The Presbyterian Church of Queensland Incorporated by Letters Patent v Attorney-General for the State of Queensland

This case concerned an application by receivers of the Presbyterian Church for directions as to whether they would be justified in proceeding with a sale of a number of aged care facilities owned by the Church in circumstances where those sale agreements had been entered into before the receivers were appointed. At issue was whether the Court had power to make those directions and whether a retrospective direction was sought. Justice Brown was satisfied that, in circumstances where the receivers had negotiated additional agreements which varied the contracts of sale, the directions sought were not retrospective. In the event, her Honour accepted that the receivers would be justified in completing the sale.

Brown J

10 June 2021

Background

The Presbyterian Church of Queensland is the trustee of a charitable trust. [2]. Amongst other things, the Church operates an aged-care facility business under the trading name “PresCare”. [3]. In April 2021, the Church entered into agreements for the packaged sale of a number of its aged care facilities. [6]. Since then, receivers have been appointed to all of the assets, property and undertakings of the Church. [1]. By this application, the receivers sought directions from the Court as to the proposed sale of the facilities. [6].

The receivers sought directions for a number of reasons, including because there are limitations on when the trustee of a charitable trust can exercise its power of alienation of property. In the result, Brown J was persuaded to make the directions sought by the receivers, to the effect that they would be justified in completing the sale of the facilities. [68]–[70].

Why the Court made the directions sought

Brown J observed that the Court has a general equitable jurisdiction to “give its opinion, advice or direction to a receiver it has appointed”, and that this may relate to “the propriety or reasonableness of the contemplated exercise of discretion”. [11]. Importantly, the receivers’ “power of alienation may only be exercised to promote and maintain the purposes of the trust”, and some prior judicial opinion is to the effect that it would be “rare that the sale of charity land can be justified, having regard to the perpetual nature of a charitable trust and the purpose of people gifting property to a charitable trust” (citing President and Scholars of the College of St Mary Magdalen, Oxford v Attorney-General (1857) 6 HLCas 189). [23]–[24]. Accordingly, it would be “imprudent for trustees not to obtain the sanction of the Court when exercising the power of alienation”. [27].

Her Honour reviewed evidence which indicated that the Church was in a “financially distressed state” and that the relevant facilities had been “operating at a net loss”. [41]–[42]. The Church’s financial situation was likely to worsen in the absence of a sale, because the Department of Health had indicated it would not provide further funding after 30 June 2021. [42]. The sale agreement reached would deliver significant monies to the Church, which would be used to operate remaining aged care facilities, “to try and ensure the residents of the centres do not have to be relocated”. [45]. The sale was reached as a “result of a diligent sales process and represents market value”. [50]. The professional opinion of the receivers was that “it is in the best interests of [the Church] and its stakeholders” for the sale to go ahead. [50]. The Attorney-General for Queensland did not oppose the orders and “considered that they were appropriate”. [63].

On the basis of this evidence, her Honour was satisfied that the Receivers would be justified in completing the sales agreements. [68]. Accordingly, the Court made the directions sought by the receivers. [70].

W Isdale