Smith v WA Trustee Executor & Agency Co Ltd [1950] HCA 32

High Court of Australia Latham C.J. Fullagar and Kitto JJ. Smith v WA Trustee Executor & Agency Co Ltd [1950] HCA 32

ORDER Appeal dismissed with costs. Appellant to pay costs of respondents as between party and party. Executor will be entitled to its costs in default of payment by the appellant out of the estate and in any event the executor will be entitled to its costs as between solicitor and client taking any difference between party and party costs and solicitor and client costs out of the estate.

The following judgments were delivered:—

Latham C.J.

This appeal raises the question of the true construction of a provision in the will of the late James MacCallum Smith whereby it was provided that a fund should be set aside to cover certain expenses and that the capital and income remaining in the fund should be held "upon trust to pay and distribute the balance of my estate between such charitable institutions bodies and organisations in the Perth-Fremantle Area as my Trustees may select in such proportions and in such manner and at such times as my Trustees shall think fit."

It is argued for the appellant, who is the widow of the deceased and who represents the next-of-kin, that this provision is invalid because it is uncertain and that it is not saved by any of the rules relating to charitable dispositions.

The first question which arises is a question of the construction of the clause. The relevant words are "such charitable institutions bodies and organisations in the Perth-Fremantle Area as my Trustees may select." The question is whether the adjective "charitable" applies to each of the nouns "institutions bodies and organisations" or whether, on the other hand, this provision relates to three separate classes, the first being charitable institutions, the second class being bodies of any kind, whether charitable or non-charitable, and the third class being organisations of any kind, whether charitable or non-charitable. It is pointed out for the appellant that in other parts of the will gifts are given to institutions and bodies and organisations, some of which are not charitable in character. His Honour the Chief Justice has held that the adjective "charitable" applies to the three nouns "institutions, bodies and organisations." That construction is certainly open upon the words of the will. It is a natural method of reading the phrase, and the decision of his Honour that the words should be so interpreted is fully justified. Considering then, the provision as being a provision for the distribution of the balance of the estate between institutions, bodies and organisations, provided that the institutions bodies and organisations are charitable, then is it a good gift? It is a gift to charitable institutions &c. and therefore is prima facie a gift for charitable purposes. That was so held in the case of Hardey v. Tory [1] , where it was decided that where a gift is made to a society having a distinctive charitable purpose, prima facie the gift is for that purpose. But it is said that, notwithstanding the existence and the applicability of that principle, under this provision the trustees may appropriate the part of the estate to which this provision applies to non-charitable purposes. Now it is clear that a gift will not be upheld as a charitable gift unless the provision is such that the trustees are bound to apply the funds to charitable purposes. As was said by Sir Samuel Griffith C.J. in Byrne v. Dunne [1] , "The question is whether these words constitute a good charitable bequest. The test is, in the words of Buckley L.J. in In re Sidney; Hingeston v. Sidney [2] , "whether under this will the trustee is bound to apply these funds to charitable purposes. If consistently with the will he could apply any part of it to purposes which are not charitable in the sense in which the word is understood in this Court, the gift must fail as being too indefinite for the Court to execute." " In this case the words of the will, interpreted in the manner which I have stated, plainly limit the selective choice of the trustees to charitable institutions and charitable bodies and charitable organisations. Accordingly there is no possibility of the trustees, consistently with the terms of their trust, applying any part of the fund to a non-charitable purpose.