Dal Pont, Gino Evan & Cockburn, Tina.

(2008)
Equity and trusts in principle, 2nd Ed.
Pyrmont, N.S.W. : Lawbook Co. 1291
Ch. 24. "Charitable Trusts", pp. 291-309.

Charitable trusts

Reading .. , .... , .... , ........... , .. ,.,'., .. , ... ,' ., .. , .... 291

Aim ... , ...... , ..... , ...... , .. ,."., ....................... 291

Principles ................................................ 292

Charitable trusts compared to private trusts . . . . . . . . . . . . . . . . . . . . . . . . .. 292
Meaning if "charitable" at law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 293
Trusts for the reliif if the poor, aged and impotent. . . . . . . . . . . . . . . . . . . .. 295
Trusts for the advancement if education ............................ 296
Trusts for the advancement if religion ............ , .. , . , . , .. , . , . . . .. 297
Trusts for other purposes benificial for the community . , .. , .......... , ,. 299
Mixed charitable and non-charitable purposes . . . . . . . . . . . . . . . . . . . . . . .. 302
Cy-pres schemes . .... , ...................................... " 304
Administrative schemes .. ....... , .... , .... , ....... ,. , .. , ., """ 307

Practice Questions , ..................................... 307

Answers to Practice Questions ......................... 307
Tutorial Question ......................................... 309

Dal Pont and Chalmers, Chapter 29;

Dal Pont, Chalmers and Maxton, Chapter 29
. ', ............ , .... .

Aim
............ ,." .. " .. .................................... ..
"

By the end of this chapter you will know and understand:

the differences between charitable and other trusts,
the difference between charitable and non-charitable purposes.
the impact of statute on charity law, and the reasons for the statutory intervention.
the circumstances in which courts can vary the terms of a charitable trust.
292 i EQUITY ANDTRUSTS IN PRINCIPLE

rincipl s
Charitable trusts compared to private trusts
[24.05] Like private trusts, charitable trusts may be created inter vivos or by will, and
must fulfil certainty of intention and subject matter. Charitable trustees are subject to
the same general duties as trustees of a private trust. Charitable trusts, however, are
trusts for purposes whereas private trusts are trusts for persons. Hence, charitable trusts
lack a beneficiary in the traditional sense, although persons who may ultimate1y benefit
from the trust are sometimes termed "ultimate beneficiaries".
The critical aspect of the charitable trust is that its ultimate beneficiaries be members
of a class of persons that represents a section of the community sufficient to meet the
criterion of public benefit: see [24.45].

Certainty of object and charitable trusts

[24.10] A charitable trust does not fail for lack of a beneficiary to enforce it because
the law recognises the Attorney-General as protector of charities, with the right and
duty to enforce charitable trusts. For this reason, certainty of object for charitable trusts
involves an inquiry into whether the purpose(s) specified in the trust are charitable. As
the law has defined what is "charitable" (see [24.35]-[24.45J), the court can determine
whether the purpose is charitable, and so whether it meets the requisite certainty.
This explains why courts uphold gifts "for charitable purposes" or "to charitable
organisations". It also explains why, once property is devoted to charitable objects,
the court has jurisdiction to give effect to that intention by varying a trust that lllay
otherwise fail for impossibility or impracticability (see [24.200]-[24.225]), or providing
the machinery for a trust expressed in general terms (see [24.230]).

Taxation and rating concessions

[24.15J Charitable trusts (and other charitable bodies and institutions) enjoy exemptions
from income tax, provided that the statutory conditions are fulfilled: see Income Tax
Assessment Act 1997 (Cth), Div 50. There are also concessions for fringe benefits tax,
payroll tax, land tax, stamp duties and various other forms of taxation. Moreover,
donations to some charitable institutions are tax deductible: see Income Tax Assessment
Act, ss 30-15,30-45.

Perpetuity rules

[24.20J Although a valid charitable gift may be held in perpetuity for charitable
purposes, it must, at the time of its inception, satisfy the rule against perpetuities (see
[19.50]-[19.60]). So a gift that legally vests in a charity trustee within the' perpetuity
period is valid even though its actual application in carrying the charitable purpose
into execution awaits an event that may not happen within the perpetuity period.
However, both the general law and the perpetuities legislation exempt gifts over from
one charity to another from the rule against perpetuities.
 CHARITABLE TRUSTS! 293

Absence of private profit

Meaning of "private profit" in this context

[24.25] An essential attribute of charity is that it not be concerned with the conferment
of private advantage or benefit. Its principal application is to exclude from charitable
status institutions or associations the profits of which can accrue to private individuals,
schools and hospitals being typical examples in this context, in that these institutions
are prima facie charitable unless they exist for private profit. The reference to private
profit does not refer to the payment of wages or allowances to employees of, or other
service providers to, the charity, but to the distribution of the profit and/or capital of
the institution to private individuals (or non-charitable entities), whether during the
operation of the institution or on its winding up. So simply because an association,
pursuant to a power conferred in its constituting documents, trades in the form of a
commercial business, does not if itselfnegative its otherwise charitable status.The Federal
Court in Federal Commissioner ifTaxation v VVord Investments Ltd (2007) 164 FeR 194 has
now made clear that a company exhibiting a charitable purpose in the disposition of all
its profits is not denied the character of a charitable institution because the activities by
which it gains its profit do not, of themselves, bear the character of charity.

Relevance of payment for service

[24.30] For the purposes of the legal definition of "charity" , the mere fact that charges
are made for services rendered by an institution does not if itself bar that institution
froni being charitable, provided that any profits it makes cannot accrue for the private
benefits ofindividuals or other non-charitable objects.The one proviso to this statement
is that the charge in question must not function so as to exclude the element of public
benefit (see [24.45]). This issue is most relevant in respect of hospitals (see [24.70]), homes
for the aged (see [24.65]) and private schools, the cost of which may be beyond the
means of the poor.

Meaning of I8 c haritable
18
at la\N
[24.35] There are three main reasons for defining what is "charitable" as understood by
the law:
trusts for non-charitable purposes are void because there is no individual
person capable of enforcing the terms of the trust: see [17.70].
where the term "charitable" is used but not defined in a statute, it is presumed
to take its legal meaning.
the court has an inherent jurisdiction to enforce and, in defined circumstances,
vary charitable trusts: see [24.200]-[24.230]. No such jurisdiction arises where
the object is non-charitable.

"Charitable" purposes

[24.40] To define "charity" courts have historically been guided by the Preamble of
the Elizabethan Statute if Charitable Uses 1601, which contains the following list of
charitable purposes:
relief of aged, impotent and poor people;
294 i EQUITY ANDTRUSTS IN PRINCIPLE

maintenance of sick and maimed soldiers and mariners, schools oflearning, free
schools and scholars in universities;
repair of bridges, ports, havens, causeways, churches, seabanks and highways;
education and preferment of orphans;
relief stock or maintenance of houses of correction;
marriages of poor maids;
support aid and help for young tradesmen, handicraftsmen and persons
decayed;
relief or redemption of prisoners or captives; and
aid or ease of any poor inhabitants concerning payment of fifteens, setting out
soldiers and other taxes.
Lord Macnaghten in Commissioners for Special Purposes of Income Tax v Pemsel [1891]
AC 531 at 583 adopted a fourfold classification of charitable objects (known as the
"heads of charity"), which continues to apply in modern charity law:
the relief of poverty, age and impotence: see [24.55J-[24. 70].
the advancement of education: see [24.75)-[24.85].
the advancement of religion: see [24.90]-[24.110].
other purposes beneficial to the community: see [24.115]-[24.160].
The purposes found in the Preamble do, however, remain relevant in modern law, at
least by way of analogy, in respect of purposes alleged to come within the fourth head
of charity: see [24.115].

IIpublic benefit" requirement

[24.45] Public benefit is a necessary prerequisite under each head of charity other than
the relief of poverty. The "public" aspect focuses on whether the purpose is "for the
benefit of the community or of an appreciably important class of the community":
Verge v Somerville [1924] AC 496 at 499.A group or class of ultimate beneficiaries under
a proposed charitable trust linked by "blood, contract, family, association membership
or employment" is not the "public" for this purpose. In Oppenheim v Tobacco Securities
Trust Co Ltd [1951] AC 297 a trust for the education of the employees of a company,
which numbered around 110,000, was struck down because the relationship between
the ultimate beneficiaries depended upon their employment with the company.
The "benefit" aspect is ordinarily presumed in the first three heads of charity,
subject to evidence to the contrary, whereas it must be affirmatively established under
the fourth head: see [24.115].

"Poor relations" and "poor employees" cases

[24.50) The courts have not required the "public" element to uphold trusts for the
relief of poverty, albeit conceding that such an exception is not grounded in principle.
A frequent issue in "poor relations" (or "poor employees") cases is whether the trust
is for the relief of poverty amongst a class of persons (purpose gift) or merely a gift to
private persons motivated to relieve poverty amongst those persons. This is determined
according to the wording of the trust, interpreted in the context of the instrument as a
whole: see Re Segelman (deceased) [1996] Ch 171 (where a trust fund to be applied for
 CHARITABLE TRUSTS i 295

the "the poor and needy of the persons set out in the Second Schedule then living",
which Schedule comprised six members of the testator's family and included but did
not name the children of five of them, was held to be a purpose gift).

Trusts for the relief of the poor.. aged and impotent

[24.55] The phrase "poor, aged and impotent", stemming from the Preamble to the
Statute cif Charitable Uses, is to be read disjunctively, so that a gift simply for relief of the
aged or impotent, independent of poverty, is a valid charitable gift.

Relief of poverty

[24.60] "Poverty" is not destitution, but "means anyone who in the normal acceptation
of life has to 'go short' in the ordinary acceptation of the term, due regard being had
to their status in life": Re Coulthurst [1951] Ch 661 at 666. The idea of "going short"
is synonymous with necessitous circumstances, namely an inability "to obtain all that
is necessary, not only for a bare existence, but for a modest standard of living in the
Australian Community": Ballarat Trustees Executors and Agency Co v Federal Commissioner
of Taxation (1950) 80 CLR 350 at 355. It follows that poverty is a concept relative to
the society in question.
The "relief" of poverty connotes need of the means to provide some necessity or
quasi-necessity, not the provision of amusement or luxuries. To this end, "relief" is not
synonymous with "benefit".
An intention to relieve poverty may be readily apparent on the face of the
disposition, such as a trust for "relieving cases of need and distress" of "persons in
indigent circumstances": Muir v Open Brethren (1956) 96 CLR 166. Alternatively, the
court may infer an intention to relieve poverty from the wording of the gift: see Downing
v Federal Commissioner c:fTaxation (1971) 125 CLR 185 (gift for the "amelioration of
the condition of members or ex-members of the defence forces" held to evince an
intention to relieve poverty).

Relief of the aged

[24.65] A trust for the relief of the needs attributable to old age is prima facie charitable.
Where its ultimate beneficiaries are identified as persons exceeding a certain age, whether
it is directed to relieving the needs arising from old age is a matter of construction. The
higher the threshold age, the more likely it is that the settlor intended to relieve the
disabilities of age: Owners of SP 39204 v Sutherland Shire Council (2003) 129 LGERA
364 at 375-376. The class of persons identified as ultimate beneficiaries may also carry
the inference that the gift is intended for the relief of the aged. The charitable status
of retirement homes and villages that do not generate private profit for individuals is a
case in point: see D V Bryant Trust Board v Hamilton City Council [1999] 1 NZLR 41.

Relief of impotence

[24.70] The "impotent" are the physically weak, disabled or helpless. So the relief of
persons who suffer some disability or sickness is a valid charitable object.
Gifts for hospitals and similar institutions that do not generate private profit for
296 EQUITY AND TRUSTS IN PRINCIPLE

their owners are charitable under this head, even though the institution charges
patients for admission. In Le Cras v Perpetual Ti'ustee Co Ltd [1969] 1 AC 514 the Privy
Council upheld a trust for St Vincent's Private Hospital as charitable. What influenced
the court was that St Vincent's was not conducted as a profit-making enterprise, and
that operating surpluses were used for the general purposes of the hospital. This was
notwithstanding that persons who had not contributed sufficiently to private health
insurance, who required a stay beyond that which that insurance would cover, or could
not get a reduction of or exemption from the charges, could not make use of the
hospital's facilities.

Trusts for the advancement of education

Educational purposes

[24.75] The advancement of education is a valid charitable purpose, provided that the
requisite element of public benefit is present. "Education" has been construed broadly,
and includes education in a specific field, such as music, art, law, medicine, literature
and physical education. Educational purposes are not restricted to the conventional
idea of classroom teaching but extend to all branches of human knowledge and its
dissemination.

II Advancement" of education

[24.80) Advancement of education includes the establishment, maintenance and

contribution to educational institutions, establishing teaching positions, and providing
scholarships and academic prizes for students. Zoological and botanical gardens,museums
and art galleries, public libraries and observatories are also educational charities. Gifts
to institutions that under their constitutions playa significant role in the dissemination
of knowledge, such as the Royal Geographical Society, the Royal Literary Society, and
the Zoological Society, have been upheld as charitable.
The historical focus on the advancement of education resting on knowledge being
imparted as well as accumulated spawned case law denying charitable status to gifts
for pure research. However, the better view, and one reflected in many of the cases, is
that research having as its object the increase of useful knowledge comes within the
advancement of education. Griffith C] in Taylor v Taylor (1910) 10 CLR 218 at 224
confessed his inability "to apprehend how the stock of available knowledge can be
increased without the diffusion of the addition to the existing stock", adding that" [i]n
these days scientific research is recognised as one of the most efficient means of adding
to the knowledge of mankind". In that case, a trust for the "advancement of scientific
research generally" was upheld. Trusts for medical research have also been upheld as
valid charitable trusts.

Public benefit and education

[24.85] An educational trust must fulfil the requirement of public benefit. The "public"
element is absent where the nexus between possible ultimate beneficiaries is their
relationship to a single propositus or several propositi, in which case those beneficiaries
are neither the community nor a section of it. So a trust for the education of the
 CHARITABLE TRUSTS 1297

descendants of named persons or for children of employees of a particU:lar firm is not

valid: Oppenheim v Tobacco Securities Trust Co Ltd (discussed at [24.45]). The "benefit"
element will be absent where the evidence shows that there is unlikely to be any
benefit attaching to the gift in question: see Re Pinion [1964] 1 All ER 890.

Trusts for the advancement of religion

Meaning of II re ligion"

[24.90] According to MasonAC] and Brennan] inChurch if the New Faith v Commissioner
if Pay-roll Tax (Vic) (1983) 154 CLR 120 at 136, the legal definition of "religion"
involves:
belief in a supernatural being, thing or principle; and
the acceptance of canons of conduct in order to give effect to that belief.
The breadth of this definition means that courts do not distinguish between religions,
or say that one religion confers a greater public benefit than another. So merely because
the religious beliefs promoted are not attached to a recognised denomination will not
render it non-charitable, provided other criteria of a religion are present. For example,
in Re Flatman [1953] VLR 33 a gift "to subsidise the preaching of the Gospel of Our
Lord] esus Christ - independently of the recognised Churches" was upheld.
However, a religion cannot properly be so characterised where it is no more than
a parody of religion or a sham. Nor can a religion involve beliefs or activities that are
contrary to the law or public policy.

Religious buildings, cemeteries and tombs

[24.95] The provision of facilities for worship is a valid charitable purpose. For example,
gifts for church construction, extension, maintenance or furnishing, or for buildings
ancillary to church purposes, are charitable. Gifts for burial grounds associated with
churches and the maintenance or erection of tombs in churches are charitable, whereas
private cemeteries and gifts for monuments and tombs that do not form part of the
fabric of the church are not. Gifts expressed to be for a limited time for the upkeep of
tombs may nonetheless be upheld, albeit anomalously, as non-charitable purpose trusts:
see [17.75].

Gifts to religious officials

[24.100] Gifts for the provision and maintenance of clergy are charitable. To this end,
a gift to a person for the time being holding a specified church office, or to that person
and her or his successors, is construed as a gift to that person virtute cjficii (by virtue of the
office) as trustee. If, on the other hand, the donee is described simply by name, the fact
that he or she is a church officer does not prevent the gift from being absolute. In each
case, the matter is one of construction of the relevant disposition.
Where the gift is construed as virtute cjficii, the court must determine whether the
purposes for which it is to be applied are exclusively charitable. Gifts to church offices
to which "superadded words" are attached, such as for" diocesan purposes", "church
purposes" or "missionary purposes", present a challenge in this regard. The court must
298 I EQUITY ANDTRUSTS IN PRINCIPLE

determine whether these words broaden the scope of the gift so as to potentially
encompass non-charitable objects. Each case depends on its own factual circumstances:
compare Farley v Vlkstminster Bank Ltd [1939] AC 430 (gift to the respective vicars
and churchwardens of two named churches for "parish work" struck down) with
Perpetual Trustee Co (Ltd) v St Luke's Hospital (1939) 39 SR (NSW) 408 (bequest to the
Archbishop "for the assistance of such poor parish or parishes as the said Archbishop in
his uncontrollable discretion may think fit" upheld).
In most jurisdictions the problems arising out of superadded words have been largely
overcome by saving legislation: see [24.180]-[24.195]. In fact, superadded words cases
represent useful illustrations of the type of case to which saving legislation is apt to
apply, given that it may reasonably be assumed that the existence of superadded words
is more likely to evidence an intention to restrict the scope of the gift than extend it.

"Advancement" of religion

[24.105] A trust for the purposes of religion must, as a condition of its validity, advance
religion. To advance religion means to promote it, spread its message, and take some
positive steps to sustain and increase religious belief, in ways that can be described as
pastoral or missionary.
Proof is not required that the relevant objects actually advance religion, but that,
being directed to this end, they may have that result. This has justified the upholding of
gifts for "preaching of the Gospel", for "the maintenance and promotion of religion",
or "towards Christian work". Conversely, organisations that do not conduct religious
instruction, religious services, programs for the persuasion of unbelievers or religious
supervision to ensure that members remain active, do not advance religion: see United
Grand Lodge of Ancient Free and Accepted Masons if England v Holborn Borough Council
[1957] 1 WLR 1080.

Public benefit and religion

[24.110J The advancement of religion is charitable only if the requisite public benefit
is present. If the purposes in issue are found to be of a religious nature, the court will
generally assume a public benefit unless the contrary is shown. This assumption reflects
the courts' reluctance to assess the comparative worth of different religions, and also the
view that religion of itself generates benefit to the public. That most gifts for religious
purposes are directed to a particular denomination or congregation does not infringe
the public benefit requirement because it is open for any member of the public to join
the denomination or congregation.
Trusts for public prayer, such as for the saying of masses, have been upheld on the
following basis:
((the public edification involved in the celebration if the mass was itself an act which
was a central act of the religion of a large proportion of Christian people and was
productive itself if reinforcing and enhancing the religious life of both the congregation
and all the members of that religious persuasion who come to know if the fact that
there is the regular practice if intercessory prayer through the ciffering up of the mass
containing as it does a public prayer in repose of the souls of the departed. )} (Crowther
v Brophy [1992] 2 VR 97 at 100 per Gobbo J)
 CHARITABLE TRUSTS 1299

The House of Lords in Gilmour v Coats [1949] AC 426 queried whether the
same should apply in respect of private prayer. The case concerned the validity of a
trust for a community of cloistered Carmelite nuns who devoted their lives solely
to contemplation, penance and intercessory prayer. Lord Simonds (at 447) reasoned
that the efficacy of intercessory prayers, intended to benefit the community, was not
susceptible to proof, and that the court "would assume a burden which it could not
discharge if now for the first time it admitted into the category of public benefit
something so indirect, so remote, imponderable and ... controversial as the benefit
which may be derived by others from the example of pious lives".
This reasoning is unlikely to find favour in modern Australian courts. It is
inconsistent with both the courts' unwillingness to favour one religion over another,
and the definition of "religion" itself, which presupposes, via the element of belief
in a supernatural thing, being or principle, matters incapable of objective proof. The
enhancement in the life, both religious and otherwise, of those who find comfort and
peace of mind in their resort to intercessory prayer is a more appropriate consideration
to adopt: see Crowther v Brophy at 100. In any case, the Extension of Charitable Purpose Act
2004 (Cth) , which supplements the general law meaning of "charitable" (or "charity")
when used in Commonwealth legislation, provides that a closed or contemplative
religious order that regularly undertakes prayerful intervention at the request of
members of the public is for the public benefit: s 5.

Trusts for other purposes beneficial to the

community
Tvvo-stage analogy approach

[24.115] Dispo8:tions under the fourth head must satisfy a "two-stage" test as a prerequisite
of validity:
the purpose in question must be beneficial to the community, namely
a qualitative assessment in addition to the chiefly quantitative criterion
governing the test of public benefit; and
the purpose must fall within the spirit of the Preamble to the Statute of
Charitable Uses 1601 (see [24.40]).
In the leading Australian case, Incorporated Council of Law Reporting of the State of
Queensland v Federal Commissioner of Taxation (1971) 125 CLR 659, the issue was
whether the appellant, the sole purpose of which was the production of law reports
not for private gain, was a "charitable institution" for the purpose of an income tax
exemption. The High Court found this purpose to be both beneficial to the community
and within the spirit of the Preamble. Regarding the former, Barwick CJ reasoned (at
668) that "the production of law reports is .,. beneficial to the whole community
because of the universal importance of maintaining the socially sustaining fabric of the
law". His Honour reasoned similarly in respect of the latter, stating (at 669):
"The sustenance of the law is a benefit of a material kind which enures for the benefit
of the whole community. Is not its administration) with regularity) and with as much
consistency as a system based on human judgment can attain) as socially fundamental
as the instances [contained in] the preamble? ... [S]ociety cannot exist as such if it
is not based upon and protected by justice under law: and nurtured by obedience to
law. ))
300 : EQUITY ANDTRUSTS IN PRINCIPLE

Although the cases that may come within the fourth head are not closed, they can
be classified into broad" classes", discussed below, which includes some areas that have
challenged the courts.

Protection of animals

[24.120] Trusts for the protection of animals have generally been upheld as charitable,
on the untested assumption that they promote personal and public morality by curbing
inborn tendencies to cruelty: Re Wedgwood [1915] 1 Ch 113. On this basis, gifts to animal
welfare organisations for the care of, and suppression of cruelty against, animals are
valid, as are gifts to establish and maintain homes for homeless, sick, stray or unwanted
animals. However, a trust for "the benefit of animals generally" is not charitable because
it is not for the benefit of the community served by benevolence towards animals:
Murdoch v Attorney-General (Tas) (1992) 1 Tas R 117.
Trusts for the preservation of native fauna are charitable on the ground that a real
and substantial benefit will accrue to the community from saving indigenous wildlife
from the encroachment of human activity: Attorney-General (NS"W) v Sawtell [1978] 2
NSWLR 200.

Locality cases

[24.125] A gift with reference to a particular district or locality is generally considered

charitable as importing the necessary element of public benefit even though a specific
purpose is not stated. Hence, a gift for the beautification of a locality is a charitable
gift, in that physical things having an element of beauty are provided in a locality for
the edification and enjoyment of the community as a whole, not for the benefit of
private individuals: see Monds v Stackhouse (1948) 77 CLR 232 (bequest to the City of
Launceston to provide a suitable hall or theatre for the holding of concerts to provide
music for the citizens of the city); Re Mair (deceased) [1964] VR 529 (gift ofland as a
public park for picnicking).

Relief of distress

[24.130] The relief of human distress is a valid charitable purpose, often arising out of
natural disasters and wars: see Re Darwin Cyclone Tracy ReliifTrust Fund (1979) 39 FLR
260. Gifts for institutions providing emergency services may also be valid under this
class.
The class of ultimate beneficiaries may cairy the inference that its aim is the relief
of human distress. The typical example is a gift for the benefit of Australian aborigines,
which have been judicially described as "notoriously in this community a class which,
generally speaking, is in need of protection and assistance" (Re Mathew (deceased) [1951]
VLR 226 at 232).

Promotion of safety and protection of the country

[24.135] The promotion of safety and protection of the country represents a good
charitable purpose. For example, gifts for the recruitment, training and improvement in
the efficiency of members of the services and police officers are charitable: see Inland
Revenue Commissioners v City of Glasgow Police Athletic Association [1953] AC 380.
 CHARITABLE TRUSTS 1301

Recreation and sport

Royal National Agricultural and Industrial

[24.140] A trust for mere sport is not charitable:
Association v Chester (1974) 48 ALJR 304 (gift for "improving the breeding and racing
of homer pigeons" struck down). Nor is a trust for mere recreation, hospitality and
entertainment: Williams Trustees v Inland Revenue Commissioners [1947] AC 44 7 (trust
for the promotion of the moral, social, spiritual and educational welfare of the Welsh
people by the establishment of a social centre struck down). However, a gift for sport
or recreation may be upheld where:
it is incidental or pursuant to an accepted charitable object: see [24.145].
it represents a public recreational facility: see (24.125].
it is validated pursuant to statute: see [24.150].

Gift incidental or pursuant to an accepted charitable object

[24.145] A trust to provide for or encourage sport or recreation incidental or pursuant
to an accepted charitable object may be upheld. Most commonly, this is in the context
of gift for the promotion of sport or recreation at an educational institution. In Kearins
v Kearins (1957) 57 SR (NSW) 286 McLelland J upheld a gift for "fostering the sport
of Rugby Union at Sydney University", reasoning (at 291) that "if an organised sport
tends to promote education in the wide sense, it is no less charitable because it could
not be said to be essential to such education".
Yet a gift alleged to be incidental or pursuant to a religious object will not receive so
favourable a construction because activities of a recreational character do not advance
religion merely because they are conducted by a religious organisation: see Attorney-
General v Cahill [1969] 1 NSWLR 85 (bequest for the "formation and advancement of
a Catholic Boys' Club" struck down).

Statutory initiatives concerning "recreational charities"

[24.150] In Queensland, South Australia, Tasmania and Western Australia statute has
modified the law regarding recreational charities: Trusts Act 1973 (Qld), s 103; Trustee
Act 1936 (SA), s 69C; Variation ofTrusts Act 1994 (Tas), s 4(1); Charitable Trusts Act 1962
(WA), s 5. This legislation makes it charitable to provide, or assist in the provision of,
facilities for recreation or other leisure-time occupation. However, in all jurisdictions
except Tasmania these facilities must be provided:
in the interests of social welfare;
<I> with the object of improving the conditions of life for the persons for whom
they are primarily intended; and
either to persons with need of them by reason of their youth, age, infirmity or
disablement, poverty or social and economic circumstances, or to be available
to members, or to male or female members, of the public at large.
These qualifications dictate that, except in Tasmania, there remains a need to satisfy a
de facto public benefit element as a condition of the validity of any such disposition.
302 I EQUITY ANDTRUSTS
\
IN PRINCIPLE

Political purposes

[24.155J As a general rule, trusts for the promulgation of political views or agitation
for legislative change are invalid. This is because "the Court has no means of judging
whether a proposed change in the law will or will not be for the public benefit":
Bowman v Secular Society Ltd [1917J AC 406 at 442 per Lord Parker. This logic has even
led the courts to deny validity to a trust for the purpose of advocating or promoting
the maintenance of the present law.
A political purpose trust will be valid only where the political purpose is ancillary
or incidental to an established charitable object, such as education (such as where it
is attached to an educational institution: see Attorney-General v Ross [1985J 3 All ER
334). Conversely, where the dominant purpose of an association can only be achieved
through legislative action, a trust for its objects will fail as a political purpose trust. The
issue is one of degree, for activities directed at political change may show an effective
abandonment of charitable objects. The constitution and activities of an association
are thus the chief determinants of whether its main object is political. For example, in
Re Cripps [1941] Tas SR 19 the testator bequeathed a sum to "the trustees ... for the
time being of the Prohibition League of Tasmania" , the objects which included "the
abolition of the traffic in intoxicating beverages" and required "that such object should
be realised through education, legislation and adequate law enforcement". Morris CJ
struck down the gift, being influenced by the very name of the League, which suggested
that its dominant purpose was to alter the law.
Yet it should not be assumed that modern courts will adopt quite so unyielding an
approach to denying charitable status to associations with potentially political objects.
Recent judicial remarks such as "in many instances, the fact that diverse arguments
are presented to the public on issues of importance may itself be important to the
community" (Attorney-General v New South TIVclles Henry George Foundation Ltd [2002]
NSWSC 1128 at [63]) may tend to undermine the Bowman theory.

Governmental functions

[24.160J That a charitable organisation carries out governmental functions, and is funded
by government to do so, does not as a matter of principle undermine its charitable
status: Central Bayside General Practice Association Ltd v Commissioner if State Revenue
(2006) 228 CLR 168. There remains scope, however, for an organisation to be denied
charitable status where, whether because of government control over its functions or
due to an otherwise very close association with government, it can be seen as being
little more than an arm of government.

Mixed charitable and non-charitable purposes

[24.165J A trust expressed to be for both charitable and non-charitable purposes, apart
from saving legislation (see [24.1801-[24.195]) or severability of the latter from the former,
is regarded as non-charitable. This is because the court cannot effectively control trusts
that can extend to non-charitable purposes because such purposes are legally uncertain
. .
mmeanmg.
 CHARITABLE TRUSTS! 303

Gifts for the purposes of associations

[24.170] Whether a gift for the purposes of an association, or an association itself, is

charitable depends upon the objects and activities of the association. Ifits main purpose
is charitable and any non-charitable elements in its constitution and operations are
merely incidental to that main purpose, the association is a charity. It follows that courts
must distinguish the main from the incidental or ancillary.
A leading case is Congregational Union of New South Wales v Thistlethwayte (1952) 87
CLR 375.The appellant's objects, as stated in its constitution, included the maintenance
of philanthropic agencies, and the preservation of civil and religious liberty. The High
Court held that, although in isolation these objects were non-charitable, when viewed
in the context of the constitution as a whole, they were ancillary to the appellant's
religious objects. The court construed the constitution as enabling the appellant to
maintain philanthropic agencies only to the extent to which these were conducive
to the achievement of its main religious object. Similarly, the appellant was entitled to
seek the preservation of civil and religious liberty so that Congregationalists could
worship according to their religious beliefs.

Alternative and cumulative expressions

[24.175] Except where validated by legislation (see [24.180]-[24.195]), gifts expressed in

the alternative, so as to admit non-charitable objects, will fail. For example, in Chichester
Diocesan Fund and Board of Finance (Incorporated) v Simpson [1944] AC 341 a trust for
"charitable or benevolent" purposes was held void as a mixture of charitable and non-
charitable objects because the word "benevolent" could not be defined with precision.
The same applies to gifts for "charitable or other purposes" or for "charitable or
philanthropic institutions".
However, gifts that can be construed as specifYing cumulative requirements, one of
those being that the object be charitable, will generally be upheld: see Smith v West
Australian Trustee Executor & Agency Co Ltd (1950) 81 CLR 320 (gift to "charitable
institutions bodies and organisations", the High Court ruling that the word" charitable"
qualified each of the words "institutions", "bodies" and" organisations").

Saving legislation

[24.180] Validating legislation exists in all States to address the problem of mixed
charitable and non-charitable purposes: Charitable Trusts Act 1993 (NSW), s 23; Trusts
Act 1973 (Qld), s 104; Trustee Act 1936 (SA), s 69A; variation of Trusts Act 1994 (Tas),
ss 4(2),4(3); Charities Act 1978 (Vic), s 7M; Trustees Act 1962 (WA), s 102. The relevant
Victorian provision reads:
"(1) A trust is not to be held to be invalid by reason that some non-charitable and
invalid as well as some charitable purpose or purposes is or are or could be
deemed to be included in any oj the purposes to or for which that trust directs or
allows the trust funds or any part oj the trust funds to be applied.
(2) A trust riferred to in sub-section (1) is to be construed and given effect to in the
same manner in all respects as if no application oj the trust funds or oj any part
oj the trust fimds to or for the non-charitable and invalid purpose had been or
should be deemed to have been so directed or allowed. )J
304 j EQUITY ANDTRUSTS IN PRINCIPLE

Its purpose is to save gifts that are primarily charitable but that would technically fail
by reason of the (possible) inclusion of some non-charitable element. Being remedial in
nature, it has been given a broad interpretation: it applies where the settlor has indicated
alternative charitable and non-charitable purposes, a compendious expression apt to
include both charitable and non-charitable purposes, and in respect of the objects of
associations that are not exclusively charitable.

Alternative purposes
[24.185] The legislation validates a disposition for alternative charitable and non-
charitable purposes by severing the non-charitable purpose ("blue pencil" approach).
For example, the disposition in Chichester Diocesan Fund and Board of Finance (Incorporated)
v Simpson) namely a trust for "charitable or benevolent" purposes, would have been
saved by the legislation by strking out the words" or benevolent".

Compendious expressions
[24.190] A gift involving a compendious expression that connotes charitable and non-
charitable purposes, such as "benevolent purposes", will be validated where its object
is so predominantly charitable as to evidence a charitable intention on the part of the
settlor. For example, in ReAshton (deceased) [1955] NZLR 192 the New Zealand Court
of Appeal saved a gift to the trustees of a specified church "to help in any good work"
by restricting the application of the trust funds to charitable purposes, so that it read
"in any good and charitable work" .
But vague and uncertain expressions that disclose no general charitable intention
are not saved by the legislation. Hence, a gift to a trustee "to be disposed of by him as he
may deem best" cannot be saved because the settlor has failed to indicate any purpose
at all: Re Hollole (deceased) [1945] VLR 295.

Application to associations
[24.195] The saving legislation applies to gifts expressed in favour of associations as
opposed to for purposes per se. So a trust for institutions whose objects are predominantly
charitable may be saved from failure. For example, in Leahy v Attorney-General (NSJiV)
[1959] AC 457 the Privy Council saved a gift to "orders of nuns" by confining it to
orders of nuns considered charitable in law.

Cy-pres schemes
[24.200] Where the intended purpose of a charitable trust in issue is impossible,
impracticable or illegal, the question arises as to the destination of the trust fund. It
may be possible for the court to apply the available funds to objects that are as near
("cy-pres") as possible to the testator's original intention (by settling a "cy-pres scheme":
see [24.205]-[24.220]). Most jurisdictions have enacted a "statutory cy-pres" doctrine
that, within its terms, for practical purposes supersedes the general law doctrine:
see [24.225].
The cy-pres doctrine does not apply where:
the trust instrument makes provision for the use of the property in the event of
failure of the particular purpose.
the evidence indicates that the testator has simply misdescribed the institution
the subject of the gift, in which case the most appropriate course for the
 I
CHARITABLE TRUSTS 1305
I

trustee is to seek directions from the court to apply the fund to the institution
intended: see Re Chanter [1952] SASR 299.

Initial failure

[24.205] Cases of "initial" impossibility or impracticability arise where a testamentary

charitable trust is impossible or impracticable to carry out as at the date of the testator's
death. The prerequisite for a cy-pres application in such cases is a general charitable
intention. This requires the court to find a purpose wider than the execution of a
specific plan involving the direction that has failed, namely an intention more general
than a bare intention that the impracticable direction be executed as an indispensable
part of the trust. In addition to construing the words used by the testator, the court
investigates the nature of the charitable trust itself and what is involved in the author's
plan or project.
In the leading case, Attorney-General (NSVV) v Perpetual Trustee Co Ltd (1940) 63
CLR 209, the testatrix's will directed that her farm ("Milly Milly") be used to train
"orphan lads". The purpose was impracticable by reason of the size of the homestead,
the antiquity of the plant and the insufficiency of income to meet operating expenses.
The issue was whether the testatrix meant that the use of Milly Milly as a place for the
training was an indispensable condition to her gift, or whether her purpose was one
of training orphan boys in farming pursuits, her choice falling on Milly Milly as an
appropriate means to give effect to this purpose. The High Court favoured the latter
interpretation, reasoning (at 229) that "there is nothing in the language of the will or
in the surrounding circumstances to suggest that the testatrix chose Milly Milly for any
better reason than that, of the assets of which she was disposing by will, Milly Milly
provided the most suitable means of giving effect to her intentions".
Conversely, in Re Good's Will Trusts [1950] 2 All ER 653 a bequest for the
establishment of a rest home for the aged failed from the outset for insufficient funds.
Attached to the testator's bequest were detailed plans, including proposed rules of
admission, proposed management powers and instructions as to its layout. The court
refused to apply the gift cy-pres because the object was too precisely defined to import
any construction of a general charitable intention.

Trusts for non-existent institutions

[24.210]The cy-pres doctrine may apply to trusts for the benefit of charitable institutions
that do not exist. A gift to what appears to be a specified charitable institution but
which never existed will lapse absent a general charitable intention that enables it to be
applied cy-pres. For example, in Re Davis [1902] 1 Ch 876 the doctrine of cy-pres was
applied where there had been a gift to a "home for the homeless", which had never
existed, because the terms and subj ect matter of the gift evidenced a general charitable
Intention.
Where an institution has existed at one time but has since disappeared, the gift will
lapse in the absence of a general charitable intention. Where a specific institution is
identified carefully as the institution to receive the gift, the courts may find it difficult
to construe the gift as importing any general charitable intention: see Re Mills [1934]
VLR 158. However, if there is a successor institution that carries on the charitable
purposes of the institution that has disappeared, the gift may be applied to the successor
institution: see Re Tyrie (No 1) [1972] VR 168.
306 i EQUITY ANDTRUSTS IN PRINCIPLE
i

Subsequent impossibility

[24.215] Where a valid charitable trust becomes impossible or impracticable after it has
commenced its operation, the court will apply its property cy-pres. This is because,
once devoted to charity, a fund or property cannot be applied for any other purpose
or person. The gift or fund is applied cy-pres because the gift has already become the
subject of charity, not due to any general charitable intention: Re Slevin [1891] 2 Ch
236. Hence, unlike cases of initial impossibility, cases of subsequent impossibility require
no proof of general charitable intention as a precondition to cy-pres application.

Public appeals

[24.220] Where money donated for a prescribed charitable purpose exceeds what is
required to fulfil that purpose, or cannot otherwise be applied for that purpose, the
question arises as to the destination of the (excess) moneys. The general law recognises
three possible options:
<J to revert to the donors, in proportion to their contribution, via the resulting
trust: see [25.30]. This outcome applies if the court can conclude that the
donors did not intend to part with their donation out and out, but only for the
specified purpose in question.
\J to be applied cy-pres, where there can be inferred an intention to donate out
and out coupled with a general charitable intention.
() to pass to the Crown as ownerless goods (bona vacantia).
However, any of these outcomes can be ousted by specific provision in the rules of
the subscription, or by statute: see Dormant Funds Act 1942 (NSW); Charitable Funds
Act 1958 (Qld); Collections Jor Charitable Purposes Act 1939 (SA), S5 16, 17; Variation oj
Trusts Act 1994 (Tas) , s 11; Charities Act 1978 (Vic), s 3; Charitable Collections Act 1946
(WA) , ss 16, 17.

Statutory

[24.225] Courts do not have an unrestricted cy-pres jurisdiction to vary a trust to

encompass some substitute purpose that is not as near as possible to the original purpose.
Also, the cost of a cy-pres application may be disproportionate to the value of the trust
fund, and it is not in the public interest that charitable funds should remain moribund.
To overcome these problem_s, statute has clarified and extended the circumstances in
which charitable trusts may be varied: Charitable Trusts Act 1993 (NSW), 5S 9-11; Trusts
Act 1973 (Qld) , s 105; TrusteeAct 1936 (SA), s 69B; Variation ofTrusts Act 1994 (Tas) , s 5;
Charities Act 1978 (Vic), s 2; Charitable Trusts Act 1962 (WA) , s 7. In New South Wales,
South Australia, Tasmania and Victoria statute also confers upon the Attorney-General
a limited power to settle cy-pres schemes: NSW ss 12-22; SA s 69B; Tas 5S 7-9; Vic
554,5.
The main change the New South Wales, Queensland, South Australian, Tasmanian
and Victorian legislation effects is to recognise broader statutory grounds for variation,
including where the original purposes have ceased to provide a suitable and effective
method of using the trust property. Proof of a general charitable intention remains a
prerequisite, although in New South Wales a general charitable intention is presumed
absent evidence to the contrary in the trust instrument. In South Australia and Tasmania
 CHARITABLE TRUSTS 1307

the variation need only accord, as far as practicable, with the spirit of the original trust
or gift, not necessarily .
< The Western Australian legislation does not in its terms require proof of a general
charitable intention, or mandate a cy-pres approach. Yet there is case authority that
the court should in practice both search for a general charitable intention, and adopt a
cy-pres approach: see Dal Pont and Chalmers, [29.340].

Administrative schemes
[24.230] Where a donor has made a gift for charitable purposes, but has failed to
fully specify a means by which it is to be applied for those purposes, the court can
provide the detailed machinery for the administration of those purposes (by settling
an "administrative scheme"). This involves no question of selecting the objects cy-pres,
as the objects to be benefited are the very objects selected by the donor. For example,
where a donor has expressed her or his charitable intention in general terms (such as a
gift for "cancer research": Re Simpson (deceased) [1961] QWN 50), the court may settle
an administrative scheme to regulate how that purpose is to be achieved.
If the court decides that an administrative scheme is necessary, it has a wide discretion
as to its terms, which provide for the appointment of trustees, make prescriptions
relating to the management and control of trust property, and regulate the class (es) of
persons to benefit.
In New South Wales the Attorney-General may settle administrative schemes in the
circumstances prescribed by statute: Charitable Trusts Act 1993 (NSW) , ss 12-22.

Practice uestions
24.1 In what sense do the "three certainties" applicable to the creation of express
trusts need to be modified in their application to charitable trusts?

24.2 Consider the validity of these bequests in Margaret's will:

(((a) $1000 to the University of Melbourne to fund a prize for the annual
chariot race;
(b) $1000 for the Catholic chaplain of the University to say prayers so that
my soul will pass from purgatory to heaven;
(c) $10) 000 for the protection of the environment; and
(d) the residue for such other benevolent purposes as my trustees think fit. »

Ans\Ners
24.1 The "three certainties" essential to the creation of an express trust also apply in
respect of the creation of charitable trusts. However, in the context of certainty of
intention, many charitable trust cases involve no express statement that property
is to be held" on trust". Rather, a gift is expressed to be for a purpose, without
expressing any notion of trust or identifying a trustee. Yet in such cases, in order
308 ' EQUITY AND TRUSTS IN PHINCIPLE

to validate what would otherwise be a gift of money or property vesting in

no one, the law can infer that the donor intended to create a trust, which is
valid if the purpose stated is charitable. The vehicle of the trust mandates the
appointment of a trustee who holds title to the money or property (under an
administrative scheme), and envisages that the purpose expressed will be enforced
by the Attorney-General.
Certainty of subject matter operates in a similar fashion to private express
trusts. Certainty of object, however, needs modification because purpose trusts
do not have individual beneficiaries to enforce their terms. Translated into the
charitable sphere, certainty of object is satisfIed if the purpose stated is a charitable
one. If so, then the law can define its boundaries (because it has defined the
concept of "charity"), and the Attorney-General can enforce its terms.

24.2 This question involves determining whether each of the bequests represents a
valid charitable purpose. Any bequest that is not charitable will fail as a non-
charitable purpose gift, and the money in question will either form part of the
residuary estate or, if the bequest concerning the residuary estate also fails, falls to
be distributed according to the rules of intestacy.

Bequest (aJ
This bequest evidences an intention to create a purpose trust, and its subject
matter is certain. The issue is whether the bequest is sufficiently related to the
advancement of education to come within that head, or whether it fails for being
merely recreational. Consider Kearins v Kearins, and determine whether that case
is distinguishable on these facts.

Bequest (bJ
Again this bequest evinces an intention to create a purpose trust, and its subject
matter is certain. The issue is whether, though apparently for the advancement
of religion, it fulfils the requisite public benefit. Although the advancement of
religion is ordinarily presumed to be for the public benefit, compare the views
of the House of Lords in Gilmour v Coats with those of Gobbo J in Crowther v
Brophy. According to the latter, it appears that even though any real "benefit" is
not substantiable, and any alleged benefit is to accrue only for Margaret, this may
not prevent such a bequest from being charitable.

Bequest (c)
The subject matter of this bequest is certain. Given that it is expressed as a
purpose gift, it can be inferred that Margaret intended that it take effect through
a trust (albeit via an administrative scheme settled by the court). The main issue
is whether protecting the environment: is a charitable purpose under the fourth
head of charity. Consider the two-stage analogy test, which in all likelihood will
be satisfied, especially in modern times when the protection of the environment
is viewed as an important public issue. There may also be an analogy here with the
locality cases. It is unlikely that a gift expressed in these terms will be construed
as having any political focus.
 I
CHARITABLE TRUSTS 1309

Bequest (dJ
This bequest evidences an intention to create a purpose trust, and its subject
matter is certain. What must be determined is whether "benevolent" purposes
can be equated with charitable purposes. At general law case authority dictates
that benevolence and charity have different parameters, and so it follows that
some benevolent purposes may fall outside the confines of charity: see Chichester
Diocesan Fund and Board of Finance (Incorporated) v Simpson. So unless validated by
saving legislation, this bequest will fail for not being exclusively charitable. On
the facts, however, saving legislation, which applies in respect of compendious
expressions, will most likely apply to validate such a bequest because of its
evident substantial charitable content (by qualifying "benevolent" with the word
"charitable") .

utorial uestion
A will provided as follows:
((I BEQUEATH the whole of my estate to the FEDERAL COUNCIL FOR
THE ADVANCEMENT OF ABORIGINES AND TORRES STRAIT
ISLANDERS (((the Council))) for its general purposes AND I DECLARE that
the receipt of the Treasurer for the time being of the Council shall be a full and
sufficient discharge to my Trustee for the payment of this legacy without my Trustee
being responsible to see to the application thereof.))
The Council existed as at the date of the will, but no longer exists at the date of the
testator's death. Its objects as at the date of the will were as follows:
((In relation to Aborigines and Torres Strait Islanders:
(1) the abolition of legislation discriminating against these people on the basis of
race;
(2) the introduction of legislation which will grant official recognition of the customs)
laws) languages and institutions of these people;
(3) the securing of wages and employment conditions on the same basis as other
Australians;
(4) the provision of educational facilities at all levels together with special facilities
to overcome social and economic handicaps which now exist;
(5) the opportunity to acquire housing conditions of the same standard provided by
housing authorities in the general community;
(6) the combating of racial discrimination and prejudice; and
(7) the fostering of mutual understanding and respect between these people and
other Australians. ))

Advise the Trustee as to whether this gift is a valid testamentary disposition.