the following year goes to the purposes of the essay competition and one-third to the corpus. The income of this one-third for the next succeeding year is dealt with in the same way and so on indefinitely. The general nature of the provision shows that the sole intention of the accumulation is to create a large fund for the fulfilment of the testator's plan and a consideration of the ultimate use of the produce of each particular sum to be placed to corpus makes it clear that in the end the moneys to which it gives rise would be applied to that purpose.
In my opinion there is enough to satisfy the requirement that the purpose of the accumulations must be the fulfilment of the purpose said to be charitable. Accordingly, if in fact the objects of the provision are all charitable, the one-third part of the income, the accumulation of which is directed, might be applied cy-pr?
But the second ground upon which the validity of the trust is attacked is that one of those objects is not charitable. No one disputes that the spread of technical education is a charitable purpose. Nor is it denied that the promotion of such an object by awards or rewards for writing essays is a valid method of fulfilling such a purpose. But the contention is that because, according to the testator's intention, it is in State schools that technical education is to be extended, his essay competition really amounts to the institution of a propaganda to influence the administration of State education and that this is a political, and not a charitable object.
The case law dealing with the distinction between charitable purposes and political objects is in an unsatisfactory condition, but the basal ideas upon which it rests may be seen. It is, of course, quite clear that any purpose which is contrary to the established policy of the law cannot be the subject of a good charitable trust. But there is a further consideration arising from the very nature of the doctrine by which charitable trusts are supported. Under all four heads of the well-known classification to which such trusts are referred, an essential element is the real or imputed intention of contributing to the public welfare. A coherent system of law can scarcely admit that objects which are inconsistent with its own provisions are for the public welfare. Thus, when the main purpose of a trust is agitation for legislative or political changes, it is difficult for the law to find the necessary tendency to the public welfare, notwithstanding that the subject of the change may be religion, poor relief, or education. When the subject matter is none of these and the case must fall under the fourth class, viz., that of undefined purposes for the public good, the difficulty becomes even greater.
Again, where funds are devoted to the use of an association of persons who have combined as a political party or otherwise for the purpose of influencing or taking part in the government of the country, it is evident that neither the good intentions nor the public purposes of such a body can suffice to support the trust as charitable.
But, in the present case, the main purpose is the spread of technical education. Under a system of State education those whom the testator doubtless regards as needing it are necessarily to be found in State schools. It is not his purpose to establish a means of affecting or interfering with government administration. No doubt he is seeking to mould opinion or spread doctrine on the subject of technical education. His purpose is to provoke the study of the subject and to propagate general views for the purpose of producing a widespread opinion coinciding with his own. But I do not think that his direction or purpose can fairly be regarded as coming within the objection that it is political in character. In my opinion none of the purposes of the essay competition is invalid.
But the committee of the Sydney Mechanics School of Arts has declined the performance of the task which the testator's plan imposes upon it. I think that its statement may be regarded as a renunciation or disclaimer. This raises the question whether the provision does not fail because it cannot be carried out by the means and in the manner chosen by the testator. In so far as his scheme depends upon the School of Arts undertaking its administration it must clearly fail. The first question, I think, is to inquire as a matter of interpretation how far his choice of the Sydney Mechanics School of Arts is an integral or essential part of his essay competition. After studying the provisions of his will. I have come to the conclusion that it discloses no intention of establishing his detailed plan of making an award biennially for an essay unless the committee of the Sydney Mechanics School of Arts undertakes the institution and control of the matter in the first instance. It is true that he provides for the possibility of public dissatisfaction with their control becoming so great that a change is necessary. But the clause in which he makes the provision is carefully guarded and the conditions prescribed are stringent. It seems clear that, except as a last resort he meant that the plan should not leave their control. The clause operates only after the essay competition has been established under the committee's control. He did not contemplate the establishment or inauguration of the plan by any other body or person. I do not think that it can be inferred that a plan into the details of which the nature and identity of the Sydney Mechanics School of Arts entered so much was intended to be carried out in the manner and form provided notwithstanding that the committee of that body refused to undertake it. Accordingly I am of opinion that, so far as the charitable purposes disclosed by the provision depend upon the establishment of the essay competition prescribed by the will, they must fail.
But it does not follow that the whole disposition fails so that there is an intestacy under which the next of kin would be entitled. If the particular manner of advancing the three purposes or principles which the testator propounds is limited to an essay competition, the disposition does so fail. But, if a wider intention exists and that intention does not exceed the limits of legal charity, the gift may be administered cy-pr?by a court of equity as a good charitable disposition. The question whether the substantial intention of such provisions as those now in question is to advance the ultimate charitable purposes but by the particular means directed or, on the other hand, the intention is confined to giving effect to the particular plan as the main or essential object in view is commonly said to be one of construction. No doubt it involves an ascertainment of the intention implicit in the testamentary dispositions. But it depends less on the construction of language than upon an estimate of the relative importance attached to the particular and to the general by the author of the scheme. In most cases in which an elaborate scheme is directed of a charitable nature the testator has been animated by a desire to achieve some object which may be stated in wider terms than his detailed plan. But it is not legitimate to infer from the fact that his plan is a means to an end that the accomplishment of the end is his substantial purpose. The question is whether, independently of the means he has chosen, he had any charitable intention. Sometimes the question is stated as a decision between regarding a particular plan as subordinate to the end and regarding it as the end in itself. Sometimes it is stated as an inquiry whether the particular means are essential or a necessary condition. Again, the question has been described as amounting to an inquiry whether the particular means prescribed should be considered as a direction engrafted upon a gift to a main purpose. But, however, it is stated, the matter to be considered is whether the will should be understood as meaning that the fund should be devoted to the attainment of the end, although the precise method directed should prove impracticable. In the present case it is clear that the testator attached great importance to the procedure which he had worked out for the propagation of his views after his death. I have had some hesitation in coming to the conclusion that his will discloses any wider intention. But, on the whole, I think that, notwithstanding the manner in which his desires are set out, it does sufficiently appear that they are the detailed means which he has thought out for the purpose of effectuating an object which he had set up. That object is the propagation of the opinions or views which he says he has advocated in his lectures and published writings with reference to Australian infantile mortality, Australian food habits and technical education in State schools. It does, I think, appear on the face of the provision that he has proceeded from these main purposes to a detailed scheme for their achievement. They are the chief, principal, paramount, or substantial purpose of his disposition. I am, therefore, of opinion that the so-called 'bequest' may be carried out cy-pr?
A small biennial sum of ten pounds is given to the Sydney Mechanics School of Arts and the gift raises a separate question. Does the gift fail as a result of the disclaimer? On the whole I think it does. It is given out of the money available for "The Philip Muskett Biennial Bequest." The gift takes its position in the will amongst the financial provisions for carrying out the essay competition. Part of it is given for the purchase of works of special utility for the reference library in the institution, and part for the general purposes of the institution. It is not easy to follow the train of thought embodied in the provision. Perhaps it was intended as a reward to the institution. But, however that may be, the testator appears to have regarded it as part of the scheme for the essay competition.
Subject to a variation of the decretal order, I think the appeal should be dismissed.
1 (1926) A.C., at p. 130; 37 C.L.R., at p. 318; (1923) 32 CLR 362
2 (1844) 1 Coll. C.R. 381; 63 E.R. 464
3 (1934) 51 CLR 1
4 (1908) 7 C.L.R. 100
5 (1923) 1 Ch. 258
6 (1917) A.C., at p. 442
7 (1934) 51 C.L.R., at p. 33
8 (1926) 42 TLR 618 ; 136 L.T. 27
9 (1933) 49 TLR 220
10 (1895) 72 L.T. 323
11 (1917) A.C., at p. 442
12 (1926) 42 TLR 618 ; 136 L.T. 27
13 (1844) 1 Coll. C.R. 381; 63 E.R. 464
14 (1873) L.R. 16 Eq., at pp. 23, 24
15 (1931) 1 Ch. 240
16 (1926) 42 TLR 618 ; 136 L.T. 27
17 (1931) 1 Ch., at p. 252
18 (1917) A.C., at pp. 452-467
19  A.C. 531
20 (1803) 7 Ves. 36; 32 E.R. 15
21 (1921) 1 Ch. 44
22 (1933) 50 TLR 82
23 (1936) 3 All E.R. 378
24 (1888) 58 L.T. 538
25 (1908) 7 C.L.R., at pp. 124, 125
26 (1937) 58 CLR 316
27 (1924) 1 Ch., at pp. 77, 78
28 (1927) 2 Ch., at p. 210
29 (1888) 58 L.T., at p. 543
30 (1917) A.C., at pp. 440, 441
31 (1781) 1 Bro. C.C. 532; 28 E.R. 1282
32 (1915) 1 Ch. 408
33 (1917) V.L.R. 127; 38 A.L.T. 150
34 (1860) 1 DeG.F. & J. 399; 45 E.R. 413
35 (1901) 1 Ch. 715
36 (1844) 14 Sim. 230; 60 E.R. 346
37 (1905) 1 Ch. 669
38 (1917) A.C., at p. 442
39 (1934) 51 CLR 1
40 (1887) 35 Ch. D., at p. 463
41 (1913) 1 Ch., at pp. 320, 321
42 (1844) 14 Sim. 230; 60 E.R. 346