Boyd & another v Talbot & others

This case concerned an application by administrators of an estate for declarations, directions or the imposition of an administrative scheme. The administrators were unsure of how to proceed in circumstances where the will seemed to envisage the creation of a single charitable foundation to be run by the deceased’s family members, but where personal relations between two groupings of the family would make that impracticable. Justice Bond was persuaded that it was appropriate to make orders for an administrative scheme, which would create two separate charitable foundations.

Bond J

14 May 2021

Background

The testator, Mr Talbot, died in 2010, at which time he held substantial assets. [1]. He was survived by his wife and four children (including two children from a previous marriage). [2]. His will made numerous gifts to each of his family members, and directed that 30 per cent of the balance of his estate be put towards the establishment of the “Talbot Foundation”, with each of his family members having responsibility for allocating a share of charitable donations in any given year. [3].

The Talbot Foundation has not yet been established. All the family members (expect for one of the children) have raised a concern with the administrators of the estate that, because of past and likely future disagreements between two different groupings of the family, “it is not practicable to establish a single foundation known as the Talbot Foundation” (because they would be unable to work together). [7]. They instead propose that two foundations be established. [7].

The administrators applied to the Court for the following relief: (1) declaratory relief as to the proper construction of the will (i.e. whether it will permit two different foundations to be created); (2) further or alternatively, judicial advice and direction pursuant to s 96 Trusts Act 1973 (as to whether two different foundations should be established); (3) and, further or alternatively, an order by way of a scheme requiring that two foundations be established (pursuant to s 106 Trusts Act 1973). [33].

The proper construction of the will

Bond J observed that “[o]n one view, it might be thought unnecessary to resolve the question of construction”, since it was possible to independently form the view that it would be expedient to require compliance with a scheme that would require the establishment of two foundations. [48]. However, his Honour considered that the proper construction of the will was a relevant consideration, since even in the case of the imposition of a scheme, “the court should accord the expression of relevant intention some weight in the exercise of its discretion” (citing Re JW Laing Trust [1984] Ch 143). [49].

All of the family members (except one), and the Attorney-General intervening, suggested that the proper construction of the will permitted the establishment of more than one foundation. [52]. However, Bond J disagreed with this submission, by reference to a number of textual features of the will. In particular, his Honour observed that the use of the term “the Talbot Foundation” represented a “specific and singular naming choice made by the testator” and it was unlikely that he “intended the possibility of multiple foundations each having the same name”. [56]. Although the parties also sought to rely on extrinsic evidence to support their submission, his Honour considered that this attempt was “misconceived” including because “the language used in the will was not relevantly ambiguous” so as to permit its consideration (citing The Public Trustee of Queensland v Smith [2009] 1 Qd R 26, concerning the proper construction of testamentary dispositions). [50], [59].

The imposition of an administrative scheme

His Honour considered that, in the present circumstances, “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”. [34]. That was principally because, once the Court had expressed a view of what was expedient in relation to the administration of the trust, it would become “the duty of all the trustees … to act in accordance with the Court’s decision”, regardless of whether they agreed with the Court about it (citing Children’s Investment Fund Foundation (UK) v Attorney General [2020] 3 WLR 461). [34].

As to the jurisdiction to order a scheme, his Honour noted that this arose both as a matter of the inherent jurisdiction of the Court, and by reason of s 106(1)(b) Trusts Act 1973. [37], [43]. In this case, the issue was whether an administrative scheme (rather than a cy près scheme) should be ordered. [40]. As observed in Re Niall (2019) 60 VR 1, 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”. [41]. Once the jurisdiction is invoked, the test is (per Re Lutheran Laypeople’s League of Australia Inc [2016] SASC 106):

“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.”

In this case, his Honour considered that 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”. [46]. His Honour was persuaded that it was not practical to formulate a scheme that would “vindicate all aspects of the testator’s expressed intention” as to the means by which the charitable object was to be implemented. [77]. However, the proposed scheme – supported by all the beneficiaries under the will (except one) – would be “expedient in the interests of charity and most likely to effectuate the testator’s basic charitable intention and to give real concrete effect to his subsidiary intentions concerning the involvement of his family and with a minimum of future disputation and cost”. [77].

Accordingly, his Honour was persuaded that it would be appropriate to order an administrative scheme that would provide for two separate charitable foundations, to be administered by different groupings of the testator’s family. [81].

W Isdale