Charitable Trusts
Associate Professor
Cameron Stewart
Introduction
• Charitable trusts are express trusts which exist for a
purpose rather than for identifiable beneficiaries. In
Attorney-General (NSW) v Perpetual Trustee Co Ltd
(1940) 63 CLR 209 at 222, Dixon and Evatt JJ
stated:
• A charitable trust is a trust for a purpose, not for a
person. The objects of ordinary trusts are
individuals, either named or answering a description,
whether presently or at some future time. To
dispose of property for the fulfillment of ends
considered beneficial to the community is an entirely
different thing from creating equitable estates and
interests and limiting them to beneficiaries. In this
fundamental distinction sufficient reason may be
Differences with other express
trusts
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No beneficiary principle
Public trusts
Indestructible
Courts nd AG have power of supervision
‘Charitable’ Purpose
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Statute of Charitable Uses 1601 (43 Eliz I, c.4)
the relief of poverty;
care of aged persons and the sick;
care of soldiers and mariners;
advancement of education through universities and
schools;
repair of bridges, havens, ports, churches and highways;
the care of orphans;
the maintenance of prisons;
the marriage of poor maids;
support for young tradesmen and persons decayed;
the relief or redemption of prisoners or captives; and
relief for poor persons concerning the payment of taxes
‘Charitable’ Purpose
• Gilmour v Coates [1949] AC 426 at 442-3;
[1949] 1 All ER 848 at 852, by Lord
Simonds:
• [F]rom the beginning it was the practice of
the court to refer to the preamble of the
statute in order to determine whether or
not it was charitable. The objects there
enumerated and all other objects which by
analogy are ‘deemed within its spirit and
intendment’ and no other objects are in
law charitable. That is settled and familiar
‘Charitable’ Purpose
• Royal National Agricultural and Industrial
Association v Chester (1974) 3 ALR 486 a
trust for the breeding and racing of
pigeons failed because there was no
analogous charitable purpose in the
preamble.
‘Charitable’ Purpose
• A trust for the not-for-profit publication of
law reports was found to be charitable in
Incorporated Council of Law Reporting
(Qld) v Federal Commissioner of Taxation
(1971) 125 CLR 659; [1972] ALR 127, on
the grounds that the reporting of cases
was fundamental to society in the same
way that the maintenance of roads, and
the promotion of agriculture were
fundamental and within the spirit of the
‘Charitable’ Purpose
• Commissioner for Special Purposes of
Income Tax v Pemsel [1891] AC 531 at
583. His Lordship stated at
• ‘Charity’ in its legal sense comprises four
principle divisions: trusts for the relief of
poverty; trusts for the advancement of
education; trusts for the advancement of
religion; and trusts for other purposes
beneficial to the community, not falling
under the preceding heads.
Report of Inquiry Into the Definition
of Charities and Related
Organisations 2001
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the advancement of health, which includes the
prevention and relief of sickness, disease or of
human suffering;
the advancement of education;
the advancement of social and community welfare,
which includes the prevention and relief of poverty,
distress or disadvantage of individuals or families;
the care, support and protection of the aged and
people with a disability; the care, support and
protection of children and young people; the
promotion of community development to enhance
social and economic participation; and the care
and support of members or former members of the
Report of Inquiry Into the Definition
of Charities and Related
Organisations 2001
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the advancement of religion;
the advancement of culture, which includes the
promotion and fostering of culture and the care,
preservation and protection of the Australian
heritage;
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the advancement of the natural environment; and
other purposes beneficial to the community, which
without limitation include the promotion and protection
of civil and human rights; and the prevention and relief
of suffering of animals.
Report of Inquiry Into the Definition
of Charities and Related
Organisations 2001
• Charities Bill in 2003,
• Extension of Charitable Purpose Act
2004.
Public benefit
• The benefit must be for the entire public or
for a significant proportion of it: Ford & Lee
at [19070]. However, the purpose of the
trust need not be effected in the
jurisdiction for it to be of benefit to the
public: Kytherian Association of Qld v
Sklavos (1958) 101 CLR 56.
Public benefit
• To illustrate these principles, trusts for the
advancement of religion have failed where they
have the object of favouring cloistered or
contemplative orders who have little contact with
the outside world: Gilmour v Coats [1946] AC
426. Trusts established to stop the practice of
vivisection have also failed because there would
be an overall detrimental effect to the public
should such experimentation cease: AntiVivisection Society v Inland Revenue
Commissioners [1948] AC 31.
Public benefit
• Re Compton [1945] Ch 123. Lord Greene MR
stated at 131,
• …[A] gift under which the beneficiaries are
defined by reference to a purely personal
relationship to a named propositus cannot on
principle be a valid charitable gift. And this, I
think, must be the case whether the relationship
be near or distant, whether it is limited to one
generation or is extended to two or three or in
perpetuity. The inherent vice of the personal
element is present however long the chain and
the claimant cannot avoid basing his claim on it.
Public benefit
• The Compton test has been used to strike down
charitable trusts when the potential recipients of
the trust funds have been defined by reference
to blood relation, employment or contract
• BUT the requirement for public benefit does not
apply to trusts for the relief of poverty: Dingle v
Turner [1972] AC 601; [1972] 1 All ER 878.
Secondly, trusts for people from particular
geographic locales do not offend the rule, as
they can be applied regardless of inherent
personal characteristics: Re Tree [1948] Ch 325;
2 All ER 65. Thirdly, a request by the creator that
family members, or others connected by
association or contract, be given preference in
Trusts for Political Purposes
• A trust which has a political purpose will not be
charitable: Bowman v Secular Society [1917] AC
406; [1916-17] All ER Rep 1. A trust will be
deemed to be political when it has the purpose of
changing the law: Anti-Vivisection Society v Inland
Revenue Commissioners [1948] AC 31. Examples
include a trust to establish a nationalised health
service, Re Bushell (dec’d) [1975] 1 All ER 721, or
to reform the alphabet, Re Shaw [1957] 1 All ER
745.
• Santow J
• There is a crucial distinction, inhering in
McGovern, between permissibly changing the law
within the framework of its established policy and
impermissibly reversing the law along with its
Trusts for Political Purposes
• Attorney General (NSW) v The NSW Henry
George Foundation Ltd [2002] NSWSC 1128. That
case concerned a trust to further the study of
Henry George’s ideas about a unitary land tax
system, and pursuing them via legislative change.
His Honour stated at [63-4]:
• There is a feeling of what I might call “judicial cop
out” in the policy that the court cannot judge the
public benefit of proposals to amend the law.
Indeed, in many instances, the fact that diverse
arguments are presented to the public on issues of
importance may itself be important to the
community. Indeed, it is clear that when
considering what is of benefit to the community,
the court rules on what is beneficial at the date of
Trusts for the Relief of Poverty
• In order to be valid as a gift for the relief of
poverty the law does not require that the
persons to be benefited should be
destitute, or even on the border of
destitution: Re Gillespie (dec'd) [1965] VR
402 at 406, per Little J. Rather a trust will
relieve poverty when it provides money to
those who would have to ‘go short’
because of their financial status: Re
Coulthurst (dec'd)
Trusts for the Relief of Poverty
• The Aged
• The Impotent
Trusts for the Advancement of
Education
• It includes gifts to particular educational
institutions, such as schools and
universities, which, coming under the
preamble, are prima facie charitable
• Educational trusts can embrace specific
purposes which are related, sometimes
loosely, to education. Trusts for
scholarships, buildings and the dramatic
arts are all examples of valid educational
trusts
Trusts for the Advancement of
Religion
• The definition of ‘religion’ was provided by
Mason CJ and Brennan J in Church of the New
Faith v Commissioner of Pay-roll Tax (Vic)
(1983) 154 CLR 120 at 136:
• [F]or the purposes of the law, the criteria of
religion are twofold: first, belief in supernatural
Being, Thing or Principle; and second, the
acceptance of canons of conduct in order to give
effect to that belief, though canons of conduct
which offend against ordinary laws are outside
the area of immunity, privilege or right conferred
on the grounds of religion.
Trusts for the Advancement of
Religion
• Advancement of Religion Generally
• Trusts for Buildings, Grounds and
Cemeteries
• Trusts for Prayers, Masses and
Ceremonies
• Gifts to Religious Office Bearers
Trusts for Purposes which are
Beneficial to the Community
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Gifts to a Community
Public Works and Beautification Trusts
Animals and Wildlife
Protection from War and Disaster
Relief of Taxes
Public Recreation and Sport
Public Safety and Defence
Trusts with Mixed Charitable and
Non-Charitable Purposes
• Compendious gifts include gifts for ‘objects
of benevolence and liberality,’ Morice v
Bishop of Durham. Additionally, if the gift
is worded to give the trustee a discretion
to choose between charitable and noncharitable purposes, the gift will fail. An
example of such a gift is a gift for
‘charitable or benevolent purposes’
Enforcement and Administration of
Charitable Trusts
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General Administrative Schemes
Cy-pres Schemes
Initial Impossibility
Supervening Impossibility
Satisfaction of Original Purpose
Statutory Powers
Valid Non-Charitable Purpose
Trusts
• Trusts for the maintenance of pets
• trusts for the construction and
maintenance of tombs unassociated with
churchyards
Problem
• At the end of World War II, Pierre Culliford,
a dentist’s assistant, left his birthplace in
Belgium and emigrated to Australia. He
settled on a farm he purchased near
Sommersby. The farm was in a very rundown condition when he purchased it.
Pierre devoted all his time, energy and
resources to establishing his beloved farm,
which he named ‘Schtroumpfland’ (the
name of the Belgian village in which he
Problem
• In 1989 Pierre contracted motor neurone
disease. As a result of his affliction Pierre
came into contact with the NSW Motor
Neurone Disease Research Council, an
unincorporated body, which was engaged
in research for an effective cure for motor
neurone disease, and which had its
research centre and headquarters in
Gosford.
Problem
• In April 1990, the NSW Motor Neurone
Disease Research Council was effectively
dissolved, but its functions were taken
over by a newly formed body called the
Motor Neurone Disease Research Institute
of NSW. At all relevant times the only
other institution concerned with motor
neurone disease in NSW was the
Newcastle-based Motor Neurone Disease
Sufferers Association.
Problem
• As a result of Pierre’s disease he was
unable to work his farm and the farm proceeded to decline rapidly. In May 1997
Pierre died. At the time of his death the
‘Schtroumpfland’ farm was worth
$350,000, but had ceased to generate any
income at all. It was estimated that the
costs of repair would run into the millions.
Problem
• In his will Pierre appointed his nephew Johan as
executor and trustee as well as residuary
beneficiary.
• Consider the following provisions left by Pierre to
his trustee in his will:
a)$50,000 to the Anti-Motor Neurone Disease
Centre.
b)The whole of my beloved ‘Schtroumpfland’ farm
for a training farm for orphan lads being
Australians.
c) $5000 to provide a stone and marble memorial
Answer
• The first disposition suffers from an initial
impossibility as the gift is to a non-existing
institution. Such a gift will fail in the absence of a
general charitable intention that can be effected
cy-près. A general charitable intention is
present, given that the gift appears intended to
address the woes associated with motor
neurone disease. Such a gift is clearly a trust to
aid the impotent:. A cy-près scheme could be
ordered under the inherent power of the court.
• The court will examine the evidence of the
purposes of the association to see which
association carries out purposes as ‘near as
Answer
• The second gift fails because of initial
impossibility. Here the initial impossibility
is related to the fact that the trust is
impractical, given the condition of the
farm. The facts of this question are very
similar to those in Attorney-General (NSW)
v Perpetual Trustee Co Ltd (1940) 63 CLR
209