Charitable Trusts

Professor Cameron Stewart

 Introduction
Charitable trusts are express trusts which exist for a
purpose rather than for identifiable beneficiaries. In
Attorney-General (NSW) v Perpetual Trustee Co Ltd
(1940) 63 CLR 209 at 222, Dixon and Evatt JJ stated:
A charitable trust is a trust for a purpose, not for a
person. The objects of ordinary trusts are individuals,
either named or answering a description, whether
presently or at some future time. To dispose of property
for the fulfillment of ends considered beneficial to the
community is an entirely different thing from creating
equitable estates and interests and limiting them to
beneficiaries. In this fundamental distinction sufficient
reason may be found for many of the differences in
treatment of charitable and ordinary trusts.
 Differences with other express
trusts
No beneficiary principle
Public trusts
Indestructible
Courts nd AG have power of supervision
 Charitable Purpose
Statute of Charitable Uses 1601 (43 Eliz I, c.4)
the relief of poverty;
care of aged persons and the sick;
care of soldiers and mariners;
advancement of education through universities and schools;
repair of bridges, havens, ports, churches and highways;
the care of orphans;
the maintenance of prisons;
the marriage of poor maids;
support for young tradesmen and persons decayed;
the relief or redemption of prisoners or captives; and
relief for poor persons concerning the payment of taxes
 Charitable Purpose
Gilmour v Coates [1949] AC 426 at 442-3;
[1949] 1 All ER 848 at 852, by Lord
Simonds:
[F]rom the beginning it was the practice of
the court to refer to the preamble of the
statute in order to determine whether or
not it was charitable. The objects there
enumerated and all other objects which by
analogy are deemed within its spirit and
intendment and no other objects are in
law charitable. That is settled and familiar
law.
 Charitable Purpose
Royal National Agricultural and Industrial
Association v Chester (1974) 3 ALR 486 a
trust for the breeding and racing of
pigeons failed because there was no
analogous charitable purpose in the
preamble.
 Charitable Purpose
A trust for the not-for-profit publication of
law reports was found to be charitable in
Incorporated Council of Law Reporting
(Qld) v Federal Commissioner of Taxation
(1971) 125 CLR 659; [1972] ALR 127, on
the grounds that the reporting of cases
was fundamental to society in the same
way that the maintenance of roads, and
the promotion of agriculture were
fundamental and within the spirit of the
preamble
 Charitable Purpose
Commissioner for Special Purposes of
Income Tax v Pemsel [1891] AC 531 at
583. His Lordship stated at
Charity in its legal sense comprises four
principle divisions: 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 the preceding heads.
 Reform
Report of Inquiry Into the Definition of
Charities and Related Organisations
2001
Charities Bill in 2003,
Extension of Charitable Purpose Act
2004.
 Charities Act 2013
Section 5 of the Act defines charity as an
entity that is a not-for-profit entity in which all
of its purposes are: (i) charitable purposes
that are for the public benefit or (ii) incidental
or ancillary to, and in furtherance or in aid of,
the entitys charitable purposes that are for
the public benefit.
None of the entitys purposes can be a
disqualifying purpose.
Finally, an individual, a political party or a
governmental entity cannot also be a charity.
 Section 12
the purpose of advancing health ;
the purpose of advancing education;
the purpose of advancing social or public welfare;
the purpose of advancing religion;
the purpose of advancing culture;
the purpose of promoting reconciliation, mutual respect and
tolerance between groups of individuals that are in Australia;
the purpose of promoting or protecting human rights (human
rights having, pursuant to s 3(1) the meaning given by the
Human Rights (Parliamentary Scrutiny) Act 2011);
 Section 12
the purpose of advancing the security or safety of
Australia or the Australian public;
the purpose of preventing or relieving the suffering of
animals;
the purpose of advancing the natural environment;
any other purpose beneficial to the general public that
may reasonably be regarded as analogous to, or within
the spirit of, any of the purposes mentioned in
paragraphs (a) to (j);
 Section 12

the purpose of promoting or opposing a change to any

matter established by law, policy or practice in the
Commonwealth, a State, a Territory or another country, if:
in the case of promoting a changethe change is in
furtherance or in aid of one or more of the purposes
mentioned in paragraphs (a) to (k); or
in the case of opposing a changethe change is in
opposition to, or in hindrance of, one or more of the
purposes mentioned in those paragraphs.
 New Act
The new Act applies to Cth law not State
law
 Public benefit
The benefit must be for the entire public or
for a significant proportion of it: Ford & Lee
at [19070]. However, the purpose of the
trust need not be effected in the
jurisdiction for it to be of benefit to the
public: Kytherian Association of Qld v
Sklavos (1958) 101 CLR 56.
 Public benefit
To illustrate these principles, trusts for the
advancement of religion have failed where they
have the object of favouring cloistered or
contemplative orders who have little contact with
the outside world: Gilmour v Coats [1946] AC 426.
Trusts established to stop the practice of vivisection
have also failed because there would be an overall
detrimental effect to the public should such
experimentation cease: Anti-Vivisection Society v
Inland Revenue Commissioners [1948] AC 31.
 Public benefit
Re Compton [1945] Ch 123. Lord Greene MR stated
at 131,
[A] gift under which the beneficiaries are defined
by reference to a purely personal relationship to a
named propositus cannot on principle be a valid
charitable gift. And this, I think, must be the case
whether the relationship be near or distant, whether
it is limited to one generation or is extended to two
or three or in perpetuity. The inherent vice of the
personal element is present however long the chain
and the claimant cannot avoid basing his claim on it.
 Public benefit
The Compton test has been used to strike down
charitable trusts when the potential recipients of the
trust funds have been defined by reference to blood
relation, employment or contract
BUT the requirement for public benefit does not
apply to trusts for the relief of poverty: Dingle v
Turner [1972] AC 601; [1972] 1 All ER 878.
Secondly, trusts for people from particular
geographic locales do not offend the rule, as they
can be applied regardless of inherent personal
characteristics: Re Tree [1948] Ch 325; 2 All ER 65.
Thirdly, a request by the creator that family
members, or others connected by association or
contract, be given preference in the administration of
the charity, will not invalidate the trust
 Trusts for Political Purposes
Bowman v Secular Society [1917] AC 406; [1916-17] All ER
Rep 1.
A trust will be deemed to be political when it has the
primary purpose of changing the law: Anti-Vivisection
Society v Inland Revenue Commissioners [1948] AC 31.
Examples include a trust to establish a nationalised health
service, Re Bushell (decd) [1975] 1 All ER 721, or to
reform the alphabet, Re Shaw [1957] 1 All ER 745.
Royal North Shore Hospital of Sydney v Attorney-General
(NSW) (1938) 60 CLR 396
Santow J extra judicially
There is a crucial distinction, inhering in McGovern,
between permissibly changing the law within the framework
of its established policy and impermissibly reversing the
law along with its established policy. Incremental change to
the law consistent with its established direction may indeed
be permitted today.
 Trusts for Political Purposes
Attorney General (NSW) v The NSW Henry
George Foundation Ltd [2002] NSWSC 1128
Aid/Watch Incorporated v Commissioner of
Taxation of the Commonwealth of Australia
(2010) 241 CLR 539
Re Greenpeace of New Zealand Inc [2013] 1
NZLR 339
 Trusts for the Relief of Poverty
In order to be valid as a gift for the relief of
poverty the law does not require that the
persons to be benefited should be destitute,
or even on the border of destitution: Re
Gillespie (dec'd) [1965] VR 402 at 406, per
Little J. Rather a trust will relieve poverty
when it provides money to those who would
have to go short because of their financial
status: Re Coulthurst (dec'd)
Trusts for the Relief of Poverty
The Aged
The Impotent
 Trusts for the Advancement of
Education
It includes gifts to particular educational
institutions, such as schools and
universities, which, coming under the
preamble, are prima facie charitable
Educational trusts can embrace specific
purposes which are related, sometimes
loosely, to education. Trusts for
scholarships, buildings and the dramatic
arts are all examples of valid educational
trusts
 Trusts for the Advancement of
Religion
The definition of religion was provided by Mason CJ
and Brennan J in Church of the New Faith v
Commissioner of Pay-roll Tax (Vic) (1983) 154 CLR
120 at 136:
[F]or the purposes of the law, the criteria of religion
are twofold: first, belief in supernatural Being, Thing
or Principle; and second, the acceptance of canons
of conduct in order to give effect to that belief,
though canons of conduct which offend against
ordinary laws are outside the area of immunity,
privilege or right conferred on the grounds of religion.
 Trusts for the Advancement of
Religion
Advancement of Religion Generally
Trusts for Buildings, Grounds and
Cemeteries
Trusts for Prayers, Masses and
Ceremonies
Gifts to Religious Office Bearers
 Trusts for Purposes which are
Beneficial to the Community
Gifts to a Community
Public Works and Beautification Trusts
Animals and Wildlife
Protection from War and Disaster
Relief of Taxes
Public Recreation and Sport
Public Safety and Defence
 Trusts with Mixed Charitable and
Non-Charitable Purposes
Compendious gifts include gifts for
objects of benevolence and liberality,
Morice v Bishop of Durham. Additionally, if
the gift is worded to give the trustee a
discretion to choose between charitable
and non-charitable purposes, the gift will
fail. An example of such a gift is a gift for
charitable or benevolent purposes
 Enforcement and Administration of
Charitable Trusts
General Administrative Schemes
Cy-pres Schemes
Initial Impossibility
Supervening Impossibility
Satisfaction of Original Purpose
Statutory Powers
 Valid Non-Charitable Purpose
Trusts
Trusts for the maintenance of pets
trusts for the construction and
maintenance of tombs unassociated with
churchyards
 Problem
At the end of World War II, Pierre Culliford, a
dentists assistant, left his birthplace in
Belgium and emigrated to Australia. He
settled on a farm he purchased near
Sommersby. The farm was in a very run-
down condition when he purchased it. Pierre
devoted all his time, energy and resources to
establishing his beloved farm, which he
named Schtroumpfland (the name of the
Belgian village in which he was born).
 Problem
In 1989 Pierre contracted motor neurone
disease. As a result of his affliction Pierre
came into contact with the NSW Motor
Neurone Disease Research Council, an
unincorporated body, which was engaged
in research for an effective cure for motor
neurone disease, and which had its
research centre and headquarters in
Gosford.
 Problem
In April 1990, the NSW Motor Neurone
Disease Research Council was effectively
dissolved, but its functions were taken over
by a newly formed body called the Motor
Neurone Disease Research Institute of NSW.
At all relevant times the only other institution
concerned with motor neurone disease in
NSW was the Newcastle-based Motor
Neurone Disease Sufferers Association.
 Problem
As a result of Pierres disease he was
unable to work his farm and the farm pro
ceeded to decline rapidly. In May 1997
Pierre died. At the time of his death the
Schtroumpfland farm was worth
$350,000, but had ceased to generate any
income at all. It was estimated that the
costs of repair would run into the millions.
 Problem
In his will Pierre appointed his nephew Johan as
executor and trustee as well as residuary beneficiary.
Consider the following provisions left by Pierre to his
trustee in his will:
a)$50,000 to the Anti-Motor Neurone Disease Centre.
b)The whole of my beloved Schtroumpfland farm for a
training farm for orphan lads being Australians.
c) $5000 to provide a stone and marble memorial to
past and present sufferers of motor neurone disease..
 Answer
The first disposition suffers from an initial impossibility as
the gift is to a non-existing institution. Such a gift will fail
in the absence of a general charitable intention that can
be effected cy-prs. A general charitable intention is
present, given that the gift appears intended to address
the woes associated with motor neurone disease. Such
a gift is clearly a trust to aid the impotent:. A cy-prs
scheme could be ordered under the inherent power of
the court.
The court will examine the evidence of the purposes of
the association to see which association carries out
purposes as near as possible to the intention of the
testator.
 Answer
The second gift fails because of initial
impossibility. Here the initial impossibility
is related to the fact that the trust is
impractical, given the condition of the
farm. The facts of this question are very
similar to those in Attorney-General
(NSW) v Perpetual Trustee Co Ltd (1940)
63 CLR 209