NATIONAL TRUST OF AUSTRALIA (NEW SOUTH WALES) v AMOUR SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL EQUITY DIVISION MEAGHER, SHELLER and COLE JJA 15 August 1997, 3 December 1997 [1997] NSWCA 219 Wills, Probate and Administration — testamentary instruments — construction of will — testamentary intention — gift — charitable purposes — condition or trust — impossibility of performance — whether void for uncertainty or otherwise fails. Paul William Butler, who died on 16 June 1991, by his will dated 17 August 1990, left the residue of his estate to the National Trust for charitable purposes but subject to conditions which could not be fulfilled. The question for decision on this appeal was whether, as the trial Judge held, the gift failed. Held: The use of the word "condition" is not in itself sufficient to deny the overall intention which appears from cl10 to give the residue to the National Trust upon trust for the purposed stated. The terms of the will indicate the testator intended to prepare a layout plan at the time the will was executed but did not intend that, if he failed to prepare such a plan, the gift should fail. The preparation of the layout plan would naturally fall to the National Trust as trustee of the property. One question which should have been raised in the proceedings was whether cl10 established a trust for charitable purposes and, if it was shown that at the date of vesting in possession it was impossible or impracticable to carry out those purposes, whether the property should be applied cy-prés and if so, how a scheme should be settled. The gift to the National Trust in cll10 of the will was a valid gift to that body of the residue of the testator's estate to be held by it upon trust for charitable purposes. Yates v University College, London (1875) LR 7 HL 438 applied; In re Wightwick's Will Trusts [1950] Ch 260 at 265; Congregational Union (NSW) v Thistlethwayte (1952) 87 CLR 375; Re Inman [1965] VR 238; In re Pinion [1965] Ch 85; The Attorney-General v The Wax Chandlers' Company (1873) LR 6HL | at 21; Wellbeloved v Jones (1822) 1 Sim & St 40; 57 ER 16; Society for the Propagation of the Gospel v Attorney General (1826) 3 Russ 142; 38 ER 530 referred to. Meagher JA I agree with Sheller JA. Sheller JA INTRODUCTION Paul William Butler, who died on 16 June 1991, by his will dated 17 August 1990, left the residue of his estate to the National Trust for charitable purposes but subject to conditions which could not be fulfilled. The question for decision on this appeal was whether, as Brownie J held, the gift failed. Probate was duly granted to the respondents, Francis Michael Amour and Ian Malcolm Stewart, the executors and trustees named in the will. The testator's estate was valued for probate purposes at $2,265,642 and included two properties known as 1 and 3 Darley Road, Randwick. After making some pecuniary bequests and other provisions out of his estate, the testator provided for the disposition of the residue in the following terms: 2 UNREPORTED JUDGMENTS "10. I GIVE the residue of my estate to the NATIONAL TRUST (NEW SOUTH WALES BRANCH) upon the condition that the Trust restore and preserve my properties 1 and 3 Darley Road, Randwick and all furniture, machinery, cars and other contents therein for future exhibition to the public at the above location and in accordance with layout plan prepared by me. My Executors shall notify the National Trust of this bequest in writing within four (4) weeks of obtaining grant of probate. If the National Trust does not accept this bequest in writing and subject to above conditions within six (6) months of my Executor's written notification my Executors at their discretion shall pay the residue to some other organisation which they consider will most nearly fulfil the above objects. If this last trust fails my Executors shall apply residue of my estate for general charitable purposes as they think fit." The correct name of the intended beneficiary is the National Trust of Australia (New South Wales). I shall refer to it as the National Trust. No "layout plan" has been found. Searches of the testator's property and personal effects has failed to reveal that he ever prepared such a plan. Numbers 1 and 3 Darley Road, Randwick were not heritage items and at the date of the testator's death were zoned in the Randwick Planning Scheme residential "A1", which meant that they could be used for the exhibition of their contents to the public only with the consent of the Council. Apparently, an officer of Randwick Council had indicated that the Council would not consent to an application to use the land for this purpose. The executors did not notify the National Trust of the bequest in writing within four weeks of obtaining grant of probate. The evidence is that the National Trust is prepared to accept the gift on the conditions set out in cl10 of the will and has taken the decision to restore and preserve the two properties and all furniture, machinery, cars and other contents therein for future exhibition to the public. These proceedings came before the Court on an amended summons filed by the executors on 13 August 1996, in which the National Trust was named as defendant. The executors sought a declaration that "upon the true construction of the Will of Paul William Butler deceased, and in the events which have happened the gift to the Defendant in paral 0 of the Will is void for uncertainty or otherwise fails." The National Trust cross claimed for a declaration that the gift in paral0 of the will was a valid gift in its favour and an order that a scheme be prepared to give effect to the intentions of the testator in cl10. Brownie J heard the proceedings and on 13 August 1996 made a declaration in the terms sought in the amended summons. He made orders that the costs of the plaintiffs be paid on an indemnity basis and out of the estate and the costs of the defendant be paid on a party/party basis and out of the estate. From this declaration the National Trust now appeals. BROWNIE J'S REASONS Brownie J concluded that on the proper construction of the will the gift in cl10 was made conditionally, that is, subject to the satisfaction of the conditions mentioned in the first sentence. The testator said as much and reinforced what he said with the statement in the third sentence requiring the defendant to accept the bequest in writing and, subject to those conditions, within a time then limited. He went on to provide for what counsel called the second tier and third tier of gifts. His Honour said: URWATIONAL TRUST OF AUSTRALIA (NEW SOUTH WALES) v AMOUR (Sheller JA) 3 "Tt does not seem to me that this is a case of non-acceptance of the gift so much as a case of failure of conditions which the testator attached to the making of the gift as set out in cl10. I therefore declare that the gift [to the National Trust] has failed." THE EFFECT OF Cl10 C110 provided for the residue of the estate to be held by the National Trust and applied indefinitely for the purposes stated. As Wynn-Parry J said in In re Wightwick's Will Trusts [1950] Ch 260 at 265: "A trust of income for an indefinite period for a purpose not being charitable is void as a perpetuity or as tending to a perpetuity, because it involves rendering the capital inalienable." See also Ford & Lee, Principles of the Law of Trusts, para7430, where reference is made to Congregational Union (NSW) v Thistlethwayte (1952) 87 CLR 375 and Re Inman [1965] VR 238; Theobald on Wills, 15th ed, at 630. No suggestion was made that if the residue was to be held in trust in accordance with the first sentence of cl10 its objects were not exclusively charitable; compare In re Pinion [1965] Ch 85. The debate at the trial was about whether non-fulfilment of the conditions resulted in the failure of the gift to the National Trust or alternatively whether the National Trust took the residue absolutely. The National Trust's primary argument was that the gift was conditional, but that the conditions referred to in the first sentence of cll0 were conditions subsequent and not conditions precedent. Accordingly, if some of them were incapable of performance because of the effect of the Randwick Planning Scheme or because no layout plan existed, the National Trust took the gift absolutely shorn of the conditions; see In re Turton [1926] Ch 96 at 100. The executors submitted that on the proper construction of the will the testator intended that the gift be "truly conditional". Reliance was placed upon the expression, "upon the condition that", reinforced by the requirement that the National Trust accept the gift in writing "and subject to the above conditions", and the provision that if the National Trust did not accept in accordance with the testator's requirements, the executors were obliged to pay the residue to some other organisation which "will most nearly fulfil the above objects". Only if this last trust failed did the testator intend that the residue be applied by the executors "for general charitable purposes as they think fit". The executors submitted that the purpose of the gift was the creation of a museum, whether that was achieved through the stewardship of the National Trust or some other entity. This purpose was apparent from the phrase "if this last trust fails" meaning that, if the National Trust was unwilling to accept the conditions and if the executors were unable to find some other organisation which would most nearly fulfil the testator's objects, the executors should apply the residue for general charitable purposes. This was the paramount purpose, not the identity or endowment of a particular beneficiary. The executors said that questions of whether the conditions were subsequent or precedent or initially impossible or became impossible were but an overrefinement of the underlying principle: "What was the testator's intention?" CONDITION OR TRUST During oral argument the Court raised with counsel the question whether cl10 should be read as a gift of the residue of the testator's estate to the National Trust upon trust to restore and preserve the properties and contents for future exhibition 4 UNREPORTED JUDGMENTS to the public at their location and in accordance with the layout plan. In Theobald at 639, the editors observe that the court is never astute to construe a testator's words as a condition if a different meaning can fairly be given to them. Thus, a devise "upon condition" that the devisee make certain payments within a given time will, as a rule, be construed as a trust, and not as a condition; see also Tudor on Charities, 8th ed, at 125 and following. In The Attorney General v The Wax Chandlers' Company (1873) LR 6HL | at 21 Lord Cairns remarked: "...... if I give an estate to A upon condition that he shall apply the rents for the benefit of B that is a gift in trust to all intents and purposes, although the word 'condition' is used." So to treat the word "condition" accords with the testator's intention. Mr Pembroke SC, who appeared for the executors, argued that cl10 did not establish a trust, but merely a gift subject to a condition precedent, namely the National Trust's acceptance of the bequest in writing subject to its conditions. Since these conditions were impossible because of the zoning and the absence of a layout plan prepared by the testator, the gift to the National Trust failed; see In re Elliott [1952] Ch 217. Counsel pointed to the use of the word "condition" not only in the first but the third sentence in cl10. In my opinion, the use of the word "condition" is not in itself sufficient to deny the overall intention which appears from cl10 to give the residue to the National Trust upon trust for the purposes stated. The testator could scarcely have intended, in light of the last three sentences of cl10, that the National Trust should have the residue of his estate subject only to performing certain conditions which, if they could not be performed, would leave the National Trust holding the property absolutely for its own objects. The testator's intention was that the trust objects should be carried out. If neither the National Trust nor any other organisation was prepared to carry them out the testator provided for the residue to be applied by his executors for general charitable purposes as they thought fit. This was only to happen "[if] this last trust fails". The last trust was that which would most nearly fulfil the above objects. This language is consistent only with there being an earlier trust, namely that expressed in the first sentence of cl10. IMPOSSIBILITY OF PERFORMANCE There are two reasons why on its face the object expressed in the first sentence of cl10 cannot be achieved; first, the zoning of the properties and second, the absence of a layout plan prepared by the testator. The second is of no consequence. In Yates v University College, London (1875) LR 7 HL 438, the testator gave certain property to University College for the purpose of founding in it a new professorship of archaeology "for the regulation of which professorship I purpose preparing a code of rules and regulations, which I intend to authenticate under my hand." The testator further declared that if University College should decline or refuse to accept the said rules, the bequest should be null and void and the property should become part of his residuary estate. The testator never framed any rules and regulations for the professorship. His widow claimed that, in these circumstances, the gift of them to the college had become wholly void. Lord Cairns LC, at 443-4, treated the bequest as a complete bequest and the words following relating to the preparation of a code of rules and regulations as not imposing any infirmity or incompetency upon the bequest, but merely "as a statement of the intention of the testator at the time the will was framed, that at some future period he proposed preparing a code of rules for the regulation of the professorship, which, if he did prepare them, would regulate the details URWATIONAL TRUST OF AUSTRALIA (NEW SOUTH WALES) v AMOUR (Sheller JA) 5 necessary to be regulated with regard to the professorship; but which, if he did not prepare them, the framing of rules would naturally fall to the University College, in which the professorship was to be created. I can find nothing here in any way approaching to the nature of a condition, and consequently the argument with regard to cases founded upon conditional bequests, has no application whatever to this bequest in its 'original' constitution." Lord Chelmsford and Lord Hatherley concurred. In my opinion, by parity of reasoning, the terms of the will indicate the testator intended to prepare a layout plan at the time the will was executed but did not intend that, if he failed to prepare such a plan, the gift should fail. To adapt the language of Lord Cairns, the preparation of the layout plan would naturally fall to the National Trust as trustee of the property. At the date of the testator's death the zoning of the properties under the Randwick Planning Scheme meant that exhibition of their contents at their location could take place only with the consent of Council. If the initial impossibility of a gift to charity is clearly established or it is impracticable to carry out the charitable purposes, the question becomes whether the properties should be applied cy-prés or where the gift is to an institution which, as in the present case, has accepted the gift, the property should not be so applied; see generally, Tudor at 392; Sheridan and Delany, The Cy-Prés Doctrine, 1959, at 156-7; Wellbeloved v Jones (1822) 1 Sim & St 40; 57 ER 16; Society for the Propagation of the Gospel v Attorney General (1826) 3 Russ 142; 38 ER 530. The initial impossibility must be clearly established. If the Court is not satisfied that the avowed object of the gift can never be carried into effect but finds that it may be possible to carry it into effect at some future date, though not immediately, the Court will not in the first instance direct a cy-prés application. The relevant date for determining the possibility or impossibility of the gift is the date on which the gift vests indefeasibly in possession; Tudor at 393. Although Brownie J proceeded on the basis that the zoning of the land made it unlawful for the properties and their contents to be exhibited to the public at their location, his Honour was concerned only with whether this meant that the gift failed. The conclusion rested upon his opinion that the gift was a conditional one. His Honour did not investigate what consequence would flow if one treated cl10 as establishing a trust for charitable purposes which could not be carried into effect in its precise terms because of the Randwick Planning Scheme. The question was never raised before his Honour, a fact perhaps explained by the executors' failure to join the Attorney General as a party to the proceedings. ATTORNEY GENERAL In my opinion, one question which should have been raised in the proceedings was whether cl10 established a trust for charitable purposes and, if it was shown that at the date of vesting in possession, that is to say, the date of acceptance of the gift by the National Trust, it was impossible or impracticable to carry out those purposes, whether the property should be applied cy-prés and if so, how a scheme should be settled. The Court raised these matters during the hearing and an order was made requiring the trustees to join the Attorney General as a party to the summons and to the appeal. An opportunity was given to the Attorney General to put such submissions to the Court as he should be advised. This the Attorney General has declined to do. 6 UNREPORTED JUDGMENTS CONCLUSION In my opinion, the gift to the National Trust in cl10 of the will was a valid gift to that body of the residue of the testator's estate to be held by it upon trust for charitable purposes. I propose the following orders: 1. Appeal allowed; 2. Set aside declaration 1 made by Brownie J on 13 August 1996; 3. Declare that upon the true construction of the will of the late Paul William Butler deceased and in the events which have happened the gift of residue to the National Trust in cl10 of the will is a valid gift to the National Trust of the residue of the testator's estate, to be held by it upon trust for charitable purposes; 4. Remit the proceedings to the Equity Division to inquire whether it is impossible or impracticable to carry the stated charitable purposes of the gift into effect and, if so, to determine whether the residue should be applied cy-prés and, if so, to direct and settle a cy-prés scheme; 5. The costs of the appellant and the respondents to be paid out of the estate, those of the appellant on a party/party basis and those of the respondents on an indemnity basis. Cole JA I agree with Sheller JA. 1. Appeal allowed; 2. Set aside declaration 1 made by Brownie J on 13 August 1996; 3. Declare that upon the true construction of the will of the late Paul William Butler deceased and in the events which have happened the gift of residue to the National Trust in cl10 of the will is a valid gift to the National Trust of the residue of the testator's estate, to be held by it upon trust for charitable purposes; 4. Remit the proceedings to the Equity Division to inquire whether it is impossible or impracticable to carry the stated charitable purposes of the gift into effect and, if so, to determine whether the residue should be applied cy-prés and, if so, to direct and settle a cy-prés scheme; 5. The costs of the appellant and the respondents to be paid out of the estate, those of the appellant on a party/party basis and those of the respondents on an indemnity basis. Counsel for the appellant: M H Tobias QC Solicitors for the appellant: Eakin McCaffery Cos Counsel for the respondent: M A Pembroke SC/P J Dowdy Solicitors for the respondent: Gillis Delaney Brown