NSW Masonic Youth Property Trust v Her Majesty’s Attorney-General in and for the State of
NSW [2010] NSWSC 333 (New South Wales Supreme Court, Hall J, 28 April 2010)
Previous hearings in this litigation had established who were the trustees of the NSW Masonic Youth
Property Trust (the trust), and the status of the trust and the trustees: see NSW Masonic Youth Property
Trust v Her Majesty’s Attorney-General in and for the State of NSW [2009] NSWSC 181 and NSW
Masonic Youth Property Trust v Her Majesty’s Attorney-General in and for the State of NSW [2009]
NSWSC 1301.
The findings in the earlier hearings included that a valid express trust had been created on 28 March 1923,
with a constitution established as at that date. The various amendments to the trust purportedly made
since 1923 were legally ineffective under the law of trusts. Persons who had been purportedly appointed
as trustees in and from 1972 were trustees de son tort (improperly acting without valid appointment). The
trustees of the trust since 1923 were in fact those who were the members from time to time of the
Executive of the trust fund.
Thus the trust was held to be exactly the trust that had been validly established in 1923 and no other. It
had been held that the charitable purposes of that trust were no longer capable of execution. This
application was to confirm that the property and funds of the trust should be applied cy-près to other
charitable purposes.
Before that could be accomplished however, a declaration was needed that the members of the present
Executive of the trust fund were the current and proper trustees of the trust. This was agreed, though only
prospectively from the date of this judgement, in accordance with section 70 of the Trustee Act 1925
(NSW).
These trustees then sought an order that they be vested with the power to sell the trust assets under section
81 of the Trustee Act 1925. This was granted as being ‘expedient’.
The next application was for orders excusing the present and past trustees (improperly appointed) under
section 85 of the Trustee Act 1925 from any liability for breach of trust in dealing with the assets of the
trust. Section 85 ‘confers a power of curial relief in respect of breach of trust where the trustee has acted
honestly and reasonably and ought fairly be excused’. His Honour declined to order this relief at this stage
of the proceedings, but rather deferred any final disposition of the section 85 applications made on behalf
of the plaintiffs for further consideration at another hearing. He said:
Whilst evidence as to the management of the Fund reaching back to 1972 may be attended with
difficulties, an analysis of records pertaining to legal advice and to management and
administration practices and processes may, in some cases, permit a reconstruction of the relevant
factual matrix from which inferences and conclusions concerning the prudential management and
other issues relevant to a s.85 application may be drawn or established. Whether such evidence
would, in fact, provide a sufficient basis for making orders under s.85 for the benefit of a class or
classes of persons referrable to a particular species of breach of trust as distinct from orders
referrable to particular transactions, is a matter upon which I here express no opinion.
Apart from these orders and others ancillary to them, the main object of the application, that the funds of
the trust, originally held for the charitable purposes of the relief of poverty, be applied cy-près, was
granted.
This case may be viewed at: http://www.austlii.edu.au/au/cases/nsw/NSWSC/2010/333.html
Implications of this case:
The applications concerning the Masonic Youth Trust illustrate that even a professionally run trust, with
seemingly good legal and financial advice provided to it, can be in fact both improperly constituted and
improperly governed. Whilst there is no suggestion that anything was done knowingly in this situation,
since all involved thought they were acting on a sound legal basis, the cost and disturbance caused by this
litigation shows that trusts must be careful to ensure that they are operating strictly within the trusts
legislation of their particular state.
Moreover, when the objects of the trust have ceased to be applicable, cy-près schemes are required.
There is usually no difficulty in obtaining permission for these from the court, but again there are costs
and complications involved, and a better statement of the charitable objects of the trust in the first place is
always desirable.