[2016] NSWSC 1308

John Francis Newnham as Executor of the Estate of the late Mary Margaret Palme

See [20]

Catchwords

WILLS & ESTATES- construction of will – bequest to charitable institution connected with a Sydney hospital- where beneficiary ceased to exist after death of testatrix, alternative charitable institution CHARITIES – Charitable gifts and trusts- whether specifically named charitable purpose has ceased to be realizable since testatrix’s death- where alternative beneficiary clause cannot be utilised because association was in existence at the time of the testatrix’s death -whether terms of gift now impracticable – whether cy-pres scheme should be ordered-HELD: Charitable purpose of the advancement of education and for the assistance of nurses to continue their career remains capable of completion- residual gift should be applied cy-pres

Cases cited

Public Trustee v Cerebral Palsy Association of W.A (2004) WAR 496;[2004] WASCA 36
Re Finger's Will Trusts [1972] Ch 286

Legislation cited

Charitable Trusts Act 1993 (NSW)

Judgment

[1]
Mr Newnham is the executor of the will of the late Mary Margaret Palme (“Ms Palme”). Ms Palme died on 7 May 2014 leaving no issue. Mr Skinner of Counsel appears in these proceedings for Mr Newnham.
[2]
By her will on 28 February 2014 she made a number of bequests to friends but the substantial beneficiaries of the will were her very good friend Mrs Colleen Carr (Mr Newnham’s sister) and an organisation known as the Mater Graduate Nurses Association “the Association.” Ms Palme granted a life interest in the proceeds of the sale of her house in Leichhardt to Mrs Carr and thereafter to the Association. The Association was also to receive the residue of the estate.
[3]
Ms Palme had an extensive career as a nurse and involvement with the Mater Hospital at North Sydney where she had been trained and then worked for many years.
[4]
The residue clause provided:
[5]
In March 2015 Mr Newnham paid $320,000.00 out of the Estate to the Association.
[6]
In October 2015 the Association determined to disband. The Association’s members resolved to transfer the funds received from Ms Palme’s Estate to another organisation called the Friends of the Mater (“FOM”) the trustee of which is the Friends of the Mater Limited. The conditions of the transfer were:
1. (1)
  That the quantum of the Educational Scholarship or Scholarships each year be approximately equivalent to the interest earned on the investment of the MGNA Palme Bequest during the previous year.
2. (2)
  That any Scholarship arising from the MGNA Palme Bequest, be known as the MGNA Palme Scholarship.
3. (3)
  That the education Scholarship or Scholarships each year be directed to Graduate Nurse(s) if there would be nil suitable Undergraduate Nurse(s) to receive a scholarship at the time.
4. (4)
  That FOM would invite a Mater Graduate Nurse and Mater Hospital Nurse Educator/Director of Nursing to assist with the selection of Scholarship recipients(s) each year.
5. (5)
  That FOM ensure that the MGNA Palme Bequest be utilised according to the terms of the Will of Mary Margaret Palme and the additional instructions of MGNA, until the MGNA Palme Bequest funds have been distributed in full
[7]
It will be observed that as at the date of Ms Palme’s death and the date of the transfer of the residue the Association existed but that now the Association does not exist. The alternative beneficiary clause cannot be utilised by the executor because the Association was in existence at the date of Ms Palme’s death. Mr Newnham therefore seeks the establishment of a cy-pres scheme to deal with the capital of the fund when, in the future, Mrs Carr dies.
[8]
It is also necessary to draw attention to the fact that the Mater Hospital itself has undergone something of an organisational restructure. The hospital which once operated as the Mater Hospital and was owned by the Mater Misericordiae Hospital Limited (“MHHL”) is now part of St Vincent’s Health Australia and is now known as St Vincent’s and Mater Health Sydney Limited (“SV&MHS”) The order of nuns connected with St Vincents are the Sisters of Charity whereas the order of nuns connected with the Mater were the Sisters of Mercy.
[9]
A further matter of significance of which I was informed by Mr Skinner is that as a result of changes in nursing education nurses employed in hospitals are graduates and not undergraduates making it unlikely that there will be any undergraduate nurses at the Mater Hospital or any other major hospital.
[10]
There is evidence of the steps that have been taken to ensure that the capital bequest will be dealt with in the same way as the residuary bequest. I think it is clear that Ms Palme wanted to provide assistance to nurses to help them continue with nursing as a profession and it is an obviously charitable purpose.
[11]
There have been filed and read in the proceedings two affidavits of Mr Newnham one of 22 July 2016 and one of 6 September 2016.
[12]
I raised with Mr Skinner:
1. (1)
  The desirability of the scholarships being available to graduate nurses only if there are no undergraduate nurses.
2. (2)
  The desirability of specifying that the nurses who are to benefit should the nurses employed at the Mater Hospital.
[13]
The Association had, by its constitution, as one of its objects, to raise funds to
[14]
FOM is a registered charity: see Annexure “D” to Mr Newnham’s second affidavit and FOM was primarily established for charitable purposes,
[15]
“Trust Purposes” of the FOM are defined (cl 1.24) of the 2014 Trust Deed (Exhibit 2) as:
[16]
I note that by s.10 of the Charitable Trusts Act 1993 (NSW) trust property cannot be applied cy-pres unless it is given with a general charitable intention but s.10(2) provides that:
[17]
In my view by her will Ms Palme made clear that the gift was intended for the charitable purpose of the advancement of education and assisting nurses to continue in their career and not for the institution i.e. the Mater Graduate Nurses Association. I say this because the purpose of the gift was clearly identified and also because Ms Palme went to the trouble of specifically providing by the alternate beneficiary clause that the executor was to find another association having the same or similar objects as the Mater Graduate Nurses Association should the Association no longer exist at the time of her death.
[18]
There is identified a particular charitable purpose which remains capable of practical completion and accordingly I think that the residual gift should be applied cy-pres.
[19]
I am satisfied that FOM is a suitable replacement for the Mater Graduate Nurses Association given the history of the hospital and the change that has been wrought. FOM, it seems to me, is the appropriate charitable organisation to best serve the wishes of Ms Palme. I note that Mr Newnham has, following a suggestion by the Court, sought the agreement of the FOM to a change of wording which will ensure that if there should be a return of undergraduate nurses to the Mater Hospital it will be made clear that the scholarship will be awarded to one of their number (subject to general suitability) but that otherwise the scholarship will go to graduate nurses, and also that it will be made clear that the nurses eligible for the scholarship (whether undergraduate or graduate) will be nurses assigned to the Mater Hospital. FOM has communicated its consent to main these proposed changes: see Annexure “C” to Mr Newnham’s second affidavit.
[20]
Accordingly I am satisfied that the residual share under Ms Palme’s will should be paid in due course to FOM under the cy-pres scheme and I will make orders in accordance with the proposed Short Minutes which were handed up in Court this morning and which include sensible adjustment to clause 4(iv) of the Short Minutes that will widen the range of persons who can be appointed to the selection committee for bestowal of Scholarships.