Practitioners advising on charitable gifts should note that a corporate body is a charitable institution if its main purpose is charitable, even if some incidental objects (such as 'philanthropic agencies' or 'preservation of civil liberty') are not independently charitable, provided those objects are construed as ancillary to the main charitable purpose.
Later decisions that cite Congregational Union of NSW v Thistlethwayte
Decisions cited by Congregational Union of NSW v Thistlethwayte
CONGREGATIONAL UNION OF NEW SOUTH WALES v. THISTLETHWAYTE [1952] HCA 48; (1952) 87 CLR 375
Charity
High Court of Australia
Dixon C.J.(1), McTiernan(1), Williams(1), Fullagar(1) and Kitto(2) JJ.
CATCHWORDS
Charity - Will - Gift - Churches - Objects and purposes - Hospital - Homoeopathic treatment - Gratuitous aid to destitute persons - Existence of hospital - Validity of gifts - Vesting - "Last surviving relative or beneficiary" - Rule against perpetuities.
HEARING
Sydney, 1952, March 27, 28, 31; April 1-3; August 29. 29:8:1952DECISION
August 29.2. The appellant in the first appeal is the Congregational Union of New South Wales. It appeals from so much of the decretal order as declares that the direction in the will of the testator to pay a one-third share of the residue of the final available balance of income to the appellant is not valid or effective, that this share is not held by the trustees of his will to be administered by-pres, and that the appellant is not entitled to a share of corpus of the testator's estate corresponding to this share of income, and as declares that the direction in the will to pay over to the committee for the time being of the appellant a sum of money out of the testator's estate equal to five per centum per annum of the net proceeds of such income is not valid or effective. (at p431)
3. The appellants in the second appeal are John Thomas Burchmore and Alexander John Ingram who represent the next of kin of Fanny Eliza Moore deceased. They appeal from so much of the decretal order as declares that the direction in the will that the trustees should pay annually to certain charitable and religious institutions out of the final available balance of income sums equal to double the amounts provided to be paid to them on the death of the testator is valid and effective and as declares that the directions to pay over to the Sydney Homoeopathic Hospital one-third of the residue of this income and in case there should be no such hospital established in Sydney or its suburbs at such time to pay the same to a committee to be appointed or approved by the committee of the Congregational Union of New South Wales to be applied in the founding and maintenance of such a hospital is valid and effective and as declares that the direction to pay the remaining one-third of this income to the Sydney Society of the New Church to be applied by it in the manner provided by the will is valid and effective. (at p431)
4. The appellants in the cross-appeal are the Sydney Homoeopathic Hospital and the Sydney Society of the New Church. They appeal from so much of the decretal order as declares that the directions in the will numbered ninthly as to the balance of income in the period between the death of the testator's widow and that of his last surviving relative or other beneficiary giving the trustees a discretion to apply the balance of income in improving and developing the Gordon estate or investing it for the general purposes of the will and empowering the trustees to earmark a certain portion of his estate or the income therefrom for the payment of the conditional aid and support provided to be paid to the beneficiaries relatives and others described in the will and distribute the final balance of income exclusive of such special provision annually on the trusts of the will are not valid or effective. (at p431)
5. The will of the testator is lengthy and complex. It can be divided into three main periods, (1) the life of the widow, (2) the period between her death and the death of the last surviving relative or other beneficiary mentioned in the will, (3) the period after that date. No difficulties of construction arise with respect to the first period. In this period the widow had a life estate in the whole of residue. The difficulties commence upon her death. (at p432)
6. The testator directed his trustees then to sell and convert into money his vacant lands except the lands comprised in his Gordon estate and with the proceeds thereof build suitable residences for orchardists on this estate or purchase adjoining land or apply the proceeds or any part thereof to the funds of his estate. He authorized his trustees to let his other real estate or sell it and gave elaborate directions for the leasing of the Gordon estate for farming or cultivation or residential purposes for terms of ninety-nine years. He directed his trustees to invest the sum of 1,000 pounds in government securities to be held by them as an assurance or safety fund and to pay the income thereof and all other income derived from his estate into a general account in a bank and to pay out of such income or fund firstly the expenses and outgoings of administering his estate; secondly and thirdly the remuneration provided for the manager of his estate, his trustees, and the Congregational Union of New South Wales; fourthly, fifthly and sixthly to pay three annuities to relatives (the last of whom died in 1922); seventhly to pay certain small annuities ranging from 1 pound to 10 pounds per annum to eight charities until such charities are dissolved, wound up or pass out of existence, whereupon the payment is to cease and the sum in question applied to the remaining trusts of the will (one was defunct before his death); eighthly the payments conditionally provided to be made to certain of his own and his wife's relations and others. (at p432)
7. He directed his trustees to pay to such relatives and others, so far as the income arising from his estate would permit, first to any such relatives or others who should be blind or crippled or who in the opinion of his trustees were in need of help, no matter what age such persons might have attained, to each such person such amount as his trustees should in their discretion deem needful but not less than seven shillings nor more than twenty shillings per week during such time as in their opinion such sum should be paid even to the natural extent of the lives of such persons provided that to any such person who should have attained the age of sixty years the payment should not be less than twelve shillings per week; secondly to any of such relatives who were spinsters and who had attained the age of sixty years and were without sufficient means of support the sum of twenty shillings per week for and during the term of their natural lives; thirdly to any such relatives or other males or females who had attained the age of sixty years and who were unable and had not sufficient means to support themselves the sum of twenty shillings per week for and during the term of their natural lives. He directed that in the case of the death of a male relative leaving a widow him surviving and who was married to him before he received or commenced to receive any such aid his trustees should pay to such widow, if she had not sufficient means to support herself and if she should have attained the age of sixty years, the sum of twenty shillings per week for and during the term of her natural life. (at p433)
8. Ninthly he directed that as to the balance of the income, until such time as the distribution of the final balance of income from his estate should come into force as thereinafter provided, his trustees might expend any part or the whole of such balance from year to year in improving and developing his Gordon estate or they might in their discretion invest for the general purposes of the will such balance of income or any part thereof from year to year instead of so expending the same. He authorized his trustees to make special provision by earmarking a certain portion of his estate or the income thereof or otherwise for the payment of the conditional aid and support payable under the eighth direction and authorized his trustees, having made such provision, to distribute the final balance of income of his estate exclusive of such provision annually as thereinafter provided. He directed that if at any time subsequent to making such provision it should be found that the same was inadequate for such purposes his trustees should then and for so long as they might think fit or necessary suspend the distribution of the whole or any part of the final balance of income and apply such suspended part to these purposes. He authorized his trustees, if they should find the special provision to be in excess of requirements, to release the excess for so long as they in their discretion might think fit and apply the same to the trusts of his will. The testator directed that, immediately upon the death of the "last surviving relative or other beneficiary", the balance of any such special provision should be applied to the remaining trusts of his will. (at p433)
9. The third period commences with a direction by the testator that on the happening of "the events aforesaid" his trustees should thereupon distribute the final available balance of income of his estate annually by paying to each of the charities benefiting under the seventh direction a sum equal to double the amounts provided to be paid to them on the death of his wife; and as to the residue by dividing the same into three equal parts and paying to the Sydney Homoeopathic Hospital one-third and in case there should be no such hospital established in Sydney or its suburbs at such time to pay the same to a committee which should be appointed or approved by the committee of the Congregational Union of New South Wales to be applied to the founding or maintenance of such a hospital; by paying a further one-third to the Congregational Union of New South Wales and the remaining one-third to the New Church or Swedenborgian Society of Sydney. The testator directed this institution, the accurate name of which is the Sydney Society of the New Church, to apply this one-third as follows forty pounds per centum for Church purposes and the remaining sixty pounds per centum for establishing lending libraries in such country towns as had newspapers established thereat and as his trustees should approve. He directed that such libraries should be under the direction and management of a paid secretary officer or agent and that his trustees should have the right to cause an inspection of the books or records and accounts of the institution with respect to such use of this one-third. (at p434)
10. The first appellant, the Congregational Union of New South Wales, is given two benefits under the will. In the first place, as remuneration for various duties imposed upon it by the will, the testator has directed his trustees to pay over to the committee of the Union a sum of money out of the income of his estate equal to five per cent of the net proceeds of such income to be applied by the committee for the benefit of the Union as the committee should deem proper. It is also given a third share in the residue of the final balance of income. His Honour held that both these gifts failed because each was a gift of income in perpetuity and such a gift could only be valid if made to a charity and the Union was not a charity. His Honour considered that the old rule against perpetuities prevents income being given for more than a life or lives in being and twenty-one years and that both these gifts infringed this rule and were invalid although they vested in interest within the period of a life or lives in being and twenty-one years allowed by the modern rule. The next of kin contend that his Honour was right in holding that each of the gifts to the Union was invalid. They also challenge his Honour's decision that the gifts to the Sydney Homoeopathic Hospital and the Sydney Society of the New Church were valid. They contend that the gifts to all three institutions fail because they do not vest in interest within the period of a life or lives in being and twenty-one years allowed by the modern rule. (at p434)
11. If this contention is right, the direction to pay out of the final available balance of income to each of the charities benefiting under the seventh direction a sum equal to double the amounts they receive under this direction must also fail for the same reason. His Honour held, and from this decision there is not appeal, that these gifts were in addition to and not in substitution for the original gifts, so that the payments of income directed to be made in the second period which continue to be payable in the third period include not only the amounts payable under the first, second and third directions but also the amounts payable under the seventh direction. The final available balance of income is therefore the income of the estate remaining after satisfying all these payments. It is true that the only gift of the residue of the final available balance of income is in the direction to the trustees to divide it amongst and pay it to the beneficiaries but this does not in our opinion prevent the gift vesting in interest prior to the moment of time when the income first becomes divisible. In Browne v. Moody (1936) AC 635 the Privy Council upheld Jarman's opinion that, even though there be no other gift than in the direction to pay or distribute in futuro, yet, if such payment or distribution appears to be postponed for the convenience of the fund or property. the vesting will not be deferred until the period in question. The Privy Council applied the same rule of construction in Greenwood v. Greenwood (1939) 2 All ER 150; 55 TLR 607 . They described the rule as well established. These decisions relate to the division of capital but no distinction in principle can be drawn between a gift to pay and divide capital and one to pay and divide income, although of course the difference may affect the construction of a gift and thus the question of the vesting of the interest. Under the will of the testator the date of division is a dies certus, that is, the death of the last surviving relative or beneficiary, whatever that expression may mean, which in the course of nature must occur sooner or later, and the direction to divide the final available balance of income on the arrival of that dies certus is not dependent upon the fulfilment of any condition peculiar to the beneficiaries. The contents of the will as a whole, and in particular the provisions relating to ear-marking the special fund so that, after a sufficient sum has been set aside the balance of income, even in the second period, may be paid to the beneficiaries entitled to the final available balance of income, demonstrates that the object of the postponement is only so that the income may be applied to purposes antecedent in point of time. We are of opinion that the gifts in question vested in interest on the death of the testator and therefore within the period allowed by the rule. (at p436)
12. This leads us to construe the expression in the will "last surviving relative or beneficiary". The expression is a compendious description of the persons intended to benefit possibly under the fourth, fifth and sixth directions and certainly of the persons intended to benefit under the eighth direction, the pension scheme as it was called during the argument. These persons are the sons and daughters of four sisters of the testator, Amy Taylor, Susan Vane, George Burchmore, the sons and daughters of Susanah Moore Thistlethwayte, Oscar Ostlund and Georgie Hudson. These beneficiaries could include persons not born in the lifetime of the testator and the direction also includes the widows of male relatives who could also be not born in his lifetime. If it were a class gift to these persons so that all the members must be ascertained before their shares could be finally fixed and the gift vest, the gift must fail because all its members might not necessarily be ascertained within the period allowed by the rule. His Honour, however, held that they were not a class, that the gift operated to confer individual benefits on the persons included in the description, and all such persons who were alive at the death of the testator qualified for the conditional aid. There is no appeal on this point and we are in any event of the same opinion. But his Honour went on to hold that the expression under discussion nevertheless included all the persons the testator intended to benefit under the eighth direction whether they could legally take or not and that the third period only commenced when all such persons had died. We do not think that this conclusion gives effect to the testator's intentions. If, as we think, the gifts of the final available balance of income are only postponed so that effect may be given to all the antecedent dispositions of income, particularly the completion of the pension scheme, there is no reason to suppose that the testator could have intended that the vesting in possession of the final available balance of income should be postponed beyond the death of the last surviving relative or other beneficiary who could legally participate under the will, or, in other words, beyond the completion of the pension scheme so far as it can lawfully be carried into effect: In re Hodge; Midland Bank Executor and Trustee Co. Ltd. v. Morrison (1943) Ch 300 . The provisions relating to the earmarking of the special fund to which we have already referred are eloquent to show that the testator wished to place his trustees in a position immediately to distribute to the ultimate beneficiaries any income not actually required for this scheme. In Parkes v. Parkes (1936) 3 All ER 653, at p 669 Lord Maugham remarked that where no technical words are in question and the intention of the testator can be collected with reasonable certainty from the whole will, that intention "must have effect given to it, beyond and even against, the literal sense of particular expressions". It is an almost decisive consideration that there is no contingency upon which the operation or enjoyment of the gifts depends: there was nothing for them to await but the cesser of the prior interest. Accordingly the gifts of the final available balance of income would vest in the ultimate beneficiaries upon the death of the last survivor of a number of persons alive at the death of the testator and therefore within the period allowed by the rule, even if we are wrong in thinking that vesting took place a morte testatoris. (at p437)
13. This leads us to consider the cross-appeal. That appeal seeks the reversal of his Honour's decision that the ninth direction in the will fails because the powers thereby conferred upon the trustees, especially the power to earmark the special fund and distribute the balance of income, might be exercised beyond the period allowed by the rule. It is true that no power can be given to change the nature of the interests limited by the instrument at a time exceeding the limit prescribed by the rule: Halsbury's Laws of England, 2nd ed., vol. 25, p. 159. But on this construction the discretion conferred upon the trustees to set up this fund could only be exercised in the course of a life or lives in being and therefore within the period allowed by the rule. The discretion to accumulate the income could not of course be exercised beyond the period of twenty-one years from the testator's death: Conveyancing Act 1919-1943 (N.S.W.), s. 31 (repealing and re-enacting the Thellusson Act). That period elapsed on 18th May 1932. There would be an intestacy as to any income sought to be accumulated after that date and not earmarked as part of the special fund. The trustees sought to accumulate such income for the years ended 30th June 1946, 1947, 1948 and 1949. These accumulations amount to 1,944 pounds 11s. 4d. As to this amount there would be an intestacy. But this is only a minor point in the cross-appeal. The important question is whether the trustees have authority to earmark the special fund now that there is an available balance of income of the estate after satisfying the payments directed to be made in the second period. In our opinion they have this power. Subject to a declaration that there is an intestacy as to the 1,944 pounds 11s. 4d. the cross-appeal should be allowed. (at p438)
14. This leads us to consider whether the gifts in thirds of the residue of the final available balance of income or any of them fail for any other reason. The principal contention of the next of kin is that the gifts are invalid because they are gifts of income in perpetuity, that such gifts infringe the old rule against perpetuities unless they are valid charitable gifts and these are not valid charitable gifts. In the case of the Sydney Homoeopathic Hospital it is contended that there is now no hospital which answers the description in the will. (at p438)
15. The Congregational Union of New South Wales contends that the gifts to it are valid on several grounds of which we need only mention two: (1) that an unlimited absolute gift of income is a gift of the capital from which the income is derived; (If this contention is sound it is immaterial whether the Union is a charity or not.) (2) that the gifts to the Union are valid charitable gifts. (at p438)
16. As to (1), in Philipps v. Chamberlaine [1798] EngR 186; (1798) 4 Ves Jun 51 (31 ER 27) , Sir R.P. Arden M.R. said: "I am not prepared to say, that I ever heard, that where a testator gives for ever and without limitation the dividends and interest to accrue upon the residue of his personal property, that would not carry the whole interest" (1798) 4 Ves Jun, at p 58 (31 ER, at p 31) . (at p438)
17. The question that usually arises is whether the testator intends to give a life or an absolute interest. That was the question before the Master of the Rolls in that case. It was also the question in Coward v. Larkman (1888) 60 LT 1 , where Lord Watson said that the rule of construction by which a general and unlimited gift of the income of real or personal estate is held to carry an absolute interest in the corpus is established beyond dispute. In the present case no question arises whether the testator intended to create life estates or any other estates limited in point of time in the final available balance of income. But it cannot be a rule of law that in such circumstances a gift of the produce necessarily amounts to a gift of the corpus. It must still be a question of the intention of the testator, and the rule of construction must yield to sufficiently definite indications of intention to the contrary. See the full discussion of the rule in the same case in the Court of Appeal (1887) 57 LT 285 . In the present will there are very definite indications of intention to the contrary. There are in the first instance the directions for the development and use of the Gordon estate which are quite inconsistent with the trustees disposing of the capital. There are also the directions with respect to the destination of the income of the estate. The first payments that have to be made are payments required by the first, second, third and seventh directions. The will provides for the appointment of a manager of the estate who is to be paid a sum equal to twelve and one-half per cent of the income of the estate, and this must mean twelve and one-half per cent of the income of the whole estate. The trustees' remuneration depends upon the number of meetings they hold and the number of inspections they make of the Gordon estate, so that it varies from year to year. A different amount would therefore have to be deducted each year from the income of the estate before the final available balance of income could be ascertained. the remuneration of five per cent of the net proceeds of the income of the estate granted to the Congregational Union of New South Wales must mean five per cent of the net proceeds of the whole estate. It is granted for an unlimited period and apparently in consideration of the Union annually appointing a professional auditor to make an annual inspection of the accounts of the estate and report to the committee of the Union as to the correctness or otherwise of the accounts and the testator must have intended that the Union should undertake this responsibility for an unlimited period. The trustees are to make an annual distribution of the final available balance of income. The testator contemplated that part of this balance would have to be distributed in the first instance amongst eight charities and the residue then divided into thirds. He could not have intended that the capital corresponding to the final balance of income should be divided into eleven capital sums. The smallness of the amounts payable to the eight charities indicates that annual payments of income are all that the testator intended them to have. Another strong indication to the contrary is that in the case of the Sydney Society of the New Church the trustees are given the right to inspect the books and the accounts of the institution to see that the income is properly applied, indicating that the testator contemplated that his estate would not be wound up and that there would be trustees in perpetuity. In the Will of Wright; Westley v. Melbourne Hospital [1917] VicLawRp 21; (1917) VLR 127 it was held that the rule of construction under consideration is not to be extended to an unlimited gift of income to a charity. According to Hood J. this was because considerations on which the rule was founded in the case of individuals such as avoiding an intestacy or a perpetuity had no reference to charities. No such distinction occurred to Stirling J. in In re Morgan; Morgan v. Morgan (1893) 3 Ch 222 . The will in that case, after directing that certain annuities should be paid out of the interest and rents, directed that the residue of the interest and rents should be given in one-tenths to certain charities. His Lordship held that these were gifts of one-tenths of the capital of residue. His judgment is reported in (1893) 69 LT 407, at pp 407, 409 . He said: "It is not open to question that under the words 'the residue of the interest and rents' given in tenths in favour of charities the corpus of the residuary estate passes" (1893) 69 LT, at p 407 . We cannot agree that this distinction exists. In our opinion the rule is the same whether the gift of income is to an individual or to a charity consisting of a body capable of holding property. The beneficiary is entitled to the capital unless there is a clear intention expressed or implied from the will that the beneficiary is not to take more than the income. In the present case such an intention is manifest. (at p440)
18. But the gifts to the Union are, in our opinion, valid charitable gifts. The Union was incorporated by the Congregational Union Incorporation Act 1882 (N.S.W.). This Act was amended by The Congregational Union Incorporation (Amendment) Act 1938 (N.S.W.). But the testator died in 1911 and the validity of the gift must be determined as at that date. This does not mean that the Act of 1938 has weakened the Union's position at all. Section 1 of the Act of 1882 provides that all persons who are or may become members of the religious body or denomination of Congregationalists or Independents and who compose the association called the Congregational Union of New South Wales shall be incorporated. This section follows a recital that certain persons being members of a religious body or denomination called Congregationalists or Independents in the colony of New South Wales and holding as their general tenets the doctrines set forth in schedule A to the Act had formed the above Association, the constitution of which was set forth and described in schedule B to the Act. The doctrines set forth in schedule A are religious doctrines. They combine certain fundamental religious beliefs with a provision that every church is to have the exclusive right to manage its own affairs. Clause 1 of schedule B provides that the General Assembly shall consist of Congregational ministers and members of Congregational churches. The schedule provides for the admission of further churches into the Union. It provides that the rules and constitution of the Union shall not be subject to any alteration or addition except at the October meeting of the Assembly and after notice given at the previous October meeting. The rules and constitution of the Union have been amended from time to time. A copy of the year book of the Union in evidence contains the fundamental principles and objects of the Union as they existed in 1911. Under these fundamental principles it is provided that the Union is founded on the recognition of the following principles:- (1) The supremacy of the Lord Jesus Christ, as Head of the Church. (2) The Scriptural right of every church to maintain perfect independence in the government and administration of its local affairs. The Assembly shall not become a court of appeal except in the case provided for in article 11 of the consititution. (3) The spiritual relationship of Christian churches of the same faith and order, and their right to unite as one in federal action for denominational purposes. These are religious principles, each church retaining local autonomy, the furtherance of which would tend to the advancement of religion. If the Union could only carry on its activities and employ its funds for the furtherance of these principles, it would clearly be a religious institution. But the constitution also includes the objects of the Union, and these objects must be intended to indicate the manner in which these fundamental religious principles may be advanced. They are nine in number:- (1) The cultivation and maintenance of fraternal intercourse with and among the associated churches. (2) The acknowledgment of the solidarity of the churches. Members of one body we live or suffer together. (3) United action for the creation, maintenance and improvement of our educational, religious, and philanthropic agencies. (4) The preservation of civil and religious liberty. (5) Intercourse or action together with churches, or associations civil and religious, outside our own pale. (6) The creation of a centre to which denominational obligations of any kind may be referred, and by which they may be dealt with. (7) The creation of a sustentation fund for the purpose of increasing, where necessary, the stipends of ministers. (8) The purchase of sites for church purposes from funds given therefor. (9) The collection of denominational statistics. (at p441)
19. It is contended, and this contention was upheld by his Honour, that at least two of these objects, those numbered (3) and (4), authorize the Union to expend its funds and therefore the income bequeathed to it by the testator for non-charitable purposes. A gift for philanthropic purposes is not a valid charitable gift: In re Macduff; Macduff v. Macduff (1896) 2 Ch 451 . We are prepared to assume that neither would a gift simply for the preservation of civil liberty be such a gift. If the third object means that the Union can use its funds for the promotion of agencies which are simply philanthropic agencies, and the fourth object means that the Union can use its funds simply for the preservation of civil liberty, the Union can carry on activities which are not wholly charitable and it would not be a charitable institution. Section 37D of the Conveyancing Act, introduced by the Conveyancing, Trustee and Probate (Amendment) Act 1938, does not apply to the wills of testators dying before 14th December 1938. But these objects must be interpreted in the light of the constitution of the Union as a whole. In In re Diplock; Wintle v. Diplock (1941) Ch 253 , when that case was in the Court of Appeal, Sir Wilfrid Greene M.R. said: "It must not be supposed for one moment from anything I have said, that in a proper context the word 'benevolent' may not be given a meaning much more limited than that which it normally bears" (1941) Ch, at p 263 . We are here concerned with the question whether a particular corporate body is a charitable institution. Such a body is a charity even if some of its incidental and ancillary objects, considered independently, are non-charitable. The main object of the Union is predominatly the advancement of religion. It is a religious institution composed of ministers and members of Congregational churches combining for certain religious purposes of common interest and a bequest to a religious institution is prima facie a bequest for a charitable purpose (In re White; White v. White (1893) 2 Ch 41 ). In a recent case in this Court, Salvation Army (Vict.) Property Trust v. Fern Tree Gully Corporation [1952] HCA 4; (1952) 85 CLR 159 , cases were cited in which it was held that an institution is a charitable institution if its main purpose is charitable although it may have other purposes which are merely concomitant and incidental to that purpose. The fundamental purpose of the Union is the advancement of religion. It can create, maintain and improve educational, religious and philanthropic agencies only to the extent to which such agencies are conducive to the achievement of this purpose. The same may be said, mutatis mutandis, of the other object, the preservation of civil and religious liberty. The object is to preserve civil liberty so that Congregationalists may worship according to their religious beliefs. In In re Delmar Charitable Trust (1897) 2 Ch 163 the Protestant Alliance was held to be a religious institution although one of its objects was "the maintenance and defence of the doctrines of the Reformation and the principles of civil and religious liberty against the advance of Popery". In In re Hood; Public Trustee v. Hood (1931) 1 Ch 240 it was held below and in the court of appeal that the main object of the gift, namely, the advancement of the application of Christian principles to all human relationships, being charitable, the gift was none the less valid because the testator had pointed out one of the means by which, in his opinion, that main object could best be obtained and which in itself might not have been charitable if it had stood alone: see also In re Scowcroft; Ormrod v. Wilkinson (1898) 2 Ch 638 . In our opinion his Honour was wrong in holding that the gifts to the Congregational Union of New South Wales were not valid charitable gifts. (at p443)
20. The gift to the Sydney Society of the New Church is a gift of income in perpetuity. It is not a gift of the capital from which the income is derived. It is a gift which is inalienable because the Society is required to expend the income in a certain manner. It is therefore a gift which can only be valid if the purposes for which the Society must apply the gift are all charitable (In re Wightwick's Will Trusts; Official Trustees of Charitable Funds v. Fielding-Ould (1950) 1 Ch 260, at p 265 ). In order that a gift may be a valid charitable gift the Court must be satisfied that it is public in the sense that it may be of benefit to the community or a considerable section of the the community (Verge v. Somerville (1924) AC 496, at p 499 ; National Anti-Vivisection Society v. Inland Revenue Commissioners [1947] UKHL 4; (1948) AC 31, at p 70 ). It is contended that the Society does not carry on activities for the benefit of the community or a considerable section of it but is a Society carrying on activities for the benefit of its members only. The Society was incorporated as a company limited by guarantee in 1886 under the provisions of the Companies Act 1874 (N.S.W.). The memorandum and articles of association of the Society are in evidence. The memorandum states that the Society is established for four objects, all of which are religious objects. They are as follows: Firstly, to worship the Lord Jesus Christ, and to proclaim that He is Jehovah in His Divine Humanity, being the Creator, Redeemer and Regenerator of man; Father, Son and Holy Spirit in One Person, as soul, body and proceeding operation are one man. Secondly, to cultivate a knowledge of the Holy Scriptures, or those Books of the Old and New Testament which contain a continuous Interior-Divine sense as revealed by the science of correspondence. Thirdly, to shun evils as sins against God, and to cultivate a life of disinterested usefulness and universal charity. Fourthly, to circulate the theological works of Emanuel Swedenborg, and such other writings as advance the life and doctrines of the Lord's New Church: and otherwise to assist as far as possible in disseminating the heavenly doctrines of the New Jerusalem. The articles of association under the heading "Nature of Society" state that the Society is established for the diffusion and advancement of religion and repeats these objects. There is evidence, scanty though it be, that the Society maintains a church in Clarence Street and that the leader of the Society is duly licensed to perform all the rites of the New Church including marriage, baptism, holy communion, funeral services, and to conduct all the services of the church. The articles of association declare that certain named persons are members and provide that all other candidates for membership must be elected and that they may be expelled as therein provided. But the activities of the Society are not confined to benefiting its members. They receive no profits for the memorandum of association expressly provides that the whole of the profits or other income of the Society shall be applied in promoting its objects and the payment of any dividend to its members is prohibited. There is no positive evidence that worship in the church and the performance of these rites is open to the public generally and is not confined to persons who are members of the Society, but, in the case of a church fronting a public road, that seems to be the only fair inference. It is difficult to see how the religion of the New Church could otherwise be diffused and advanced. The testator must have intended to benefit the Society in respect of certain of its activities and therefore have intended that the particular purposes should be purposes which, as his Honour said, were purposes within the objects of the company itself. The direction to apply forty per cent of the gift for church purposes must relate to the worship of the Lord Jesus Christ referred to in the first object and the expenditure by the Society of its funds on the erection or maintenance of a church in which believers in the doctrines of the New Church may worship and find spiritual edification. These are religious charitable purposes: Re Moroney; Maguire v. Reilly (1939) 39 SR (NSW) 249; 56 WN 105 . The power to expend sixty per cent of the moneys in establishing lending libraries must relate to establishing lending libraries of the kind the institution could lawfully establish, that is to say, libraries the main purpose of which would be to circulate the theological works of Emanuel Swedenborg and such other writings as advance the life and doctrines of the Lord's New Church and disseminate the heavenly doctrines of the New Jerusalem. It was contended that it would be necessary for the Court to read the works of Emanuel Swedenborg and these other writings to judge for itself whether they were theological works or writings of a religious character. It is usual to place some works of an author before the Court so that the Court may determine their character for itself (Thornton v. Howe [1862] EngR 724; (1862) 31 Beav 14 (54 ER 1042) ; Bowman v. Secular Society Ltd. (1917) AC 406, at p 442 ; In re Price; Midland Bank Executor and Trustee Co. Ltd. v. Harwood (1943) 169 LT 121 ; In re Hamilton-Grey (1938) 38 SR (NSW) 262; 55 WN 45 ), but it is not essential. Each case must depend upon its own facts. There is evidence in the present case which has not been challenged that the works of Emanuel Swedenborg are religious works. The only power of the Society is to circulate works of Emanuel Swedenborg which are theological works and the other writings described in the memorandum of association which are religious works and it can only establish lending libraries the main object of which is the circulation of such works. The gift to the Sydney Society of the New Church is, in our opinion, a valid charitable gift. (at p445)
21. The Sydney Homoeopathic Hospital. It was not disputed that hospitals are prima facie charitable institutions (Perpetual Trustee Co. (Ltd.) v. St. Luke's Hospital (1939) 39 SR (NSW) 408, at pp 419, 420; 56 WN 181 ). But it was contended that the gift fails because there is no longer a hospital which answers the description in the will. The charitable character of the hospital is attacked on the ground that there is no evidence that homoeopathic treatment may be of benefit to the community or a considerable section of the community. His Honour thought that the question was not whether the hospital answered the description in the will at the present time but whether it would do so when the gift vested in possession in futuro. As we consider, contrary to his Honour's view, that the trustees can now earmark the special fund and commence to distribute the surplus income on the trusts of the final available balance of income, the question does now arise whether the hospital does now answer the description. We agree with his Honour that "As yet there has not been such a change in the objects or purposes of the Sydney Homoeopathic Hospital as to destroy its identity as it now exists with the institution named in the will". The hospital was first established in 1902 at Cleveland Street, Redfern. In 1915 it was moved to 186 Glebe Road, Glebe, its present site. The testator was himself a homoeopathic practitioner and subscribed to its funds. From the time of its foundation until his death the supreme control of the hospital was vested in the contributors who contributed a lump sum of 10 pounds or more or annual sums of 10s. or more to its funds. The object of the hospital for which it was founded was to afford gratuitous medical and surgical aid under the homoeopathic system to sick persons in destitute circumstances and to others on such terms of payment as should from time to time be determined by the board. Until 1941 the hospital was conducted as a homoeopathic hospital and visited by medical practitioners who practised their profession in accordance with the principles of homoeopathy. From 1941 to 1945 homoeopathic treatment was given to patients by the matron of the hospital. Since then homoeopathic treatment has not been given at the hospital because no homoeopathic practitioners have sought to have patients admitted. But there has always been at least one bed available at the hospital in case a homoeopathic practitioner should desire to have a patient admitted. The hospital is now incorporated under the Public Hospitals Act 1929-1949 (N.S.W.). Although patients at the hospital do not now receive homoeopathic treatment because there are no visiting doctors who practise that system, it is not established that the system has completely or finally disappeared. The hospital still has the same objects as it had in 1902. The practice of homoeopathy is not active in Sydney at present. But it is active in other parts of the world. There is nothing to show that the actual use of the hospital for homoeopathy may not revive in Sydney in the future. It is true that the Court must consider the question whether the gift is beneficial to the public. The testator's opinion is not conclusive. But in the National Anti-Vivisection Case [1947] UKHL 4; (1948) AC 31 Lord Simonds said that "when a purpose appears broadly to fall within one of the familiar categories of charity, the court will assume it to be for the benefit of the community and, therefore, charitable, unless the contrary is shown, and further that the court will not be astute in such a case to defeat on doubtful evidence the avowed benevolent intention of a donor" (1948) AC, at p 65 . There is no evidence in the present case to prove that the practice of homoeopathy may not be of benefit to the public. The institution as it now exists is still, in our opinion, the same institution as that named in the will. If this identity should disappear at some future time the committee appointed by the committee of the Congregational Union may be able to establish a new homoeopathic hospital. If the gift should ultimately fail the question will arise whether there is not a sufficient general charitable intention to afford gratuitous medical and surgical aid to sick persons in destitute circumstances although the prescribed system of medical and surgical aid has become impracticable. But that question has not yet arisen. (at p447)
22. For these reasons we would allow the first appeal. Subject to the declaration that there is an intestacy as to the 1,944 pounds 11s. 4d. already mentioned, we would also allow the cross-appeal. We would dismiss the second appeal. (at p447)
KITTO J. On one aspect of this case I desire to state my own view, but otherwise I concur entirely in the judgment which has just been delivered. (at p447)
2. In my opinion a gift of the income of trust property in perpetuity is a gift of corpus, and cannot be reduced to a gift of something less than corpus by any manifestation of intention. I am aware that there are to be found in the books expressions which suggest that it is a question of construction whether an indefinite gift of income entitles the donee to corpus; but usually if not always it will be found that the question under consideration is the preliminary question, whether upon the true construction of the relevant instrument a gift of income expressed in general terms is a gift of that income for ever, or for a limited period such as a life. That question of course does depend upon the intention manifested by the instrument. But once the conclusion is reached that the gift is unlimited in point of time, it seems to me to follow necessarily that it is a gift of corpus. Every gift of the income of property confers an interest in the property, and the interest which a gift of all the income confers cannot be less than the beneficial ownership of the property itself. (at p447)
3. There is no dearth of authority to this effect. "To have the issues and profits, and to have the land, is all one," said two Justices of the King's Bench in Parker v. Plummer [1653] EngR 1352; (1590) Cro Eliz 190 (78 ER 446) , and Coke wrote:- "If a man seised of lands in fee by his deed granteth to another the profit of those lands, to have and to hold to him and his heires, and maketh livery secundum forman chartae, the whole land itselfe doth passe; for what is the land but the profits thereof?": Co. Litt. 4b. Again and again the proposition is stated as not admitting of qualification. Sir Richard Arden M.R. said in Philipps v. Chamberlaine [1798] EngR 186; (1798) 4 Ves Jun 51 (31 ER 27) :- "I am not prepared to say, that I ever heard, that where a testator gives for ever and without limitation the dividends and interest to accrue upon the residue of his personal property, that would not carry the whole interest. If the words 'for ever' were added, I suppose, it would not be contended, that it would not carry the principal also, though without the word 'executors'; for there would be nobody, who could ever claim the capital" (1798) 4 Ves Jun, at p 58 (31 ER, at p 31) . An indefinite gift of the dividends gives the absolute property of the stock", said Sir William Grant in Page v. Leapingwell [1812] EngR 134; (1812) 18 Ves Jun 463, at p 467 [1812] EngR 134; (34 ER 392, at p 394) . In Ramsay v. Lowther [1912] HCA 68; (1912) 16 CLR 1 Isaacs J. quoted the statement of Lord Westbury in Phillips v. Gutteridge (1862) 3 De GJ & S 332, at p 336 [1862] EngR 1023; (46 ER 664, at p 665) :-"An unlimited indefinite charge upon rents and profits is a charge upon the corpus, just as an unlimited indefinite gift of rents and profits is a gift of corpus" (1912) 16 CLR, at p 19 . And North J. in In re L'Herminier; Mounsey v. Buston (1894) 1 Ch 675 said:- "Supposing an absolute owner of personal property to give the income of his property to a person, what does that person take? He has a right to receive the income for ever, and, having the right to the whole income, he has the right to dispose of the capital which produces that income" (1894) 1 Ch, at p 676 . All this has as much application where the gift of income is to charity as where the gift is to an individual (In re Morgan (1893) 3 Ch, at p 224 ) and in my opinion In the Will of Wright; Westley v. Melbourne Hospital [1917] VicLawRp 21; (1917) VLR 127 should not be accepted as establishing the contrary. (at p448)
4. In In re Lawes-Wittewronge; Maurice v. Bennett (1915) 1 Ch 408 Warrington J. said:- "It is an undoubted rule of law, or rather perhaps of construction, that a gift unlimited in point of time of the income of a fund is a gift of the fund itself, and the reason is obvious, for it would be absurd to say that the income arising from a fund was for all time to be paid to one person while the corpus of the fund was to belong to some one else" (1915) 1 Ch, at p 412 . The words "or rather perhaps of construction" were doubtless used because his lordship had been pressed with the statement of Parker V.C. in Blann v. Bell (1852) 5 De G & Sm 658, at pp 663, 664 [1852] EngR 790; (64 ER 1287, at p 1290) , that "the rule which gives an absolute interest in the fund, where there is a general gift of the income, is not a very strong rule". This observation refers, as the judgment proceeds to make clear, to the question whether a general gift of income is a perpetual gift of income; and it therefore may be put on one side for the present purpose. It is noticeable that Warrington J., in the passage I have quoted from In re Lawes-Wittewronge (1915) 1 Ch, at p 412 introduced no qualification into his statement of the rule concerning unlimited gifts of income, and assigned a reason for it which recognizes the logical absurdity of denying that an unlimited gift of interest is a gift of the corpus. (at p449)
5. The cases in which a gift of the income of property for ever is accompanied by an expression of intention that the corpus of the property shall be inalienable by the donee of income fall into two classes. If the expression of intention is found in a severable provision of the relevant instrument, such as a condition of defeasance, there is no difficulty in rejecting it as repugnant to the gift and void, as it would be if annexed to an absolute gift of corpus expressed as such (In re Dugdale; Dugdale v. Dugdale (1888) 38 Ch D 176 ). Thus, a gift by will of the income of a trust fund to A his executors, administrators and assigns for ever would surely not be considered, by Sir Richard Arden Philipps v. Chamberlaine, [1798] EngR 186; (1798) 4 Ves Jun 51 (31 ER 27) , for example, as any the less a gift of corpus because the will contained also a statement that it was the testator's intention and direction that A should have no power to dispose of the corpus. The added statement would be held inefficacious; and the reason would be, I should think, that a gift of income for ever cannot be turned into something other than a gift of corpus, even by the clearest expression of intention; the gift stands, and the attempt to deny one of the incidents which belong to it as a gift of corpus fails for repugnancy. Then there is a second class of cases, in which the intention to deny to the donee of income the power of alienation is found, not in a severable provision, but inextricably woven into the very trusts by which the gift of income is made. That is the case here, and it is the case in many instances to be found in the books of attempts to create perpetual endowments. The difficulty is that while it is quite clear that the possibility of alienation of corpus or any part of it, by the donees acting together or singly, is inconsistent with the whole conception of the will, it is no less clear that the income is intended to be given without limit of time. When the gift is one made in favour of an ascertained person taking beneficially, the two notions are irreconcilable, and the gift, it seems to me, must fail for self-contradiction. It is only where the objects of the gift consist of purposes, and there is consequently no beneficiary in any real sense, that the gift can take full effect according to its terms. Such a gift of course can be validly made if the selected purposes are charitable. (at p449)
6. Gifts such as I have been discussing have always been held to fail when non-charitable, but the ground of invalidity usually assigned is that public policy condemns dispositions which make property inalienable for an indefinite period: see Jarman on Wills, 8th ed. (1951), p. 284, and cases there cited. This principle does not invalidate a gift of income which is limited to continue for a lengthy but determinate or determinable period. There is then a remainder outstanding in someone other than the donee of income, and, provided that the interest of that donee vests within the time allowed by the rule against remoteness of vesting, the gift of income offends no rule of law, however long may be the period of its duration (In re Chardon; Johnston v. Davies (1928) Ch 464 ; In re Chambers' Will Trusts (1950) Ch 267 ; cf. In re Johnson's Settlement Trusts; McClure v. Johnson (1943) Ch 341, at pp 344, 345 ; In re Wightwick's Will Trusts (1950) Ch 260 . These cases show that the reason why the objection to indefinite inalienability has no application to a gift of income for a long but finite period is that the donee could join with the person beneficially entitled in remainder, and together they could dispose of the corpus. The essential point, therefore, of the doctrine that a perpetual gift of income is invalid if it purports to make corpus perpetually inalienable, is that where there is such a gift of income there is no remainder; there is no one for whose benefit the trust instrument operates to preclude alienation of the corpus by the donee of income; and therefore there is no person or combination of persons by whom alienation can be effected consistently with the terms of the gift. To say that there is no remainder after the gift of income is simply to say that the gift is a gift of corpus. It seems to me, therefore, that to ascribe the invalidity of the gift to the fact that it attempts to make the corpus inalienable is only to emphasize one aspect of its self-contradictory character. (at p450)
7. Whatever may be the preferred method of stating the ground of invalidity, an exception exists in favour of gifts for charity (Commissioners for Special Purposes of Income Tax v. Pemsel [1891] UKHL 1; (1891) AC 531, at p 581 ; In re Macaulay's Estate; Macaulay v. O'Donnell (1943) Ch 435 (n) (HL) ), including gifts to corporations whose objects are exclusively charitable in the sense that each object either is charitable per se or should be construed as ancillary to other objects which themselves are charitable: cf. Royal College of Surgeons of England v. National Provincial Bank Ltd. (1952) AC 631 ; Salvation Army (Vict.) Property Trust v. Fern Tree Gully Corporation [1952] HCA 4; (1952) 85 CLR 159 (at p450)
8. I agree that the perpetual gifts of income which have been challenged in these proceedings are charitable gifts and must be upheld as such. (at p451)
ORDER
The order of the Court was that the decretal order of the Supreme Court be varied as follows:-