NSW Legislative Council Hansard, Full Day Transcript for 20 April 1993.


LEGISLATIVE COUNCIL
Tuesday, 20th April, 1993

CHARITABLE TRUSTS BILL
Second Reading

Debate resumed from 11th March.

[Jim Samios, Kytherian; then member of the NSW Legislative Council, speaks in favour of the Bill.

He makes reference to the prolonged and complicated matter of the Sklavos bequest - which was contested in the Full Court of Queensland.

A part of Kytherian history, and an interesting case in its implications for both wills and charities; I hope those who have more information about the matter - can post such information onto kythera-family.net. (G.C.P).]

The Hon. J. M. SAMIOS [2.58]:

I support the Charitable Trusts Bill which seeks to clarify and extend the jurisdiction of the Supreme Court in the protection of a charitable property. The Charitable Trusts Bill will give the Attorney General the scope to establish schemes for the cy-pres administration of charitable trusts which have failed. For the information of the House, "cy-pres" refers to similar purposes. "Charitable trust proceedings" means proceedings in the court brought by any trustee of a charitable trust or by any other person under the court's statutory or general jurisdiction with respect to any breach or supposed breach of a trust or with respect to the administration of a charity.

The United Kingdom's Charities Act 1960 has been the basis for this bill. Similar legislation has been put in place in Victoria, Queensland, South Australia and Western Australia. The experiences of these jurisdictions have been used in the drafting of this bill. The Supreme Court's powers in relation to charities are a result of its general and inherent jurisdiction. This bill calls for a clearer identification of the powers of the Supreme Court, without limiting its jurisdiction. The bill will simplify and clarify existing law and the now complex system of obtaining court approval for changes to the operation of charitable trusts, which at present is a lengthy and costly experience. Under this bill the powers of the Supreme Court to deal with misconduct or mismanagement in the running of a particular charity are clearly spelt out. So, too, is the power of the court to remove a person associated with a charity and to freeze the charity funds.

The bill also will empower the Attorney General to settle administrative and cy-pres schemes for charities and charitable trusts where the involved funds are less than $500,000. The cy-pres schemes are necessary when the original purposes of the charitable trust fail but there is a similar purpose to which the trust property can be applied. This often is the case when an institution that is to receive a bequest ceases to exist. The cy-pres doctrine allows for property to be used for a similar charitable purpose to the one that has failed or ceased to exist. At present the Supreme Court takes responsibility for settling such schemes through the judge of the court. This process is often long and drawn out, with numerous court mentions before matters are actually heard.

Furthermore, the Attorney General is involved in the process by examining all the material filed. The Attorney General has to examine all possible schemes that have been prepared by other parties; he may even come up with schemes of his own. This results in a time consuming and costly exercise, which is often draining on charitable funds as all costs are payable from the trust fund. The position is often aggravated further, particularly when one is dealing with bequests of people of non-English speaking background who leave property for charitable purposes overseas.

When I was a student of law at the University of Queensland I became familiar with the matter of Kytherian Association of Queensland and Anor v. Sklavos. The testator, George Sklavos, left the residue of his estate, after the death of his wife, to the Kytherian Association of Queensland upon trust for the erection and or benefit of a sanatorium and or hospital on the island of Cerigo, or Kythira, as the said association in its discretion thought fit. In that instance, three years after the death of the testator in 1953, a case was stated for the opinion of the Full Court of Queensland on the validity of the gift. The Full Court held that costs of all parties as between solicitor and client should be paid out of the residuary estate.

On appeal to the High Court, three years later in 1958, the High Court held that the trust constituted a good charitable gift. In delivering its judgment, the court held further that the costs of all parties to the appeal as between solicitor and client should be paid out of the residue of the deceased's estate. Honourable members would appreciate that such costs would not have been inconsequential, involving, as they did, costs between solicitor and client of appearances before Mr Justice Mansfield of the Supreme Court of Queensland, the decision of the Full Court on the case stated in 1956 - three years after the matter was heard by Mr Justice Mansfield - and the costs on a solicitor and client basis of the hearing in the High Court of Australia in 1958.

In that instance, the costs of all parties to the appeal came from the residue of the deceased's estate. Where the approval of the court is necessary a small trust fund may soon find itself with little or no assets because of the financial burden of a lengthy court process. In the case I mentioned, the estate was wealthy enough to carry the enormous costs of the appeal to the High Court of Australia. But in relation to small estates it is a poor situation, as all honourable members would agree, that the potential for funds should disappear as a result of legal and court costs brought about by a cumbersome Supreme Court hearing.

It is proposed in this bill, therefore, to grant the Attorney General the power to settle such schemes in respect of property up to the jurisdictional limit of $500,000. The Attorney General is to be commended for this legislation, which, in particular, deals with that aspect of the cy-pres doctrine. The limit of $500,000 will ensure that funds are not lost unnecessarily to legal and court costs but go towards much more worthwhile purposes. Administrative procedures through which interested parties can have input to the formulation of a scheme prior to the Attorney General's approval are also stated in the bill. The public will have access to schemes previously approved by the Attorney General.

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The power given to the Attorney General is a positive alternative to settling in the Supreme Court. The Charitable Trusts Bill will give the Attorney General power to authorise the sale, mortgage and lease of property held in a charitable trust. As it stands, under section 81 of the Trustees Act 1925 the Attorney General is already joined as a party in applications to the Supreme Court. Again the jurisdictional limit is $500,000.

The bill will re-enact section 27 of the Conveyancing Act, which provides that no charitable trust will be invalid because of the inclusion of invalid non-charitable purposes, and is to be commended for this aspect. The subject-matter dealt with in section 37(d), however, would be more appropriately located in the other laws that govern charitable trusts. The bill will make principles of charitable law more easily applicable and will speed up the administration of charitable trusts. I commend the Government for introducing this good housekeeping legislation. It is consistent with the Government's commitment to more effective legislation, and I commend it.