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Boyd v Talbot[2021] QSC 99

SUPREME COURT OF QUEENSLAND

CITATION:

Boyd & another v Talbot & others [2021] QSC 99

PARTIES:

WILLIAM FRANCIS BOYD AND PAUL JAMES VINCENT AS ADMINISTRATORS AND TRUSTEES OF THE ESTATE AND WILL TRUSTS OF KENNETH TALBOT, DECEASED

(applicants)

v

AMANDA DIANNE TALBOT

(first respondent)

COURTNEY ERIN TALBOT

(second respondent)

LIAM ANTHONY TALBOT

(third respondent)

ALEXANDRA CECILE TALBOT

(fourth respondent)

CLAUDIA ELISABETH TALBOT

(fifth respondent)

ATTORNEY-GENERAL FOR THE STATE OF QUEENSLAND

(sixth respondent)

FILE NO/S:

BS 7832 of 2020

DIVISION:

Trial Division

PROCEEDING:

Originating application

DELIVERED ON:

14 May 2021

DELIVERED AT:

Brisbane

HEARING DATE:

18 August 2020 and 29 October 2020

Further written submissions filed on 21, 28 and 31 August 2020, 1, 4 and 30 September 2020 and 1 and 29 October 2020

JUDGE:

Bond J

ORDER:

The orders of the Court are:

  1. The parties are directed by 11 June 2021 to bring in minutes of order requiring that the property which is the subject of cl 11.2(b) of the will of the testator, Kenneth Talbot, be applied by way of an administrative scheme which provides for two foundations, in a form consistent with these reasons.
  2. The Court will hear the parties on the form of those orders, initially at a hearing to be convened at 9:00am on 18 June 2021, and, in the event that it becomes apparent that any substantial argument is required, at a date to be fixed at that hearing.
  3. Save for the costs of the sixth respondent, the parties’ costs of the application are to be paid out of the estate of the testator, Kenneth Talbot, on the indemnity basis.

CATCHWORDS:

SUCCESSION – CONSTRUCTION AND EFFECT OF TESTAMENTARY DISPOSITIONS – CONSTRUCTION GENERALLY – GENERALLY – where the subject will required that a foundation be established to give effect to a general charitable object – where s 48 of the Property Law Act 1974 (Qld) applied so that, unless the context otherwise required, words in the singular included the plural – whether the context otherwise required so that the will should be construed as requiring the establishment of a single foundation to give effect to the general charitable object

SUCCESSION – CONSTRUCTION AND EFFECT OF TESTAMENTARY DISPOSITIONS – CONSTRUCTION GENERALLY – ADMISSIBILITY AND USE OF EXTRINSIC EVIDENCE IN AID OF CONSTRUCTION – GENERALLY – where some of the parties sought to use affidavit material and a statement by the testator to help inform the interpretation of the language used in the will – whether the evidence was admissible in aid of construction of the will – whether the testator intended to have a single permanent foundation

CHARITIES – ADMINISTRATION AND CONTROL BY COURT – GENERALLY – SETTLEMENT OF SCHEMES – WHEN SCHEME APPROPRIATE – where the will required that a single permanent foundation be established to give effect to a general charitable object – where the will did not specify means by which the foundation should be formed and structured – where relevant parties would not be able to work together as a group – whether it was expedient to order an administrative scheme requiring the establishment of two foundations

Property Law Act 1974 (Qld), s 48

Trusts Act 1973 (Qld), s 96, s 106

Children’s Investment Fund Foundation (UK) v Attorney General [2020] 3 WLR 461; [2020] UKSC 33, cited

Chinachem Charitable Foundation Ltd v The Secretary for Justice [2015] HKFCA 35, considered

Construction Industry Training Board v Attorney General [1973] Ch 173, cited

Corish v Attorney-General’s Department of NSW [2006] NSWSC 1219, considered

Re A Solicitors’ Arbitration [1962] 1 WLR 353, cited

Re JW Laing Trust [1984] Ch 143, cited

Re Lutheran Laypeople’s League of Australia Inc [2016] SASC 106, applied

Re Niall (2019) 60 VR 1; [2019] VSC 423, applied

Rinehart v Hancock Prospecting Pty Ltd; Rinehart v Rinehart (2019) 366 ALR 635; [2019] HCA 13, cited

The Public Trustee of Queensland v Smith [2009] 1 Qd R 26; [2008] QSC 339, applied

COUNSEL:

D P O'Brien QC, with J I Otto, for the applicants

P Dunning QC, with P Telford, for the first respondent

N M Cooke for the second respondent

D A Skennar QC for the third respondent

A P Collins for the fourth and fifth respondents on 18 August 2020

D R Prince (sol) for the fourth and fifth respondents on 29 October 2020

R Treston QC, with H Blattman, for the sixth respondent

SOLICITORS:

Hopgood Ganim for the applicant

Everingham Lawyers for the first respondent

Hillhouse Legal Partners for the second respondent

McInnes Wilson for the third respondent

Woods Prince Lawyers for the fourth and fifth respondents

Crown Law for the sixth respondent

Introduction

  1. [1]
    Mr Kenneth Talbot (the testator) died on 19 June 2010,[1] at which time he owned or controlled valuable and complex assets in Australia and overseas.[2]
  1. [2]
    He was survived by:[3]
    1. (a)
      his widow, the first respondent, Amanda Dianne Talbot (Mrs Talbot);
    2. (b)
      the two adult children of his previous marriage;
      1. (i)
        the second respondent, Courtney Erin Talbot (Courtney), who was, at the time of the first hearing before me on 18 August 2020, aged 35; and
      1. (ii)
        the third respondent, Liam Anthony Talbot (Liam), who was, at the time of the hearings before me, aged 38; and
    3. (c)
      the two daughters of his marriage to Mrs Talbot:
      1. (i)
        the fourth respondent, Alexandra Cecile Talbot (Alexandra), who was, at the time of the hearings before me, aged 21; and
      1. (ii)
        the fifth respondent, Claudia Elisabeth Talbot (Claudia), who was, at the time of the hearings before me, aged 18.
  2. [3]
    By his last will dated 29 November 2002 (the will), the testator referred to Mrs Talbot and his four children as his “beneficiaries”.  The will then –
    1. (a)
      (by cl 11.1) made gifts of particular identified real estate and personal property to particular beneficiaries;
    2. (b)
      (by cl 11.2(a)) directed that 70% of the balance of his estate was to be held on trust for particular beneficiaries in particular proportions; and
    3. (c)
      (by cl 11.2(b)) directed that the remaining 30% of the balance of his estate was to be put towards the establishment of “the Talbot Foundation”, as a vehicle for donations for charitable purposes, with each beneficiary having responsibility for allocating a share of the charitable donations in any given year.
  3. [4]
    On 20 August 2010, probate of the will was granted to Mr Paul Bret as executor.[4]
  4. [5]
    On 29 June 2012, letters of administration with the will annexed were granted to Mr William Francis Boyd as administrator and, by deed poll dated 26 June 2012, Mr Bret appointed Mr Boyd to be the trustee of the will trusts in his place.[5]
  5. [6]
    In accordance with orders made by Applegarth J on 20 September 2019, on or about 1 October 2019, the letters of administration granted to Mr Boyd were revoked and letters of administration with the will annexed were granted to Mr Boyd and Mr Paul James Vincent as administrators (the administrators).[6]  Mr Vincent was appointed as co-trustee of the testator’s will trusts by deed poll dated 25 September 2019.[7]  Accordingly, the administrators now jointly occupy the role of “the Trustee” referred to in the will.
  6. [7]
    The administration of the testator’s estate has been protracted and the subject of various disputes between the parties.[8]  The Talbot Foundation has not yet been established.[9]  As will appear, all of the beneficiaries, with the exception of Liam, now raise the concern that, owing to past and likely future disagreements between, on the one hand, Mrs Talbot and her two children, Alexandra and Claudia, and, on the other hand, Liam and Courtney, it is not practicable to establish a single foundation known as the Talbot Foundation.  Their proposal, in brief, is that two foundations should be established, one for each group of beneficiaries.  They (excluding Liam) also wish to be directors of whatever corporate entities are established to be trustees of the proposed foundations.
  7. [8]
    The administrators now apply to the Court for:[10]

1. a declaration that, properly construed, clause 11.2(b) of the will … permits the establishment of:

  1. (a)
    the charitable trust and private ancillary fund described in, and in the form of, the trust deeds which comprise annexure PJV-E, pages 49-67, to the statement of facts filed in support of this application, and exhibit JMW2 to the affidavit of Julia Maree Wallace filed 11 August 2020; and
  1. (b)
    the charitable trust described in, and in the form of, the trust deed which comprises annexure PJV-H to the statement of facts filed in support of this application and a private ancillary fund to be constituted by and in the form of a trust deed to be approved by the applicants and the second and third respondents;

(together the Foundations);

  1.  if clause 11.2(b) of the will … does permit the establishment of the Foundations:
  1. (a)
    a declaration that, properly construed, the requirements of clause 11.2(b) of the will … would be satisfied by the payment of the Foundations' entitlement to 30% of the balance of the estate of the deceased in the following proportions:
  1. (i)
    60% to the private ancillary fund and/or charitable trust to be constituted by and in the form of the trust deeds which comprise annexure PJV-E, pages 49-67, to the statement of facts filed in support of this application and exhibit JMW2 to the affidavit of Julia Maree Wallace filed 11 August 2020, and in such proportions between them as the first, fourth and fifth respondents determine, save that, to the extent that distributions are proposed to be made in specie, such distributions must be made to the said private ancillary fund;
  1. (ii)
    40% to the charitable trust to be constituted by and in the form of the trust deed which comprises annexure PJV-H to the statement of facts filed in support of this application and/or a private ancillary fund in the form of a trust deed to be approved by the applicants and the second and third respondents, and in such proportions between them as the second and third respondents determine, save that, to the extent that distributions are proposed to be made in specie, such distributions must be made to the said private ancillary fund; or
  1. (b)
    if not in the proportions referred to in paragraphs 2(a)(i) and (ii) herein, a declaration as to the proportions in which, properly construed, clause 11.2(b) of the will … requires the Foundations' entitlement to 30% of the balance of the estate of the deceased to be paid to:
  1. (i)
    the private ancillary fund and charitable trust to be constituted by and in the form of the trust deeds which comprise annexure PJV-E, pages 49-67, to the statement of facts filed in support of this application and exhibit JMW2 to the affidavit of Julia Maree Wallace filed 11 August 2020;
  1. (ii)
    the charitable trust to be constituted by and in the form of the trust deed which comprises annexure PJV-H to the statement of facts filed in support of this application and a private ancillary fund to be constituted and by and in the form of a trust deed to be approved by the applicants and the second and third respondents;
  1. if clause 11.2(b) of the will … does not permit the establishment of the Foundations, a declaration that, properly construed, the said clause  permits the establishment of a charitable trust described in, and in the form of, the trust deed which comprises exhibit 5NJD2 to the affidavit of Neal John Dallas sworn 28 October 2020, to which 30% of the balance of the estate of the deceased is to be paid (Single Foundation);
  2. further or alternatively, pursuant to section 96 of the Trusts Act 1973 (Qld), judicial advice and directions as to the following matters respecting the administration of the property subject to the charitable trusts of clause 11.2(b) of the will:
  1. (a)
    whether or not the applicants would be justified in establishing the Foundations;
  1. (b)
    if so, whether or not the applicants would be justified in paying the Foundations' entitlement to 30% of the balance of the estate of Kenneth Talbot, deceased, in the following proportions:
  1. (i)
    60% to the private ancillary fund and/or charitable trusts to be constituted by and in the form of the trust deeds which comprise annexure PJV-E, pages 49-67, to the statement of facts filed in support of this application and exhibit JMW2 to the affidavit of Julia Maree Wallace filed 11 August 2020, and in such proportions between them as the first, fourth and fifth respondents determine, save that, to the extent that distributions are proposed to be made in specie, such distributions must be made to the said private ancillary fund;
  1. (ii)
    40% to the charitable trust to be constituted by and in the form of the trust deed which comprises annexure PJV-H to the statement of facts filed in support of this application and/or a private ancillary fund to be constituted by and in the form of the trust deed to be approved by the applicants and the second and third respondents, and in such proportions between them as the second and third respondents determine, save that, to the extent that distributions are proposed to be made in specie, such distributions must be made to the said private ancillary fund;

 and if not, the proportions in which they would be justified in so paying the Foundations' entitlement;

  1. (c)
    if the applicants would not be justified in taking the steps referred to in paragraphs 4(a) and (b) herein, whether or not the applicants would be justified in establishing the Single Foundation having an independent trustee company as its trustee and paying to it 30% of the balance of the estate of the deceased;
  1. further or alternatively, in the court's equitable jurisdiction or pursuant to s 106 of the Trusts Act, an order by way of scheme that the property subject to the charitable trusts of clause 11.2(b) of the will, representing 30% of the balance of the estate of the deceased, be applied as follows:
  1. (a)
    as to 60% thereof, to be paid to the private ancillary fund and/or charitable trust to be constituted by and in the form of the trust deeds to comprise annexure PJV-E, pages 49-67,  to the statement of facts filed in support of this application and exhibit JMW2 to the affidavit of Julia Maree Wallace filed 11 August 2020, and in such proportions between them as the first, fourth and fifth respondents determine, save that, to the extent that distributions are proposed to be made in specie, such distributions must be made to the said private ancillary fund;
  1. (b)
    as to 40% thereof, to be paid to the charitable trust to be constituted by and in the form of the trust deed which comprises annexure PJV-H to the statement of facts filed in support of this application and/or the private ancillary fund referred to in paragraph 4(b)(ii) above, and in such proportions between them as the second and third respondents  determine, save that, to the extent that distributions are proposed to be made in specie, such distributions must be made to the said private ancillary fund;

 or if not in the proportions referred to in paragraphs 5(a) and (b) herein, then in the proportions determined by the court;

  1. such further or other orders, advice or directions as to the court may seem appropriate;
  2. save for the costs of the sixth respondent, the parties' costs of the application be paid out of the estate of Kenneth Talbot, deceased, on the indemnity basis.
  1. [9]
    I have received helpful written and oral submissions on behalf of the administrators, each of the beneficiaries, and also from the Attorney-General for the State of Queensland, who intervened on behalf of the Crown to uphold the public interest in the administration and enforcement of charitable trusts.
  2. [10]
    For reasons which follow, I form the view that it is expedient to order that the property which is the subject of cl 11.2(b) of the will of the testator be applied by way of an administrative scheme which provides for two foundations. 

The circumstances which suggest the need for some form of judicial intervention

  1. [11]
    Clause 11.2(b) of the will was in these terms:[11]

11.2 The balance of my estate is to be distributed as follows:

  1. (a)
    70% is to be held by my Trustee on the terms of the Talbot Estate Trust established by clause 15. … [There followed an allocation of the beneficiaries’ interests in that Trust in a particular way, not necessary presently to record.];
  1. (b)
    30% is to be held by the Talbot Foundation, as to which:
  1. (i)
    I instruct my Trustee to establish a permanent foundation to be known as the Talbot Foundation as a vehicle for donations for charitable purposes;
  1. (ii)
    the formation and structure of the Talbot Foundation is a matter for my Trustee’s discretion but is to take into account the matters set out below;
  1. (iii)
    I would like the Foundation to make donations to a maximum of A$1 million per annum, with each beneficiary having responsibility for allocating $200,000 each per annum;
  1. (iv)
    I request that all beneficiaries meet every 6 months to discuss and coordinate donations to be made; and
  1. (v)
    I also request all beneficiaries to give priority to benefiting charities and community projects whereby the maximum moneys are used “at the coal face” and are not diluted by management fees.
  1. [12]
    As at 31 July 2020, a sum of $35,716,874 from the estate has been provisioned for the Talbot Foundation.  For cash flow reporting purposes, further provision will be made for the Talbot Foundation’s entitlement as further interim distributions are paid to the beneficiaries, currently on a monthly basis.
  2. [13]
    In the course of the administration of the estate, the administrators obtained advice from a number of sources as to the potential structure of the Talbot Foundation which may be established in conformity with cl 11.2(b) of the will. 
  3. [14]
    A position paper provided by McCullough Robertson Lawyers described as “Position Paper No. 3 - Establishment of Talbot Foundation” and dated 30 May 2017 was annexure PJV-C to the statement of facts.   Amongst other things, McCullough Robertson gave the following advice:
    1. (a)
      The Talbot Foundation should be established so as to ensure: (1) proper governance; (2) that each of the beneficiaries had the opportunity to take responsibility for allocating part of the Talbot Foundation’s funds; and (3) that each of the beneficiaries could do so separately from each other.
    2. (b)
      An important consideration underlying the structuring of the Talbot Foundation would be the tax implications of the chosen structure.  Capital gains tax considerations suggested it was important that the Talbot Foundation attract the status of a “deductible gift recipient” (DGR).  To attract that status the Talbot Foundation needed to fall within one of the requisite categories set out in s 30B of the Income Tax Assessment Act 1997 (Cth). 
    3. (c)
      An ancillary fund was eligible for registration as a charity and also eligible to attract DGR status.  Such a fund  could be established and managed by a corporate trustee and the individual involvement of each of the five beneficiaries under the will could be accommodated by the establishment of sub-funds which could be administratively named, with the opportunity provided for each of the beneficiaries to sit on a committee which made recommendations to the corporate trustee about the subfund.
    4. (d)
      The advice also considered the distinction between public and private ancillary funds, noting that each required a corporate trustee and each was required to make an annual distribution to charitable beneficiaries of a certain proportion of the fund’s gross value.  For private ancillary funds the proportion was at least 5% and for public ancillary funds the proportion was at least 4%.   The advice recommended that the better option would be to establish a public ancillary fund, because it had a lower distribution threshold and was more flexible in relation to the type of donations it could solicit.
    5. (e)
      Either an existing corporate trustee should be used as the trustee of the fund or a new public company, limited by guarantee for that purpose, should be established.  As the trustee (through its board) would be required to comply with specific legislation and avoid actual, perceived and potential conflicts of interest, the board ought not comprise a majority who were related in family or business relationships.
  4. [15]
    Mrs Talbot, Courtney, Alexandra and Claudia each wished to be directors of whatever corporate entity was established to be trustee of the proposed Talbot Foundation, yet their position was that the relationships between Mrs Talbot, Alexandra and Claudia, on the one hand, and Courtney and Liam, on the other, were such that they were practically unable to work together as directors on a board or at all.
  5. [16]
    The position of Liam was as follows:
    1. (a)
      The will did not require any of the beneficiaries to be directors of the board of the Talbot Foundation.
    2. (b)
      Any inability of the beneficiaries to work together would be avoided if an independent board were appointed to the Talbot Foundation.
    3. (c)
      The trustee and the board should be determined by the administrators as part of the establishment of the Talbot Foundation.  Thereafter, the beneficiaries should have no direct control over the appointments to the board (either individually or collectively).
    4. (d)
      There was no necessity for there to be a relationship between Mrs Talbot, Alexandra and Claudia, on the one hand, and Courtney and Liam, on the other, in order to fulfil the responsibilities identified in cl 11.2(b)(iii) of the will but that if co-operation of some kind was necessary, he believed that he could work with the other beneficiaries for that purpose.
    5. (e)
      An advisory board for the Talbot Foundation should be established with each of the beneficiaries being members of that advisory board, for the purposes of fulfilling the responsibilities identified in cl 11.2(b)(iii) of the will.  The beneficiaries’ role would be to make non-binding recommendations to the independent trustee.
    6. (f)
      The advisory board could also make recommendations with respect to appointments to the board, but the trustee should be ultimately responsible for the appointments.
    7. (g)
      There should be a mechanism ensuring that membership of the advisory board always remained in the Talbot family.
  6. [17]
    Mrs Talbot, Courtney, Alexandra and Claudia did not share Liam’s belief that they could work with the other beneficiaries in relation to the Talbot Foundation.  In particular:
    1. (a)
      Mrs Talbot, Alexandra and Claudia did not believe they could work with Liam and Courtney;
    2. (b)
      Courtney did not believe that she could work with Mrs Talbot, Alexandra and Claudia, but did believe she could work with Liam.
  7. [18]
    The administrators were concerned that it was not practicable to establish a single Talbot Foundation as envisaged by the McCullough Robertson advice.  Chief among those reasons was the occurrence of past and likely future disagreements between Liam and Courtney on the one hand, and Mrs Talbot, Alexandra and Claudia, on the other. The administrators accepted that the relationships between those two groups were such that they are practically unable to work together as directors on a board or at all in relation to the Talbot Foundation.
  8. [19]
    By letter dated 17 September 2019, the solicitors for Mrs Talbot (Everingham Lawyers) made the following suggestions:
    1. (a)
      To continue with the path previously outlined would have been ineffective and unworkable as the public ancillary fund would have resulted in a board of eleven people (assuming all family members were on the board).  It would also not provide sufficient flexibility for a giving strategy outside of charities with DGR status.
    2. (b)
      The solution was a two-foundation model which would involve establishing a separate charitable foundation or fund for each of the two beneficiary groups, to be established, managed and operated separately by them.
    3. (c)
      That course would:
      1. (i)
        allow each beneficiary group to retain control of their own foundation to individually pay respect to and provide a legacy for the testator;
      1. (ii)
        allow a giving strategy with sufficient flexibility to accommodate the different views as to such a strategy which had been expressed by the two beneficiary groups; and
      1. (iii)
        meet the objectives of the Attorney-General of Queensland to ensure the foundation: (1) would meet charitable guidelines and would be used for charitable purposes; (2) would operate in a workable and effective manner; and (3) would be in line with the testator’s wishes.
    4. (d)
      Suggested draft trust deeds for a private ancillary fund and a charitable trust, to be established by Mrs Talbot, Alexandra and Claudia were attached.  Those deeds formed annexure PJV-E to the statement of facts (which was the deed for the proposed form of private ancillary fund) and exhibit JMW2 to the affidavit of Ms Wallace filed 11 August 2020 (which was the deed for the proposed form of charitable trust).  A draft trust deed suggested to be appropriate for a private ancillary fund to be established by Courtney and Liam was also attached.  It formed annexure PJV-F to the statement of facts. 
  9. [20]
    Everingham Lawyers also recorded the administrative steps which would need to be taken by each beneficiary group in order to have the foundations in a state ready for the receipt of proceeds from the administrators.  Those steps included (1) establishing a new corporate trustee (and ensuring in relation to private ancillary funds that there was at least one independent director meeting “responsible person” criteria), (2) determining the name of the fund, and (3) seeking other appropriate regulatory approvals.
  10. [21]
    Mr Otto of Counsel provided an advice to the administrators dated 9 October 2019, addressing the question of whether the two-foundation model proposed by Everingham Lawyers accorded with the requirements of cl 11.2(b) of the testator’s will.  Amongst other things, he concluded that, on its proper construction, cl 11.2(b) did not authorise the administrators to establish the proposed twofoundation model.
  11. [22]
    By letter dated 10 July 2020, the solicitors for Courtney (Hillhouse Legal Partners) noted that the proposal as it then stood was for a private ancillary fund to be established by Courtney and Liam.  They proposed a model of a charitable foundation to be established by Courtney and Liam.  The attached draft trust deed comprised annexure PJV-H to the statement of facts. The letter also noted that Courtney did not object to Mrs Talbot, Alexandra and Claudia’s foundation being established as a private ancillary fund.  
  12. [23]
    By the time the matter first came on for argument before me, the agreed statement of facts also set out correspondence which had been exchanged between the parties. 
  13. [24]
    It also recorded that Mrs Talbot, Courtney, Alexandra and Claudia agreed with and supported the proposal reflected in:
    1. (a)
      Everingham Lawyers’ letter dated 17 September 2019 to the extent it proposed the establishment of two separate foundations with the attached draft trust deeds being used to establish a private ancillary fund and charitable trust for Mrs Talbot, Alexandra and Claudia; and
    2. (b)
      Hillhouse Legal Partners’ letter dated 10 July 2020 to the extent it proposed the establishment of a separate foundation for Courtney and Liam in accordance with the attached draft trust deed (annexure PJV-H to the statement of facts).
  14. [25]
    Liam did not support the proposal by Everingham Lawyers for the establishment of separate foundations.  He did not support the models in annexures PJV-F or PJV-H to the statement of facts, which had been proposed as models for he and Courtney.  Liam believed that there should be a single foundation.  Irrespective of the appropriate model, Liam was of the view that none of the proposals addressed the following matters:
    1. (a)
      how the trustee of each foundation was to be constituted;
    2. (b)
      what level of involvement, if any, was proposed with respect to the beneficiaries on the trustee board/s for the Talbot Foundation/s;
    3. (c)
      what level of involvement, if any, each beneficiary would have with respect to the distribution of funds from each of the Talbot Foundations, given the limited involvement contemplated by the terms of the will; and
    4. (d)
      to the extent that any beneficiary was involved in the trusteeship of a foundation or decisions with respect to the distributions from a foundation, or control over the appointment and removal of any trustee or director of a trustee of a foundation, what rights the beneficiary would have to appoint a successor to that position.
  15. [26]
    There had been correspondence from the solicitors for Mrs Talbot (on behalf of herself, Alexandra and Claudia) to Courtney and Liam setting out their respective views in relation to the matter, copies of which are annexure PJV-I to the statement of facts. 
  16. [27]
    The administrators were not opposed to the establishment of separate foundations as proposed but, having regard to:
    1. (a)
      the McCullough Robertson advice, which was premised on the assumption that the will contemplated the establishment of a single foundation;
    2. (b)
      Mr Otto’s advice, which expressed the opinion that, properly construed, cl 11.2(b) of the will required the establishment of a single foundation; and
    3. (c)
      the position taken by Liam in relation to the proposal,

they were concerned to ensure that they would be justified in:

  1. (d)
    establishing separate foundations as proposed by Everingham Lawyers and Hillhouse Legal Partners, and, by doing so, would not commit a breach of trust or otherwise expose themselves to personal liability; and
  2. (e)
    if not, establishing a single foundation.
  1. [28]
    If the Court held that a single foundation must be established, the administrators proposed to establish a foundation in accordance with the draft trust deed which was attached to a letter from Hopgood Ganim dated 30 July 2020 (annexure PJV-J to the statement of facts).
  2. [29]
    For her part, the Attorney-General accepted that the relationships between Mrs Talbot, Alexandra and Claudia, on the one hand, and Courtney and Liam, on the other, were such that they were practically unable to work together as directors on a board or at all in relation to the Talbot Foundation.  The Attorney-General was not opposed to the establishment of separate foundations as proposed by Mrs Talbot, Alexandra, Claudia and Courtney in the form of the proposed trust deeds comprising annexures PJV-E and PJV-H to the statement of facts.
  3. [30]
    Further differences between the beneficiaries became apparent during the course of oral argument and the provision of supplementary written submissions.

What sort of jurisdictional intervention is warranted?

  1. [31]
    The level of explicit disputation which exists, and the lack of direction contained in the will as to the form and structure of the charitable foundation contemplated, amply justify the administrators’ decision to seek some form of judicial intervention.
  2. [32]
    The administrators’ submission before me was that the present application had been prepared and listed for hearing with the co-operation of the parties and that the parties were united in their wish to see either a single foundation or separate foundations established.
  3. [33]
    To recapitulate, the relief sought by the administrators was as follows:
    1. (a)
      declaratory relief as to the proper construction of the will in relation to the establishment of the Talbot Foundation referred to in cl 11.2(b) (paragraphs 1 to 3 of the amended originating application);
    2. (b)
      further, or alternatively, upon a written statement of facts, judicial advice and directions pursuant to s 96 of the Trusts Act 1973 (Qld) as to whether they would be justified in taking particular identified courses in relation to the establishment of the Talbot Foundation (paragraph 4 of the amended originating application); and
    3. (c)
      further, or alternatively, in the court's equitable jurisdiction or pursuant to s 106 of the Trusts Act 1973 (Qld), an order by way of scheme requiring that the property which is the subject of cl 11.2(b) of the will of the testator be applied towards the establishment of two foundations in a particular identified way (paragraph 5 of the amended originating application).
  4. [34]
    In the present circumstances, I think that the remedy of the imposition of a scheme is more apposite than the remedy of giving judicial advice and direction to the administrators that they would be justified in making a particular choice.  On any view, the provisions of the will lack definition as to how the foundation or foundations should be formed and structured.  A scheme would give sufficient definition to whichever course is chosen by the Court.  And it would also give certainty.  That is principally because – subject to appeal of course – once the Court has, in the exercise of its jurisdiction over a charitable trust, formed and acted on a view of what is expedient in relation to the administration of the trust, it becomes the duty of all the trustees and those charged with fiduciary duties in relation to the trust to act in accordance with the Court’s decision, regardless of whether they agree with the Court about the merits of the matter: see Children’s Investment Fund Foundation (UK) v Attorney General [2020] 3 WLR 461 at 513-4 [208] per Lord Briggs JSC (with whom Lord Wilson and Lord Kitchin JSC agreed).
  5. [35]
    Further, once a decision is made to require compliance with a scheme there is no utility in giving a declaration as to the proper construction of the will. 
  6. [36]
    It is appropriate to turn first to an examination of the nature of the jurisdiction to order a scheme for a charitable trust with a view to identifying the considerations which should inform the exercise of that jurisdiction.

The nature of the jurisdiction of the Court to order a scheme for a charitable trust

  1. [37]
    The Court has an inherent jurisdiction over the administration of charitable trusts which may be invoked to ensure the due administration of such trusts and the proper application of funds devoted to charitable purposes, and which may be regarded as a branch of the Court’s jurisdiction in relation to trusts: Construction Industry Training Board v Attorney General [1973] Ch 173, per Buckley LJ at 186.[12]  In the same passage, Buckley LJ went on to observe that the relief granted “often takes the form of an order approving a scheme for the administration of the charity which has been laid before the court…”.[13] 
  2. [38]
    Similarly, Lord Walker NPJ said in Chinachem Charitable Foundation Ltd v The Secretary for Justice [2015] HKCFA 35 at [41]:

“The court has an inherent jurisdiction over the administration of charitable trusts, originally based on the notion of the sovereign as parens patriae (parent of the nation).  … Where the court exercises its jurisdiction to clarify or modify the purposes of a charitable trust, or to improve the administration of a charitable trust, it does so by making a scheme – that is, a written instrument approved by the court to regulate, in whole or in part, the future management and administration of the trust.”

  1. [39]
    The distinction drawn by his Lordship between, on the one hand, clarification or modification of the purposes of a charitable trust and, on the other hand, the improvement of the administration of such a trust is the distinction between a cy près scheme and an administrative scheme.  The difference was explained by Campbell J in Corish v Attorney-General’s Department of NSW [2006] NSWSC 1219 at [9] as follows:

“There is a clear conceptual difference between a cy près scheme and an administrative scheme for a charitable trust.  It is the difference between ends and means.  A cy près scheme can be directed when it is impossible or impractical to carry out the objects of the trust in all the details the settlor stipulated.  An administrative scheme supplements and/or clarifies any provisions the settlor has stipulated concerning the manner in which the objects of the trust are to be pursued, when practical circumstances show that the settlor’s stipulation (if any) of the means is inadequate or impractical.”

  1. [40]
    The jurisdiction invoked in the present case is the jurisdiction to order an administrative scheme rather than the jurisdiction to order a cy près scheme.  That conclusion is justified on the basis of the “ends” versus “means” distinction, to which Campbell J referred.  In this case, the “ends” (or “end”) is properly to be regarded as the general charitable object that 30% of the balance of the testator’s estate be held for the purpose of making “donations for charitable purposes”.  The provisions in cl 11.2(b) concerning the establishment of the Talbot Foundation and the involvement of the testator’s beneficiaries must be regarded as the testator’s indication of his undoubtedly important but nevertheless subsidiary intention as the means by which that general charitable object should be pursued.  
  2. [41]
    The jurisdiction to order an administrative scheme was explained in these terms by McMillan J in Re Niall (2019) 60 VR 1 at 11 [46]–[47] (footnotes omitted; emphasis added):

“The law is ordinarily jealous to facilitate the realisation of the charitable intentions of a testator, and provided the ‘threshold certainty’ of intent and subject-matter are satisfied, the law adopts a particularly flexible attitude to the certainty of object for trusts with general charitable purposes.  One way this is achieved is through the Court’s inherent jurisdiction to settle administrative schemes in respect of the implementation of a charitable trust.  An administrative scheme is ‘[a] scheme administered by a court of equity to give effect to a charitable trust where a charitable object is intended but the directions are indefinite, ambiguous or insufficient’.

Where a testator expresses a general intention in his or her will to give to charitable purposes, but either fails to specify a particular means by which the gift is to be applied for those purposes, or the means specified are otherwise insufficient for the practical application of those purposes, the Court has jurisdiction to settle an administrative scheme, which is a mechanism detailing the means by which the gift is to be applied for the charitable purposes.  Such jurisdiction is well established in Australia, as informed by English authorities.”

  1. [42]
    When the jurisdiction is invoked, the test to be applied is whether it is “expedient” to regulate the administration of the trust in the manner proposed.  The nature and breadth of that test was explained by Hinton J in Re Lutheran Laypeople's League of Australia Inc [2016] SASC 106 at [31]–[32] in these terms (footnotes omitted; emphasis added):

“On an application for an order imposing a scheme for the regulation of the administration of a charitable trust, the question is whether, having regard to the trust objects, it is expedient to regulate the administration of the trust in accordance with a proposed scheme.  In answering this question two cardinal principles are controlling.  First, the function of the Court is to enforce the charitable trust and secure the intended public benefit.  Second, the Court has no authority to change the trust objects nor to alter by a scheme the benefit that such objects intend.  Thus any scheme must operate within the ambit of the trust objects.

I have stated the test to be applied in terms of what is expedient relying upon the decision of Peter Gibson J in In Re J W Laing TrustIn Riddle v Riddle, Sir Owen Dixon said of the notion of expediency that it is “a criterion of the widest and most flexible kind.”  In that same case, Williams J considered the ordinary natural grammatical meaning of the word expedient to be that of “advantageous”, “desirable”, and “suitable to the circumstances of the case”.  Whilst Riddle v Riddle concerned the meaning of expedient as used in s 81(1) of the Trustee Act 1925 (NSW), no reason arises to think that in In Re J W Laing Trust Peter Gibson J used that word in any sense other than as it would be ordinarily understood.”

  1. [43]
    The Court also has statutory jurisdiction to order an administrative scheme pursuant to s 106(1)(b) of the Trusts Act 1973 (Qld), which provides:

106 Proceedings in case of charitable trust

  1. (1)
    The court may upon application under this section by an order in respect of any charitable trust—
  1. (a)
    give directions in respect of the administration of the trust; and
  1. (b)
    require any trustee to carry out the trust, or to comply with a scheme (if any); and
  1. (c)
    require any trustee to satisfy the trustee’s liability for any breach of the trust.
  1. (2)
    An application under this section may be made—
  1. (a)
    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. (3)
    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. (4)
    On any such application the court may make such order as to costs and otherwise as may be just.
  1. (5)
    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. [44]
    No specific test is laid down by the statute as to the circumstances in which the statutory power might be exercised.  However, it has been said of other statutes in pari materia that they supplement rather than diminish the inherent jurisdiction of the Court in relation to charitable trusts,[14] so I conclude that the section must at least permit an order being made in circumstances in which an exercise of the inherent jurisdiction would be justified.  Accordingly, I propose to apply the same test.   My exercise of power should be regarded as an exercise of the inherent and of the statutory jurisdiction.

What form should an administrative scheme take in this case?

How the testator’s intentions might impact upon a scheme

  1. [45]
    I have explained at [42] above by reference to Re Lutheran Laypeople's League of Australia Inc that the Court has no jurisdiction to change, by the imposition of an administrative scheme, the objects of a charitable trust or to alter the benefit that such objects intend. 
  2. [46]
    In the present case, there is no attempt to make any such change.  The proposed administrative scheme has no impact on the general charitable object and seeks only to affect the means by which the general charitable object may be pursued.  I have explained my reasons for thinking that it is expedient to require the relevant monies to be applied by way of an administrative scheme.  The real question here concerns the form of the scheme.
  3. [47]
    I have mentioned that there is a dispute between the administrators and some of the beneficiaries as to whether, on its proper construction, those provisions –
    1. (a)
      required the administrators to establish a single foundation to pursue the general charitable intention; or
    2. (b)
      permitted the administrators to establish more than one foundation to pursue that intention.
  4. [48]
    On one view, it might be thought to be unnecessary to resolve the question of construction.  If the proper construction required a single foundation, I would form the view, for reasons to which I will come, that it is expedient to require compliance with a scheme which requires the administrators to establish two foundations in a particular form.  And, if the proper construction permitted the establishment of more than one foundation, then I would still form the view that I should require that to be done by way of an administrative scheme so as to: (1) make sufficient the presently insufficient specification of the means by which the foundations should be formed; and (2) put an end to the possibility of any future dispute concerning the administrators’ performance of their duty to form the foundations.  Either way, the imposition of an administrative scheme would put a final end to any dispute as to the construction of that part of the will which identified the means by which the general charitable object should be achieved. 
  5. [49]
    Ultimately, however, although a court exercising the jurisdiction to require compliance with an administrative scheme might well find it expedient to require compliance with a scheme which, whilst it was consistent with the trust objects, did not accord with some aspects of a testator’s expressed intention, the court should accord the expression of relevant intention some weight in the exercise of its discretion:  Re JW Laing Trust [1984] Ch 143 at 154E.  It is this consideration which has persuaded me that it is appropriate to express a conclusion as to what are the relevant aspects of the testator’s expressed intention.  One could not give weight to the testator’s expressed intention unless one had first determined what the intention was.

The proper construction of cl 11.2(b) of the will

  1. [50]
    In The Public Trustee of Queensland v Smith [2009] 1 Qd R 26, Atkinson J helpfully summarised presently applicable rules of construction, and also the law governing the admissibility of extrinsic evidence, in these terms (footnotes omitted):

“[20] The task of a court of construction is to discover the testator’s intention by examination of the words used in the will. Judicial construction involves having “regard to any rules of construction which have been established by the Courts, and subject to that, [such courts] … are bound to construe the will as trained legal minds would do”.

[21] The general principle governing construction of a will is the “usual meaning rule”. This rule finds its source in the classic work by Sir James Wigram, Admission of Extrinsic Evidence in Aid of the Interpretation of Wills, first published in 1831. It is expressed by Hardingham, Neave and Ford as:

“The basic principle, to which several qualifications must later be made, is that the court interprets the words of the will, in the context in which they appear, according to their usual or primary meaning.  If the words of the will are clear, and are capable of application by reference to extrinsic circumstances, the court will not admit evidence to demonstrate that the testator used the words in something other than their ordinary sense.”

It is only where the usual meaning rule is insufficient to resolve the construction of a provision of a will that the court may consider extrinsic evidence to resolve its meaning.

[22] The circumstances in which extrinsic evidence may be used and the purpose for which it may be used are now governed by s 33C of the Succession Act 1981 (Qld) (“the Act”) which was extensively amended with effect from 1 April 2006. Section 33C sets out what extrinsic evidence is admissible in interpreting a will:

“(1) In a proceeding to interpret a will, evidence, including evidence of the testator’s intention, is admissible to help in the interpretation of the language used in the will if the language makes the will or part of it –

  1. (a)
    meaningless; or
  1. (b)
    ambiguous on the face of the will; or
  1. (c)
    ambiguous in the light of the surrounding circumstances.
  1. (2)
    However, evidence of the testator’s intention is not admissible to establish any of the circumstances mentioned in subsection (1)(c).
  1. (3)
    This section does not prevent the admission of evidence that would otherwise be admissible in a proceeding to interpret a will.”

[24] As a result, in addition to the circumstances set out in s 33C(1), s 33C(3) continues to allow the admission of extrinsic evidence in the construction of wills in the three circumstances which obtained prior to the introduction of s 33C in its present form on 1 April 2006. The three rules of construction which have been retained are:

  1. (1)
    The ”armchair principle” which permits the court to sit in the testator’s armchair to take account of his or her ”habits of speech and of her or his family, property, friends and acquaintances” in order to determine what the testator meant by the words of a will. The “armchair principle” does not, however, allow direct evidence to be given of the testator’s intention by, for example, allowing evidence of the instructions to the solicitor.
  1. (2)
    The ”equivocation” exception. This rule of construction provides that ”evidence of the testator's actual intention, while not ordinarily admissible to assist in the construction of a will, is admissible where there is what is described as ‘equivocation’ in the will, that is, where a description, usually of a person, is equally capable of referring to more than one person.” This rule is sometimes referred to as the ”latent ambiguity rule” where there are, for example, two legatees of the same name. 
  1. (3)
    The equitable presumption rule. Evidence of a testator’s intention may be given when a presumption arises in equity that a legacy in a will is in satisfaction of payment due under another instrument such as a deed.

[25] In addition to these three circumstances in which extrinsic evidence may be led are the three circumstances set out in s 33C of the Act:

  1. (1)
    when the language used in the will makes the will or part of it meaningless;
  1. (2)
    when the language used in the will makes the will or part of it ambiguous on the face of the will;

In both of these circumstances extrinsic evidence, including evidence of the testator’s intention, is admissible to help in the interpretation of the language used in the will.

  1. (3)
    when the language used in the will makes the will or part of it ambiguous in the light of the surrounding circumstances, then extrinsic evidence, but not evidence of the testator’s intention in order to establish any of those circumstances, is admissible to help in the interpretation of the language used in the will.”
  1. [51]
    It is appropriate to recapitulate the relevant expression of the testator’s intention from cl 11.2(b) of the will:

30% [of the balance of my estate] is to be held by the Talbot Foundation, as to which:

  1. (i)
    I instruct my Trustee to establish a permanent foundation to be known as the Talbot Foundation as a vehicle for donations for charitable purposes;
  1. (ii)
    the formation and structure of the Talbot Foundation is a matter for my Trustee’s discretion but is to take into account the matters set out below;
  1. (iii)
    I would like the Foundation to make donations to a maximum of A$1 million per annum, with each beneficiary having responsibility for allocating $200,000 each per annum;
  1. (iv)
    I request that all beneficiaries meet every 6 months to discuss and coordinate donations to be made; and
  1. (v)
    I also request all beneficiaries to give priority to benefiting charities and community projects whereby the maximum moneys are used “at the coal face” and are not diluted by management fees.
  1. [52]
    The submission that the proper construction of the will permitted the establishment of multiple foundations was supported by the Attorney-General and by all beneficiaries except Liam.  The administrators and Liam contended that the proper construction of the will was that the testator required the administrators to establish a single foundation.  Those who supported the multiple foundation construction relied heavily on s 48 of the Property Law Act 1974 (Qld), which provides:

48  Construction of expressions used in deeds and other instruments

  1. (1)
    In all deeds, contracts, wills, orders and other instruments executed, made or coming

into operation after the commencement of this Act, unless the context otherwise requires—

(a) month means calendar month; and

(b) person includes an individual and a corporation; and

(c) words indicating a gender include each other gender; and

(d) words in the singular include the plural and words in the plural include the singular.

  1. (2)
    A covenant, power or other provision implied in a deed or other instrument because of

this or any other Act shall be construed in accordance with subsection (1).

  1. [53]
    The section creates, by operation of law, a position equivalent to that which would have been obtained had there existed a definitions clause to similar effect in the will itself: Re A Solicitors’ Arbitration [1962] 1 WLR 353 per Russell J (as Lord Russell then was) at 356.
  2. [54]
    The effect of the submission by those who support the multiple foundation construction was that, unless the context otherwise required, words in the singular in cl 11.2(b) should be taken to include the plural and words in the plural should be taken to include the singular.  It would follow, so the argument went, that cl 11.2(b) should be read as though it were expressed in these terms (the changes are highlighted by shading and bold print):

30% [of the balance of my estate] is to be held by the Talbot Foundation(s), as to which:

  1. (i)
    I instruct my Trustee to establish a permanent foundation (or permanent foundations) to be known as the Talbot Foundation(s) as a vehicle (or vehicles) for donations for charitable purposes;
  1. (ii)
    the formation and structure of the Talbot Foundation(s) is a matter for my Trustee’s discretion but is to take into account the matters set out below;
  1. (iii)
    I would like the Foundation(s) to make donations to a maximum of A$1 million per annum, with each beneficiary having responsibility for allocating $200,000 each per annum;
  1. (iv)
    I request that all beneficiaries meet every 6 months to discuss and coordinate donations to be made; and
  1. (v)
    I also request all beneficiaries to give priority to benefiting charities and community projects whereby the maximum moneys are used “at the coal face” and are not diluted by management fees.
  1. [55]
    I reject the multiple foundation construction.  I think the context does require that the singular does not include the plural in cl 11.2(b), which has the effect of displacing the operation of s 48 of the Property Law Act 1974 (Qld), at least insofar as that question is relevant to the current dispute.
  2. [56]
    First, the term “the Talbot Foundation” in the chapeau and in subparagraph (ii) is used as a noun phrase which in this context operates as a proper noun.  It represents a specific and singular naming choice made by the testator.  It is unlikely that the testator intended the possibility of multiple foundations each having the same name.  It might well be, as was suggested on behalf of Mrs Talbot and on behalf of Courtney in oral argument, that each of the multiple foundations could be called some form of derivative of the name “the Talbot Foundation”, but that would be to alter rather than comply with the testator’s intention.[15] 
  3. [57]
    Second, and consistently with the foregoing, the capital to be held by “the Talbot Foundation” is 30% of the balance of the testator’s estate.  The text of subparagraph (ii) commits to the Trustee’s discretion the formation and structure of the Talbot Foundation.  It does not commit to the Trustee’s discretion the question of allocation of the capital endowment as between multiple foundations.  That there is no mechanism for dividing the capital endowment between multiple foundations is a strong textual indication that a single foundation was contemplated by the testator.  It may well be, as was suggested on behalf of those who supported the multiple foundation construction, that a fair allocation could be made as between multiple foundations, but again but that would be to alter rather than comply with the testator’s intention.[16]   
  4. [58]
    Third, the capitalised term “Foundation” in subparagraph (iii) must be read as a shorthand reference to the proper noun phrase used in the chapeau and in subparagraph (ii).  The mechanisms then expressed in subparagraph (iii) work in their usual sense in relation to a single foundation.  The intention of having a clause specifying the maximum limit set out in subparagraph (iii) would be defeated if the limit applied to each of the multiple foundations.  And if the intention was that the limit would apply collectively to multiple foundations, one would not expect the proper noun to have been used.
  5. [59]
    It remains to note that there was an attempt by some of the parties to suggest that extrinsic evidence was admissible in aid of construction of the will.  In my view, that attempt was misconceived.  In the first place, the language used in the will was not relevantly ambiguous.  However, as will appear, even if –
    1. (a)
      the threshold for admissibility of extrinsic contextual material could be regarded as having been met; or
    2. (b)
      as Edelman J recently observed, “[n]o meaningful words, whether in a contract, a statute, a will, a trust, or a conversation, are ever acontextual”,[17]

the evidence was not probative of anything which could actually be used in aid of construction.

  1. [60]
    There were three pieces of evidence which were said to be admissible in aid of construction.  I will deal with them separately.
  2. [61]
    Mrs Talbot deposed: “[i]t is my desire to see Ken’s legacy achieved in the most economical and cost-effective fashion.  I know Ken wanted this because when we were establishing the Foundation during his lifetime the role of external advisors was kept to a minimum”.[18]  She then deposed to having concerns about “Ken’s objective” not being achieved in certain circumstances.[19]  But Mrs Talbot’s evidence did not prove any aspect of the testator’s intention.  To the contrary, her evidence identified her own opinion, formed in a particular way.  And the evidence that during the testator’s lifetime, when doing a particular task, the role of external advisers was kept to a minimum is a hopelessly inadequate basis from which to infer something about his actual intention as to how his will should operate.  This evidence was not capable of helping in the interpretation of the language used in the will.  
  3. [62]
    Courtney deposed to having a close and loving relationship with her father and an understanding of her father’s beliefs, values and ethos, particularly when it came to the management of money and charity.[20]  She then stated that, based on that relationship and that understanding, she believed that “clause 11.2(b)(v) … reflects a part of Dad’s beliefs, values and ethos when it refers to ensuring ‘maximum moneys are used ”at the coal face” and are not diluted by management fees’”.[21]   She referred to that as the “coal-face principle”.[22]  She expressed a number of opinions about various matters being consistent with or inconsistent with the “coal-face principle”, including her beliefs as to what “Dad would have wanted”.[23]  But as was the case with Mrs Talbot’s evidence, this was evidence of her own opinion.  It shed no actual light on the testator’s intention other than that the words used in the will reflected that intention.  This evidence was not capable of helping in the interpretation of the language used in the will.
  4. [63]
    Whilst addressing the so-called “coal-face principle”, I should identify – so as to dismiss – an argument which was advanced in relation to the construction of cl 11.2(b)(v).  It was suggested the clause should be regarded as an indication of the testator’s intention relevant to the formation and structure of the Talbot Foundation.  It was suggested that it would be contrary to the so-called “coal-face principle” for the Talbot Foundation to be structured in such a way as to involve trustees or directors who might require payment for their services.  I reject that suggestion.  There was nothing in the language used by the testator which supported it.  Clause 11.2(b)(v) was a direction applicable to the identification of appropriate donees of funds from the Talbot Foundation.  The subparagraph said nothing about how the donor itself should be structured or governed.  There is no indication in the will that professional persons who provide professional services in relation to the administration of any part of the estate should not be provided an appropriate professional fee.  In fact, cl 20.1 of the will reveals an intention to the contrary when it provides, amongst other things, that if the Trustee under the will and particular accounting and legal advisers identified in the will:

… practise a profession, they are entitled to be paid all usual professional fees for work done either personally or by their respective firms on the same basis as if they were employed to act in connection with the administration of my estate.

  1. [64]
    Finally, the will itself was a potential source of the admissibility of material not stated in the will.  Clause 2 of the will stated that annexed to the will was a statement which the testator wished to make to each of the parties. Clause 2 provided that the testator had prepared the statement because he wished the parties to know the philosophy which he had adopted in structuring his will and providing for his beneficiaries.  Had there been anything useful in the statement, I think it would have been admissible, not because it was admissible extrinsic evidence, but because the language of the will itself specifically directed attention to the document for the purpose of understanding why the testator had structured the will in the way he had.  In this way the statement could be regarded as intrinsic rather than extrinsic context.  Unfortunately, there was nothing of utility in the statement annexed to the will.  It was a document which expressed the testator’s personal advice to his beneficiaries and the testator’s views on the important elements of that advice. The only relevant part of the document for present purposes was the statement recorded in cl 1.5(a), namely that the testator encouraged all beneficiaries to undertake the following initiatives during their lifetime: “(a) [t]he need to do good things; (b) [t]he need to do interesting things; (c) [t]he need to achieve and have a sense of purpose and satisfaction”.  This evidence was not capable of helping in the interpretation of the language used in the will.  It was consistent with but did not add to what could already be gleaned from the language of the will, namely the testator had a general charitable intention and wished to have his beneficiaries participate in the implementation of that intention in a particular way. 
  2. [65]
    In my view, the following propositions may be advanced as to the proper construction of cl 11.2(b) of the will:
    1. (a)
      Clause 11.2(b) of the will expresses the general charitable object that 30% of the balance of the testator’s estate be held for the purpose of making “donations for charitable purposes”. 
    2. (b)
      The clause also identifies the means by which the testator intended that the general charitable object would be met.
    3. (c)
      The relevant means are:
      1. (i)
        The Trustee of the will (presently the administrators) is instructed to establish a single permanent charitable foundation, to be known as “the Talbot Foundation”.
      1. (ii)
        The Trustee is instructed to exercise the Trustee’s discretion as to the formation and structure of that single permanent charitable foundation.
      1. (iii)
        In the exercise of that discretion, the Trustee is instructed to “take account of” the three indications of the testator’s wishes expressed in subparagraphs (iii), (iv) and (v), all of which suggested that the members of his family have responsibility for making decisions as to the donations to be made by the Talbot Foundation, and that whilst there would be individual responsibility for a certain amount of donations, there would be collective responsibility for discussion and co-ordination of all of the donations.

Evaluation of the options concerning the form and structure of the administrative scheme

  1. [66]
    The administrators sought to support the imposition of a two-foundation model by way of scheme. 
  2. [67]
    Their argument before me was that if the testator’s intention was to have a single permanent foundation, the actual and potential conflict between beneficiaries was such that they would not be able to work together and the single foundation model was impractical.  As I have mentioned, the evidence supported the conclusion that the beneficiaries would not be able to work together as a group.    I make that finding.
  3. [68]
    Accordingly, the better approach, it was contended by all parties except Liam, would be to deal with that practical problem by requiring the formation of two foundations. 
  4. [69]
    One immediate problem with that proposal is that it would defeat both the testator’s intention for a single foundation and the testator’s intention that the beneficiaries have a collective responsibility for the co-ordination of donations by that single foundation.  In this regard, it is tempting to think that if it is the foreseeable conflict between the beneficiaries which is the cause of the problem, perhaps the better course might be to eliminate or to reduce their involvement.  Then at least there could be a single foundation which carried on charitable donations in the testator’s family name, thereby vindicating the first of the testator’s intentions without any qualification. 
  5. [70]
    It would be possible to exclude the beneficiaries from any actual involvement.  But apart from the fact that no one suggested that was the appropriate course, it would be a most unattractive course because it would defeat the testator’s intention for his beneficiaries to have responsibility for the allocation of funds between potential donees.  Although that intention was expressed so as to be subsidiary to the general charitable object, it was nevertheless a plainly expressed and understandable wish of the testator that the charitable object be vindicated in a way which involved his family on an ongoing basis and in more than merely an advisory role.  In the present circumstances, I would not require compliance with a scheme which was in a form which would defeat that intention.
  6. [71]
    The single foundation course, which Liam submitted should be taken, was a model which provided for a reduced involvement of the beneficiaries, in the sense that decisions would be made by an independent corporate trustee with advice only from the beneficiaries.  Liam suggested that the will did not accord to the beneficiaries any more than an advisory involvement in the allocation of donations.  He suggested the will did not convey the intention that the beneficiaries be involved in administering the foundation or any corporate vehicle which might be involved in its structure.  He argued that the potential for conflict between the beneficiaries in that advisory role was overstated and, in any event, should not be used as a tool to undermine the clear language of the will.  He submitted that the appointment of an independent trustee to run the single foundation would resolve those difficulties. 
  7. [72]
    I interpolate that an argument advanced against Liam’s suggestion was that the single foundation model (involving an independent corporate trustee) might involve more expense and greater risk of erosion of the trust fund than a two-foundation model.  As to this:
    1. (a)
      The single foundation model involved an independent corporate trustee and directors.  It must be assumed that that course would involve expense, although there was a dispute on the evidence as to how much. 
    2. (b)
      The two-foundation model would, presumably involve some duplication of administrative expenses but –
      1. (i)
        Mrs Talbot proposed (presumably contemplating that this would be reflected in those parts of the applicable deeds governing the trustee’s remuneration),[24] that neither the directors of the corporate trustee involved in the foundation connected with her, and with Alexandra and Claudia, nor those involved in any associated advisory committees would require remuneration; and
      1. (ii)
        Courtney made a similar proposal in relation to the foundation which would be connected with her and with Liam.
    3. (c)
      There was conflicting evidence (including expert opinion evidence) touching upon this issue.  As there was no cross-examination, I was not satisfied that I could reach a rigorous view as to which of the two proposed models would involve less expense and therefore carry the lesser risk of erosion of the trust fund at the expense of the charitable objects.  I was not persuaded to find that cost considerations constituted a compelling argument against Liam’s suggestion.
  8. [73]
    To my mind, the principal problems with Liam’s suggestion were a different set of problems.  Contrary to Liam’s submission, the testator’s desire was that each beneficiary would have “responsibility for allocating” donations.  Having an advisory role would not amount to having responsibility for allocating because the independent trustee would not be obliged to take the advice.  And seeking to give beneficiaries actual dispositive decision-making power within a single foundation framework, whilst technically possible, would give rise to an unacceptable risk of loss of DGR status due to possible inconsistencies with the Taxation Administration (Private Ancillary Fund) Guidelines 2019 (Cth).[25]  Moreover, if the means provided for the giving of the advice complied with the intention expressed in cl 11.2(b)(iv), it would be necessary to embrace the risk of disputation as between beneficiaries.  I would not dismiss the problems caused by such disputation as easily as did Liam.
  9. [74]
    I should mention another problem with vindication of the testator’s intention which was shared by all models under consideration, namely that the maintenance of DGR status required the corporate trustees of public and private ancillary funds to make an annual distribution to charitable beneficiaries of a certain proportion of the fund’s gross value.  As noted at [14](d) above, for private ancillary funds the proportion was at least 5% and for public ancillary funds the proportion was at least 4%.  Given the likely value of the part of the testator’s estate which was to be allocated to the Talbot Foundations, even 4% would likely be greater than the $1 million maximum annual limit for which the will provided. 
  10. [75]
    Although a two-foundation model would be inconsistent with the testator’s intention for a single foundation and the testator’s intention that the beneficiaries have a collective responsibility for the co-ordination of donations by that single foundation, it had the distinct advantages of involving the two groups of beneficiaries in the making of dispositive choices in relation to donations (albeit by the mechanism of their involvement as directors of corporate trustees), and doing so in a way which minimised the potential for future conflict and the concomitant risk of erosion of the trust fund and delay in the promotion of the charitable objects.
  11. [76]
    An important issue involved the question of the proportion of the 30% of the balance of the estate of the testator which should be allocated as between two foundations.  As to this:
    1. (a)
      Those parties promoting the two-foundation model proposed a 60:40 split, on the basis that, among other things, cl 11.2(b)(iii) revealed an intention that each beneficiary be responsible for 20% of the annual donations and the beneficiaries would be split 3:2 as between two foundations. 
    2. (b)
      Liam proposed a different approach.  He proposed a 52:48 split on the basis that cl 11.2(a) of the will made such a split in relation to the 70% of the balance of the estate, namely 52% of that amount to Mrs Talbot, Alexandra and Claudia and 24% to each of Liam and Courtney. 
    3. (c)
      In my view Liam’s approach is flawed.  Clause 11.2(a) was dealing with distribution of monies to which the beneficiaries were beneficially entitled.  And the allocation was made in the way there set out expressly because the testator assumed that Mrs Talbot would provide for her daughters in her own will.   That logic does not apply in relation to funds which were never intended to go beneficially to any of the beneficiaries.
    4. (d)
      Accordingly, I favour the 60:40 split proposed by the administrators.
  12. [77]
    I am persuaded that in the circumstances of this case, it is not practical to formulate a scheme which would vindicate all aspects of the testator’s expressed intention as to the means by which his general charitable object would be implemented.  On balance, I favour the two-foundation solution proposed by the administrators and favoured by all the beneficiaries but Liam.  It is not insignificant that the Attorney-General, whose rule in the present context is to uphold the public interest in the administration and enforcement of charitable trusts, also favours that course.  It seems to me that an administrative scheme involving separate foundations is expedient in the interests of charity and most likely to effectuate the testator’s basic charitable intention and to give a real concrete effect to his subsidiary intentions concerning the involvement of his family and with a minimum of future disputation and cost.

Relief

  1. [78]
    As I have indicated at [31] above, the administrators had applied for –
    1. (a)
      declaratory relief as to the proper construction of the will in relation to the establishment of the Talbot Foundation referred to in cl 11.2(b) (paragraphs 1 to 3 of the amended originating application);
    2. (b)
      further, or alternatively, upon a written statement of facts, judicial advice and directions pursuant to s 96 of the Trusts Act 1973 (Qld) as to whether they would be justified in taking particular identified courses in relation to the establishment of the Talbot Foundation (paragraph 4 of the amended originating application); and
    3. (c)
      further, or alternatively, in the Court's equitable jurisdiction or pursuant to s 106 of the Trusts Act 1973 (Qld), an order by way of scheme requiring that the property which is the subject of cl 11.2(b) of the will of the testator be applied towards the establishment of two foundations in a particular identified way (paragraph 5 of the amended originating application).
  2. [79]
    The views I have reached as to the proper construction of the will are such that it is not appropriate to grant the declaratory relief sought by paragraphs 1 and 2 of the amended originating application.  And because I have formed the view that it is appropriate to exercise the Court’s jurisdiction to require compliance with an administrative scheme, there is no utility in granting the declaratory relief sought by paragraph 3 of the amended originating application.
  3. [80]
    Similarly, the views I have reached in relation to the exercise of the Court’s jurisdiction to require compliance with an administrative scheme render inutile the consideration of the exercise of the jurisdiction to judicial advice and directions pursuant to s 96 of the Trusts Act 1973 (Qld) (paragraph 4 of the amended originating application).
  4. [81]
    I form the view that it is expedient to order that the property which is the subject of cl 11.2(b) of the will of the testator be applied by way of an administrative scheme which provides for two foundations.  Subject to what follows, I am satisfied that the scheme should generally be in accordance with what was sought by paragraph 5 of the amended originating summons.
  5. [82]
    I am concerned, however, that there may be insufficient certainty in the terms of paragraph 5 to warrant making an order precisely in the terms there expressed.  Moreover, it strikes me that some of the details which are not yet finalised carry with them the risk of future disputation, which it would be expedient to avoid if possible.  It seems to me that the appropriate course is to identify my concerns and to make an order which gives the parties the opportunity to bring in minutes of order which address my concerns and to be heard on the appropriate course. 
  6. [83]
    I make these observations.
  7. [84]
    First, the order is an exercise of the Court’s jurisdiction to require the administrators to comply with an administrative scheme.  As with all court orders which require a person to do something (and which expose a person to proceedings for contempt in the event of non-compliance), it is desirable that there is both clarity and certainty as to what the person has to do in order to comply with the order.
  8. [85]
    Second, I have indicated that I favour an administrative scheme providing for a two-foundation model generally in accordance with that proposed by the administrators and supported by all parties except Liam and I am satisfied with the rationale which underlies the 60:40 split as between the two beneficiary groups.  However, the current wording of subparagraph 5(a) does not identify what the administrators must do.  Rather it postpones the identification of what the administrators must do to a joint decision by three named beneficiaries, subject only to a constraint concerning distributions in specie.  Further, the use of the “and/or” construction creates ambiguity. 
  9. [86]
    Third, I acknowledge that the evidence suggests that the adoption in the amended originating summons of the “and/or” construction as between the two types of funds was driven by: (1) the possibility that the administrators might eventually wish to make distributions in specie (for example, in the form of shares) to the foundations, rather than merely in cash; and (2) tax advice which suggests that in such circumstances there may be tax advantages if any such distribution was made to a private ancillary fund rather than to a charitable trust.[26]  I question whether it is an appropriate (or appropriately certain) exercise of the power to require the administrators to comply with an administrative scheme to leave undetermined, as at the time the order is made, the question of the nature of the fund to which the administrators should pay monies, either at all, or in the proposed way.  If a choice as to the recipient fund is to be made subsequent to the order, why would it not be appropriate to express objective criteria which must be met by the administrators?  And if some person other than the administrators is to be involved in the choice, why should it not be the trustee of the recipient fund rather than the three nominated beneficiaries?
  10. [87]
    Fourth, the same difficulties arise in relation to the current wording of subparagraph 5(b).  However, they are exacerbated by the fact that the current wording of subparagraph 5(b) (and paragraph 4(b)(ii) to which it refers) postpones a decision in relation to the form of a private ancillary fund to a subsequent agreement between the applicants and Courtney and Liam.  I question whether it is an appropriate (or appropriately certain) exercise of the power to require the administrators to comply with an administrative scheme to leave that question open, either at all, or in the proposed way.
  11. [88]
    Fifth, on the evidence presently before me many of the details identified as needing to be addressed by Everingham Lawyers in their letter of 17 September 2020 still need to be addressed, not least amongst which are: (1) the identity of the legal person who, as the trustee of the charitable trust or private ancillary fund, is to be the recipient of monies from the administrators; (2) the naming of the foundations; and (3) the question of remuneration for the corporate trustee.  I note that some of those considerations were addressed in Courtney’s affidavit before me.[27]  Mrs Talbot’s lawyers also addressed those considerations.[28]  I question whether it is an appropriate (or appropriately certain) exercise of the power to require the administrators to comply with an administrative scheme to leave such matters open at the time of making the order.  One possibility is that the order might be made on detailed undertakings offered by those who have said they would establish the foundations.  Another possibility is that the requisite steps might be capable of being taken before an order is made.  There may be other options.
  12. [89]
    On the merits of the application before me, I make the following orders:
    1. (a)
      The parties are directed by 11 June 2021 to bring in minutes of order requiring that the property which is the subject of cl 11.2(b) of the will of the testator, Kenneth Talbot, be applied by way of an administrative scheme which provides for two foundations, in a form consistent with these reasons.
    2. (b)
      The Court will hear the parties on the form of those orders, initially at a hearing to be convened at 9:00am on 18 June 2021, and, in the event that it becomes apparent that any substantial argument is required, at a date to be fixed at that hearing.
  13. [90]
    It remains to deal with the question of costs.  In relation to an application of this nature, the appropriate course would be that costs be paid out of the estate, unless there was some particular disentitling conduct from a party.  No submission was advanced that there had been any such conduct.  I note also that the Attorney-General wished to bear her own costs.  Accordingly, the appropriate order is that, save for the costs of the sixth respondent, the parties’ costs of the application are to be paid out of the estate of the testator, Kenneth Talbot, on the indemnity basis.

Footnotes

[1]  Statement of facts dated 5 August 2020 at [1].

[2]  Statement of facts dated 5 August 2020 at [6].

[3]  Statement of facts dated 5 August 2020 at [2].

[4]  Statement of facts dated 5 August 2020 at [3].

[5]  Statement of facts dated 5 August 2020 at [4].

[6]  Statement of facts dated 5 August 2020 at [5].

[7]  Statement of facts dated 5 August 2020 at [5].

[8]  Statement of facts dated 5 August 2020 at [9].

[9]  Statement of facts dated 5 August 2020 at [8].

[10]  Amended originating application filed 29 October 2020.

[11]  The statement of facts paraphrased the terms.  I have inserted the full terms from the will, which was in evidence before me (annexure PJV-A to the statement of facts).

[12]  Recently cited with approval by Lady Arden JSC in Children’s Investment Fund Foundation (UK) v Attorney General [2020] 3 WLR 461 at 481-2 [69].

[13]Construction Industry Training Board v Attorney General [1973] Ch 173, per Buckley LJ at 186.

[14]  See, for example, Re Polykarpou (2016) 16 ASTLR 400 per Lindsay J at 435 [159] and Kerin v Attorney-General (SA) [2019] SASC 103 per Nicholson J at [13].

[15]  The submission may have significance for another purpose, namely the manner of formulation of the order requiring compliance with an administrative scheme.

[16]  The submission may have significance for another purpose, namely the manner of formulation of the order requiring compliance with an administrative scheme.

[17] Rinehart v Hancock Prospecting Pty Ltd; Rinehart v Rinehart (2019) 366 ALR 645 per Edelman J at 655 [83].

[18]  Affidavit of Amanda Dianne Talbot filed 10 August 2020 at [7].

[19]  Affidavit of Amanda Dianne Talbot filed 10 August 2020 at [8].

[20]  Affidavit of Courtney Erin Talbot filed 10 August 2020 at [2].

[21]  Affidavit of Courtney Erin Talbot filed 10 August 2020 at [3].

[22]  Affidavit of Courtney Erin Talbot filed 10 August 2020 at [3].

[23]  Affidavit of Courtney Erin Talbot filed 10 August 2020 at [6]–[13].

[24]  Clause 10.4 of the charitable trust deed (exhibit JMW2 to the affidavit of Julia Maree Wallace filed 11 August 2020) provided that the Trustee was not entitled to any fee or remuneration.  However, cl 14.1 of the trust deed for the private ancillary fund proposed to be established (annexure PJV-E, pages 49-67) provided the contrary.

[25]  Supplementary submissions from the administrators at [6] to [16]; Supplementary submissions by Mrs Talbot at [4] to [6]; Supplementary submissions by Courtney at [10] and [11]; Affidavit of Professor Myles McGregor-Lowndes filed 28 August 2020.

[26]  Affidavit of Paul Vincent filed 21 August 2020 and exhibit PJV-3 thereto.  See also supplementary submissions from the administrators at [2] to [5].

[27]  Affidavit of Courtney Erin Talbot filed 10 August 2020 at [9].

[28]  Statement of facts, annexure PJV-I pp 118- 119, although compare cl 14 of the trust deed for the private ancillary fund proposed to be established.  Presumably that clause is intended to be altered to accord with the contention that the trustee would not require remuneration.

Close

Editorial Notes

  • Published Case Name:

    Boyd & another v Talbot & others

  • Shortened Case Name:

    Boyd v Talbot

  • MNC:

    [2021] QSC 99

  • Court:

    QSC

  • Judge(s):

    Bond J

  • Date:

    14 May 2021

  • Selected for Reporting:

    Editor's Note

Appeal Status

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