NEW SOUTH WALES SUPREME COURT
CITATION: Tantau v MacFarlane [2010] NSWSC 224
JURISDICTION: Equity Division Probate List
FILE NUMBER(S): 300334 of 2009
HEARING DATE(S): 8 February 2010
JUDGMENT DATE: 25 March 2010
PARTIES: Robyn Tantau (Plaintiff) Margaret MacFarlane (First Defendant) The Trustees National Gallery of Victoria (Second Defendant) Attorney-General of the State of New South Wales (Third Defendant)
JUDGMENT OF: Ward J
LOWER COURT JURISDICTION: Not Applicable
LOWER COURT FILE NUMBER(S): Not Applicable
LOWER COURT JUDICIAL OFFICER: Not Applicable
COUNSEL: J Wilson SC (Plaintiff) J Needham SC (First Defendant) M Meek SC (Second Defendant) C Mantziaris (Third Defendant)
SOLICITORS: Herd & Associates (Plaintiff) Wills & Estates Legal Service (First Defendant) Maddocks Lawyers (Second Defendant) I V Knight (Third Defendant)
CATCHWORDS: WILLS PROBATE AND ADMINISTRATION – principles of rectification and construction – acceptance and disclaimer of gifts – CHARITABLE TRUSTS – whether valid gift for charitable purposes – whether general charitable intention – cy- près schemes – half of residuary estate left to non-existent „Art Gallery of Victoria‟ to create an annual painting award – HELD – rectification of will to refer to National Gallery of Victoria – valid disclaimer despite initial acceptance of gift due to misapprehension of conditions of gift – gift does not fail by reason of non-existence of „Art Gallery of Victoria‟, by reason of disclaimer, for uncertainty or impracticality and is a valid gift for a charitable purpose – alternate trustee to be appointed to administer award
LEGISLATION CITED: Charitable Trusts Act 1993 (NSW) Family Provision Act 1982 National Gallery of Victoria Act 1966 (Vic) Probate and Administration Act 1898 (NSW) Statute of Charitable Uses (1601) (England)
CATEGORY: Principal judgment
CASES CITED: Aljaro Pty Ltd v Weidmann [2001] NSWSC 206 Arnott v Leong [2009] NSWSC 187 Attorney-General for New South Wales v Adams (1908) 7 CLR 100 Bush v National Australia Bank Limited (1992) 35 NSWLR 390 Chesterman v Mitchell (1925) 24 SR (NSW) 108 Commissioner for Stamp Duties (NSW) v Carlenka Pty Limited (1995) 41 NSWLR 329 Commissioners of Income Tax v Pemsel [1891] AC 583 Commissioner of Taxation of the Commonwealth of Australia v Ramsden [2005] FCAFC 39 Construction Training Board v Attorney General [1971] 1 WLR 1301; [1971] 3 All ER 449 Corish v Attorney-General of NSW [2006] NSWSC 1219 Crystal Palace Trustees v Minister of Town and Country Planning [1951] 1 Ch l32; [1950] 2 All ER 857 Cummings v De Santis; De Santis v De Santis [2002] NSWSC 729 Doe on the demise of Jane Smyth v Sir George Henry Smyth, Bart (1826) 6 B & C 112; 108 ER 394 Donnolley v Clarke [2008] NSWSC 522 Guardhouse v Blackburn (1866) LR 1 P&D 109 In re Litchfield, Public Trustee v Millett [1961] ALR 750; (1961) 2 FLR 454 In re Lysaght [1966] 1 Ch 191 Incorporated Council of Law Reporting for England and Wales v Attorney-General [1972] Ch 73; [1971] 3 All ER 1029 Lady Naas v Westminster Bank Ltd [1940] AC 366 Lawson v Lawson NSWSC, unreported, 17 November 1997 Lewis v Lohse [2003] QCA 199 Lloyd v Federal Commissioner of Taxation (1955) 93 CLR 645; [1956] ALR 95 Long v Long; Estate of Ethel Edith Long [2004] NSWSC 1002 Lutheran Church of Australia South Australia District Incorporated v Farmer's Co- operative Executors and Trustees Ltd (1969) 121 CLR 628; [1970] ALR 545 McLean v Attorney General of New South Wales [2002] NSWSC 377 Menna v Jacobs; Re The Estate of Catherine Nolan [2004] NSWSC 1191 Miskelly v Arnheim [2008] NSWSC 1075 Narsi v Bhiudi; Estate of Kalyanji [2008] NSWSC 1160 Perpetual Trustee Co Ltd v Groth & Ors (1985) 2 NSWLR 278 Public Trustee v Attorney General of New South Wales (1997) 42 NSWLR 600 Public Trustee v Permanent Trustee Co Ltd [2003] NSWSC 556 Rawack v Spicer [2002] NSWSC 849 Re Boyd (deceased); Knowles & Anor v Commissioner of Inland Revenue [1966] NZLR 1109 Re Chanter (deceased) [1952] SASR 299 Re Cranstoun (deceased); Gibbs v Home of Rest for Horses [1949] Ch 523 Re Dupree's Deed Trusts; Daley v Lloyds Bank [1945] 1 Ch 16 Re Estate of Dyranda Prevosk [2004] VSC 537 Re Estate of Max Frederick Dippert [2001] NSWSC 167 Re Hodge: Hodge v Griffiths [1940] Ch 260 Re Hodges; Shorter v Hodges (1988) 14 NSWLR 698 Re Lawton [1936] 3 All ER 378 Re Leitch (deceased) [1965] VR 204 Re Lowin: Perpetual Trustee Co Ltd v Robins (1967) 2 NSWR 140 Re Paradise Motor Co Ltd [1968] 2 All ER 625 Re Taylor; Martin v Freeman (1888) 58 LT 538 Re Young; Fraser v Young [1913] 1 Ch 272 Royal Choral Society v Commissioners of Inland Revenue [1943] 2 A11 ER 101 Royal North Shore Hospital of Sydney v Attorney General for New South Wales (1938) CLR 396 State Trustees Ltd v Wheeler & Ors [1998] VSC 115 Stephens v Stephens [2007] FamCA 680 The Cram Foundation v Corbett-Jones and Anor [2006] NSWSC 495 The Trustees Executors and Agency Co Ltd v Zelman Memorial Symphony Orchestra; Re Lloyd [1958] VR 523 Townsen v Tichell (1819) 3 B Ald 31 Williams v Milone [2004] NSWSC 576
TEXTS CITED: G Dal Pont, Charity Law in Australia and New Zealand, Oxford University Press 2000 Professor Crago, "Principles of Disclaimer of Gifts" (1999) 28 Western Australian Law Review 65 Mortimer & Summucks on Executors, Administrators and Probate, 19th ed, Sweet & Maxwell, 2008 Theobald on Wills 16th edn. Sweet & Maxwell, 2001 Tudor on Charities, 7th ed, Sweet & Maxwell, 1984 Williams on Wills, 9th ed, Butterworths 2008
DECISION: 1. Order under s 29A of the Probate and Administration Act 1898 that the will dated 3 February 2003 of the late Mona Alexis Fox (also known as Mona Alexis Brand) (who died on 1 August 2007), probate of which will was granted on 12 December 2007, be rectified by substituting for the word “Art”, in the description of the institution “Art Gallery of Victoria” in clause 3(c) of the will, the word “National”. 2. Declare that the gift to the National Gallery of Victoria under the will as so rectified is a valid gift for charitable purposes. 3. Declare that the National Gallery of Victoria has disclaimed the gift to it under the will as so rectified. 4. Direct the executors and trustees of the said will to take steps to identify a substitute trustee for the administration of the 'Len Fox Award'. 5. Declare that, in the event that a substitute trustee for the administration of the „Len Fox Award” cannot be identified within a reasonable time to be determined, the matter should be referred to the Attorney-General to establish a scheme for the administration of the gift cy-près in accordance with s 13 of the Charitable Trusts Act 1993 (NSW).
JUDGMENT:
- 44 - IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION PROBATE LIST
WARD J
THURSDAY 25 MARCH 2010
2009/300334 ROBYN TANTAU V MARGARET MACFARLANE & ORS IN THE ESTATE OF MONA ALEXIS FOX
JUDGMENT
1 This matter concerns the will of the late Mona Alexis Fox, who died on 1 August 2007. On 12 December 2007, probate of her last will (made on 7 February 2003) was granted jointly to the plaintiff and the first defendant.
2 Under her will, the deceased (after two gifts of individual pieces of artwork by the artist Emanuel Phillips Fox, her late husband‘s uncle, and various small pecuniary legacies) left her residuary estate (valued, as I understand it, in the order of $800,000) in two equal shares – one half to the State Library of New South Wales (for the creation of a fund to establish an annual award to an outstanding Australian woman writing for the stage or screen, to be known as the Mona Brand Award) and the other half to the Art Gallery of Victoria (for the purpose of creating an annual award for a painting by an Australian artist of an Australian subject in sympathy with the works of E. Phillips Fox, to be known as the Len Fox Award). No difficulty arose with the first of the residuary bequests. It is with the second of the residuary bequests that problems have arisen.
3 First, there is no entity known as the ―Art Gallery of Victoria‖ and, secondly, the entity which (for reasons on which I elaborate below) it is probable was the intended recipient of the second residuary bequest (the National Gallery of Victoria) has, following an initial acceptance of the gift, subsequently indicated its wish to disclaim the gift.
4 The plaintiff, Ms Tantau, has no interest in the outcome of this application. The first defendant, Ms MacFarlane, is one of the nieces of the deceased and was appointed on 21 September 2009 as the representative of the interests of the beneficiaries of the estate should the gift fail and fall to be administered on intestacy. She has permitted the plaintiff to act as sole executor in these proceedings.
5 The remaining parties to the proceedings are the second defendant, the Trustees of the National Gallery of Victoria (NGV) (the Council of which is a body corporate constituted by s 5 of the National Gallery of Victoria Act 1966 (Vic)), seeking declaratory relief in relation to the disclaimer of the gift, and the third defendant, the Attorney General of the State of New South Wales, who has authorised the continuation of these proceedings as a charitable trust proceeding pursuant to s 6(2A) of the Charitable Trusts Act 1993 (NSW) and has been joined as a necessary party to the proceedings.
6 Broadly speaking, the NGV does not take any position in relation to the issues in contention between the parties but has made submissions as to the validity of its disclaimer of the gift. (Although no party contends that the NGV‘s disclaimer of the gift should not operate as a valid disclaimer, Senior Counsel for the NGV (Mr Meek SC) has quite properly drawn my attention to the existence of doubt on the authorities in relation to this issue.) There is, however, a dispute as between the other parties as to the effect of such a disclaimer, assuming it is valid, as to whether it renders the gift void ab initio.
7 There is also a difference between the parties (other than the NGV) as to whether the process by which they say the gift should be read as a gift to the NGV is that of construction or rectification of the will (although it seems to be agreed that nothing ultimately will turn on this).
8 The more substantive dispute is between Ms Tantau and the Attorney General on the one hand (who agree that the gift is a valid gift for a charitable purpose and, if that need be established, that the gift is supported by a general charitable intention) and Ms MacFarlane, on the other hand, who contends that there is no charitable intention (particular or general) in the will, that the gift fails and that there is an intestacy.
9 There is also a difference of opinion as to the administration of the gift if it be found that it was a valid charitable gift. Ms Tantau says that, in light of the NGV's disclaimer, the gift should be administered cy-près. The Attorney General considers that the cy-près administration of the gift is necessary only if an alternative trustee for the administration of the Len Fox Award cannot be found.
Issues
10 The parties have formulated an Agreed Statement of Issues, which I set out below together with the conclusions I have reached on those issues:
1. Rectification: Whether the testamentary gift in clause 3(c) of the will to the ‗Art Gallery of Victoria‘ should be rectified pursuant to section 29A of the Probate and Administration Act 1898 (NSW) so that
it reads as a gift to the NGV.
I am of the view that the will should be so rectified.
2. Construction: Alternatively to Issue 1, whether the gift should be construed as a gift to the NGV.
Given the view I have formed as to Issue 1, this question does not arise. However, had it been necessary to determine I would have concluded on balance that the will should be so construed.
3. Disclaimer: On the assumption that the will is rectified or construed as a gift to the NGV, whether the NGV has disclaimed the gift made to it under the will.
I am of the view that the initial acceptance by the NGV of the gift was based on a misunderstanding or misapprehension as to the conditions on which it was devised and that, there being no prejudice to any other occasioned by the retraction of the NGV’s acceptance, it is open to the NGV to disclaim (and it has validly disclaimed) the gift.
4. Failure of the particular gift: Whether the gift in clause 3(c) of the will fails,
(a) by reason of the non-existence of the ‗Art Gallery of Victoria‘; or
(b) by reason of the disclaimer of the NGV; or
(c) impracticality, uncertainty or any other reason.
I am of the view that the gift does not fail by reason of any of the above; that there was no initial impossibility of the gift and that it was a valid gift for a charitable purpose. By reason of the subsequent disclaimer by the NGV, it is necessary for a new trustee to be appointed to administer the bequest.
5. General charitable intention and validity of charitable gift: Whether, notwithstanding any failure of the particular gift, clause 3(c) of the will,
(a) manifests a general charitable intention; and
(b) is a valid gift for charitable purposes.
I am of the view that the gift under clause 3(c) of the will, as rectified, is a valid gift for charitable purposes. Had it been necessary to determine, I would have found that clause 3(c) manifested a general charitable intention.
6. Cy-près scheme: In the event that the Court finds that the gift under clause 3(c) is a gift for charitable purposes, whether the Court should refer the matter to the Attorney General so that he may establish a scheme pursuant to s 13(1)(c) of the Charitable Trusts Act 1993 (NSW) for its administration cy-près under Part 4 of that Act.
This does not arise in view of my finding on issue 4 above. Only in the absence of a suitable alternative trustee would it be necessary for the gift to be distributed cy-près. If the issue were to arise (due to a failure to identify a suitable alternative trustee), then I would consider it appropriate for the gift to be administered cy-près.
7. Costs: The appropriate orders to be made in relation to the costs of the proceedings (as to which Counsel considered that submissions would more appropriately be made once judgment had been handed down on the above issues).
The costs orders are to be determined following submissions from Counsel.
Facts
11 The deceased‘s late husband (Leonard Fox) was a nephew of the late Emanuel Phillips Fox, an Australian artist a number of whose works are held in the NGV‘s collection (as itemised in an NGV listing which is Annexure C to an affidavit sworn 3 February 2010 of Ms Holly Stenning, the solicitor with the carriage of these proceedings for the Attorney General). Although described in these proceedings by Senior Counsel for Ms MacFarlane (Ms Needham SC) as a landscape artist, it seems that E. Phillips Fox also painted in the field of portraiture (as described in a paper prepared by the Senior Curator Australian Art of the NGV, which is Annexure D to Ms Stenning‘s affidavit; E. Phillips Fox there being said to have combined an impressionist-oriented vision with an academic training and to be one of Australia‘s most gifted colourists and figure painters).
12 The late Mr Len Fox published, apparently at his own expense, in April 1969 a booklet titled ―E. Phillips Fox: Notes and Recollections‖ (a copy of which is Annexure F to Ms Stenning‘s affidavit) and in 1985 a book titled ―E. Phillips Fox and his family‖ (extracts from which comprise Annexure G to Ms Stenning‘s affidavit) in which he expressed the view that there had seemed a danger that, fifty years after his uncle‘s death, he might become to some extent a forgotten artist (and acknowledged his wife‘s critical advice in relation to the book).
13 In early January 2003, the deceased contacted a solicitor, Mr Kenneth Herd, who had previously acted for Mr and Mrs Fox in relation to the preparation of a power of attorney, requesting assistance in the preparation of wills for herself and her husband. Mr Herd‘s affidavit, affirmed 24 December 2009, set out the circumstances in which he became involved in the preparation of the couple‘s wills.
14 Initially, Mr Herd gave some advice (contained in a letter dated 30 January 2003 a copy of which is Annexure A to his affidavit) as to certain pro forma wills which had previously been prepared and executed by each of his clients. He advised his clients that those pro forma wills had not been properly executed. It seems from his advice that, at that stage, the wills made no provision for any bequest to the ‗Art Gallery of Victoria‘ or, for that matter, to the NGV.
15 After he gave his advice on the executed wills, Mr Herd was asked to advise on a handwritten draft will (or draft notes) prepared by the deceased (a copy of which document was Annexure B to his affidavit), the substance of which was apparently intended also to form the basis of Mr Fox‘ will. Mr Herd attended on Mr and Mrs Fox together on a number of occasions for the purpose of advising in relation to the preparation of their final wills.
16 In her handwritten draft will/notes, the deceased had made various notes as to her ‗other property‘. Significantly (for present purposes), in those notes the deceased referred both to a request she had made for her husband to consider bequeathing his half share of the proceeds from the sale of their jointly owned property to the initiation of an award of his choice in his name an award in her husband‘s name (―perhaps involving the Art Gallery of Victoria, commemorating the life and work of his uncle Emmanuel [sic] Phillips Fox‖ (my emphasis)) and, in the context of a proposed bequest of an E. Phillips Fox sketch, to a painting by E. Phillips Fox, The Arbour, as being one possessed by the ―Art Gallery of Victoria‖. Both the NGV listing of works held by E. Phillips Fox, to which I have referred above, and the one page schedule of paintings exhibited in the NGV, which is Annexure D to Mr Herd‘s affidavit, include a painting titled The arbour as a painting held in the NGV‘s current collection and there is no suggestion that this was not the case as at 2003. (It was not suggested that the difference between the capitalisation of ― The Arbour‖ in the deceased‘s notes and the use of the lower case in the title of ―The arbour‖ in the NGV‘s collection listing was of any significance. In this judgment I have used variously the form of the painting‘s title as appearing in the relevant documents but have assumed that the title is correctly listed in Annexure A as ―The arbour‖. In my view nothing turns on the difference in usage.)
17 Also of relevance is a conversation to which Mr Herd deposes, which took place with Mr and Mrs Fox during the course of various discussions in relation to their wills. Mr Herd, who was not aware at the time of the name of the major art gallery in Victoria, says that in relation to the proposed bequest to an art gallery, he said words to the effect ―so it‘s not the ‗National‘‖ or ―not the National then‖, at which point Mr Fox shook his head and Mrs Fox said ―No not Canberra‖. (my emphasis)
18 From the exchange in which the deceased linked the word ―national‖ art gallery in Canberra, and the reference to ―The Arbour” in the proposed draft will notes, as being a painting possessed by the Art Gallery of Victoria, it is clear that the deceased‘s understanding as at the time her final will was being prepared was not only that a reference to the ―National‖ gallery would be a reference to the National Art Gallery in Canberra (which she did not wish to be the recipient of the bequest) but also that the art gallery to which she did want to make a bequest of half her residuary estate was the art gallery in Victoria in which the painting ―The arbour” is held. There is no dispute that the latter gallery is the NGV.
19 There is evidence that the deceased was aware of an association between the NGV and E. Phillips Fox. The NGV had commissioned the painting of The Landing of Captain Cook in Botany Bay by E. Phillips Fox in about 1901-2 and the NGV (properly so named) was referred to by Mr Fox in his 1985 book (in the foreword of which he acknowledged the critical advice of his wife). In paragraph 8 of the affidavit affirmed by Ms Tantau on 19 May 2009 (not read in her case but tendered by the Attorney General), Ms Tantau deposes in general terms to an awareness of the ‗connections‘ both Mr and Mrs Fox had with the state of Victoria and with the NGV. Ms McFarlane, for her part, has deposed (in an affidavit similarly not read in her case but in part tendered by the Attorney-General) that she does not dispute that the intended beneficiary was the NGV (paragraph 16 of her affidavit of 27 March 2009).
20 Set out in full, clause 3(c) of the deceased‘s will (which mirrored the corresponding clause in her husband‘s will) is in the following terms:
"I GIVE DEVISE AND BEQUEATH to my Trustee the whole of my estate of whatsoever nature and wheresoever situate UPON TRUST to pay my funeral and testamentary expenses and debts and all death probate estate succession and other like duties payable in respect of my estate and the legacies specified in Clause 3(b) and (c) above and to hold the residue then remaining ("my residuary estate") UPON TRUST to be divided in two equal shares one equal half to be given to the State Library of New South Wales or to its designated administrators and Trustees for the purpose of the creation of a fund to present an annual award at a figure at the discretion of the said designated administrators or Trustees to an outstanding Australian woman writing for the Stage or Screen being known as the Mona Brand Award and the other equal half to be given to the Art Gallery of Victoria or its designated administrators and Trustees for the purpose of initiating and administering an annual award commemorating the life and works of Emmanuel [sic] Phillips Fox to be known as the Len Fox Award for a painting by an Australian artist of an Australian subject in sympathy with the works of Emmanuel [sic] Phillips Fox."
21 There is no suggestion that at any relevant time there was in existence a body known as the Art Gallery of Victoria. The NGV is established by s 4A(1) of the National Gallery of Victoria Act 1966 (Vic). It is operated by a Council of Trustees (s 13 of the Act). A Director of the National Gallery of Victoria is appointed by s 12(1) of the Act. The Director is the chief executive officer of the Council and has the control and management of the day to day affairs of the Council in accordance with the directions of the Council.
22 The statutory functions of the Council include to control, manage and operate the NGV (s 13 of the Act). Its powers are specified, inter alia, in ss 13A, 14, 16, 17A, 17B and 18AA of the Act. References to the Trustees of the National Gallery are deemed to be references in favour of or for the uses or purposes of the Council (s 20 of the Act).
23 Mr Len Fox died on 3 January 2004 and his entire estate passed to Mrs Mona Fox. Some time in late 2007, after the death of Mrs Mona Fox on 1 August 2007, Mr Herd made contact with the NGV to inform the NGV of the bequest.
24 Evidence was given by affidavit in these proceedings by Ms Leigh Mackay, the Head of the Corporate Office of the NGV and Secretary to the Council, as to the circumstances in which the NGV ultimately came to disclaim the gift.
25 No affidavit evidence of either Ms Tantau or Ms McFarlane in the proceedings was read (the evidence for Ms Tantau being restricted to that of the deceased‘s solicitor, Mr Herd). However, parts of an affidavit sworn by Ms Tantau on 19 May 2009 and an affidavit affirmed by Ms MacFarlane on 27 March 2009 were tendered and relied upon by the Attorney General (paragraph 8 and paragraphs 15 and 16 of the respective affidavits, admitted as Exhibit 2). Further, for the NGV, Mr Meek relied upon both those and certain other parts of the unread affidavits of Ms Tantau and Ms McFarlane as well as an affidavit sworn by Mr Herd on 20 May 2009) as identified in a letter dated 5 February 2010 from his instructing solicitors which was handed up to me as an aide-memoire. (So that there is no later confusion, the NGV relied, apart from the two affidavits of Ms Mackay, on paragraphs 5-13, 17 and pages 7, 10, 13, 15, 16, 18, 20, 21, 22, 24-27 of Ms MacFarlane‘s affidavit of 27 March 2009; paragraphs 7-9, 11, 23 of annexure C and pages 11, 13 and 16 of Mr Herd‘s affidavit of 20 May 2009; and paragraphs 10 and 15 of Ms Tantau‘s affidavit of 19 May 2009; tendering those parts of the affidavits insofar as they were not otherwise formally read. For administrative convenience I note that those parts of the respective affidavits will be read as Exhibit 4.)
26 Part of the affidavit evidence of Ms MacFarlane on which Mr Meek relied was her evidence that, at a meeting with Mr Herd on 29 November 2007, Mr Herd had said that the NGV seemed to be "disinterested in the bequest" (paragraph 5, Ms McFarlane‘s affidavit sworn 27 March 2009), and references made in correspondence passing between Mr Herd and others during early 2008 as to the reluctance of the NGV to accept the gift. (Mr Herd himself referred to the NGV‘s attitude as an ‗apparent disclaimer‘ in correspondence with Ms MacFarlane in September 2008.) However, there is no suggestion that there had been any final decision made by the NGV (or communication of any such decision) to disclaim the gift at that stage.
27 The doubt as to the NGV‘s position in relation to the gift continued through to September 2008, when Mr Herd wrote directly to the Director of the NGV. Ms Mackay says that it was then that the bequest came to her attention for the first time. Ms Mackay responded to Mr Herd by letter dated 8 September 2008 letter (a copy of which is exhibit LM-2 to the affidavit sworn 3 February 2010 of Ms Mackay) to the effect that, in the Director‘s absence, the matter was being referred to the ―senior Curators of Australian Art and Contemporary Art for their consideration‖.
28 In Mr Herd's affidavit sworn 20 May 2009 (not read in Ms Tantau‘s case but paragraphs of which were relied upon by the NGV, as noted above), he deposes that at no time (up to this point) had he received correspondence from the NGV rejecting the gift; the only response from the NGV by that stage apparently having been in conversations with a Ms Judy Williams at the NGV in October and November 2007 (those presumably being the source of his opinion as to the initial reluctance of the NGV to accept the bequest).
29 On 25 November 2008, Ms Mackay, who was asked by the Director of the NGV to correspond on its behalf, wrote a letter to Mr Herd as follows:
We refer to previous correspondence regarding the Estate of Mona Alexis Fox and her generous bequest to the National Gallery of Victoria.
We are grateful to be a beneficiary of this Will and welcome this bequest.
The NGV is able to accept the gift and broadly give effect Mrs Fox's wishes so that the works in sympathy with the works of Emanuel Phillips Fox by Australian artists will be acquired. We would anticipate that we would use the bequest to introduce to the State collection naturalisation landscapes of living Australian artists. The funds will be spent on an annual basis until such time the funds under the bequest to the NGV has been fully expended.
The credit line for the acquisitions from this bequest will be:
‗Purchased as the winner of the Len Fox Award, (date)'
We look forward to receiving the funds from the estate.
30 From this letter it seems clear that Ms Mackay was of the understanding that the gift could be used for the purpose of acquisition of artwork (hence the reference to the ―credit line for acquisitions‖ and the intimation that the funds would be used to acquire works in sympathy with the works of E. Phillips Fox until those funds were exhausted) and Ms Mackay has deposed that this was indeed her impression at the time (paragraph 6 of her affidavit sworn 3 February 2010).
31 I also note that this letter appears to have been more than a mere expression of an intention or ability to accept the gift, given the final sentence of the letter which anticipated receipt of the funds representing the bequest. This is confirmed by the fact that on 27 November 2008, Ms Mackay wrote to Ms MacFarlane‘s solicitor, who had separately contacted the NGV pressing for confirmation of its position in relation to the bequest, advising of the NGV‘s acceptance of the gift:
The National Gallery of Victoria (NGV) is grateful to be a beneficiary of the will. On behalf of the NGV I have written to Herd & Associates, who we understand are solicitors for the executors of the estate, to advise that the NGV is able to accept the gift.
32 As at 28 July 2009, the position of the NGV, as set out in paragraph 7 of Ms Mackay‘s affidavit of that date, seems to have been that the NGV remained willing to accept the gift under clause 3(c) of the will ―assuming the Court finds it was the intended recipient in the terms set out in the bequest‖.
33 That no longer remains the position of the NGV. In fact, the position of the NGV is now precisely the opposite. The reason for this appears from Ms Mackay‘s more recent affidavit of 3 February 2010, in which she explains that it was not until a telephone conference held with other parties to these proceedings on 24 August 2009 that it became clear to her ―that the view of the other parties was that the gift was for the purposes of an annual award to an Australian artist rather than a gift which would enable the acquisition by the NGV of artworks which were sympathetic with the works of Emmanuel [sic] Phillips Fox‖.
34 Having consulted with personnel at the NGV and having sought legal advice, Ms Mackay says that the NGV reached the ―firm view‖ that it did not wish to be the trustee for an annual award ―as NGV is primarily a collecting institution and not a promoter or awarder of prizes‖ (paragraph 9 of Ms Mackay‘s affidavit).
35 By letter dated 19 November 2009, headed ‗Without Prejudice‘, the solicitors acting for NGV confirmed their client‘s instructions ―that it wishes to disclaim the bequest in its favour in the Will of the deceased subject to agreement being reached as to payment of our clients costs of and incidental to the proceedings‖. (A copy of that letter is Exhibit LM-4 to the affidavit of Ms Mackay sworn 3 February 2010.)
36 Although the expression of a wish to disclaim was expressly made on a without prejudice basis, and was subject to agreement being reached as to costs, it seems to have been treated by the parties (and indeed by the NGV) as a formal disclaimer of the gift (see paragraph 10, Ms Mackay‘s 3 February 2010 affidavit).
37 The letter of 19 November 2009 set out the reasons for NGV‘s wish to disclaim the gift, which I summarise as being that the NGV is a collector and exhibitor of artworks and not in the business of promoting and awarding prizes (a business which it seems to regard as of no benefit to it and likely to be of not inconsiderable expense in terms of administration); that there are not many artists of the description specified and there would be a good deal of effort involved in the administration of the award (―which is simply not a core objective‖ of the NGV); and that the functions of the NGV are primarily those contained in s 13(1)(a),(b) and (ca) of the Act and that none of its other related functions ―are directed to arranging and awarding prizes for art‖.
38 In relation to the last reason proffered for the disclaimer, I note that the first statutory function of the Council – to ―control, manage, operate, promote, develop and maintain‖ the gallery and land – seems to me to be very broad and, insofar as administration of the proposed award might be thought necessarily to involve an element of promotion, operation or development of the gallery, this would seem to permit the NGV to accept and administer the present bequest. Further, the incidental functions of the Council include the provision of leadership in the provision of art gallery services in Victoria (g) and the carriage of such other functions as the Minister from time to time approves (h). Therefore, it does not seem to me that there was any statutory incapacity on the part of the NGV to administer such an award had it wished to accept the bequest. (It was submitted that if this were not the case this would come as some surprise to art galleries throughout the country.) Having regard to the breadth of the NGV‘s functions, it does not seem to me that there is any initial impossibility affecting the gift, nor was this suggested by Mr Meek. It is very clear, however, that the NGV does not see the administration of an annual award of this kind as falling within its core objectives and does not wish to accept the gift.
Issues
Issues 1/2 Rectification/construction of will
39 Ms Tantau, by paragraph 1 of her Amended Summons, seeks an order that the deceased‘s will be rectified. Paragraph 3 seeks a declaration that it be rectified in order to substitute the word 'Art’ in the expression 'Art Gallery of Victoria' in clause 3(c) of the deceased‘s will with the word 'National’. That claim for rectification is not opposed by any of the defendants. It will fall to be determined under s 29A of the Probate and Administration Act 1898 (NSW) and the application was made within the time prescribed for such an application.
40 Paragraph 2 of the Amended Summons seeks a declaration that the deceased, in bequeathing one half of the residue of her estate to the Art Gallery of Victoria, intended such gift for the NGV. In his opening submissions, Senior Counsel for Ms Tantau (Mr Wilson SC) argued (on the basis that disclaimer operates from the date of death and makes the gift void ab initio) that the suit would best be conceived as a construction suit. In that regard, Mr Wilson referred to the claim in paragraph 2, though not expressed in the pleading to be in the alternative, as a claim for alternative relief (if rectification is not granted) in the nature of a construction suit and confirmed that Ms Tantau seeks a declaration that the deceased intended the gift to the ―Art Gallery of Victoria‖ to be a gift for the ―NGV‖.
41 The Attorney General, who supports the approach of this suit as a rectification suit, in effect submits that this is a non-issue on the basis that whether the gift is rectified or construed, the result is the same, (namely that there is a gift to the NGV and that the NGV's subsequent disclaimer does not render the gift void).
42 As a preliminary issue as to the appropriate basis on which relief should be granted in relation to the reading of the will has thus squarely been raised, I address this issue first before turning to the agreed issues as stated.
43 The distinction between suits for construction and suits for rectification of a will was considered by Young J, as his Honour then was, in Re Estate of Max Frederick Dippert [2001] NSWSC 167 (at [20]) in terms of the evidentiary issues raised as between the respective kinds of suit.
His Honour said:
Before the merger of the courts, the principles quite clearly were that the Court of Probate had limited power of construing a will, the power to be exercised only so that the Court of Probate could carry out its tasks in ascertaining what was the last will of a free and capable testator and for dealing with questions of accounts of executors etc, see eg Re Hawksley’s Settlement [1934] Ch 384 and Re Fawcett [1941] p 85 … One of the principal reasons for confining the powers of the Court of Probate in construing wills in this way is because the evidence which is properly received by a Court of Probate a fortiori when a Court of Probate is considering a rectification case, ranges over a wide range of matters including declarations of intention and what the testator said to his solicitor. When a Court of Equity is construing a will the Court is confined to the words used by the testator plus the factual matrix in which the will was made. (My emphasis)
44 Thus his Honour observed that, even though now theoretically possible to include both questions in the one summons, it would usually be appropriate to deal with the matters separately. (In Re Dippert, questions of construction were postponed until after the grant.)
45 Counsel for the Attorney General, Mr Mantziaris, submits that, in this case, the only evidence on which the parties rely for the claim for rectification of the will but which would be excluded from consideration in a construction suit (on a strict application of the rules as to inadmissibility of extrinsic evidence of the deceased‘s intention) is, first, the evidence as to the making of the deceased‘s will at the same time as that made by her then husband (coupled with the evidence of the couple‘s association with the NGV and the NGV‘s maintenance and exhibition of the works of E. Phillips Fox) (to be found in the affidavit of Mr Herd of 24 December 2009, paras 3-10) and, secondly, the evidence of the executors as to the communications the deceased and her late husband had had with the NGV on the subject of his uncle‘s work (to be found in those paragraphs of Ms McFarlane‘s and Ms Tantau‘s unread affidavits which were tendered by the Attorney General and admitted as Exhibit 2).
46 Otherwise, it is submitted that the evidence in favour of the deceased‘s gift to the NGV would be admissible in either suit, that evidence being summarised as the association between E. Phillips Fox and the NGV (indicated by its commission to him to paint The Landing of Captain Cook in Botany Bay); the NGV‘s extensive holdings of E. Phillips Fox paintings; and the description of The arbour as a painting possessed by the ‗Art Gallery of Victoria‘ (in the handwritten draft of the deceased‘s will).
47 In other words, Mr Mantziaris submits that a court of construction could construe clause 3(c) having regard only to the matters summarised in paragraph 46 above (as evidence of the surrounding circumstances in which the will is to be construed) and yet this would still be sufficient to permit a finding that the will should be read as a gift to the NGV.
48 As it seems to me that the strongest evidence in favour of reading the bequest as a gift to the NGV is the reference to The arbour (in the deceased‘s handwritten draft will) as being a painting possessed by a non- existent art gallery (in light of the evidence that it is in fact possessed by the NGV), I am inclined to agree with Mr Mantziaris that it would not matter whether the relief sought was for rectification or construction of the will, if that evidence would be admissible in either event. That said, however, I think there is significance to be placed in the conversation to which Mr Herd deposes (which it is accepted would not be admissible on a construction suit) and that it might therefore be thought that the appropriate order (where both rectification and construction are sought and assuming both would be available and have the same result) is that which takes into account the most compelling combination of the admissible evidence – which in this case would be an order for rectification of the will.
49 In that regard, I note that where rectification and construction would produce the same result it may nevertheless be appropriate to order the rectification of the will (Rawack v Spicer [2002] NSWSC 849).
50 The basis on which Ms Tantau, through her Senior Counsel, advances the relief described in opening as alternate relief over the claim for rectification was initially put by reference to the contention that disclaimer operates to render the gift void ab initio (a contention with which Mr Mantziaris takes issue, arguing that the fact of disclaimer of the gift does not have such a legal consequence in this case). During submissions in reply, however, it emerged that the real concern was as to whether the evidence would support a finding that the will should be rectified (and hence was a concern that the court not be led into error by the ‗weight of opinion at the bar table‘ on the issue of rectification).
51 In that regard, Mr Wilson points to the fact that the deceased had specifically instructed her solicitor to prepare a will bequeathing half her residuary estate to a body known as the ‗Art Gallery of Victoria‘, and had, by executing the will, approved its contents. In the absence (he submitted) of evidence that the deceased had intended to benefit a body known as the National Gallery of Victoria, it is said that there is not the requisite evidence of mistake to support a construction. The position articulated for Ms Tantau is thus that the deceased intended to nominate a body she identified as the Art Gallery of Victoria; that she did so and, hence, that rectification is not available. I consider this argument in addressing Issue 1 below.
52 Ms McFarlane concurs in the application for rectification, Ms Needham SC joining with Mr Mantziaris in contending that this is properly to be treated as a rectification suit. Ms Needham submits that it is sufficient for rectification if it is found that the deceased‘s intention was to make the bequest to the art gallery in Victoria in which (among other of E. Phillips Fox‘ works) The arbour was exhibited and that the will failed to carry out the deceased‘s intentions due to her error regarding the name of that gallery. It is submitted by Ms Needham SC that this should be done even though there has been a disclaimer, as the will needs to be put in the form in which the deceased intended it to be. (However, where Ms Needham parts company with Mr Mantziaris is that she contends that the rectified gift fails, among other reasons, because it has been disclaimed by the NGV, a matter I consider later in these reasons.)
53 It seems to me that the appropriate course is to consider separately the claims for rectification and construction (which logically must, though not pleaded as such, be in the alternative) but that if both would be available then, for more abundant caution, to make an order for the rectification of the will.
Issue 1 - Rectification
54 Section 29A of the Probate and Administration Act 1898 (NSW) under which the application for rectification is made provides that:
29A(1) If the Court is satisfied that a will is so expressed that it fails to carry out the testator's intentions it may order that the will be rectified so as to carry out the testator's intentions.
55 In Re Dippert, Young J, as his Honour then was, explained the problems
which s 29A had been enacted to redress and said (at [17] - [18]):
The section has been construed so as to apply the basic principles of rectification worked out in contract cases. Accordingly, what one must look for is an error which has occurred in the transcription of the will or where one can see what the intention of the testator was but the words used have not fulfilled that intention. What one cannot do is to look at unforeseen circumstances and speculate what the testator might have done in those circumstances and then supply words to meet those circumstances. (My emphasis)
Thus in Mortensen v The State of New South Wales (NSWCA, unreported, 12 December 1991) Sheller JA said:
The Court‘s discretion, assuming it is satisfied that the will is so expressed that it fails to carry out the testator‘s intentions, is limited to rectifying the will in such a manner ‗as to carry out the testator‘s intention‘.
Thus where there is no evidence to show what the testator‘s intention was in the event of certain things happening, the Court cannot rectify the will under s 29A.
56 At [34] Young J went on to say:
None of these cases [Wesley v Wesley (1998) 71 SASR 1; Trimmer v Lax (Hodgson J - 9 May 1997, unreported) Green v Green (24 June 1998, Young J unreported] give any support to the proposition that one can rectify the will other than in cases where there is clear proof of the testator‘s actual intention and that even if the evidence tends towards indicating what the testator would have intended had he or she considered the matter, that is not enough.
57 The principles governing an application under s 29A of the Probate and Administration Act 1898 (NSW) were outlined by Campbell J in Rawack v Spicer (at [26]). There, his Honour said:
Before the power of rectification can be exercised, the court must be satisfied both that the will was so expressed that it fails to carry out the testator‘s intentions, and also what it was that the testator intended concerning the part of the will which is to be rectified. Even if the court is satisfied that a testator would not have wanted his property to go in the way that, in the events which have happened, a particular clause results in the property going, the court can rectify the will only if it is satisfied about what the testator actually intended to happen to his property in that particular event: Brian William Mortensen v State of New South Wales (New South Wales Court of Appeal, 12 December 1991, unreported); Re Estate of Max Frederick Dippert [2001] NSWSC 167 (Young J, 20 March 2001, unreported). "It is not enough for the Court to have the opinion that, if the deceased had considered the possibility, she probably would have provided in favour of [a named beneficiary]. What is required is an actual intention, which has miscarried": Trimmer v Lax (Hodgson J, 9 May 1997, unreported at 12). (my emphasis)
58 Mr Mantziaris notes that those principles have been applied in numerous later cases (citing Public Trustee v Permanent Trustee Co Ltd [2003] NSWSC 556, at [13]; Re Estate of Dyranda Prevosk [2004] VSC 537, at [17]; Menna v Jacobs; Re The Estate of Catherine Nolan [2004] NSWSC 1191, at [19]-[22]; Long v Long; Estate of Ethel Edith Long [2004] NSWSC 1002, at [8]-[10]; Narsi v Bhiudi; Estate of Kalyanji [2008] NSWSC 1160, at [45]-[46]; Donnolley v Clarke [2008] NSWSC 522, at [7]; and Miskelly v Arnheim [2008] NSWSC 1075, at [25]).
59 In contending that rectification is not appropriate, Mr Wilson describes the conversation Mr Herd had with the deceased and her husband as to the name of the art gallery as one in which ―the deceased said that she did not want a body with the name "National" in it as the recipient‖. Mr Wilson says therefore that this is not a case of there being a mistake by a solicitor in the preparation of the will; rather, that it is a case of the deceased mistakenly naming a beneficiary and adhering to that mistake when questioned about the name of the beneficiary by the solicitor.
60 Mr Wilson notes that the deceased gave written instructions for her will and that the will as executed on 7 February 2003 reflected those written instructions so far as clause 3(c) was concerned. Therefore, in the absence of suspicion attaching to the document as propounded, it is said that the deceased's execution of it must be taken as sufficient evidence of her knowledge and approval (Guardhouse v Blackburn (1866) LR 1 P&D 109 cited by Powell J in Re Hodges; Shorter v Hodges (1988) 14 NSWLR 698, at 705).
61 Mr Wilson submits that, while there can be no doubt (and he accepts the court may be satisfied) that the will as expressed fails to carry out the intentions of the deceased, it is not to be overlooked that it was the deceased who nominated the beneficiary and that she adhered to the name of the beneficiary when discussing it with her solicitor. Hence, he says, the court could not be satisfied that the deceased intended something different to that which appears in the will.
62 For her part, Ms MacFarlane submits that this is a clear case for rectification. Ms Needham submits that the court can be satisfied to the proper standard that the will failed to "carry out the testator's intentions" since it is clear from the evidence that the deceased wished her gift to go to the institution which held other E. Phillips Fox paintings (and, in particular, I might add, The arbour).
63 Ms Needham submits that it is incorrect to say that the deceased did not want the gift to go to an institution with the name ―National‖ in it. Rather, the evidence is simply that the deceased did not want the gift to go to the national gallery in Canberra. I accept that this is the thrust of the evidence given by Mr Herd of the relevant conversation.
64 Ms Needham further submits that the fact that the deceased herself was mistaken as to the name of the correct body is irrelevant. The deceased intended that half of her residuary estate should benefit the particular gallery in Victoria which held the E. Phillips Fox collection but was mistaken about the name. Ms Needham submits that the fact that the deceased "adhered to her instructions" in relation to the name of the institution does not change the fact that she had an intention to leave the funds in question to the National Gallery of Victoria. I agree.
65 Insofar as the court, on a rectification suit, applies the basic principles of rectification applied in contract cases (as observed by Young J in Re Dippert, at [17]), I note that in Commissioner for Stamp Duties (NSW) v Carlenka Pty Limited (1995) 41 NSWLR 329 (at 336 and 337), the fact that particular words were chosen but that they bore a meaning other than that which the parties intended, enabled the court to rectify the document. Sheller JA there noted with apparent approval that Brightman J, had held in In re Butlin's Settlement Trusts [1976] Ch 251 at 260-261 that rectification is available not only in a case where particular words have been added, omitted or wrongly written as the result of careless copying or the like but:
also … where the words of the document were purposely used but it was mistakenly considered that they bore a different meaning from their correct meaning as a matter of true construction. In such a case, which is the present case, the Court will rectify the wording of the document so it expresses the true intention: see Jervis v Howle and Talke Colliery Co Ltd [1937] Ch 67; Whiteside v Whiteside [1950] Ch 65 at 74 and Joscelyne v Nissen [1970] 2 QB 86 at 98.
66 His Honour noted (at 344) the opinion of Hodgson J in Bush v National Australia Bank Limited (1992) 35 NSWLR 390 (at 406) that the preponderance of authority favoured the view that rectification will not be refused merely because the mistake is as to the legal effect of the words used rather than as to the actual words used (see also McLelland AJA at 345 and Mahoney AP at 332-3 in Commissioner for Stamp Duties (NSW) v Carlenka).
67 Here, it seems to me to be abundantly clear that the deceased (by reference to her draft will notes) mistakenly thought that the art gallery which owned The arbour was known as the Art Gallery of Victoria. It was to that gallery (whatever might be its correct title) that she intended the bequest to be made. In those circumstances the execution (even with the apparent approval of it contents that this entailed) of a document incorrectly identifying the gallery in question does not preclude rectification of the will.
68 I am satisfied that the will should be rectified to reflect the actual intention of the deceased, which was not carried out by the terms of her will due to an error in the identification of the gallery to whom the bequest was intended to be made.
Issue 2 - Construction
69 In Williams v Milone [2004] NSWSC 576 (at [16] - [19]), the Court set out the principles to apply on a construction suit:
[16] First, of course, the court leans against intestacy, if any other solution can reasonably be found. Secondly, the court only supplies words (other than in a rectification suit) where it is clear that words have been inadvertently omitted, and it is clear just what sort of words (though not necessarily the exact words) should be inserted; see for instance Butlin v Butlin (1965) 113 CLR 353.
[17] In Hope v Potter (1857) 3 K & J 206, 209; 69 ER 1083, 1084 Page Wood VC noted that there were two particular situations where words could be supplied. First, where there would otherwise be an intestacy and the Court can clearly and precisely see what words should be inserted (the obvious case is where the drafter had been clearly following some sort of precedent, and one could see by looking at the precedent where there had been an omission; see eg Phillips v Rail (1906) 54 WR 517), and secondly, where there had been a series of limitations and an obvious gap.
[18] The cases where words can be inserted go beyond that but, as the High Court made clear in Butlin, and, indeed, as it has been the rule for a long period of time, words can only be inserted if the court has complete conviction that they have been omitted; see for instance Towns v Wentworth [1858] XI Moore 526; 14 ER 794 (PC).
[19] In the 11th edition of Theobald on Wills at p 642 the learned editor JHC Morris said: With regard to supplying words in a will, the rule seems to be that where the will as it stands is clearly inconsistent, so that the choice lies between rejecting some portion of it or supplying some words, whilst at the same time the latter course will make the will consistent the court will be justified in making the necessary addition.
70 As to the presumption against intestacy, in Arnott v Leong [2009] NSWSC 187 (at [10]), the Court said: ... [There is a presumption against intestacy, namely, that the will should, if possible, on a fair and reasonable construction, be construed so as to lead to a testacy rather than an intestacy or partial intestacy. In Fell v Fell (1922) 31 CLR 268 at 275-276, Isaacs J said: "The mind never inclines towards intestacy; it is a dernier ressort in the construction of wills" (Lord Shaw in Lightfoot v Mayberry (1914) AC 782, at p 802). "In ascertaining the intention, I ought to a certain extent — we all know what the expression means — to lean against an intestacy, and not to presume that the testator meant to die intestate if, on a fair construction, there is reason for saying the contrary" (Buckley LJ in Kirby-Smith v Pamell (1903) 1 Ch 483, at p 489).
See also Hamersley v Newton (2005) 30 WAR 568, at 583 per Heenan J. In other words, where there is only a slight reason to favour one ambiguous construction over another, the Court will do so if that construction avoids intestacy, on the basis that it is closer to the deceased's intention than intestacy: Hyde v Holland [2003] NSWSC 733 per Austin J at [27]. It has been said that the presumption against intestacy "is not a strong presumption" Marks v Pope [2001] NSWSC 105 at [17] per Young J (as his Honour then was).
71 Here, if it is accepted (as I do) that the deceased‘s intention was to make the gift to the particular art gallery in which The arbour was held, then there is no doubt as to the error which has been made or how the will should correctly be read. The word which has been omitted from the title of the recipient is ―National‖ (and the word incorrectly added is ―Art‖).
72 In relation to the construction of the will, emphasis is placed by the parties on the deceased‘s association with the NGV and her knowledge that the NGV had an extensive collection of E. Phillips Fox artworks, as making it likely that, when referring to ―The‖ Art Gallery in Victoria, she intended not only that it be the major public art gallery of Victoria but also that it be the gallery which housed such a collection. That, taken with the presumption against intestacy, given the strength of the connections between the deceased‘s late husband‘s uncle and the gallery, of which the deceased was clearly aware, leads me to conclude on balance that, were the will not to be rectified to refer to the NGV, it should be so construed.
Conclusion
73 As to whether the will should be rectified or construed, where relief of both kinds would be available, I note that in Rawack v Spicer Campbell J said (at [25]):
It is possible for rectification of an unclear clause in a will to be granted ex abundanti cautela, where rectification makes clear the testator‘s intention, even if the clause which the testator actually executed, on its proper construction, means the same as the clause as rectified: Application of Spooner: Estate JJ Davis (Hodgson J, 28 July 1995, unreported); Estate of Cross (McLelland CJ in Eq, 9 May 1996, unreported).
74 In those circumstances, and where I consider the stronger argument to be for rectification, that is the order which is in my view appropriate.
Issue 3 Disclaimer
75 Two questions arise in this context.
76 First, was it open to the NGV, having advised of its acceptance of the gift, later to disclaim the gift (or is that disclaimer of no effect) and, secondly, as to the effect of disclaimer. I note that no party contends that the NGV has not in fact disclaimed the gift. However, as noted earlier, Mr Meek has quite properly raised the issue as to whether as a matter of law such a disclaimer is effective, ie whether it was open for NGV to do so, having already notified its acceptance of the gift.
Ability to disclaim after initial acceptance of gift
77 There is no doubt that it is open to a beneficiary to disclaim a gift made in its favour under a will, though it is said that generally the disclaimer must be absolute (not partial) in its operation. Mr Meek refers to Theobald on Wills, 16th edn, Sweet & Maxwell, 2001, at paras 14 – 25 and Commissioner of Taxation of the Commonwealth of Australia v Ramsden [2005] FCAFC 39 (at [131]).
78 Once accepted, however, ordinarily a beneficiary may not retract that acceptance and disclaim the gift (Williams on Wills, 9th edn, Butterworths, 2008, Vol 1, at para 46.4). Mr Meek submits that this ordinary position is subject to a number of qualifications or exceptions. In essence he argues, by analogy with cases in which a beneficiary has been permitted to retract a disclaimer of a testamentary gift if it can be shown that no prejudice is occasioned to another thereby, that the NGV should in this case be permitted to retract its acceptance of the gift. It is submitted that retraction of its acceptance of the gift should more readily be permitted in circumstances where the evidence shows that the acceptance was made under a misapprehension by the party now wishing to disclaim.
79 Mr Meek, in his written submissions, helpfully analysed a number of cases in which the principles regarding a change of position on the part of a beneficiary who had initially disclaimed a testamentary gift were considered. There are, however, relatively few cases in which a beneficiary, having accepted rather than disclaimed the gift in the first instance, later seeks to retract that acceptance.
80 The issue did arise for consideration in Re Hodge: Hodge v Griffiths [1940] Ch 260, where the gift of real property to the executor and sole residuary legatee under her will was subject to the payment of a weekly sum to the testatrix‘s sister and a direction that on sale of the property a sum should be paid to the sister. Farwell J held that that the will created a personal obligation which was binding on the residuary legatee if he accepted the devise. His Honour found, on the facts, that the residuary legatee had accepted the devise and had undertaken the burden laid on him as devisee. Accordingly, the residuary legatee was held to be under an obligation, having sold the property some five years after the death of the testatrix (and having in the interim taken the benefit of the property and paid the sister the stipulated weekly sum after proving the will), to provide the sum as directed on the disposition of the property.
81 In that case, however, it is apparent that there was more than (as is here the case) a mere notification of acceptance of the gift; in Re Hodge the beneficiary had actually received and benefited from the gift for some time before purporting to disclaim. That, in my view, is a significant point of distinction from the facts in the present case.
82 More recently, the question arose in the context of a Family Provision Act 1982 application in Cummings v De Santis; De Santis v De Santis [2002] NSWSC 729. There, the beneficiary had been left an equal share for life in the net income from the property and had, since the death of the deceased, received income apparently produced from the business conducted on that property. (There was an issue as to whether the payments received by the beneficiary were in fact referable to the gift under the will but Macready AsJ was prepared to proceed on the basis that such payments might have been referable to the income payable under the gift.) At some time after the deceased‘s death but before the Family Provision Act claim, the beneficiary made an affidavit deposing that she did not wish to accept the gift but in the conduct of the subsequent proceedings the position was taken by the beneficiary that there had been no disclaimer of the gift.
83 In that context, where the ultimate issue considered by his Honour seemed to be as to whether the subsequent voluntary disclaimer of the gift could be withdrawn (his Honour accepting (at [44]) the proposition that a beneficiary may retract a voluntary disclaimer at any time provided that there has been no change of position in reliance on the disclaimer, relying upon Re Young; Fraser v Young [1913] 1 Ch 272 and Re Cranstoun (deceased); Gibbs v Home of Rest for Horses [1949] Ch 523), his Honour observed in passing that once the benefit of a gift had been accepted it could not be disclaimed (at [43], citing Re Hodge).
84 However, the fact that his Honour went on to consider whether there had been a change of position in reliance on the subsequent disclaimer (at [44]), so as to preclude its retraction, and then dealt with the Family Provision Act claim on the basis that the gift had not been disclaimed by reference to the fact that there had been no suggestion of a change of position, suggests that his Honour did not accept that there were no circumstances in which a beneficiary might be permitted to retract an initial acceptance of a testamentary gift (since if that had been the case the question whether there had been any change of position in reliance on the disclaimer would have been irrelevant).
85 (That said, the uncertainty as to whether the beneficiary had received payments referable to the gift itself might also suggest that there was some doubt as to whether there had been any acceptance of the gift in the first place, so it may be that ultimately little can be drawn from this decision when considering the issues in the case before me.)
86 In Queensland, the Court of Appeal in Lewis v Lohse [2003] QCA 199 (at [99]), considered the position to be clear, again relying on Re Young (at 276) and Re Cranstoun (at 527 – 528), that a beneficiary could disclaim a testamentary gift after an acceptance of that gift provided that no prejudice had been occasioned to another. In that case, there was a question as to whether the particular gift under the will had to be accepted by both beneficiaries before it took effect (one having initially accepted and then withdrawn that acceptance). At first instance, it was held that the beneficiary was entitled to withdraw the acceptance of the gift on the basis that there was no evidence that the other beneficiary had altered his position to his detriment in reliance on the initial acceptance. The Court of Appeal stated at [9]:
The law seems clear that a bequest may be disclaimed after initial acceptance provided that no prejudice has been occasioned to another. So much would appear to be consistent with statements of principle found in Laws of Australia, Vol. 36 Para. 232, Halsbury, 4h Edition, Vol. 50 Paras. 390 - 392, in Re: Young; Fraser v Young [1913] 1 Ch 272 at 276 and Re: Cranstoun (deceased); Gibbs v Home of Rest for Horses [1949] Ch 523 at 527-8.
87 In Commissioner v Ramsden, the court was considering whether beneficiaries had effectively disclaimed their entitlement to a share of income in a trust. Lee, Merkel and Hely JJ, in considering whether the beneficiary in the case had lost a right to disclaim the gift in question, stated (at [51]);
[51] Where a donee asserts disclaimer, mere silence or inactivity will not be sufficient: there must be ‗some act to show his dissent‘: Federal Commissioner of Taxation v Cornell at 401. The right to disclaim will be lost if a beneficiary accepts the gift: Re Stratton’s Disclaimer [1958] Ch 42. In that case, Jenkins LJ said (at 54) that the beneficiary is free to choose ‗whether to avail himself of (the gift) or not until such time as he has either unequivocally disclaimed or unequivocally accepted the gift‘.
[52] Subject to one possible qualification, it was common ground on the hearing of the appeal that a beneficiary may not disclaim after acceptance of the relevant gift. The possible qualification arises out of the observations of the Queensland Supreme Court in Lewis v Lohse [2003] QCA 199 that a bequest may be disclaimed after initial acceptance provided that no prejudice has been occasioned to another. Whether or not that is the law in relation to a bequest, Re Paradise Motor Co at 1143 decides that the position is otherwise in relation to an inter vivos gift: see also Lady Nass v Westminster Bank Ltd [1940] AC 366 at 401 and Hardoon v Belilious [1901] AC 118 at 123.
[53] A donee may indicate acceptance of a gift by positive conduct. In addition, if a donee knows of a gift, and does not disclaim it within a reasonable period having regard to the circumstances of the particular case, the donee is ordinarily treated as tacitly accepting it: J W Broomhead (Vic) Pty Ltd (in liq) v J W Broomhead Pty Ltd [1985] VR 891 at 930-931. In that case McGarvie J pointed out that the significance of inactivity over time is that it may operate in an evidentiary way to found an inference that the beneficiary has accepted the gift. At 931 his Honour said:
In the absence of positive conduct by which the donee indicates acceptance, the right to disclaim is lost because the court makes a presumption of fact or draws an inference. The presumption or inference is that by remaining silent beyond the time when he would be expected to decline the gift if not accepting it, the donee has tacitly accepted. The inference in the case of a donee is easy to draw because it is human nature to accept gifts. With a gift such as one under a trust deed or a will it is not normally considered necessary to indicate acceptance, but a beneficiary who desires not to receive what is given would commonly indicate that desire. Inaction by the beneficiary is consistent with acceptance. ...
The test for whether a beneficiary is entitled to disclaim is whether in the circumstances he has accepted by words or conduct or has remained silent for so long that the proper inference is that he has determined to accept the interest.
88 The court thus seems to have left open the question whether retraction after an initial acceptance might be possible in testamentary cases.
89 It may be that a distinction can be drawn between the position on the one hand of donees of a gift made inter vivos (in which disclaimer after acceptance seems not possible) and the position on the other hand of beneficiaries of a testamentary gift (or beneficiaries under a discretionary trust, per Bryant CJ in Stephens v Stephens [2007] FamCA 680), (in which disclaimer after acceptance is at least in some cases seen to be possible as recognised in Lewis), as discussed in the article of Associate Professor Crago, "Principles of Disclaimer of Gifts" (1999) 28 Western Australian Law Review 65, at 78, to which Mr Meek referred.
90 Mr Meek points out in that regard that the Full Court of the Federal Court in Commissioner v Ramsden referred to the decisions in both Lewis v Lohse and Re Hodge without apparent criticism. (Nevertheless, in Commissioner v Ramsden the references to Re Hodge, at [31] and [55] were in a very different context to the issue now before the court.)
91 Insofar as the position in Lewis v Lohse (where the court accepted the proposition that acceptance of a testamentary bequest does not necessarily preclude later retraction of that acceptance and an effective disclaimer of the gift) depends on an analogy to be drawn with the position where a beneficiary seeks to retract an initial disclaimer of the gift, reliance was placed on Re Young and Re Cranstoun. However, Associate Professor Crago, in the article to which I have referred above, argues that a close reading of those cases does not support the proposition that a donee may retract a disclaimer simply because there has been no prejudice occasioned by the disclaimer, and asserts that this is inconsistent with fundamental principle.
92 In order to consider whether an analogy can properly be drawn from these cases, it is necessary to consider the basis on which they were decided.
93 In Re Young, the court considered a situation in which the beneficiary of a life interest in the income derived from the investment of the proceeds of sale of the deceased‘s real and personal estate had refused to accept a cheque sent to her representing interest on the investment and had written to one of the trustees stating that she had ―no interest whatever in Ms Young's will and wish for none, so please do not let me be troubled further‖. Subsequently, the income was paid with her consent to her son (to whom, under the will, the income was to be paid after his mother‘s death), whose interest was treated as having been accelerated. The Inland Revenue accepted duty on the son's interest as an interest in possession without requiring duty on her interest. After the death of her son, the beneficiary made a demand for the income from the investment and the residuary legatee contended that there had been a disclaimer of the beneficiary‘s life interest in the legacy and that this could not be retracted.
94 Swinfen Eady LJ considered that the beneficiary‘s refusal to receive the income at the relevant time did not amount to a relinquishment of her life interest, but was merely a voluntary relinquishment of her right to income for the time being (something perhaps inconsistent with the treatment by the Inland Revenue of the vesting in possession of the son‘s interest in the legacy) (at pp 276 – 277). His Lordship held that it was a voluntary act on the beneficiary‘s part for which the beneficiary received no consideration and noted that there had been no change of position as regards the trustees or residuary legatees (at p 275).
95 The second case on which reliance is based for the proposition that a disclaimer (and, by analogy, acceptance) can in certain circumstances be retracted is Re Cranstoun. There, the institution which was a beneficiary of a residuary gift advised of its intention to renounce the gift, being under a mistaken impression that acceptance of the gift carried onerous liabilities and that the gift was of little if any value. Within two weeks of so doing, the secretary of the institution wrote to the executor advising that there had not been a full appreciation of the position in relation to the estate and requesting that the executor disregard the letter in which the intention to renounce the gift had been communicated. Some years later the gift was formally renounced. The estate was not finally administered until some 11 years after the formal renunciation, at which time the institution purported to withdraw its renunciation and expressed the desire to claim the benefit of the gift.
96 Romer J held that the chairman and secretary of the institution had misunderstood its rights. Being prepared to assume that there had been an effective renunciation by reason of the communications between the institution and the executors, and having been referred to the decision in Re Young, Romer J formed the view that a beneficiary might change his mind about a renunciation when no one had acted to his hurt on the faith of the renunciation, observing that (at p 528):
From the scanty material available on this principle of renunciation it seems that it was introduced for the benefit of beneficiaries, so that a beneficiary should not be obliged to take what might be an onerous burden; but a natural corollary of the principle is that if anyone acted on the faith of his renunciation and altered his position to his detriment in consequence thereof, the beneficiary would not be allowed to retract his renunciation. Where, as here, no one has altered his position, I cannot see why the claim to retract should not prevail.
97 Those decisions were considered by Haslam J in Re Boyd (deceased); Knowles & Anor v Commissioner of Inland Revenue [1966] NZLR 1109, as being to the effect that an informal disclaimer by a legatee could be retracted where there had been no detrimental change of position by any party as a consequence thereof. His Honour considered that the legatee in the case before him had indicated her unwillingness to accept an interest in a life policy at a time when she did not have full knowledge of her financial position and that the voluntary disclaimer had not been acted upon or accepted at any time. However, the basis of his Honour‘s decision (that the legatee was able to claim the life policy) seems to have been that there was no unequivocal renunciation of that gift (not that it would have been open to her to retract a disclaimer had it in fact been unequivocal), his Honour saying (at 1116):
I cannot read this document as anything more than an expression, intrinsically inconsistent, of an intention to disclaim, with a direction to apply the moneys in a certain manner which had no validity unless she had already accepted the gift. She did not at any stage renounce unequivocally the benefit of that policy.
98 Therefore, the apparent approval by Haslam J of the proposition for which it seems his Honour considered Re Young and Re Cranstoun stood does not seem to be part of the ratio of his Honour‘s ultimate decision in the case before him.
99 Those decisions were considered by Bryson J, as his Honour then was, in Lawson v Lawson (NSWSC, unreported, 17 November 1997), a case in which one of two residuary beneficiaries had given an informal disclaimer to a debtor of the estate (that debtor being the executor and trustee of the estate). The other beneficiary brought proceedings against the debtor, which resulted in payment of the whole debt into the estate, and then resisted a claim by the residuary beneficiary who had disclaimed the debt that her share of the estate should be enhanced by the monies recovered in respect of the debt. The basis on which the claim was resisted was that of waiver or, alternatively, estoppel. On the facts, there was no waiver or estoppel found.
100 Bryson J considered the aspect of disclaimer and referred to the decisions in Re Young and in Re Cranstoun, expressing the view that in the former case (at 17):
"To my reading his Lordship did not regard the passage in Sheppard's Touchstone [to the effect that a gift becomes void on the refusal of the beneficiary to receive it and cannot be restored by retraction of that refusal] as relating to a refusal to accept an equitable interest in a legacy where the legacy had not been waived but had taken effect."
thus seemingly confining the observations in Re Young to the situation where the testamentary gift had not already taken effect (as is the case before me).
101 His Honour distinguished the case before him from the facts in Re Young on the basis that the disclaimer in Lawson was not directed to the executor and trustee in that capacity but rather was directed to the executor in another capacity (as alleged debtor); and thus it was not a disclaimer of the gift in the will, but of the liability of that person to the estate which, if met, would enhance the value of the gift in the will.
102 His Honour stated (at 19):
"In my opinion if such a share (and a gift on trust of an interest in a residuary estate) is to become unenforceable there must be a basis such as a transaction for consideration, an effectual release, acquiescence or equitable estoppel. Identification of parties against whom the share is unenforceable is important. Only parties to transactions can enforce them; only persons who have acted on a representation are entitled to the benefit of any estoppel. None of this law avails the Plaintiff."
103 By reference to the above, it seems that Bryson J accepted a possible exception to the general principle that a beneficiary cannot retract a disclaimer, that exception being in circumstances where there was no consideration, or an ineffectual release, or where there is nothing to estop the person in equity from later seeking to retract the disclaimer. If so, then it is possible that (by analogy with the result in the opposite situation); retraction of an acceptance might best be considered by reference to whether the initial acceptance itself is supported by consideration or otherwise binding or whether there is an estoppel which would preclude retraction of the initial acceptance. 104 What Associate Professor Crago asserts as ―quite inconsistent with fundamental principle‖ is the line of reasoning in Re Young; Re Crantoun; Re Boyd and Lawson v Lawson, to the effect that a valid disclaimer may be retracted (at all) simply on the basis that such a retraction will not cause prejudice to third parties (the fundamental principle being that, once a gift has been effectively disclaimed or accepted, that is the end of the matter and there can be no further negotiation or variation of the act of disclaimer) (at 79). The Associate Professor writes (at pp 78 - 79)
It is a necessary incident of an effective disclaimer that, being pre-emptory, it cannot be retracted. It is effective in and of itself …herein lies the fundamental basis of the principle that a disclaimer must be pre-emptory: any gift is the donor‘s gift and must be assented to or disclaimed on the donor‘s terms … a gift being a transfer of property for nothing must be assented to or disclaimed. There is, by the fundamental policy of the law, no middle ground. A gift altered by negotiation is a new gift.
105 In a footnote to the above quoted passage (note 60, p 78), the author writes (after referring to Re Paradise Motor Co Ltd [1968] 2 All ER 625; and Sheppard’s Touchstone, 7th edn, 1820, at 452);
Superficially, there appears to be some authority to the contrary on this question, in that in relation to testamentary gifts it has been said a donee may retract a disclaimer so long as nobody has been prejudiced by the disclaimer; Re Young [1913] 1 Ch 272; Re Cranstoun [1949] Ch 523; Re Boyd supra n 55. A close reading of these cases, however, shows that they do not in fact decide this point; and it would be quite inconsistent with fundamental principle. See also Lawson v Lawson.
106 In Commissioner v Ramsden, the court asserted that ―any gift is the donor‘s gift and must be assented to or disclaimed on the donor‘s terms‖ (at [31]), thus seemingly applying the fundamental principle to which Associate Professor Crago had adverted.
107 However, it seems to me that the essence of Associate Professor Crago‘s criticism of Re Young, Re Cranstoun, Re Boyd and Lawson v Lawson is that those cases suggested that a disclaimer could be retracted simply by reason that a third party‘s interests had not or would not be so prejudiced. Insofar as the author explains that once a gift has been effectively disclaimed, it cannot be accepted later, nor can the disclaimer be retracted, the original gift having failed by account of an effective disclaimer, this turns on the effectiveness of the initial disclaimer. I accept that, by analogy, in principle it would follow that an effective acceptance of a gift could not be retracted, once made, irrespective of whether to retract such an acceptance would affect any third party interests.
108 Nevertheless, there are circumstances where it seems clear that a disclaimer (and, hence by analogy an acceptance) may be retracted, those being where the disclaimer was made without full knowledge and full intention, as appears from the decisions in Lady Naas v Westminster Bank Ltd [1940] AC 366 and Re Paradise Motor Co. It would seem that this is because in such a case (ie where there is insufficient knowledge or appreciation of the terms of the gift) there was no effective disclaimer in the first place. It is thus not inconsistent with the fundamental principle outlined above (that a disclaimer once made cannot be retracted) to find that a donee is not bound by a disclaimer if it is shown that the disclaimer was made without full knowledge and thus was ineffective, there having been no effective disclaimer to retract. Associate Professor Crago appears to support the reasoning in Lady Naas and Re Paradise Motor Co on that basis and goes on to accept that such reasoning, by analogy, should apply to allow retraction of ineffective acceptances, ie acceptances made without full knowledge and intention (at p 82). It seems to me that this is correct.
109 If what is required for an effective disclaimer or acceptance, amongst other things, is that such disclaimer or acceptance is made with full knowledge of (and, in the case of acceptance, intention to accept) the terms of the gift (relying on Lady Naas and Re Paradise Motor Co), then logically (at least in the absence of third party rights being affected) there would seem to be no reason in principle not to permit the retraction of a disclaimer or acceptance made without full knowledge of (and, in the case of acceptance, an intention to accept) all the circumstances, terms and conditions of the gift.
110 If so, this explains why retraction of a disclaimer seems more readily permitted where the disclaimer is made under some misapprehension by the disclaiming party (Mr Meek relying in this regard on Doe on the demise of Jane Smyth v Sir George Henry Smyth, Bart (1826) 6 B & C 112; 108 ER 394).
111 In Doe on the demise of Jane Smyth v Sir George Henry Smyth, Bart, a devisee had made an oral disclaimer under the misapprehension that she was entitled as heir, but was not held to be thereby precluded later “from acting under her improved judgment‖ in setting up the devise to enforce her title in support of a claim for ejectment. In Re Boyd, Haslam J referred to this as an illustration of the importance of complete appreciation on the part of a donee of the right which it is proposed to renounce.
112 As I understand his submissions, Mr Meek also suggests that a less strict approach may be warranted when dealing with cases where the beneficiary wishes to retract an acceptance of the gift (at least where that takes place prior to the gift having taken effect or the beneficiary having accepted the gift receives a benefit in relation to the gift) than in cases where a beneficiary wishes to retract an initial refusal of the gift so as later to take the benefit of the gift. (To perhaps similar effect is the seeming willingness of courts to take a strict view of what is required for a beneficiary to be taken to have disclaimed a gift, such as in State Trustees Ltd v Wheeler & Ors [1998] VSC 115 where Hedigan J was not prepared to infer that a persistent refusal by the beneficiary to acknowledge or engage in correspondence in relation to a bequest of chattels amounted to a refusal to accept the gift.)
113 Thus in Aljaro Pty Ltd v Weidmann [2001] NSWSC 206, Hamilton J (at [19]) referred to both Re Young and Lawson v Lawson for the proposition that a document must be sufficiently clear or unequivocal to constitute an immediate disclaimer in itself. His Honour construed the correspondence there before him as a statement of then held intention rather than as an immediate disclaimer (at [19]).
114 I think it unnecessary to form a concluded view on whether there is a relevant distinction between cases of purported retraction an initial disclaimer and an initial acceptance (as Mr Meek has suggested) in circumstances where I consider in this case the purported acceptance was ineffective due to the misapprehension on which it was based.
Conclusion as to validity of disclaimer
115 Insofar as there must be proper authority for a gift to be disclaimed (Aljaro v Weidmann, at [19]), this must also follow for an acceptance of the gift. However, there seems no suggestion that Ms Mackay was not authorised to bind the NGV in 2008 to either an acceptance or a disclaimer of the gift. The correspondence of late 2008 seems to me to amount to a clear acceptance of the gift.
116 A change of position where there has been an initial disclaimer of a gift seems to be permissible where there has been some operative misapprehension or misunderstanding by the disclaiming party (Lady Naas v Westminster and Re Paradise Motor Co). (Although there is also authority that a change of position regarding disclaimer of a gift may be permissible where there has been no actual payment of the gift and it is shown that that no prejudice has been occasioned to another (Lewis v Lohse, following Re Young; Re Cranstoun), I accept the force of Associate Professor Crago‘s criticism of the reasoning underlying that proposition and think the more sound basis for upholding the disclaimer in this case is that it was based on a misunderstanding by the beneficiary of the conditions to which the gift was subject.)
117 I am satisfied that when the NGV notified its acceptance of the gift it did so under a misunderstanding or misapprehension of the conditions to which the gift was subject. Its acceptance was under the belief that the gift could be used simply to acquire artwork of the style described in the will and that there was no requirement for an annual competition to be conducted in relation to the bequest. The NGV regards the imposition of such a condition on the gift as unduly onerous and says that the fulfilment of such a condition would not be in accordance with its core objectives.
118 In those circumstances, I cannot see the initial acceptance as being an informed and unequivocal acceptance of the gift with the conditions to which it was subject. I therefore consider that it was open for the NGV (it not being suggested that there is anything which should estop it from so doing by reason of the position of the other parties following its initial acceptance) to disclaim the gift as at late November 2008, when it did so (albeit on a without prejudice basis). (Insofar as that disclaimer was itself not unconditional (it being without prejudice and subject to conditions as to the payment of costs), the stance taken by the NGV in the present proceedings seems to me to amount to an unconditional disclaimer of the gift.)
119 I note that nothing has happened as a consequence of that acceptance which has caused any prejudice to the parties such that the parties would be in a position to assert that the NGV should be held to that acceptance, nor do the parties in fact seek to hold the NGV to such an acceptance.
120 The position here is that all parties wish to treat the subsequent disclaimer by the NGV as effective. In those circumstances, the dictum of Abbott CJ in Townsen v Tichell (1819) 3 B Ald 31 (at 36) (and cited in Williams, Mortimer and Sunnucks on Executors, Administrators and Probate, 19th edn, Sweet & Maxwell, 2008, at 67-22) seems apposite:
The law certainly is not so absurd as to force a man to take an estate against his will.
121 I find that disclaimer to be effective.
Effect of disclaimer
122 The second issue in relation to disclaimer is the effect of the disclaimer. The position of both Ms Tantau and Ms McFarlane (though attributing different consequences thereto) is that the gift, as rectified or construed, fails due to the disclaimer of the NGV. I consider that in the context of Issue 4 below.
Issue 4 Failure of Particular Charitable Gift
123 The first basis on which it is postulated that the gift in clause 3(c) may fail is the non-existence of the Art Gallery of Victoria. Given that I consider that the will should be rectified in relation to the identification of the proposed beneficiary of this share of the residuary estate, this issue does not arise.
124 The second basis is the effect of the disclaimer by the NGV. I consider this below.
125 As to the third basis on which it is postulated that the gift might fail, ie the question of impracticability or uncertainty, it was not suggested that there was any reason why the gift should fail on this basis and I do not consider that it does so fail. Indeed the NGV did not in fact disclaim for any reason relating to the uncertainty or impracticability of administering the bequest (as opposed to the inconvenience and cost to the gallery of such administration).
126 Turning back to the second basis on which it is said that the gift fails, the correct position in relation to the effect of disclaimer is submitted by Mr Mantziaris to be that stated by Professor Dal Pont, in Charity Law in Australia and New Zealand, Oxford University Press, 2000, as follows:
There are frequent judicial statements to the effect that a validly constituted charitable trust will not be allowed to fail for lack of a trustee to carry out the charitable work — the court can appoint a trustee to administer the trust. ... Where a trustee, in relation to a gift, refuses to accept that office [note omitted] in circumstances where the charitable work cannot be performed by an alternative trustee, the trust will fail in the absence of general charitable intent. In other words, if it is of the essence of a trust that the trustees elected by the settlor and no one else act as trustees, and those trustees cannot or will not undertake office, the trust must fail unless to do so would defeat the settlor's general charitable intention. If such a general charitable intent exists, the court will apply the subject matter of the trust cy-près . On the other hand, a disclaimer by the intended trustee does not cause the trust to fail if the discretion of the particular trustee is not the essence of the trust, that is, it can be performed by another person. The court will, in such a case, appoint a new trustee, irrespective of any issue of charitable intent. (my emphasis)
127 Accordingly, Mr Mantziaris submits that the proposition that a disclaimer operates from the time of death and makes the gift void ab initio does not hold true for charitable trusts. (In any event he submits that even if this rule did hold true for trusts for charitable purposes, it is a prima facie rule, which renders the gift void for certain purposes only.)
128 It is submitted by Mr Mantziaris that if the gift is determined to be a gift to the NGV (whether upon construction or rectification of the will), the NGV's disclaimer would render the gift void only if the role of the NGV in administering the trust could not be performed by another person, and that this result follows irrespective of whether there is a general charitable intention disclosed by the will. In illustration of this proposition, Mr Mantziaris pointed to the decisions in Royal North Shore Hospital of Sydney v Attorney General for New South Wales (1938) CLR 396 (where a general charitable intention was discerned and the bequest applied cy-près following the refusal of the recipient of the bequest to administer an essay competition). Reference was also made to Lutheran Church of Australia South Australia District Incorporated v Farmer's Co-operative Executors and Trustees Ltd (1969) 121 CLR 628; [1970] ALR 545, Re Lawton [1936] 3 All ER 378 and In re Lysaght [1966] 1 Ch 191, where it was not seen to be necessary for the court to find a general charitable intention to give effect to a gift for a charitable purpose in circumstances where the trustee in question refused to carry out the particular purpose but where another trustee could be found to do so.
129 Brereton J in The Cram Foundation v Corbett-Jones and Anor [2006] NSWSC 495, at [49]-[50] said:
[49] The starting point is that in the context of supervening (as distinct from initial) impossibility or impracticability, the availability of cy pres does not depend on a "general charitable intention" the principle that once property is effectively dedicated to charity, whether in pursuance of a general or particular charitable intent, the next-of-kin and residuary legatees are forever excluded, and no question of subsequent lapse can affect the matter so far as they are concerned, is well-established [Re Slevin, Slevin v Hepburn [1891] 2 Ch 236, Re Wright [1954] Ch 347 at 362-3 (Romer LJ), 364 Denning LJ), Re Ulverston and District New Hospital Building Trusts [1956] Ch 622 at 636 (Jenkins LJ), Re Tacon [1958] Ch 447, Re Lysaght, Hill v The Royal College of Surgeons [1966] Ch 191 at 208 (Buckley J)]
[50] While Charitable Trusts Act, s 10, reiterates the general law requirement that trust property cannot be applied cy pres unless it is given with a general charitable intention, that is so only in a case of initial impossibility This is because, where it is initially impossible to implement the terms of the trust, no charitable trust has come into existence unless there is a general charitable intention But where a charitable trust has been validly created, and afterwards implementation has become impossible (or, under the Act, ceased to be suitable and effective) as a result of supervening circumstances, a general charitable intention is not required because the property has already been given to charity)', and cannot be taken back [Hixon v Campbell (1924) 24 SR(NSW) 436 at 441-442 (Maughan 4J), Williams v Attorney General (194S) 48 SR(NSW) 505 at 508 (Sugerman J). Re Wright, 362-3 (Romer LJ), Re Ulverston New Hospital Building Trusts, 635-7 (Jenkins LJ), Re Lysaght, 208 (Buckley J), ANZ Executors & Trustee Co Ltd v Trustees for the Presbyterian Chinch of Australia (NSWSC, Waddell CJ in Eq, 12 June 1990), pp 19-23, Attorney General for New South Wales v Fulham, [21]-[22] (Bryson J)]
130 Accordingly, the Attorney General submits that the NGV‘s disclaimer does not cause this particular charitable gift to fail; there is simply a need for the court to identify an alternative trustee to perform the obligations associated with the gift. Mr Wilson accepts that if the gift to the body described as the Art Gallery of Victoria is held to be a gift for a charitable purpose, a proposition supported by Ms Tantau, then this would be the case and the appropriate course would be to identify a substitute trustee (referring to Tudor on Charities, 7th ed, Sweet & Maxwell, 1984, at p224 on the failure to trust ‗machinery‘).
131 The position for which Ms MacFarlane contends seems not to be that the above is an incorrect statement of the legal position but, rather, that the gift itself is not a valid charitable gift, not being for a charitable purpose.
132 The question of the effect of the NGV‘s disclaimer depends on whether this was a gift for a particular charitable purpose. I consider this below.
Charitable purpose
133 In Commissioners of Income Tax v Pemsel [1891] AC 583, the four traditional heads of charity (established by the Elizabethan Statute of Charitable Uses 1601) were restated as being for the relief of poverty, age or impotence; the advancement of education; the advancement of religion; and other purposes beneficial to the community. It is accepted that, for the gift to be charitable, it must fall within one of these heads.
134 As to the charitable purpose of education, this is construed broadly to include ―the improvement of a useful branch of human knowledge and its public dissemination‖ (Incorporated Council of Law Reporting for England and Wales v Attorney-General [1972] Ch 73, at 102; [1971] 3 All ER 1029). In Lloyd v Federal Commissioner of Taxation (1955) 93 CLR 645, at 675; [1956] ALR 95, Kitto J described the education head of charity:
In Chesterman v Federal Commissioner of Taxation (1923) 32 CLR 362, Isaacs J spoke of the general understanding of the words "public education" in the context of s 8(5) as having the sense of "imparting knowledge or assisting and guiding the development of body or mind" (1923) 32 CLR 362, at p 386, and Starke J said that "the essential idea of education is training or teaching" (1923) 32 CLR, at p 400. The conception is unquestionably much wider than mere book-learning, and wider than any category of subjects which might be thought to comprise general education as distinguished from education in specialized subjects concerned primarily with particular occupations.
135 Mr Mantziaris submits that the promotion of artistic activity is recognised as falling firmly within the 'education' head of charity (citing Crystal Palace Trustees v Minister of Town and Country Planning [1951] 1 Ch l32, at 140; [1950] 2 All ER 857; Re Chanter (deceased) [1952] SASR 299; Construction Training Board v Attorney General [1971] 1 WLR 1301, at 1307; [1971] 3 All ER 449; Royal Choral Society v Commissioners of Inland Revenue [1943] 2 A11 ER 101, at 105; The Trustees Executors and Agency Co Ltd v Zelman Memorial Symphony Orchestra; Re Lloyd [1958] VR 523, at 527). He also notes that it is common for the court to analyse the purpose of promoting artistic activity as falling within both the charitable heads of education and purposes beneficial to the community (citing, as well as the first two authorities above, Perpetual Trustee Co Ltd v Groth & Ors (1985) 2 NSWLR 278, at 289C-D, and G Dal Pont, Charity Law in Australia and New Zealand, at p 134).
136 In Perpetual Trustee v Groth, a gift not dissimilar to the present was considered. The gift in question (for the establishment of the Archibald Prize for portraiture to be administered by the Art Gallery of New South Wales) was upheld as a charitable trust both because it was for an educational purpose (that being the encouragement of the production of a particular form of painting) (at pp 286F-289B) and because it was seen to be for a purpose beneficial to the community (at pp 289C-D).
137 Similarly, the Court of Appeal in Re Lowin: Perpetual Trustee Co Ltd v Robins (1967) 2 NSWR 140 held that the purpose of conducting musical competitions involving an annual award was a charitable purpose. There, a gift of residue to be invested and used as prize money for a musical competition in Australia for an orchestral work and song cycle in alternate years, with a bequest that the additional income over a certain amount should be fused for a similar competition in Austria, was accepted as clearly charitable, the only issue being as to the foreign component of the bequest. There was no suggestion, of the kind put in these proceedings, that the absence of a requirement for there to be a public performance or exhibition of the winning musical work, or that of other entrants to the competition, would mean that the gift was not for a charitable purpose.
The majority said:
The validity of the charitable trust respecting the Australian musical competition was not and in the light of authority could scarcely be challenged by any party.
138 In Perpetual Trustee v Groth, Powell J, in upholding the gift on the alternative basis that it was a means of effecting a purpose beneficial to the community, said:
[E]ven if it did not meet the test of "the advancement of education", a bequest to establish, endow and maintain any competition which encourages participation, on the scale revealed by the evidence in this case, and public interest, on the scale revealed by the evidence in this case, in one of the fine arts, ought, in this day and age, to be regarded as being of general public utility
139 The principal bases on which the present gift is said by Ms Needham not to be charitable, seem to be that it is for the establishment of an award (not coupled with an obligation to exhibit or display the winning painting or the entrants for the prize), that it is for the benefit only for that small segment of the community comprised by painters who paint in the style of E. Phillips Fox, and that it does not require the artworks in question to be newly created artworks.
140 Ms Needham places reliance on what was said in Corish v Attorney-General of NSW [2006] NSWSC 1219 by Campbell J, when considering whether the trustees there might properly give money to institutions for the endowment or creation of prizes or awards. In that case, the objects of the Trust Deed were, broadly, for the support and endowment of medical and scientific research (as to approximately 80% of the income of the trust) and, as to the balance, for the sponsorship, support and endowment of students, scholars, artists and performers in the area of music and dance.
Campbell J said:
[29] I am not satisfied that they [the Trustees] presently have that power, or that it is appropriate to confer any such power on them. Prizes and awards are capable of being a retrospective recognition of merit, rather than a means of providing for future activities that involve research or development of skills of performing artists. It seems to me that the whole thrust of the objects of the Trust is directed to the funding of activities of particular people in ways that, in the future, will be beneficial I am not persuaded that the provision of prizes and awards is a way of carrying out the objects of the Trust. (my emphasis)
141 It is submitted by Ms Needham that the NGV gift is a "retrospective recognition of merit", in that it contemplates the award of a prize to a painting which may already have been created (a painting, perhaps, stowed away in the back of a cupboard), the future purchase or display of which is not provided for in the gift, and does not represent a "means of providing for future activities" involving the development of the skills of artists (to adopt the terminology used in Corish v Attorney-Generals Department of NSW). The element of public benefit is said to be missing as the will does not in its terms require that the paintings are held for the benefit of the public, Ms Needham referring to what was said in this regard in Perpetual Trustee v Groth, where Powell J observed:
If this be so, then it matters not that the popularity of portrait painting, as such, may have declined over the years, or that, in the view of some, the quality of any particular winning portrait may have been ―dreary and uninspired‖ or ―negative, indeed quite insipid‖, or that those who may have attended any particular exhibition were motivated to do so, not by any desire to improve their appreciation of portrait painting, but by some current controversy as to the winning portrait — although I would suggest that even those who came but to stand and stare must learn something, it would matter not if it were not so, for the question is not, has the intended purpose been achieved, but, what was the intended purpose.)
142 Ms Needham submits that a proper reading of Perpetual Trustee v Groth reveals that the educational aspect of the exhibition of the works was the basis of the finding that the trust in that case was educational in nature, in that (at 288) Powell J said:
That it was the continuing production of such portraits which was intended is indicated by the provision that entries be painted during the twelve months preceding each annual competition; that it was intended to encourage portraiture of a high standard is suggested by both the character of the judges appointed, and the provision that the prize might be withheld if, in any year, no competing entry be worthy of the award; and that the exhibiting of the portraits was intended is indicated both by the right of the trustees to exhibit the winning portrait in each year, and the power to apply the amount of any unawarded prize in, or towards, the purchase for permanent exhibition of any winning portrait.
If this be the correct view to be taken of the testator's intention, then, so it seems to me, as did Jacobs J, as he then was ([1965] NSWR 1624) and the Court of Appeal (Wallace P, Asprey and Holmes JJA) ([1967] 2 NSWR 140) in respect of the bequest to provide prizes for a musical competition considered by him, and them, in Re Lowin (deceased); Perpetual Trustee Co Ltd v Robins, I should hold that the bequest, or bequests, to establish endow and maintain ―The Archibald Prize‖ was, or were, charitable as being a bequest, or bequests, for the advancement of education.
143 In contrast to the position there considered (namely a gift exhibiting an intention that the works be of persons influential in public life, and that the portraits be purchased by the Art Gallery of New South Wales for the permanent education of the public) Ms Needham points to the fact that the gift provided for under the deceased‘s will here provides for an award to a painter of a portrait in a particular style, without there being any requirement for the purchase or exhibition of the artwork. Hence, it is said, there is no educational element and no purpose beneficial to the community. It is submitted by Ms Needham that the community benefited by this trust consists solely of the artists themselves who may enter for the prize, given that their works may never be exhibited and that the prize moneys are not necessarily to be used for the furtherance of beauty or aesthetics in the community. It is further submitted by Ms Needham that the number of artists, even if large, is too insufficient a sector of the public to qualify as "the community". (A gift to particular artists who paint in a particular style, it is said, is not within the spirit and intendment of the Statute of Elizabeth.)
144 However, the intended purpose of the gift, to which I must have regard, seems to be to ensure that the appreciation and continuation of the style of E. Phillips Fox‘ artwork should continue. In that regard the fact that there may only be a small section of artists presently painting in that genre seems to me not to be to the point. As Powell J in Perpetual Trustee v Groth said (at 289):
…there is much to be said for the view that a competition which helps to preserve, or encourage the revival of, an old established art form, and encourages it, as it appears to have done, to move in new directions, is educative of both those who enter, and those who come to view pictures which are later exhibited. (my emphasis)
145 It does not seem to me that it was essential, to the reaching of the conclusion in Perpetual Trustee v Groth that the gift be for an educational purpose, that the artwork be exhibited to the public even though that was a factor which added to the conclusion that it had educational value. There was also perceived to be of educational value for those who might enter the competition. Indeed, the existence of an award of the kind presently under consideration might encourage the development of artistic endeavours in a perhaps little followed art form, just as was contemplated by Powell J in relation to the Archibald prize, whether or not there is any public exhibition of the entries to the competition. (I note that there was, in any event, no requirement for the purchase or exhibition of any artwork in the case of the bequest in the Groth case.)
146 Mr Mantziaris points out that the late Mr Len Fox' publications on the work of his uncle indicate that he was concerned that the Australian public should come to know and appreciate the artistic work of E. Phillips Fox and that both he and the deceased, in providing in their wills identical gifts to the nominated gallery, intended that the Len Fox Award should promote knowledge and enjoyment of the work of E. Phillips Fox, and promote production of modern works in his style. Mr Mantziaris submits that the gift was intended to encourage activity that would produce ―a painting by an Australian artist of an Australian subject in sympathy with the works of Emanuel Phillips Fox” and that the establishment of The Len Fox Award was simply the means selected by the deceased (and her husband) to effect that charitable purpose.
147 Mr Mantziaris submits that the stipulation that the gift be administered in the form of an award cannot of itself defeat the charitable character of the gift, relying on those authorities in which the validity of charitable gifts for the establishment of awards and prizes have been upheld (such as Chesterman v Mitchell (1925) 24 SR (NSW) 108 (at 113) where a prize for competition among members of the NSW police force was said to be a valid means for effecting the charitable purpose of promoting efficiency of a state service; Re Dupree's Deed Trusts; Daley v Lloyds Bank [1945] 1 Ch 16, at 20-21, where a gift enabling the organisation of and a monetary prize for a chess tournament was seen as a valid means of effecting the charitable purpose of education; and In re Litchfield, Public Trustee v Millett [1961] ALR 750; (1961) 2 FLR 454, at 459, where a gift for establishing an annual award to encourage Australian literature for the charitable purpose of education was upheld).
148 Mr Mantziaris notes that the bequest in Perpetual Trustee v Groth did not do more than give the trustees the right to exhibit the paintings entered for the prize and to purchase any portrait that may have won such a prize, there was not an obligation to do so.
149 Insofar as Ms MacFarlane places reliance on the decision in Corish v Attorney-Generals Department of NSW, Mr Mantziaris submits that this dealt not with the direct construction of an actual testamentary intention, but with the question whether the court ought permit a scheme vesting in the trustees a new power 'to give money to [institutions in which researchers, scientists, artists or performers work] for the endowment or creation of prizes and awards'. Mr Mantziaris submits that the observation by Campbell J that '[p]rizes and awards are capable of being a retrospective recognition of merit, rather than a means of providing for future activities', made in the context of a request for a new broad general power to create prizes and awards, ―cannot be extrapolated into a general rule that prizes are not charitable if they contain some retrospective recognition of merit. To suggest that the Archibald Prize, an undoubted charitable trust, contains no aspect of retrospective recognition for the artist's merit would be absurd.‖
150 It seems to me that the gift in question to the NGV has educational value insofar as it encourages appreciation and knowledge of a style of artwork (even if, at a very basic level, by encouraging the public to look in their cupboards for artwork of this genre which might qualify for such a prize – something which it was suggested could be possible under the terms of this bequest, since even this level of activity would require at the very least an understanding and consideration of the aspects of the artistic genre exhibited by the works of E. Phillips Fox and hence have educational value). Insofar as it would be open to the recipient of the bequest to use the advertisement and promotion of such an award to promote public awareness of the works of E. Phillips Fox more generally, I see the gift likely to facilitate a purpose beneficial to the community beyond the mere making of an award.
151 I accept the submission of the Attorney General that the gift should be classified as being both for an educational purpose and for a purpose beneficial to the community. I am thus of the view that this is a gift for a charitable purpose.
Does any charitable intention depend on the administration by the NGV?
152 Ms Needham submits that even if it is held that the purpose of the gift is charitable, the gift still fails for lack of a general charitable intention, since the particular intention, (even if charitable), depends upon the administration by it of the NGV and the NGV has disclaimed the gift.
153 Ms Needham refers to Re Taylor; Martin v Freeman (1888) 58 LT 538 (quoted by Isaacs, J, in Attorney-General for New South Wales v Adams (1908) 7 CLR 100, at p 124, and by Latham CJ in Royal North Shore Hospital of Sydney v Attorney-General) where it was said that:
"If upon the whole scope and intent of the will you discern the paramount object of the testator was to benefit not a particular institution, but to effect a particular form of charity independently of any special institution or mode, then, although he may have indicated the mode in which he desires that to be carried out, you are to regard the primary paramount intention chiefly, and if the particular mode for any reason fails, the court, if it sees a sufficient expression of a general intention of charity, will, to use the phrase familiar to us, execute that cy pres, that is, carry out the general paramount intention in some way as nearly as possible the same as that which the testator has particularly indicated without which his intention itself cannot be effectuated.
and contends that, here, it cannot be said that the gift was to effect a particular form of charity independent of the NGV, since the gift is linked with the nature of the NGV as being an institution which has a significant collection of paintings by E. Phillips Fox.
154 Mr Mantziaris, in response, submits that the deceased‘s paramount intention was to create an award which would further knowledge of, and respect for the artistic work of E. Phillips Fox and encourage the production of works in sympathy with his style of painting and that the identity of the NGV as the trustee of such a gift is a subordinate consideration, the non-fulfilment of which does not defeat the gift. It is said that the presence of E. Phillips Fox paintings at the NGV is not determinative of the identity of the trustee administering the prize and that there is no reason that another gallery or art institution could not be found to perform the role of administering the Len Fox Award on the same terms. I agree.
155 Mr Mantziaris notes that the deceased did not express any negative intention with respect to any institution other than the national gallery in Canberra. He submits that the selection of the NGV was not of the essence of the trust (in the words used in Royal North Shore Hospital of Sydney v Attorney- General, at 415) and that if the means used is impracticable then it is open to the court to frame a scheme cy-près for the attainment of the general objects mentioned in the will.
156 To the extent that Ms Needham relies upon the fact that the NGV contains a significant collection of E. Phillips Fox paintings, Mr Mantziaris submits that the existence of an ―ideal‖ charitable trustee in the mind of the deceased cannot exclude the selection of other trustees deemed acceptable by the court in the circumstances of the NGV's disclaimer. I agree.
157 I see no reason why this gift could not be effectively administered by a substitute trustee. Although I note the firm views of the deceased and her husband that the National Art Gallery in Canberra was not the intended recipient of the gift, it does not seem to me that I should infer from those views that the NGV alone (and no other gallery than the NGV) would have been acceptable to the deceased had she been made aware of the NGV‘s ultimate refusal to accept the gift. Indeed, insofar as the deceased‘s draft will notes refer to the bequest ―perhaps‖ involving the [NGV], it seems to me clear that the fundamental purpose of the gift was to ensure the promotion of an appreciation of the works of E. Phillips Fox, by an art gallery which might be expected to have the ability and motivation to achieve that purpose, not that the institution so named was the only institution which could do so.
158 Therefore, I find that the particular gift does not fail by reason of the NGV‘s disclaimer. That means that it is not necessary to discern any general charitable intention in the will (nor do I consider it necessary at this stage for a cy-près scheme to be considered). However, as the issue was raised I consider it below.
Issue 5 Gift for a charitable purpose
159 Mr Mantziaris made various submissions in the event that the court were to require a finding of general charitable intention as a prerequisite for cy-près distribution in the case of a disclaimer. Mr Mantziaris noted that even if the court could not make a finding of an actual general charitable intention on the facts, it must presume such a general intention through the operation of the Charitable Trusts Act 1993 (NSW), s 10(2) if it holds the initial particular gift to the NGV to have been for a charitable purpose (Public Trustee v Attorney General of New South Wales (1997) 42 NSWLR 600, 609, McLean v Attorney General of New South Wales [2002] NSWSC 377, [53]-[54]) and that it is for the party disputing that intention (here, Ms McFarlane) to rebut the application of the presumption.
160 It is submitted by Mr Mantziaris that there is no doubt that the will exhibits a general charitable intention because, apart from modest legacies, the bulk of the estate is distributed to the State Library of New South Wales and to an art gallery in Victoria in public ownership.
161 Ms Needham, however, submits that the extent to which the NGV is linked with the gift is sufficient to overcome the presumption of a general charitable intention (see s 10(2) of the Charitable Trusts Act 1993 (NSW)). In particular, it is submitted that the identification of the NGV with the gift is clear from Mr Herd's evidence as to the vehemence with which the deceased and her husband gave their instructions.
162 In Re Lowin, where Asprey JA found that the will exhibited a general charitable intention, his Honour said that:
I have come to the conclusion that the context of the will exhibits a general charitable intention. I think that the wide scope of the musical work for which the prize is to be awarded, alternating each year, and the wide range of persons designated as possible entrants shows that the paramount intention of the testator was to make a gift of his property for the encouragement of musical education generally and that the words which he has used in his will are directions as to his desires as to the manner in which the general gift is to be carried into effect (see In re Wilson (29) per Parker J). It will be observed also, firstly, that we are dealing here with a share of residue; secondly, that a gift for a musical competition would not be charitable unless there was an underlying charitable intention which in this case is, in my view, that of musical education and, thirdly, that the preceding gift from the same fund is itself charitable so that the testator has devoted the whole of the residue to charities which is not an unimportant factor in determining whether there is a general charitable intention. In these respects I direct attention to the observations of Simonds J, in In re Royce.
163 Here the whole of the residuary estate is devoted to purposes for the encouragement of endeavours in artistic or dramatic areas. I consider there to be a general charitable intention disclosed by the will.
Issue 6 Cy-près scheme
164 This issue is predicated on there being both a finding that the gift fails as a particular gift and there being a finding that it was a gift for general charitable purposes, so as to give rise to the question whether the matter should be referred to the Attorney General for establishment of a scheme for its administration cy-près.
165 As Brereton J noted in Cram:
[44] At general law, the power of the Court to direct a cy pres scheme for the administration of property given to charity arose if a gift to charity was impossible of performance at the outset, or if it subsequently became impossible of performance, and was limited to directing a scheme which carried out the testator‘s charitable intention as nearly as possible. However, the Charitable Trusts Act 1993 (NSW) provides as follows:
9 Extension of the occasions for applying trust property cy pres
(1) The circumstances in which the original purposes of a charitable trust can be altered to allow the trust property or any part of it to be applied cy pres include circumstances in which the original purposes, wholly or in part, have since they were laid down ceased to provide a suitable and effective method of using the trust property, having regard to the spirit of the trust.
(2) References in this section to the original purposes of a charitable trust are to be construed, if the application of the trust property or any part of it has been altered or regulated by a scheme or otherwise, as references to the purposes for which the trust property are for the time being applicable.
10 Requirement for general charitable intention of donor
(1) This Part does not affect the requirement that trust property cannot be applied cy pres unless it is given with a general charitable intention.
(2) However, a general charitable intention is to be presumed unless there is evidence to the contrary in the instrument establishing the charitable trust.
[45] Thus for cy pres to be available, it is no longer necessary that actual compliance with the original terms be impossible, and it is now enough that they have ceased to provide a suitable and effective method of using the trust property [Attorney General for New South Wales v Fulham [2002] NSWSC 629, [12]-[17] (Bryson J)]. The requirement to have regard to ―the spirit of the gift‖ refers to the basic intention underlying the gift, as ascertained from the terms of the relevant instrument in the light of admissible evidence [Re Lepton’s Charity [1972] Ch 276, 285A-B (Pennycuick V-C), a decision on s 13(1)(e)(iii) of the Charities Act 1960 (UK), from which s 9 is derived]. Thus, when directing a cy pres scheme, the Court acts in accordance with the spirit of the trust, to apply the property to the charitable purpose in a presently effective and practical way [Attorney General (NSW) v Fulham, [20]].
166 Mr Mantziaris submits that the NGV‘s disclaimer creates a case of supervening impossibility rather than initial impossibility; that the charitable gift (as rectified or construed) was valid as at the death of the deceased (Re Leitch (deceased) [1965] VR 204, at 206), since the NGV existed and there is no evidence to suggest that its performance was not possible at that point in time; it simply being a case where at a subsequent point in time the nominated trustee (the NGV) refused to perform the trust.
167 For this reason, Mr Mantziaris submits that it is not necessary for the Court to find a general charitable intention before it orders a scheme and that, rather, all that is required is a finding that the initial gift to the NGV was for a charitable purpose. He contends that it must follow from a finding (of the kind which I propose to make) that the gift was for a charitable purpose that the interests of the next of kin are forever excluded, relying on what was said in Cram.
168 As I do not accept that the disclaimer by the NGV effected an initial impossibility, and I consider that the initial gift was for a charitable purpose not limited to a particular institution, the result must be, following the reasoning in Cram, that the residuary estate given to the NGV is a gift which has been given to charity and it is not necessary that there be found to have been a general charitable intention. (Had I found otherwise then I would have had held that clause 3(c) of the will did exhibit a general charitable intention and that the matter would have been suitable for referral to the Attorney General for distribution cy-près.) It follows that the gift will only fall for distribution cy-près if a suitable alternative trustee cannot be identified to accept the gift subject to the conditions placed thereon.
Issue 7 Costs
169 Ms Tantau, as executor, seeks her costs of the proceedings, being necessary costs in order to determine the issues surrounding the operation of the gift in clause 3(c) of the will. The Attorney General was a necessary defendant to a charitable trust proceeding and seeks his costs from the trust fund in the usual manner. Insofar as the NGV seeks its costs of the matter, the Attorney General considers that the NGV was joined unnecessarily (and says that it remained ‗ambivalent‘ for a considerable time as to its participation in the proceeding) but the Attorney General takes no position on whether it should be awarded its costs of the proceedings. For Ms MacFarlane, it was submitted that issues of costs should be determined once the outcome of the principal claims was made known. Accordingly, I will list the matter for submissions on all costs issues at an appropriate time.
170 It will also be necessary on that occasion to consider the procedural directions to be made for the identification and appointment of asuitable alternative trustee in the place of the NGV to administer the bequest.
Orders
171 For the reasons set out above, I make the following declarations and orders: 1. Order under s 29A of the Probate and Administration Act 1898 (NSW) that the will dated 3
February 2003 of the late Mona Alexis Fox (also known as Mona Alexis Brand) (who died on
1 August 2007), probate of which will was granted on 12 December 2007, be rectified by
substituting for the word ―Art‖, in the description of the institution ―Art Gallery of Victoria‖
in clause 3(c) of the will, the word ―National‖.
2. Declare that the gift to the National Gallery of Victoria under the will as so rectified is a valid
gift for charitable purposes.
3. Declare that the National Gallery of Victoria has disclaimed the gift to it under the will as so
rectified.
4. Direct the executors and trustees of the said will to take steps to identify a substitute trustee
for the administration of the 'Len Fox Award'.
5. Declare that, in the event that a substitute trustee for the administration of the ‗Len Fox
Award‘ cannot be identified within a reasonable time, to be determined, the matter should be
referred to the Attorney General to establish a scheme for the administration of the gift cy-près
in accordance with s 13 of the Charitable Trusts Act 1993 (NSW).
172 I will list the matter for directions as to the process to be undertaken in compliance with the direction made in 4 above and to hear submissions as to costs.
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LAST UPDATED: 25 March 2010