Background/facts
The three plaintiffs were the executors and trustees of the deceased estate of Lilian Dorothy Field, being the step-niece, niece and sister of the deceased. The plaintiffs sought judicial advice on the construction of clause 3.1 of the will, under which the deceased gifted half of the residue of her estate to ‘Radius Disability Services of Bendigo [Radius, the defendant] or its successor for its general purposes‘.
At its establishment in 1953, Radius was known as ‘Peter Harcourt Disability Services’. Radius provided education facilities and activities for children with physical and/or intellectual disabilities in the Bendigo area. Over time, Radius’ services expanded to provide for adults with disabilities, including by providing supported employment services, day care, and some adult education and training.
Radius entered voluntary administration on 17 October 2016, and went into liquidation on 22 November 2016. Although it ceased all trading operations and activity in late 2016, it remained registered and did not have a successor.
Issues considered
- Did Radius cease to exist at time of the deceased’s death? The Court considered whether Radius had ceased to exist at the time of the deceased’s death, such that the gift under clause 3.1 of the will failed.
- What was the intended purpose of the gift? The Court determined whether the gift was made to Radius simpliciter, or for the advancement of Radius’ charitable purposes.
Decision
The Court ultimately found that the gift in clause 3.1 of the will was made to Radius simpliciter, and not for its charitable purposes. Accordingly, the Court held the gift to Radius had not lapsed. To this end, the Court determined the issues as follows.
Did Radius cease to exist at the time of the deceased’s death?
Although Radius ceased operations in late 2016 when it entered administration, it had not been wound up and still held funds for the payment of its creditors. Accordingly, the defendant was an entity capable of termination, but this had not occurred. Therefore, the Court found that Radius still existed for the purpose of receiving the gift made to it under clause 3.1 of the will.
What was the intended purpose of the gift?
The Court considered that if the gift was made for the advancement of Radius’ charitable purposes, then the cessation of Radius’ charitable activities led to the inevitable conclusion that the gift failed. However, if clause 3.1 of the will was construed as a gift to Radius simply and unconditionally, then the gift did not fail because Radius still existed.
Common law
The Court summarised the relevant aspects of the principles to be applied in construing a will. For example, in Perrin v Morgan1, Lord Romer referred to the armchair rule:
‘…that a will should be so construed as to give effect to the intention of the testator, such intention being gathered from the language of the will read in the light of the circumstances in which the will was made. To understand the language employed the court is entitled, to use a familiar expression, to sit in the testator’s armchair. When seated there, however, the court is not entitled to make a fresh will for the testator merely because it strongly suspects that the testator did not mean what he has plainly said.‘
Statute
In addition to the position at common law, s36 of the Wills Act 1997 permits evidence to be admitted in proceedings ‘to assist in the interpretation’ of the language used in a will, where there is ambiguity or uncertainty, either on the face of the will or in the light of surrounding circumstances. However, in the latter scenario, evidence of the testator’s intention may not be admitted.
Analysis
In this case, the deceased’s long association and involvement with the Peter Harcourt Centre, including in fundraising activities, as well as the support provided to the deceased and her intellectually disabled daughter Robyn, over many years, formed part of the surrounding circumstances in which the will was made.
The Court stated that the most significant feature of clause 3.1 of the will were the words ‘for its general purposes’. These words, together with the absence of any reference to Radius’ charitable purposes, suggested that the deceased expressly foreclosed a characterisation of the gift as being for the advancement of Radius’ charitable purposes.
Confirming the Court’s conclusion was the absence of sufficient evidence to support a finding that Radius was a charitable trust with charitable purposes. A gift to a charitable institution will usually be treated as a gift for the advancement of the charitable work or purpose of that institution.
The Court cited the well-accepted dicta in Commissioners for Special Purposes of Income Tax v Pemsel2, in which Lord Macnaghten identified four broad heads of charity under which a recognisable charitable object may fall, namely trusts for:
- the relief of poverty;
- the advancement of education;
- the advancement of religion; and
- other purposes beneficial to the community, not falling under any of the preceding heads.
The fact that Radius was once registered as a charity was not determinative of its status as a charity. Although it may be accepted that some of Radius’ activities and operations related to the provision of education for persons with disabilities (being one of the recognised categories of charitable objects), its activities were not solely, or limited to, the recognised purposes of charitable trusts.
This is because its operations extended to providing supported employment of persons with disabilities, and the running of businesses for the benefit of these persons to enable meaningful supported employment. Given there was no evidence about how Radius selected the participants of the employment support programs and related activities, any charitable purpose of these activities could not be assumed. Further, the ‘public’ nature of any benefits, pursuant to the fourth head as identified by Lord Macnaghten, had not been affirmatively proven.
Accordingly, the Court determined that the gift under clause 3.1 of the will could not be construed as one for the advancement of Radius’ charitable purposes. Therefore, the gift was intended to Radius simply and unconditionally and did not lapse.
This article was written by Simon Crawford, Partner and Jinny Guo, Solicitor.
1[1943] AC 399
2[1891] AC 531
