Re Hoey

[1994] 2 Qd R 510

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(Judgment by: Demack J)

Re Hoey

Court:

Judge:
Demack J

Subject References:
Charities
Non-charitable purposes
Trust for conduct of registered horse racing

Legislative References:
Trusts Act 1973 - 103; (A.Dig.3rd [9])

Case References:
Commissioner for Special Purposes of Income Tax v Pemsel - [1891] AC 531.
Inland Revenue Commissioners v McMullen - [1978] 1 All ER 230; [1979] 1 All ER 588; [1980] 1 All ER 884.

Hearing date: 1 April, 1987
Judgment date: 1 June 1987

Mackay, Qld

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Judgment by:
Demack J

This is an application for an order that:

"the Schedule of Trusts duly registered with the Deputy Registrar of Titles at Townsville on the 21st April, 1980 in respect of the Land described as Subdivision 1 of Resub-division B of Subdivision 2 of Portion 1189 containing an area of 58 acres 2 roods 12 perches situate in the County of Carlisle Parish of Hector be varied in accordance with S95 of the Trusts Act 1973-1979 by the addition of a further Clause to the Powers of Trustees that if in the opinion of the Trustees the principal object of the Trust hereby created becomes illegal or incapable of being carried out the Trustees may by resolution resolve the Trust be wound up and the assets of the Trust transfered to a Trust of a similar or like objects and being expressly for the purposes of recreation or any other objects the Trustees in their sole discretion may deem fit, alternatively, the Applicant applies for an Order that pursuant to S105 of the Trusts Act 1973-1979 the Trustees of the aforementioned Trust be empowered to transfer all their Right Title and Interest in the aforementioned Land to the Trustees for the time being of the Sarina Show Society; and for such further or other Order as this Honourable Court may deem meet."

The Schedule of Trusts referred to is a schedule to a nomination of trustees in respect of the said land whereby Thomas Lawrie Graham, Ernest John Brewer, Jack Henry O'Neill, Francis Sydney Boyle and William Alphonsus Hoey, being registered as proprietors of an estate in fee simple as trustees transfered the estate in fee simple to William Alphonsus Hoey, Allan Thomas Cummings, Morris Patrick Ivory and Leonard George Goode as trustees subject to the trusts in the Schedule.

The clauses in the Schedule which are significant for present purposes are as follows:

"It is agreed that the abovedescribed land (the expression 'land' being deemed whenever used herein to extend to comprise and include any buildings, improvements, fixtures and plant erected, effected or being thereon) shall be held by the abovenamed Trustees or the survivors or survivor of them upon the following trusts that is to say:

1.

To provide the said land for the express purpose of allowing to be conducted thereon registered horseracing.

2.

So far as it does not interfere or conflict with registered horse-racing, to allow any other sporting body to use the said land.

3.

To stand possessed of the said land to allow the same to be used for any other purpose not conflicting with the first and second purposes abovementioned.

...

7.

Without in any way limiting or restricting any of their powers to carry out the objects and purposes of the Trust, to erect any buildings upon the said land and fence in or otherwise enclose level, drain, plant and form, cricket grounds, football grounds, bowling greens, tennis courts, swimming pools, racecourse or any other formations necessary for any sports, through, over and on the said land construct dams or water-pumps, windmills, and other engines in aid of the purpose aforesaid and otherwise improve and ornament same and do all such further acts and carry out such measures as they may think fit and proper for the adaption of such reserve for recreation, amusement and enjoyment.

8.

To remove, or alter, if they deem it advisable, any fences buildings and stalls erected in upon and about the land and to alter the position of any show-ring, race track football ground cricket grounds, or any such sports grounds, as may have been formed in upon or about the land."

The nomination of trustees was executed by the parties on various dates in July 1979. The evidence in support of the application comes chiefly from an affidavit of William Alphonsus Hoey, one of the trustees. He says that the subject lands are commonly referred to as the Sarina Show Grounds. He has been a trustee of the lands since 1971. A copy of the Certificate of Title to the lands was exhibited to his affidavit. It is a poor copy but some things can be ascertained from it.

The Certificate was issued to Susan Mary Brewer, wife of Ernest John Brewer on 8 September 1914. It is conceivable that this is the same Ernest John Brewer who was a trustee of the subject lands until July 1979. He executed the nomination of trustee is by a duly constituted attorney. The first dealing noted on the Certificate appears to be a transfer to Sarina Racecourse Ltd in May 1921. Then a change of name to Sarina Racecourse Pty Ltd is recorded in March 1951. The next dealing appears to be a nomination of trustees also registered in 1951 and then the dealing to which I have already referred.

There is no material before me to explain what occurred in 1951.

Mr Hoey says that horse racing has not been conducted on the land since 1959. The Sarina Show Society has been in occupation of the land since 1980, and improvements valued at $190,000 have been erected. The constitution of the Sarina Show Society reveals that its aim is "to foster and encourage a community interest in all avenues of human endeavour and by open competition to raise the standards of such avenues as lend themselves to this end". It provides that property acquired by the Society shall be vested in three trustees, although four are proposed as trustees of the subject land.

There are clearly many unanswered matters raised by the material to which I have referred. An analysis of the relevant law helps to expose these. A useful starting point is s221 of the Property Law Act 1974 which reads:

"221. Non-charitable purpose trusts. [cf Qld. s17; Vic s18; UK s15; NZ s20] (1) Except as provided in subs(2) nothing in this Act shall affect the operation of the rule of law rendering non-charitable purpose trusts and trusts for the benefit of corporations which are not charities void for remoteness in cases where the trust property may be applied for the purposes of the trusts after the end of the perpetuity period.

(2) If any such trust is not otherwise void the provisions of s209 and s210 shall apply to it and the property subject to the trust may be applied for the purposes of the trust during the perpetuity period but not thereafter."

This provision keeps alive the rules that developed over a long period and which were designed to limit restrictions on the alienability of interests in land. The effect of s221 is that only land held in trust for a charitable purpose can be so held in perpetuity. If the trust is non-charitable and the land may be applied for the purposes of the trust after the end of the perpetuity period, the trust is void. The schedule of trusts contains no power to sell the land so it clearly envisages that the purposes for which the land is held in trust should continue in perpetuity.

Are the purposes for which the land is held in trust charitable? The purpose is the conduct of registered horse racing. The scope of the concept of a charitable trust has been established in a substantial number of cases over a long period. Generally the concept is broken into four categories, 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 (see Commissioner for Special Purposes of Income Tax v Pemsel [1891] AC 531 at 583). The first three categories are not appropriate, so can it be said that the conduct of registered horse racing is a purpose beneficial to the community?

"Trusts for the promotion of 'mere sport' have on many occasions been held not to be charitable, however beneficial to the public, Principles of the Law of Trusts by Ford and Lee (1983), para1947 . The reason underlying these decisions is that such trusts have been seen as outside the spirit and intendment of the preamble of the; Statute of Elizabeth I which laid the basis for the law of charitable trusts. It seems to me that the same reasoning must apply; to registered horse racing.

The Trusts Act 1973, by s103 has enlarged the scope of charitable trusts in the area of recreation and leisuretime occupation; "if the facilities are provided in the interests of social welfare". That condition is defined in this way:

"(3) The requirement of subs(2) that the facilities are provided in the interests of social welfare shall not be satisfied unless -

(a)

the facilities are provided with the object of improving the conditions of life for the Persons for whom the facilities are primarily intended; and

(b)

either -

(i)

those persons have need of such facilities by reason of their youth, age, infirmity or disablement, poverty or social and economic circumstances; or

(ii)

the facilities are to be available to the members or to the male members or to the female members of the public at large."

These provisions are taken from the English Recreational Charities Act 1958. There are apparently only five reported decisions under that Act, and two decisions of the Charity Commissioners (see Ford and Lee, Principles of the Law of Trusts, para1950). The passage those learned authors quote from the judgment of Walton J in IRC v McMullen [1978] 1 All ER 230 at 241, cannot in my opinion be regarded as having much weight. The actual decision of Walton J was eventually overturned by the House of Lords who found the particular trust to be charitable. That House left open the question of how the Recreational Charities Act should be construed.

However in the Court of Appeal the dissenting judgment of Bridge LJ [1979] 1 All ER 588, at 598 contains the following passage, which in my opinion, has much to commend it:

"Save in the sense that the interests of social welfare can only be served by the meeting of some social need, I cannot accept the judge's view that the interests of social welfare can only be served in relation to some 'deprived' class. The judge found this view reinforced by the requirement of s1(2)(a) that the facilities must be provided 'with the object of improving the conditions of life for the persons for whom the facilities are primarily intended'. Here again I can see no reason to conclude that only the deprived can have their conditions of life improved. Hyde Park improves the conditions of life for residents in Mayfair and Belgravia as much as for those in Pimlico or the Portobello Road, and the village hall may improve the conditions of life for the squire and his family as well as for the cottagers.

However, even with that broader view of the provisions of s103 of the Trusts Act, I am not satisfied that registered horse racing is conducted with the object of improving the conditions of life for the persons for whom the facilities are primarily intended. In the speech of Lord Hailsham LC in IRC v McMullen [1980] 1 All ER 884 at 891 reference is made to the provisions of the Eduction Act to define the scope and purpose of education. Here the relevant Act is the Racing and Betting Act 1980. From the various provisions of that Act it appears that registered horse racing is conducted for a variety of purposes but these can be summed up in the phrases in s12(2)(b), "the welfare of the racing industry and the protection of the public interest". In my opinion the first of these phrases suggests a sectional or class interest something which has always been regarded as negating a charitable trust, and the second does not suggest the improvement in the conditions of life of the persons involved but rather a desire to see that the existing conditions are not eroded.

In my opinion, then, the objects specified in the schedule of trusts are not charitable. In those circumstances the trustees hold the land subject to a resulting trust in favour of the settler of the land; For and Lee op cit para2106 and Pettit, Equity and the Law of Trusts (1966), at 104.

The orders sought in the application confuse the objects of the trust and the powers given to the trustees. The court has jurisdiction to vary the powers a trustee has, but the objects of the trust go to the very reasons why the settler established the trust, and there is no jurisdiction to alter the objects of the trust. Where those objects fail there is a resulting trust in most instances.

As I have said there are unexplained matters which need to be exposed. In the state of the evidence it is not appropriate for me to give any hypothetical opinions. It does not seem likely that anything useful will be achieved in this application, but I shall adjourn the application to a date to be fixed to allow Mr Hoey to take such steps as he may be advised.

Solicitors: KJ Seaniger and Associates (applicant).

RW LAWRENCE

Barrister