Perpetual Trustees Tasmania LTD v Tasmania

BC 200003210

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(Judgment by: Slicer J)

Perpetual Trustees Tasmania Ltd
v. The State of Tasmania

Court:

Judge: Slicer J

Subject References:
Success
Wills, probate and administration
Construction and effect of testamentary disposition
Generally
General principles of construction
Scheme of will
Bequest to trustee for the benefit of animal welfare
Not a bequest to the person for his own benefit
Charities
Charitable purposes
Other purposes beneficial to public
Protection of animals
Gift for 'purposes related to animal welfare'
Valid charitable bequest

Case References:
Re Hollole deceased - [1945] VR 295
Re Pollock deceased - [1964] VR 554
Attorney-General (SA) v Bray - (1964) 111 CLR 402
Murdoch v The Attorney-General - (1992) 1 Tas R 117
Attorney-General (NSW) v Donnelley - (1958) 98 CLR 538
Leahy v Attorney-General - [1959] AC 457
Perpetual Trustees Co Ltd v John Fairfax & Sons Pty Ltd - (1959) 76 WN (NSW) 226

Hearing date: 5 May 2000
Judgment date: 16 June 2000

Hobart

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Judgment by:
Slicer J

[1] The testatrix executed her will on 13 May 1997 and died two years later.

[2] On 28 June 1999, the executor appointed under the will, authorised Perpetual Trustees Tasmania Ltd to obtain letters of administration which were issued on 30 July 1994. The relevant provisions of the will are:

"1 I APPOINT my neighbour IAN MATTERSON, magistrate (herein referred to as 'my trustee') executor and trustee of this my will.

...

3 I DECLARE I have no living relatives or next of kin.

4 I GIVE AND BEQUEATH free of all duties death estate succession or otherwise State or Federal the following:

(a) to my helper JOYCE WHITE of Fern Tree the sum of $10,000.00 together with all my jewellery that is held in the safety deposit box at the ANZ Bank ( Sandy Bay branch) at the time of my death

(b) ...

5 I GIVE DEVISE AND BEQUEATH to my friend JOYCE WHITE my two faithful canine friends BEA-BEAU and HONEY-BEA or should she decline to accept and care for them then to such person or persons as my Trustee shall in his absolute discretion determine on the basis that from the residue of my estate my Trustee shall set aside the sum of twenty thousand dollars ($20,000.00) in trust for the care and upkeep of the said dogs and so long as the said dogs are produced alive to my Trustee he shall pay to the person caring for the said dogs such amount whether by way of income or capital as the trustee shall in his absolute discretion determine for the maintenance and care of the dogs and as from the date on which my trustee in his absolute discretion shall decide the last of the two dogs shall have died to hold the remainder of the said trust UPON TRUST for the Animal Protection Society of Tasmania for the general purposes of that society AND I DECLARE the receipt of the secretary, treasurer or public officer thereof shall be a full and sufficient discharge to my trustee for the said legacy nor shall my trustee be bound to see to the application thereof.

6 I EMPOWER my Trustee in any sale of my real and personal estate no matter where situate to sell or dispose of the same or any part thereof either by public auction or private contract either in one lot or in parcels and either for cost or on such terms as to credit as my trustee shall deem expedient.

7 I EMPOWER my trustee notwithstanding the trust for sale hereinbefore contained to retain for so long as my trustee shall in his absolute discretion think fit any real estate property owned by me at the date of my death with power should my trustee in his absolute discretion think fit to allow such person or persons as may be caring for my dogs BEA-BEAU and HONEY-BEA to live with the said dogs on the property at 4 Melrose Court, Sandy Bay for such period and upon payment of such rental as my trustee shall in his absolute discretion determine AND I DECLARE that pending conversion the net yearly produce of such property shall be treated as income for the purposes of the trusts of this my will.

8 I DIRECT my Trustee after payment of my just debts funeral and testamentary expenses and all death estate and succession duties whether State or Federal and whether within Australia or the United States of America upon the whole of my dutiable estate (hereinafter referred to as 'my residuary estate') to hold same upon trust for his use absolutely.

9 THAT for the purposes of any sale of my estate pursuant to cl6 of this my will I declare the following specific items of real and personal nature that will form part of my residuary estate:

a

Real estate situate at 4 Melrose Court, Sandy Bay in Tasmania

b

Real estate situate on the Isle of Pines, Cuba

c

Investment with the Swiss Bank Corp, Paradeplatz 6, 8010 Zurich, Switzerland

d

Deposit account with the Santa Barbara Savings and Trusts, Santa Barbara, California, USA

e

Deposit account with the ANZ Bank, Sandy Bay branch

f

Contents of security box at ANZ Bank, Sandy Bay branch

g

Collection of prints and etchings at 4 Melrose Court, Sandy Bay

h

All furniture and fittings at 4 Melrose Court, Sandy Bay

i

Any shares or debentures owned by me at the date of my death

j

Any other property owned by me at the date of my death and not specified above;

AND I DECLARE that from the accumulation of my residuary estate my trustee shall hold same IN TRUST with the income so accumulated being used by my trustee at his absolute discretion to use for such purposes related to animal welfare as he shall see fit in perpetuity

AND I DECLARE the receipt of the secretary, treasurer or public officer of any society thereof shall be a full and sufficient discharge to my trustee for the said monies nor shall my trustee be bound to see to the application thereof.

10 I DIRECT that my trustee IAN MATTERSON shall whether or not he accepts the office of trustee under this my will be employed as solicitor to my trust estate and shall be entitled to make all usual and proper charges for his professional services in the administration of the trusts of this my will that he would have been entitled to make if not a trustee and so employed and I further empower my trustee to employ in performing the trusts of this my will such solicitors accountants valuers estate agents and other professional persons as my trustee shall think necessary and expedient and to pay such fees and charges in respect of such employment as are customary and reasonable for work of that nature."

[3] Joyce White, the trusted housekeeper for the testatrix, was also a signatory to the bank accounts of the testatrix. Ian Matterson had been a neighbour of the testatrix for some ten years and had assisted her over that time with advice and practical household and maintenance tasks. The testatrix had unsuccessfully requested him to draw her will and had been advised by him to obtain the services of a practising solicitor. The applicant seeks resolution of the following questions:

"1 Whether upon the true construction of the Will of Beatrice Grass Thompson the bequest to Ian Matterson of the whole of the dutiable estate of the testator to hold the same on trust for his use absolutely is:

(a)

a gift of all the residuary estate to Ian Matterson absolutely, or

(b)

a gift to Ian Matterson absolutely of only that property of the testator upon which duty is payable by reason of the death of the testator

2 If the answer to question 1(a) is yes, whether the gift of all the residuary estate to Ian Matterson absolutely prevails over the trust contained in cl9 of the Will

3 If the answer to question 1(b) is yes, or if the answer to question 2 is no, then whether upon the true construction of the Will that part which states 'AND I DECLARE that from the accumulation of my residuary estate my trustee shall hold same IN TRUST with the income so accumulated being used for my trustee at his absolute discretion to use all such purposes related to animal welfare as he shall see fit in perpetuity' constitutes a valid charitable trust

4 If the answer to question 3 is yes, whether that bequest is applicable cy-pres and if so, by what scheme should the gift be applied?

5 That the Court give directions pursuant to s25A(3) of the Trustee Act 1898 as to notice that the applicant is required to give for the purposes of s25A(1) of the Trustee Act 1898."

[4] Questions 4 and 5 do not require answer at this time. Before consideration of the remaining questions, it is appropriate to mention that Ian Matterson has taken no part in the proceedings and in his affidavit, sworn for another purpose, states:

"11 Should the Court find that Cl8 of the Will is valid but that Cl9 fails for perpetuity, it is my intention to set up a valid Trust which would allow investment income, (and, if appropriate, capital) to be utilised specifically for animal welfare."

[5] The scheme of the will is clear. The testatrix intended to provide a bequest for her helper and to provide for her pet animals. The trustee was empowered to postpone the sale of the residence so as to permit the animals to continue living in a familiar place with a carer. Any moneys remaining at the time of the death of the dogs were to be held on trust for the Animal Protection Society of Tasmania. Her neighbour and confidante, appointed executor and trustee, was authorised to act as solicitor for the estate on a professional basis.

[6] Cl8 contains a number of elements. The trustee was:

(1) to pay debts, funeral and testamentary expenses;

(2) to pay death and succession duties, wherever arising, imposed on the whole of the dutiable estate;

(3) to hold the same upon trust for his use absolutely.

[7] The term for "his use absolutely" must be considered in the light of the other powers afforded the trustee in the other parts of the will. The trustee had absolute discretion as to the amount of payment, income or capital, to be made for the care of the animals (cl5), and had wide powers of sale (cl6) with an absolute discretion to postpone sale, permit occupancy by others and determine the appropriate rent. Irrespective of the effect of cl8, the trustee was given absolute discretion to determine "such purposes related to animal welfare ... in perpetuity". Thus the term "for his use absolutely" is referable to other powers granted elsewhere in the will.

[8] Three possible meanings can be given to the terms of cl8:

(1) that the whole of the estate not specifically bequeathed is to be granted to Ian Matterson for his own use and benefit;

(2) that part of the estate, namely that which is subject to death and succession duties, is bequeathed to Ian Matterson;

(3) Cl8 is not a bequest at all but a direction to the trustee to hold the residual estate on trust for the purposes of cl9.

[9] The testatrix provided in cl10 for the possibility that Ian Matterson might decline to accept the office of trustee. In that event, cl8 would operate to vest the estate in a person appointed by law. That person would be unknown to the testatrix and it is inconceivable that the testatrix intended to vest all or portion of her estate to a stranger. She did not name Ian Matterson in cl8, as was done elsewhere, but vested the estate in a trustee which might or might not have been Ian Matterson. Had she intended to bequeath all of the estate to him, then there was no point in including cl6, cl9 and cl10 in the will. Had the testatrix intended Ian Matterson to receive all of the property which was subject to death and succession duties, then there was no point in including the description "any other property owned by me at the date of death and not specified above" in cl9(j). Cl8 must be read in conjunction with cl9. All of the property not bequeathed in accordance with cl4 and cl5 was to vest in the trustee absolutely to hold on trust to be used by him "at his absolute discretion to use for such purposes related to animal welfare as he shall see fit in perpetuity".

[10] The term "absolutely" relates to the discretionary purpose stated in cl9. Cl8 is a direction which coupled with cl9 sets out the terms of the bequest.

[11] That conclusion accords with the approach taken in the cases of Re Hollole deceased [1945] VR 295 and Re Pollock deceased [1964] VR 554. In the former case, the terms of the will concluding:

"... to my executor I give my second watch and chain ... The balance of my real and personal estate I give to my trustee and executor to be disposed of by him as he may deem best."

were held to create a residual trust, which failed for uncertainty, rather than a bequest to the trustee. In the latter case, the residue of the estate was left to the trustees to sell and convert into cash as and when they might think so to do. In relation to the effect of the devise, Gillard J said at 557 - 558:

"... Finally, it must be implied from the use of the expression 'my trustees' and the contrast with the description of the beneficiaries in the other clauses, that the gift was intended by the testatrix to be a joint one to trustees in that capacity, and not to them, either personally or in their executorial capacity. There was undoubtedly a devise to the trustees of the legal estate in the land.

The purpose of the gift to the trustees was to sell and convert the same into cash. This purpose, together with the express gift to 'my trustees', suggests that a trust was intended to be created by the testatrix and a duty imposed upon the trustees."

and concluded at 559:

"... As will be seen, it is my view that the will effectively disposed of the residue to the trustees in trust. Consequently, the condition for invoking s48 is absent in this will and, therefore, the provisions of that section do not apply: see Williams v Arkle, supra; Neo v Neo (1875), LR 6 PC 381, at p388; Re Roby; Howlett v Newington, [1908] 1 Ch 71, at p77. Finally, by her choice of the expression 'my trustees' as the object of the disposition, the testatrix significantly indicated the character of the recipients rather than giving a description of the persons to receive the beneficial estate. She did not use their personal names as she had done in the earlier dispositions of beneficial gifts. Further, that she did not refer to them in their capacity as her executors. In my view, she was making the gift to persons jointly to carry out the function of trustees thereof. Whilst no expression 'in trust' is used, this does not mean a trust has not been constituted: see Saltmarsh v Barrett (1861), 29B 474; 54 ER 711; 3 DeG F & J 279; 45 ER 885; Barrs v Fewkes (1864), 2 H & M 60; 71 ER 382. As has already been noticed, this is the only clause with any semblance of fiduciary duties being imposed. Nevertheless, the testatrix did appoint trustees and this is the only clause where that expression is used other than in the appointment. Accordingly, it would appear that the testatrix was intending the residue of estate to go to the trustees as such to carry out certain duties in respect thereof. The clause indicated the duty to be undertaken, namely, to sell and convert into cash."

[12] There was no bequest to the trustee in cl8 of the will.

[13] The second issue which arises is whether the terms of cl9 create a valid charitable trust. In Murdoch v The Attorney-General (1992) 1 Tas R 117 Zeeman J held that a will which contained a general term did not create a valid trust. In Murdoch, Zeeman J was required to consider the term of a will which provided, inter alia, "for a bequest to be granted to a named veterinary surgeon for the benefit of animals generally". His Honour determined that the term of the bequest failed since the purpose or object of the bequest was "not charitable per se". His Honour's view was stated at 131 - 132:

"A consideration of these authorities leads me to the conclusion that a gift for the benefit of animals is not charitable per se. Something more, by way of a benefit to the community, is required. If the object of the gift is to prevent cruelty to animals such a benefit may readily be perceived. It must immediately be observed that the present gift is not expressed to be for the protection of animals but for 'the benefit of animals generally'. All animals of whatever description equally were intended to be made the object of the bounty of the testator. The purposes for which the gift is to be applied are not expressed to be and cannot be construed as being limited to animals of any particular description or in any particular geographical location. The terms of the clause are such that animals of all types, wherever found, might equally take the benefit. It is the benefit of animals rather than the benefit of the community served by benevolence towards animals that is the expressed object. In some circumstances the achievement of one object will tend to further the achievement of some other object. This is not such a case. Certain things which might be done for the benefit of animals are of no benefit to the community and may even be contrary to the best interests of the community (eg National Anti-Vivisection Society v Inland Revenue Commissioners [1948] AC 31). It is not enough to say that some things done for the benefit of animals will be for the benefit of the community. Tasmania stands alone amongst the States in not having any statutory provision to save trusts which are for mixed charitable and invalid non-charitable purposes. It cannot be said that the gift is a valid charitable gift. It fails."

[14] I do not take issue with that formulation. However, the term "animal welfare" contains a meaning different from benefit. The term of the bequest in Murdoch might have been used by the veterinary surgeon to obtain improved equipment in his surgery on the basis that better services for animals would be for their benefit. But the term welfare connotes public interest. A gift for the benefit of animals generally cannot be said to be for the benefit of the community. But the protection of homeless or unwanted animals, the suppression of cruelty to animals and the provision of veterinary treatment for stray animals have been held to be ones of charitable purpose (Attorney-General (SA) v Bray (1964) 111 CLR 402; Re Weaver; Trumble v Animal Welfare League of Victoria (1963) VR 259).

[15] One approach which might be taken is to concentrate on the term "animal welfare", a description not used in the will which was the subject matter of Murdoch. The rationale that in order to be charitable the terms of a trust must be of benefit to humankind can be accepted when the prevention of cruelty to animals, the prevention of the destruction of species, imbalance within the environment with the attendant harm to animals, are matters which enhance the life of humans.

[16] Subsequent to Murdoch, Parliament enacted the Variation of Trusts Act 1984 (Tas), ("the Act") which adopted, in part, the Report on Variation of Charitable Trusts (Law Reform Commission of Tasmania Report No 38 (1984)). The Act, s4 relevantly provides:

"4 -- ...

(2) A charitable trust is not invalid by reason only that a non-charitable purpose is, or could be taken to be, included in any of the purposes to, or for which, an application of any of the trust funds is directed or allowed by the trust.

(3) A trust of a type referred to in subs(2) is to be construed and has effect as if no application of any of the trust funds to or for any such non-charitable purpose were directed or allowed by the trust."

[17] Different approaches have been taken as to whether there is a precondition to the application of such a provision in that the predominant purpose must be clearly of a charitable nature and purposes which detract from that purpose might be excised or whether a wide purpose might itself be limited so as to leave a valid predominant purpose. The competing approaches are discussed in Principles of Law of Trusts, Ford and Lee, para19460, para19630; Trusts Including Charitable and Non-Charitable Purposes - Special Statutory Provisions (1973) 47 ALJ 68, Hardingham.

[18] The question has been the subject of judicial interpretation and criticism (Roman Catholic Archbishop of Melbourne v Lewin (1934) 51 CLR 1, Leahy v Attorney-General [1959] AC 457, Attorney-General (NSW) v Donnelley (1958) 98 CLR 538). In this case, it is not necessary to consider the issues in depth. If the term "animal welfare" is sufficient to establish a valid charitable trust because it enhances the lives of persons and the desired objects of society, then even on the more stringent test, possible meanings which might detract form a valid purpose (eg, an organisation which provides holidays in the South of France for Labradors) can be excluded. Non-charitable purposes might be construed to include the term "animal welfare", but the direction to the trustee can be seen as confining discretion to purposes which advanced the welfare of animals. This is not a case such as Perpetual Trustees Co Ltd v John Fairfax & Sons Pty Ltd (1959) 76 WN (NSW) 226 where the legislation could not be invoked to save a bequest to "deserving journalists". Here the predominant purpose is "welfare". The requirements of the Act are satisfied in that:

(i) the purpose or object is so predominantly charitable that the intention of the testatrix ought be assumed;

(ii) the expression as used might be capable of connoting charitable and non-charitable purposes but in a manner which permits the application of the legislation.

[19] Even if that approach be wrong, and the language of the will in either the construction of cl8 or the use of the words "animal welfare" in cl9 might render the will either ambiguous or meaningless, evidence has been provided in accordance with the Wills Act 1992, s43,which resolves any ambiguity or gives meaning to the terms used by the testatrix. The intention of the testatrix, in general terms, can be readily discerned. She wanted to provide for the welfare of her animals and any unexpended moneys from that purpose were to be given to the Animal Protection Society of Tasmania. The residual estate was to be held on trust for the purpose of animal welfare with the particular organisations which were to give effect to that purpose to be nominated by the trustee. Assuming that meaning ought to be given to any ambiguity on the use of the term "animal welfare" so as to enable the court to have recourse to the Act, s4, then there is clear evidence which removes that ambiguity. In an affidavit tendered during these proceedings, the original executor and trustee, Ian Matterson, deposed:

"4 On a number of occasions she asked me to assist her to prepare a Will but I declined and instead gave her a list of possible solicitors with whom she could make contact. She spoke with me on several occasions after seeing different solicitors expressing concerns that her instructions, as to the disposition of part of her estate to be set side for the welfare of animals, were not being set out in the Wills so drawn to her satisfaction. I was never shown any Will and my stock response was for her to go back to the solicitor in question and seek advice as to why the instruction was not being, or could not be, followed.

...

7 At this time she was very attached to her two dogs and she conceded that she should keep Mrs White's services since, in the event of her death, Mrs White could take care of the dogs (as she had done on several occasions whilst Mrs Thompson as hospitalised). On the day she had requested me to take the Power of Attorney she again asked me to draw her a Will to cover that eventuality and also to ensure that some part of her estate was spent on animals in general, and the dog's home, Dog's Homes of Tasmania at 101 Scotts Road, Risdon Vale, from which she had obtained her two pets, in particular. Again I declined and advised her to seek legal advice from a solicitor.

8 This was not the only time she had mentioned the desire to leave some monies for animals. At no time did she indicate any specific amount. It was my impression that her desire was, rather than outright bequest, for some monies to be invested with the interest to be utilised on an occasional but ongoing basis for those purposes. My impression came from comments along the lines that sometimes the dog's home might need some funds but that she would also like to see some other animal organizations (which were never specified to me) benefit from those monies."

That evidence shows that the testatrix had attempted to define the purpose of her intended bequest but that the terms of wills drafted at her request had not been adequate for her wishes. The evidence shows that her predominant purpose was for the protection and care of animals who were neglected, abandoned or otherwise at risk. The evidence brings into operation of s4 of the Act..

Order

[20] The answer to question 1, namely:

"1 Whether upon the true construction of the Will of Beatrice Grass Thompson the bequest to Ian Matterson of the whole of the dutiable estate of the testator to hold the same on trust for his use absolutely is:

(a) a gift of all the residuary estate to Ian Matterson absolutely, or

(b) a gift to Ian Matterson absolutely of only that property of the testator upon which duty is payable by reason of the death of the testator"

is no.

In relation to question 2, namely:

"2 If the answer to question 1(a) is yes, whether the gift of all the residuary estate to Ian Matterson absolutely prevails over the trust contained in cl9 of the Will"

an answer is not necessary.

The answer to question 3 (by necessary implication, the answer to question 2 is no), namely:

"3 If the answer to question 1(b) is yes, or if the answer to question 2 is no, then whether upon the true construction of the Will that part which states 'AND I DECLARE that from the accumulation of my residuary estate my trustee shall hold same IN TRUST with the income so accumulated being used for my trustee at his absolute discretion to use all such purposes related to animal welfare as he shall see fit in perpetuity' constitutes a valid charitable trust"

is yes.