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In the matter of the Public Trustee of Queensland as trustee of Queensland Community Foundation[2016] QSC 276

In the matter of the Public Trustee of Queensland as trustee of Queensland Community Foundation[2016] QSC 276

 

SUPREME COURT OF QUEENSLAND

 

CITATION:

In the matter of the Public Trustee of Queensland as trustee of Queensland Community Foundation [2016] QSC 276

PARTIES:

THE PUBLIC TRUSTEE OF QUEENSLAND AS TRUSTEE OF QUEENSLAND COMMUNITY FOUNDATION

(applicant)

FILE NO/S:

BS No 5876 of 2015

DIVISION:

Trial Division

PROCEEDING:

Application

ORIGINATING COURT:

Supreme Court at Brisbane

DELIVERED ON:

15 December 2016

DELIVERED AT:

Brisbane

HEARING DATE:

11 November 2016

JUDGE:

Ann Lyons J

ORDER:

1.The Applicant is justified in executing the Amended Trust Deed for the charitable trust known as the Queensland Community Foundation (QCF), a copy of which is exhibit “LFB-4” to the affidavit of Linda Fay Blackburne sworn 31 October 2016.

2.The Applicant is advised and directed that, upon receipt of the consent of the Commissioner of Taxation to the amendments to the QCF contained in the Amended Trust Deed as so executed:

(a)He may administer the QCF in accordance with the Amended Trust Deed and in compliance with the Applicant's obligations as trustee of a registered charity and Public Ancillary Fund within the meaning of the Income Tax Assessment Act 1997 (Cth) section 30-15 item 2;

(b)He may administer the QCF on the basis that:

(i)He may treat payment to, and receipt thereof by, him as trustee of the QCF, of funds to be held on trust to apply the income thereof to a named charitable institution, as a gift to the QCF for the charitable purposes of such charitable institution on the terms of the QCF, as amended from time to time, whether such payment was made before, or is made after receipt of such consent;

(ii)He may regard reference by a donor, in making a gift to him as trustee of the QCF, to the gift being for a named charitable institution, or to be for an identified charitable purpose, as not precluding him from distributing the income derived from such gift in the manner provided for by clause 7.11(b) of the Amended Trust Deed, whether such gift was made before, or is made after receipt of such consent.

3.The Applicant’s reasonable costs and other expenses of and incidental to this application and the preparation of the Amended Trust Deed, are expenses of the QCF, and pursuant to section 72 of the Trusts Act 1973, the Applicant may obtain and receive payment for such costs and other expenses from the income derived by the QCF.

CATCHWORDS:

EQUITY – TRUSTS AND TRUSTEES – APPLICATIONS TO COURT FOR ADVICE AND AUTHORITY – where the Public Trustee of Queensland seeks advice and/or directions from the Court pursuant to s 134 of the Public Trustee Act 1978 (Qld) or s 106 of the Trusts Act 1973 (Qld) to execute an amended Trust Deed for a charitable trust – where the amendment will allow for inter alia compliance with the Guidelines in Schedule 1 to the Taxation Administration Act 1953 (Cth) and the preservation of the taxation status of the trust – whether s 134 of the Public Trustee Act 1978 (Qld) or s 106 of the Trusts Act 1973 (Qld) should be relied upon – whether the Court’s jurisdiction has been enlivened – whether an Order should be made

Property Law Act 1974 s 210, s 219, s 220 and s 221

Public Trustee Act 1978 (Qld) s 19, s 134

Trusts Act 1973 (Qld) s 106

Taxation Administration Act 1953 (Cth)

Attorney-General Act 1999 (Qld)

Attorney-General for NSW v Homeland Community Ltd [2013] NSWSC 723

Ban v The Public Trustee of Queensland [2015] QCA 18

Christopher Harris v  Sophia Rothery (as co-executor of the Estate of the Late Christopher George Harris) [2013] NSWSC 1275

Commissioner of Taxation v Bargwanna (2012) 244 CLR 655

Global Custodians v Mesh [2006] NSWSC 47

Graham Australia Pty Ltd v Perpetual Trustees WA Limited [1989] 1 WAR 65

Mayor, Alderman and Citizens of Canterbury v Whyburn (1895) QC 89

Jenkins v Ellett [2007] QSC 154

COUNSEL:

DB Fraser QC for the applicant

C Cater (sol) for the respondent Attorney-General

SOLICITORS:

Official Solicitor to the Public Trustee for the applicant

GR Cooper Crown Law for the respondent

  1. The Public Trustee (PTQ) is the trustee of the Queensland Community Foundation (QCF) which is a Perpetual Public Charitable Trust (the Trust) formed under a Trust Deed Poll made on 4 February 1997 (the Deed).
  2. By application filed on 16 June 2015, PTQ seeks advice and/or directions from the Court pursuant to s 134 of the Public Trustee Act 1978 (Qld) or s 106 of the Trusts Act 1973 (Qld) as to whether PTQ should execute an amended Trust Deed for the Trust.
  3. The purpose of those amendments is to allow PTQ to lawfully vary the terms and provisions of the Trust Deed Poll, in order to comply with its obligations as trustee of the QCF to continue to administer the QCF as a named charitable institution and to maintain the QCF as a Public Ancillary Fund for taxation purposes.
  4. Advice and direction is also sought about whether, upon execution of the Amended Trust Deed, PTQ should manage and administer the QCF on the basis that it is a Perpetual Public Charitable Trust which is singular in nature and not comprised of a number of discrete trusts held on behalf of specific charitable entities.
  5. Advice and direction is also sought that PTQ as Trustee is empowered to consolidate or otherwise amend funds held by or on behalf of the QCF in a separate sub-fund, for the benefit of the QCF and in furtherance of the charitable purposes of the foundation.

Background

  1. Clause 25 of the Deed allows for amendment and is in the following terms:

“The Trustee may at any time or times in its absolute discretion by deed or deeds executed from time to time revoke add to or vary all or any of the terms and provisions of, and without limiting the generality thereof, all of any of the trusts beneficial interests powers and discretions set out or contained m this Deed Poll as added to revoked or vaned from time to time PROVIDED THAT no part of the Trust Fund or the income therefrom shall become subject to any trusts other than trusts for the benefit of Designated Charities and PROVIDE FURTHER that no additions or variations shall be made without the prior consent of the Commissioner of Taxation or the Deputy Commissioner of Taxation.”[1]

The Deed has been amended on three previous occasions.

  1. The QCF is registered on the Australian Charities and Not for Profits Commission (ACNC) Charity Register and has received endorsement as an income tax exempt charity from the Commissioner of Taxation. It also has endorsement as a deductible gift recipient (DGR) from the Commissioner of Taxation.
  2. As a result of the Tax Laws Amendment (2011 Measures No 8) Bill, the QCF became “a public ancillary fund” within the meaning of that expression in the Schedule to the Taxation Administration Act 1953 (Cth) (TAA 1953) with effect from 1 January 2012.
  3. The definition of public ancillary fund is outlined in Schedule 1 in the following terms:

“(1)A trust is a public ancillary fund if:

  1. at least one of the following subparagraphs applies:
  1. each trustee of the trust is a * constitutional corporation;
  1. the only trustee of the trust is the Public Trustee of a State or Territory, or each trustee of the trust is prescribed by the regulations for the purposes of this subparagraph; and
  1. each trustee of the trust has agreed, in the * approved form given to the Commissioner, to comply with the rules in the * public ancillary fund guidelines, as in force from time to time; and
  1. none of the trustees has revoked that agreement in accordance with subsection (2).
  1. A trustee may revoke an agreement mentioned in paragraph (1)(b) only by giving the revocation to the Commissioner in the * approved form.
  1. Sections 426-125 to 426-165 do not apply to a * public ancillary fund if subparagraph (1)(a)(ii) of this section applies to the fund.”
  1. It is the public subscription of funds and the description of the trustee involved which distinguishes a public ancillary fund from a private ancillary fund.
  2. In December 2011, Guidelines[2] were introduced which required that a public ancillary fund distribute at least four per cent of the market value of the fund’s net assets annually for it to maintain an endorsement as a DGR.
  3. The Deed as it is presently constituted does not contain a power to distribute capital. Due to the reduction in income returns, there is a risk that the QCF will fail to satisfy that requirement under the Guidelines. As a result PTQ has taken advice and proposes to amend the Deed under the current amendment power in cl 25 to allow it to make distributions of capital so as to comply with the Guidelines. The applicant has also taken the opportunity to update and clarify other terms in the Deed.

The initial application

  1. The application first came before the Court on 25 June 2015 but was adjourned on that date so that further matters which had arisen during the hearing of the application could be considered. Those considerations included concern around the extent of the scope of the protections in the then proposed Amended Deed for those who already had dealings with the QCF, as well as the consequences of those amendments. Questions had also arisen as to whether the width of the power of amendment could give rise to a perpetuity period concern and whether the relief sought should be granted under s 134 of the Public Trustee Act or s 106 of the Trusts Act.

Subsequent events

  1. In the meantime amendments were made on 29 April 2016 to the Guidelines in Schedule 1 to the TAA 1953. Accordingly, the Court is now being asked to consider a different proposed Amended Deed as it has been prepared in the context of those amendments and replaced the earlier proposed Amended Deed.
  2. A new Guideline 19.7 was inserted at the time the amended Guidelines were promulgated to enable certain trustees of public ancillary funds to apply to access a lower minimum distribution rate for a financial year. In reliance upon that Guideline PTQ as trustee for the QCF made an application for a reduction in the minimum annual distribution rate for the financial years ending June 2017 through to June 2021.
  3. On 14 September 2016 the Commissioner of Taxation granted PTQ’s application for a reduction.
  4. Accordingly the effect of the extension is that the PTQ will not breach the Guidelines at least until the financial year ending 30 June 2021 provided it can continue to generate a net income above the average of the Reserve Bank’s cash rate for the previous financial year.
  5. Currently there is no provision in the Trust Deed for the distribution of capital by the trustee where the income available for distribution is not sufficient to meet the minimum distribution requirements.

The current application

  1. Notwithstanding the variation in the Guidelines granting the Commissioner a discretion to reduce the minimum annual distribution rate, PTQ seeks to overcome the risk of breaching the terms of the QCF trust by adopting the new Amended Trust Deed for the QCF. In particular the new amendments make it clear that any persons who had dealings with the QCF prior to the amendments were not to lose any rights that may have existed previously and ensures compliance with the current Guidelines. It is also more closely aligned to the model deed promoted by the ATO. The terms of the new Amended Deed are such that it retains its intent of a perpetual nature and the compliance requirements of a tax concession entity by limiting the power to distribute capital in circumstances where such a distribution is required by law.
  2. A copy of the proposed Amended Trust Deed is attached to the affidavit of Linda Blackburne sworn 31 October 2016.[3] Ms Blackburne is the acting Director of Estates and Trust at PTQ and I note her reference to the following aspects of the current Amended Trust Deed:[4]
  1. The power to apply capital remains limited to that which is necessary to carry out the legally imposed obligations through clause 6.3 but there is greater protection for parties that could be prejudiced by the changes in clause 2.2(c);
  1. The role of the Board of Governors is returned to being only advisory in clause 5 and thus closer to the original Deed of 4 February 1997…;
  1. The way the sub-funds actually operate is clarified through the more detailed explanation of sub-funds in clause 7.10 and the definition of sub-funds in clause 14.3; and,
  1. The obligation on the Trustee to identify and carry out obligations howsoever arising in relation to the Trust is spelt out in some detail in clause 7.11 and enshrines in the Trust Deed and enhances the protections available under the Trusts Act (1973) (Qld) s 106(2).
  1. The terms of Trust now align much more closely with the Model Deed preferred by the Australian Taxation Office which, among other things, requires that distributions be made only to ‘Eligible Entities’.
  1. I also note that the Amended Trust Deed anticipates a charter setting out the internal and external responsibilities of the Board of Governors and its management practices. Ms Blackburne states that because the QCF is a charitable trust which is perpetual by nature, any distributions of income from the trust fund will be limited to distributions of income only (not capital), that the capital of the fund cannot be accessed for administrative purposes and that a gift made by a donor to the fund will be perpetually invested to provide an ongoing income and will never be spent. Ms Blackburne states that PTQ’s intention as Trustee to continue to abide by those intentions but to clarify that the changes to law have meant that circumstances could arise in the future where capital may need to be distributed to satisfy Commonwealth law requirements. It is clear however that for the foreseeable future relief has been provided.
  2. The ACNC has been consulted as to the view it takes and has indicated that it regards the Amended Trust Deed as appropriate to constitute the QCF as a single charitable trust for registration purposes. The Trustee specifically requested that the ACNC classify the status of each sub-fund and sent a request asking ACNC to determine whether each sub-fund constituted a separate trust. The ACNC, in a letter dated 28 October 2016,[5] confirmed that each sub-fund does not constitute a separate trust and confirmed that the effect of the changes made by the Amended Trust Deed does not alter that position.
  3. An additional concern had also been raised by the applicant in relation to the requirements for public ancillary funds to only operate one trust where a separate trust is created and is required to be separately registered, pursuant to the Guidelines. The applicant therefore proposes to delete the relevant provision in the current Deed in order to permit it to create additional trusts to guard against the risk of exposure to the regulatory burden which may ensue without the safeguards.
  4. A draft of the Amended Trust Deed has been provided to the Commissioner of Taxation as required by cl 25 of the Deed. Under the transitional provision of the Guidelines the QCF was required to take action to be compliant by 1 July 2015. The amendments currently proposed are designed to be retrospective and to take effect from that date. On 5 October 2016 a letter was received from the ATO confirming that the amendments do not change the tax compliance obligations of the QCF and confirming that the Commissioner will consent to the proposed amendments.
  5. The draft Amended Trust Deed has also been served on the Attorney-General who has appeared by counsel on this application. Counsel had indicated that whilst the Attorney-General is not a party she appears as protector of charitable trusts. Section 7 of the Attorney-General Act 1999 (Qld) gives the Attorney-General specific powers to enforce charitable and public trusts and to grant a fiat to achieve the same ends. Under s 8 of the Act the Attorney-General retains common law rights, one of which is the general supervision of charitable trusts as parens patriae.
  6. Counsel for the Attorney-General submits that the amendments would allow the applicant to continue to administer the QCF as a named charitable institution and continue its charitable purpose. As the orders sought by the applicant seek to preserve the taxation status of the fund as a charitable institution, the Attorney-General supports the intent of the application and through counsel submits that she will abide the order of the Court. 

Should the Deed be amended?

  1. There are five main issues which need to be discussed.
    1. The first issue is whether the amendments, which would allow capital to be distributed to comply with the Guidelines, impinge upon the perpetual nature of the QCF (the perpetual issue).
    2. The second issue relates to the definition of the charitable purposes for which the QCF is intended to operation (the definition issue).
    3. The third issue concerns the statutory requirements which limit the applicant to holding all amounts received by it in its Common Fund (the admixture issue).
    4. The fourth issue is whether the phrase “but is not under any obligation to do so” as set out in the model deed provided by the ATO is appropriately included in the present case (the administration issue).
    5. The fifth issue is whether the applicant is correct to treat the funds received by it as trustee of the QCF as funds held on the trusts of the QCF, rather than involving any separate trusts (the purposes issue).

The Power of Amendment

  1. Clause 25 is clearly in very wide terms and therefore gives the applicant some flexibility in relation to the suggested amendments to the Deed. Dal Pont in his book, Law of Charity expresses the view that a charitable trust can be varied pursuant to its own express terms and Hubert Picarda QC in his work The Law and Practice Relating to Charities (4th ed) considers that charitable trusts can be revoked, varied or added to pursuant to a valid power of appointment or revocation contained within the trust deed. In this regard Picarda refers to Re Holloway’s Trusts[6] and Re Harrison[7] to support a power to vary.
  2. Counsel for the applicant has referred me to a more recent analysis of the power to vary a charitable trust pursuant to its own express terms in Attorney-General for NSW v Homeland Community Ltd.[8] In that decision Windeyer J was concerned with a power of variation set out in a deed and a subsequent amendment which was made by deed. The case proceeded on the basis that the power of variation set out in the deed was not to be impugned because of any limits in relation to the law of charitable trusts.
  3. Before turning to the Orders sought there are however some other issues which require some further consideration.

The rule against perpetuities

  1. The next issue which must be considered is the rule against perpetuities or the “rule against remoteness of vesting” as Dal Pont describes it. The rule is concerned with not allowing the vesting of an interest in property to be indefinitely postponed and requires that the vesting of property is not to be postponed beyond the perpetuity period. The perpetuity period extends the life times of persons alive at the date of the creation of the trust and 21 years from the date of the death of the last survivor of those persons. The rule applies to both personal and real property.
  2. Once a charitable trust comes into operation, however, the rule against perpetuities is not applicable and the charitable trust can be made to last for any period whether perpetual, indefinite or limited. In Queensland the law against perpetuities is also ameliorated by the Property Law Act 1974 (Qld) in s 210, s 219, s 220 and s 221.
  3. When one considers the words of cl 25 it is clear that there are two limitations on the power of amendment. The first is that no part of the trust fund or income shall be subject to any trust other than trusts for the benefit of the designated charities and secondly that no additions or variations can be made without the consent of the Commissioner of Taxation.
  4. Those limitations therefore would preclude any changes to the Deed which might introduce non charitable objects or purposes for the QCF. There is no doubt that the QCF has been set up for purposes which are expressed as charitable purposes and it applies the net income of the trust fund to or for the benefit of the designated charities pursuant to cl 18. When one considers the recital to the Deed it is also plain that the income is to be applied for charitable purposes. Accordingly, I am satisfied that the variation here is clearly limited to charitable purposes and it does not breach the rule.
  5. Whilst counsel for the applicant has made reference to the Mortmain Act 1736, the decision of Mayor, Alderman and Citizens of Canterbury v Whyburn[9] makes clear that the Act has no application to the Australian colonies. Accordingly, I can see no bar to the operation of the amendment power which is contained in the Deed.

Retrospective operation – is a retrospective amendment valid?

  1. In Global Custodians v Mesh[10] Young CJ in Equity held that if a trust deed is drafted in a sufficiently wide way, a retrospective amendment is valid. Young CJ noted that a subsidiary trust repugnant to the main trust would be considered to void in equity and that the exercise of a power to amend could not affect any vesting which has already taken place because the power to alter the trust is itself an interest in the trust and its exercise cannot affect an already vested interest. In coming to that conclusion reliance was placed on the 1989 decision of the Western Australian Full Court in Graham Australia Pty Ltd v Perpetual Trustees WA Limited[11]which held that a retrospective amendment is not necessarily beyond power and what is within power is a matter of construction.

Limits to Power

  1. There is no doubt an issue as to whether the power of amendment can be used to alter or defeat the main purpose of the trust. That question was considered by Douglas J in Jenkins v Ellett[12] by reference to the text Thomas on Powers[13] in the following terms:

“[15]…

‘A power of amendment or variation in a trust instrument ought not to be construed in a narrow or unreal way. It will have been created in order to provide flexibility, whether in relation to specific matters or more generally. Such a power ought, therefore, to be construed liberally so as to permit any amendment which is not prohibited by an express direction to the contrary or by some necessary implication, provided always that any such amendment does not derogate from the fundamental purposes for which the power was created. Thus, a power of amendment will undoubtedly be capable of making amendments which are essentially ancillary to, and for the better execution of, such fundamental purposes, e.g. so as to substitute an easier form of communication or service for the one originally stipu­lated, or so as to make other powers exercisable in writing rather than by deed, or, indeed, introduce other amendments which are not simply administrative or managerial in nature. It does not follow, of course, that the power of amendment itself can be amended in this way. Indeed, it is probably the case that there is an implied (albeit rebuttable) presump­tion, in the absence of an express direction to that effect, that a power of amendment (like any other kind of power) cannot be used to extend its own scope or amend its own terms. Moreover, a power of amendment is not likely to be held to extend to varying the trust in a way which would destroy its ‘substratum’. The underlying purpose for the furtherance of which the power was initially created or conferred will obviously be paramount.’”

  1. Whilst in Douglas J held that the proposed amendment to the deed was not allowed in that case because it was in fact akin to destroying the substratum of the deed that would not seem to be the case here.

What does Clause 25 allow?

  1. The scope of the power outlined in cl 25 is to be determined by a process of construction as outlined by Kunc J in the 2013 decision of George Christopher Harris v  Sophia Rothery (as co-executor of the Estate of the Late Christopher George Harris):[14]

“[52]‘The rules for the construction of contracts apply also to trusts’: Byrnes v Kendle [2011] HCA 26; (2011) 243 CLR 253 at [102], [105]-[107] per Heydon and Crennan JJ, see also at [53] per Gummow and Hayne JJ. Thus Hamilton J in Nic Kritharas Holdings Pty Ltd (in liq) v Gatsios Holdings Pty Ltd [2001] NSWSC 343; (2001) 38 ACSR 57 at [18] identified the task as being:

… In construing a trust deed one must turn to the deed itself, examining carefully the words construed and giving them their natural and ordinary meaning in the context of the whole deed.

[53]As with any contract, the terms of the trusts are to be construed by reference to what a reasonable person would have understood them to mean rather than the subjective intentions of the parties. This ordinarily requires consideration not only of the text, but also the surrounding circumstances known to the parties, and the purpose and object of the transaction: Pacific Carriers Ltd v BNP Paribas [2004] HCA 35; (2004) 218 CLR 451 at [22]; Equuscorp Pty Ltd v HGT Investments Pty Ltd [2004] HCA 55; (2005) 218 CLR 471 at [33]-[36]; Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165 at [35]-[48].”

  1. Having considered the words used in cl 25, I am indeed satisfied that the power of amendment is wide and would in my view permit the changes proposed here. I agree with the submission of counsel for the applicant that the changes proposed to be made in the description of the purposes are within the substratum of the trust constituted by the Deed. As the proposed changes are directed to the continuance of all charitable purposes they do not offend the rule against perpetuities. Furthermore as Commissioner of Taxation v Bargwanna[15] held there is no impediment to a charitable trust blending amounts held for differing purposes on an express authorisation in the trust deed.
  2. I consider that the power of amendment contained in cl 25 could authorise the making of the amendments proposed to be made by PTQ.

How does the QCF operate?

  1. The QCF has been set up as a charitable trust whose purposes are expressed as “charitable purposes”. It operates by applying the income of the Trust Fund to charitable purposes for the benefit of designated charities.
  2. The recital to the Deed states that income can be applied for all charitable purposes extending to the “relief of poverty, the advancement of education, the advancement of religion or any other purpose beneficial to the community”.[16] The whole of the trust fund is held in a single account and because of the advantages of scale, it is thereby able to conduct the fund in a prudent manner. A separate entity, QCF Management Co Ltd (QCF Co), administers the fund. That entity is in receipt of sponsorship from the applicant and other bodies to assist it in the administration of the QCF. The way in which the QCF operates has been to create sub-funds to account for payments which are to be made for the purposes of the particular charities nominated.
  3. An issue however was raised by Taxation Determination 2004/23, which concerned tax deductible donations where particular donors expressed a preference to benefit particular artists or organisations, some of whom were not charitable institutions but were providers of services as part of the Arts. It has been held that in those circumstances where a preference was indicated no trust obligation arose. The QCF however by the terms of the Deed is empowered to apply income from gifts for the charitable purposes of various charitable institutions in PTQ’s absolute discretion. Thus any donor to the QCF who has identified a particular charity as being the beneficiary of a gift can enforce that gift by way of an administration action to compel the trustee to perform the terms of the Trust. Due to the terms of the Deed, the trustee is not obliged to hold the funds for a particular charity’s purposes in a separate account and the sub-fund structure ensures that the duties imposed on the trustee under the Trust are performed.

The Proposed Deed

  1. The drafting changes proposed in the Amended Deed have been made to clarify the obligations imposed on the trustee consistently with the Guidelines and to ensure continued tax deductibility of donations to the QCF. Those amendments are set out in cl 6.2 and cl 6.3. Additional trusts which were contemplated by clauses 4 and 5 have been deleted because of the need to have just one trust provided for in the Deed, so as to comply with the Guideline requirement that the fund be public in nature.
  2. I also note that clauses 6.6 and 7.10 are based on the requirements of the ATO and are designed to comply with paragraph 42 of the Guidelines. Clause 7.4 requires the trustee to keep or cause to be kept proper accounts and clauses 7.10(3)(c) and (d) are included so as to comply with TD 2004/23. The power to combine funds received into one account is also now dealt with by cl 6.2 and cl 7.10(e) and (f).

The definition issue

  1. I note the definition of a charitable trust in the proposed Amended Deed is in the following terms:[17]

“‘Charitable Trust’ for the purposes of clause 1.2 means a trust that satisfies the requirement for being charitable at common law and in equity, as expanded or redefined by statute (including under the Trusts Act 1973 (Qld) and Charities Act 2013 (Cth)) and takes the broadest meaning for the purposes of the law in the relevant jurisdiction be it Commonwealth, Queensland or otherwise.”

  1. I consider that it is appropriate that such a definition should be incorporated into the Deed as it affords the greatest flexibility to PTQ.

The admixture issue

  1. Clause 7.2 of the proposed Amended Deed states that:

“Whilst ever the Public Trustee is Trustee then the monies vested in or coming into the hands of the Public Trustee, howsoever arising, and whether directed to be invested or not, shall be received into the Common Fund of the Public Trustee notwithstanding that the Public Trustee holds funds on any other account therein, and shall from there be invested by the Public Trustee.” 

  1. That is a matter which is required by s 19(1)(a) of the Public Trustee Act 1978 (Qld) which provides that “all moneys vested in or coming into the hands of the public trustee, howsoever arising, and whether directed to be invested or not, shall be held in 1 or more common funds (the common fund) and shall be invested by the public trustee.” Whilst I accept that the general rule is that trust funds must be kept separate but that has never been the case under the Deed given the limits on PTQ arising from the requirements of s 19. In the circumstances of this case it is appropriate for the fund to continue to be held in common with all other amounts held by PTQ. It would seem to me that cl 7.2 is sufficiently clear in this regard.

The administration issue

  1. The next issue which arises is in relation to clause 7.10(d), which provides:

“The Trustee is under no obligation to comply, and the Trustee is at liberty to not agree, or give any assurance that it will comply, with any such request or preference.”

  1. Those words are taken from the model deed prepared by the ATO as at 1 January 2014. An issue arises as to whether those words should be included where particular donors may have limited a gift for charitable purposes of a particular organisation or a particular charitable purpose of that organisation. PTQ therefore proposes that the requirements in cl 7.10(d) should be further qualified by cl 7.11 which provides a mechanism for enforcement and a record of what must be enforced. It also addresses the regulatory issue of ensuring there is in place only one trust, by establishing one overarching trust under which all accepted obligations are comprehended.
  2. Subclauses 7.11(a) and (b) provide protection to any person potentially affected by the amendment. In particular sub clause 7.11(c) is a statement of the nature of the overarching trust akin to the operation of the cy prés principle and being expressed with reference to a specific set of circumstances, takes precedence over the earlier subclauses as a matter of construction where such a situation arises. Any gift to the Trustee in its capacity as trustee of the QCF must be taken to have been subject to the power of amendment in cl 25 and for the purposes of the trust constituted under the Deed.

The purposes issue

  1. The last issue relates to the standard terms of Will clauses which are used to provide for bequests to be made to the QCF. The standard clause essentially provides that an amount is given “to the Public Trustee of Queensland as trustee of the Queensland Community Foundation (the Foundation) established by a Declaration of Trust dated 4 February 1997 to be held UPON PERPETUAL TRUST (the Trust Fund) for the general charitable purpose of the Foundation”. The question for the Court is whether gifts made on such terms are within the purposes provided for under the proposed Amended Deed.
  2. In this regard I note that the relief sought in paragraph 2(a) of the Originating Application[18] is for “advice and/or a direction pursuant to s 134 of the Public Trustee Act 1978 (Qld) that upon execution of the Amended Trust Deed the Applicant should manage and administer the Foundation on the basis that the Foundation is a perpetual public charitable trust which is singular in nature and is not comprised of a number of discrete trusts held on behalf of specific charitable entities.”
  3. It would seem to me that such bequests are made to PTQ in its capacity as Trustee of the QCF and it is thereby bound by the terms of the Deed either in its original form or as varied. Clearly such a bequest would have been on the basis that PTQ as Trustee holds the bequest under the terms of the Deed to be applied for particular charitable purposes which are comprehended by the width of the purposes contained in the Deed.  PTQ is Trustee of only one trust, namely the QCF, and it holds the funds the subject of the bequest in the Trust Fund and subject to the terms of the Deed. It wold seem to me that by creating sub-funds within the Trust Fund PTQ is in fact acting consistently with obligations it has as Trustee under the Deed, as well as giving effect to the donor’s intention. 

Should s 106 of the Trusts Act 1973 or s 134 of the Public Trustee Act 1978 be relied upon?

  1. In terms of the current application PTQ has applied for advice and/or directions pursuant to either s 106 of the Trusts Act 1973 (Qld) or s 134 of the Public Trustee Act 1978 (Qld).
  2. Section 106 Trusts Act 1973 is in the following terms:

“106 Proceedings in case of charitable trust

  1. The court may upon application under this section by an order in respect of any charitable trust—
  1. give directions in respect of the administration of the trust; and
  1. require any trustee to carry out the trust, or to comply with a scheme (if any); and
  1. require any trustee to satisfy the trustee’s liability for any breach of the trust.
  1. An application under this section may be made—
  1. by the Attorney-General or person authorised by the Attorney-General; and
  1. (b)
    by the charity, or any trustee of the trust; and
  1. (c)
    by any person interested in the due administration of the trust.
  1. Notice of the application shall be given to the Attorney-General, and to the trustee of the trust and to such other person as the court directs.
  1. On any such application the court may make such order as to costs and otherwise as may be just.
  1. In this section—

charitable trust means any property held in trust for a charitable purpose.

charity means any institution, whether or not incorporated, which is established for charitable purposes.”

  1. Section 134 Public Trustee Act 1978 is in the following terms:

“134 Public trustee may take opinion of court on question arising in course of duties

  1. The public trustee may, without instituting formal proceedings, take the opinion or obtain the direction of the court upon any question, whether of law or of fact, arising under this Act or in the course of the public trustee’s duties.
  1. Any such question shall be submitted to a judge of the court in such manner and at such time as the public trustee may direct, and shall be accompanied by such statement of facts, affidavits, documents, and other information as the public trustee may require and the public trustee or anyone authorised by the public trustee shall, if the judge so desires, attend upon the judge at such time and place as the public trustee may appoint.
  1. The judge may, before giving the judge’s opinion or direction, require the attendance of, or communication with, any person interested, but no such person shall have a right to be heard unless the judge so directs.
  1. The judge shall give the judge’s opinion or direction to the public trustee and, subject to any order of the court in other proceedings formally instituted, the public trustee, acting in accordance with such opinion or direction, shall be fully indemnified.
  1. The public trustee shall, upon the request in writing of any such interested person, communicate to the person the effect of such opinion or direction.”
  1. In the circumstances of this case I consider that s 134 of the Public Trustee Act is the appropriate section to proceed under rather than s 106 of the Trusts Act, given that the Public Trustee Act and s 134 in particular are concerned specifically with the PTQ and its powers. There is no doubt that s 134 requires the PTQ to point to a question of law or of fact arising under the Public Trustee Act or in the course of the Public Trustee’s duties.
  2. This aspect of the Court’s jurisdiction is of course fundamentally different to its usual role of determining disputes between litigants as the Court of Appeal noted in Ban v The Public Trustee of Queensland.[19]  The basis of the jurisdiction is the role of a superior court in assisting with the administration of trusts and estates. Morrison JA, with whom Holmes and Gotterson JJA agreed, stated:

“[62] Section 134 is a provision giving the Supreme Court power to act in its protective jurisdiction in respect of deceased estates. It concerns a particular category of deceased estates, namely those where the Public Trustee is involved. It permits the Public Trustee, and no other party, to apply for the court’s assistance “upon any question, whether of law or of fact, arising under this Act or in the course of the Public Trustee’s duties”. That it is directed to a “questions … arising” points, in my view, to the fact that the section applies to real questions, even if hypothetical in the usual sense in inter-partes litigation. The appellant’s contentions focus on what might be objectionable in such litigation, missing the fact that this jurisdiction is an exception to the court’s ordinary function of deciding disputes between competing litigants.

[63] It is only a question “arising under this Act or in the course of the Public Trustee’s duties” which can be submitted to the court under s 134(3),64 and only such a question which can be answered by the “court’s opinion or direction”. Further, s 134(4) provides that the court can require the attendance of, or communication with, any interested person. Given the protective nature of the jurisdiction in respect of deceased estates, one could be confident that a court entertaining an application under s 134 would be astute to ensure that any interested party was given notice and the opportunity to be heard. None of that involves vices of the sort raised by the appellant, namely that proceedings might be informal and without notification to interested or affected parties.”

  1. I am satisfied that the requirements of s 134 have been met and that the Court’s jurisdiction has been enlivened. Having considered the extensive submission of counsel for PTQ and counsel for the Attorney General, I am satisfied that the following Orders and Declarations should be made.  

Orders

  1. The Applicant is justified in executing the Amended Trust Deed for the charitable trust known as the Queensland Community Foundation (QCF), a copy of which is exhibit “LFB-4” to the affidavit of Linda Fay Blackburne sworn 31 October 2016.
  1. The Applicant is advised and directed that, upon receipt of the consent of the Commissioner of Taxation to the amendments to the QCF contained in the Amended Trust Deed as so executed:
  1. He may administer the QCF in accordance with the Amended Trust Deed and in compliance with the Applicant's obligations as trustee of a registered charity and Public Ancillary Fund within the meaning of the Income Tax Assessment Act 1997 (Cth) section 30-15 item 2;
  1. He may administer the QCF on the basis that:
  1. He may treat payment to, and receipt thereof by, him as trustee of the QCF, of funds to be held on trust to apply the income thereof to a named charitable restitution, as a gift to the QCF for the charitable purposes of such charitable institution on the terms of the QCF, as amended from time to time, whether such payment was made before, or is made after receipt of such consent,
  1. He may regard reference by a donor, in making a gift to him as trustee of the QCF, to the gift being for a named charitable institution, or to be for an identified charitable purpose, as not precluding him from distributing the income derived from such gift in the manner provided for by clause 7.11(b) of the Amended Trust Deed, whether such gift was made before, or is made after receipt of such consent.
  1. The Applicant’s reasonable costs and other expenses of and incidental to this application and the preparation of the Amended Trust Deed, are expenses of the QCF, and pursuant to section 72 of the Trusts Act 1973, the Applicant may obtain and receive payment for such costs and other expenses from the income derived by the QCF.

Footnotes

[1] Affidavit of SJ Forster sworn 24 June 2015 (Court Document 4), Exhibit “SJF-1”.

[2] Public Ancillary Fund Guidelines 2011.

[3] Court document 6, Exhibit “LFB-4”.

[4] Affidavit of LF Blackburne sworn 31 October 2016 (Court Document 6), at [12].

[5] Ibid, Exhibit “LFB-11”.

[6] (1909) 26 TLR 62.

[7] (1915) 85 LJ Ch 77.

[8] [2013] NSWSC 723.

[9] (1895) AC 89.

[10] [2002] NSWSC 47.

[11] [1989] 1 WAR 65.

[12] [2007] QSC 154.

[13] 1st Edition 1998 at pp 585-586.

[14] [2013] NSWSC 1275.

[15] (2012) 244 CLR 655.

[16] See Affidavit of SJ Forster sworn 24 June 2015 (Court Document 4), Exhibit “SJF-1”.

[17] Clause 14.2, proposed Amended Deed.

[18] Court Document 1.

[19] [2015] QCA 18

Close

Editorial Notes

  • Published Case Name:

    In the matter of the Public Trustee of Queensland as trustee of Queensland Community Foundation

  • Shortened Case Name:

    In the matter of the Public Trustee of Queensland as trustee of Queensland Community Foundation

  • MNC:

    [2016] QSC 276

  • Court:

    QSC

  • Judge(s):

    Ann Lyons J

  • Date:

    15 Dec 2016

  • White Star Case:

    Yes

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.

Cases Cited

Case NameFull CitationFrequency
Ban v Public Trustee of Queensland [2015] QCA 18
2 citations
Jump To
Cite 1 - [2015] QCA 18
Cite 2 - [2015] QCA 18
Byrnes v Kendle [2011] HCA 26
1 citation
Jump To
Cite 1 - [2011] HCA 26
Byrnes v Kendle (2011) 243 CLR 253
1 citation
Jump To
Cite 1 - (2011) 243 CLR 253
Canterbury v Whyburn (1895) QC 89
1 citation
Jump To
Cite 1 - (1895) QC 89
Christopher Harris v Sophia Rothery (as co-executor of the Estate of the Late Christopher George Harris) [2013] NSWSC 1275
2 citations
Jump To
Cite 1 - [2013] NSWSC 1275
Cite 2 - [2013] NSWSC 1275
Commissioner of Taxation v Bargwanna (2012) 244 CLR 655
2 citations
Jump To
Cite 1 - (2012) 244 CLR 655
Cite 2 - (2012) 244 CLR 655
Equuscorp & Anor v Glengallan Investments Pty Ltd [2004] HCA 55
1 citation
Jump To
Cite 1 - [2004] HCA 55
Equuscorp Pty Ltd v Glengallan Investments Pty Ltd (2005) 218 CLR 471
1 citation
Jump To
Cite 1 - (2005) 218 CLR 471
Global Custodians Ltd v Mesh [2002] NSWSC 47
1 citation
Jump To
Cite 1 - [2002] NSWSC 47
Global Custodians v Mesh [2006] NSWSC 47
1 citation
Jump To
Cite 1 - [2006] NSWSC 47
Graham Australia Pty Ltd v Perpetual Trustees WA Limited [1989] 1 WAR 65
2 citations
Jump To
Cite 1 - [1989] 1 WAR 65
Cite 2 - [1989] 1 WAR 65
Jenkins v Ellett [2007] QSC 154
2 citations
Jump To
Cite 1 - [2007] QSC 154
Cite 2 - [2007] QSC 154
Municipality of Canterbury v Wyburn (1895) AC 89
1 citation
Jump To
Cite 1 - (1895) AC 89
New South Wales v Homeland Community Ltd [2013] NSWSC 723
2 citations
Jump To
Cite 1 - [2013] NSWSC 723
Cite 2 - [2013] NSWSC 723
Nic Kritharas Holdings Pty Ltd (in liq) v Gatsios Holdings Pty Ltd (2001) 38 ACSR 57
1 citation
Jump To
Cite 1 - (2001) 38 ACSR 57
Nick Kritharis Holdings Pty Ltd (In Liq) v Gatsios Holdings Pty Ltd [2001] NSWSC 343
1 citation
Jump To
Cite 1 - [2001] NSWSC 343
Pacific Carriers Limited v BNP Paribas [2004] HCA 35
1 citation
Jump To
Cite 1 - [2004] HCA 35
Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451
1 citation
Jump To
Cite 1 - (2004) 218 CLR 451
Re Harrison (1915) 85 LJ Ch 77
1 citation
Jump To
Cite 1 - (1915) 85 LJ Ch 77
Re Holloway’s Trusts (1909) 26 TLR 62
1 citation
Jump To
Cite 1 - (1909) 26 TLR 62
Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165
1 citation
Jump To
Cite 1 - (2004) 219 CLR 165
Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) HCA 52
1 citation
Jump To
Cite 1 - (2004) HCA 52

Cases Citing

No judgments on Queensland Judgments cite this judgment.

1

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