Aboriginal Housing Office v Jacky

1. [1]

   The issue in this case is whether the trust known as the “Dunghutti Aboriginal Elders Tribal Council Trust” established by a deed dated 22 October 2001 (the Trust) to hold certain land near Kempsey is a charitable trust.

2. [2]

   In their written submissions and oral submissions, the plaintiffs, who are the trustee and the Attorney General respectively, took the position that the Trust was a charitable trust either as one for the relief of poverty or, alternatively, for other purposes beneficial to the community. During the course of the hearing on 12 May 2022, counsel for the plaintiffs indicated that ultimately what the plaintiffs sought was clarity from the Court as to whether the Trust was a charitable trust or a private trust as this would affect steps proposed to be taken by the trustee regarding the future use of the land. The defendants are various individuals who are “Beneficiaries” of the Trust and those who took an active role in the proceedings all advanced the view that the Trust was not a charitable trust.

Background

1. [3]

   The Trust was established by a deed executed on 22 October 2001 (the Deed) between the Dunghutti Aboriginal Elders Tribal Council (in liquidation) (the DAET Council) as settlor, the Aboriginal Housing Office (AHO) as trustee (the Trustee) and the then Aboriginal and Torres Strait Islander Commission (ATSIC) (now succeeded by the Commonwealth of Australia). The Deed was registered in the Deeds Register on 3 April 2002.

2. [4]

   The AHO, which is the Trustee, is a statutory body representing the Crown created by s 6 of the Aboriginal Housing Act 1998 (NSW). ATSIC, which is also party to the Deed, was established by the Aboriginal and Torres Strait Islander Commission Act 1989 (Cth).

3. [5]

   Clause 2.1 of the Deed records that the DAET Council provided to the AHO at the time of execution of the Deed a duly executed transfer of certain real property known as Old Burnt Bridge (Land). It comprises 192 acres located along Euroka Creek at Burnt Bridge, near Kempsey in New South Wales.

4. [6]

   The DAET Council first acquired the Land for the sum of $1 from the Aboriginal Development Corporation (ADC), a Commonwealth agency, for the purpose of settling the Land on the AHO as trustee of the Trust in the circumstances described below.

5. [7]

   As at 1983, Old Burnt Bridge was owned in fee simple by Mr Cecil J Turner. Adjacent was land known as New Burnt Bridge, which was held by Ngaku Co-operative Ltd (Ngaku) pursuant to a 99-year lease. At that time, Ngaku and the DAET Council were in dispute in relation to the occupancy and control of New Burnt Bridge.

6. [8]

   The ADC had proposed on 5 May 1983 that it would “purchase Old Burnt Bridge” and “hold the land title in accordance with the ADC’s present policy in regard to land titles which could mean eventual freehold ownership by the occupants”, in return for DAET Council providing a written undertaking that it would cease all conflict with Ngaku in relation to the occupancy and control of New Burnt Bridge. The DAET Council rejected the proposal “unless it also included the transfer of New Burnt Bridge” to the DAET Council.

7. [9]

   Mr Charles Perkins (Chairman of the ADC) chaired an “open meeting” on 18 May 1983 of Aboriginal groups in the Kempsey area to discuss housing matters of both the parties, including the dispute over New Burnt Bridge. The DAET Council declined to attend but requested to be informed of the outcome. According to a memorandum prepared by the ADC dated 15 June 1983, discussions during the meeting revealed that:

8. [10]

   The ADC informed the DAET Council and Ngaku on 20 May 1983 that:

9. [11]

   On 28 February 1984, the ADC purchased the Land from Mr Turner for $110,000, and in July that year the ADC transferred the Land to the DAET Council for $1.

10. [12]

    On 7 December 1984, the ADC stated in a letter to Mr Hector Dungay who was, at the time, the Administrator of the DAET Council:

11. [13]

    In a letter to Mr Hector Dungay dated 8 March 1985, the ADC advised the DAET Council of the results of a meeting of ADC’s Commissioners in February of that year, as follows:

12. [14]

    On 14 December 1994, development consent was granted by Kempsey Shire Council to a development application for the erection of an additional 27 dwelling sites, a community centre and infrastructure on the Land.

13. [15]

    In 1995 to 1996, DAET Council build 15 houses on the Land pursuant to this consent funded by a grant made by ATSIC.

14. [16]

    The establishment of the Trust arose out of the administration and liquidation of DAET Council.

15. [17]

    It appears that the allocation of the 15 new houses by the DAET Council Board caused ongoing disputes between some groups and led to ATSIC’s decision to appoint an administrator

16. [18]

    On 5 August 1997, Ferrier Hodgson was appointed as an administrator of DAET Council. On 22 September 1997, creditors of DAET Council approved a Deed of Company Arrangement which the DAET Council ultimately did not execute and so, on 13 October 1997, the DAET Council was subject to an automatic winding up with Ferrier Hodgson appointed as liquidator.

17. [19]

    Various discussions were had regarding the best approach for dealing with the assets of DAET Council, namely the Land. Ultimately, those were resolved by AHO, ATSIC and the DAET Council entering into the Deed on 22 October 2001.

18. [20]

    At the time the AHO became the registered proprietor of the Land on establishment of the Trust, there were 16 houses on the Land. There are presently 14 houses on the Land as two were demolished in 2017 because extensive termite damage made them unsafe for occupation.

The Deed

1. [21]

   The Deed is entitled “Discretionary Trust Deed”. The recitals contained in the “Background” to the Deed state:

2. [22]

   Clause 2 of the Deed is headed “Establishment of Trust” and includes the following:

3. [23]

   “Beneficiary” is defined in cl 1.1 as follows.

4. [24]

   Annexure 1 referred to in sub-paragraph (i) is a list of 59 people stated to be present or past members of the DAET Council as at 30 September 2001. It was not in dispute that the definition of “Beneficiary” satisfies the test for certainty as to the objects of a discretionary trust: see J D Heydon and M J Leeming, Jacobs’ Law of Trusts in Australia (8th ed, 2016, LexisNexis Butterworths) (Jacobs’ Law of Trusts in Australia) at [5-28]-[5-29].

5. [25]

   The following definitions are included in cl 1.2:

6. [26]

   Various clauses in the Deed refer to the “objects of the Trust” or to its “purposes and objects”, as extracted below (underlining added):

7. [27]

   Clauses 3 to 6 use the term “properties” which is not defined. It appears to be a reference to (or at least include) the particular houses or other buildings situated on the Land from time to time (of which there were 16 at the date of the Deed). This is indicated by clause 8 which permits the Trustee to appoint a “Tenancy Manager” in respect of some or all of the “Trust properties” with the term “Tenancy Manager” defined to mean an entity appointed to undertake “tenancy management, property maintenance and associated functions in respect of Trust properties”. That suggests that “Trust properties” is a reference to particular buildings (and surrounding land) on the Land.

8. [28]

   Clauses 3 to 6 also use the expression “purposes and objects of this Deed”. While the expression “objects” is defined in cl 1.2(i) of the Deed, “purpose and objects” and “purpose” are not defined. The word “and” in the expression “purpose and objects” is used conjunctively so that both must be satisfied: Victims Compensation Fund Corporation v Brown (2003) 77 ALJR 1797; [2003] HCA 54 at [34]-[35].

9. [29]

   The fact that clauses 5 and 6 refer to the “objects of the Trust” and also the “purpose and objects of this Trust Deed” suggests that the latter expression which is used in each of clauses 3, 4, 5 and 6 is intended to cover something different from the former, and in particular that the “purposes” of the Trust Deed extend to something more than the “objects” identified in clause 1.2(i). The only indication in the Deed of its “purpose” is to be found in recital A, being “to benefit members of the Dunghutti Aboriginal families and their descendants”.

10. [30]

    Further discretion is vested in the Trustee by cl 14 including, with the consent of the Beneficiaries under cl 15, a power to amend the Deed as set out below.

11. [31]

    The Trust commenced on the execution of the Deed (22 October 2001) and “expires on the Termination Date or at an earlier date if the Trust is terminated in accordance with clauses 11.1 or 13.1”. “Termination Date” is defined in cl 1.1 as:

12. [32]

    Clause 13 confers on the Trustee the power to terminate the Trust early by “transferring” the assets and liabilities of the Trust to an “Identified Housing Management Organisation” (defined in cl 1.1 to mean “an organisation which has been identified by the Trustee as having the required powers and skills to hold and manage Trust properties for the benefit of the Dunghutti community”). Clause 13 provides:

13. [33]

    Contemporaneously with execution of the Deed, the Trustee entered into a “collateral agreement” with ATSIC for the provision by it of various services to assist the Dunghutti community living on the Land “to address current problems and promote the social, economic and cultural development of the community” (cl A1.4).

Legal principles

1. [34]

   All express trusts can be classified as either trusts for a person or persons (the beneficiaries), or trusts for purposes. Trusts in the first category (often called private trusts) need to satisfy the “three certainties” in order to be valid, being certainty of intention to create a trust, certainty as to the property which is subject to the trust and certainty as to the person or persons who are the beneficiaries: Kauter v Hilton (1953) 90 CLR 86 at 97; [1953] HCA 95; Korda v Australian Executor Trustees (SA) Ltd (2015) 255 CLR 62; [2015] HCA 6 at [7].

2. [35]

   Trusts in the second category comprise charitable trusts (often called public trusts) and a small miscellaneous group of other purpose trusts not presently relevant (which are discussed in Jacobs’ Law of Trusts in Australia at ch 11). In the case of charitable trusts, there is no person who is identified as the beneficiary of the trust and this is the key difference between a private trust and a charitable trust. As Dixon and Evatt JJ stated in Attorney-General (NSW) v Perpetual Trustee Co Ltd (1940) 63 CLR 209 at 222; [1940] HCA 12:

3. [36]

   In Commissioner of Taxation (Cth) v Bargwanna (2012) 244 CLR 655; [2012] HCA 11 at [8], the High Court approved the following statement of Lord Millett in Latimer v Commissioner of Inland Revenue [2004] 1 WLR 1466 (Latimer) at 1475:

4. [37]

   As noted by Lord Millett in this passage, to say that a charitable trust is a trust for a purpose or purposes is not to deny that individuals benefit from the trust. Indeed in a number of the leading cases, the persons who benefit under a valid charitable trust are described as “beneficiaries”: e.g. Re Compton [1945] 1 Ch 123 (Re Compton) at 129. The point is that they do so as a consequence of the trustee’s effectuation of the charitable purpose or purposes of the trust: Stratton v Simpson (1970) 125 CLR 138 at 144; [1970] HCA 45. A charitable trust is not one for the benefit of individuals as beneficiaries for, if that were the case, the trust would (assuming the three certainties were satisfied) be properly classified as a private trust rather than a charitable trust.

5. [38]

   Given the issue in the present case, it is necessary to identify the key elements of a charitable trust. Broadly, charitable trusts are trusts for objects expressly mentioned in the preamble to the Statute of Charitable Uses 1601 (43 Eliz I, c 4) or which by analogy are for objects within the spirit and intendment of the preamble to that statute: see Jacobs’ Law of Trusts in Australia at [10-02].

6. [39]

   In Income Tax Special Purposes Commissioners v Pemsel [1891] AC 531 (Pemsel) at 583, Lord Macnaghten divided charitable trusts into four principal categories:

   1. (1)

      trusts for the relief of poverty;

   2. (2)

      trusts for the advancement of education;

   3. (3)

      trusts for the advancement of religion; and

   4. (4)

      trusts for other purposes beneficial to the community not falling under any of the preceding heads.

7. [40]

   An additional requirement for a trust to be charitable is that it must be for the benefit of the community or a section of the community because the presence of a public purpose is an essential element for a charitable trust: Pemsel at 580; Verge v Somerville [1924] AC 496 at 499; Oppenheim v Tobacco Securities Trust Co Ltd [1951] AC 297 (Oppenheim) at 305-306 per Lord Simonds; Davies v Perpetual Trustee Co Ltd [1959] AC 439 at 454-455; Thompson v Federal Commissioner of Taxation (1959) 102 CLR 315 at 321-322 per Dixon CJ; [1959] HCA 66.

8. [41]

   A number of English cases have established that a group of persons will not be a “section of the community” if the members of the group are numerically negligible and they are identified by a purely personal relationship to one or more persons or entities. In Re Compton, Lord Greene MR said at 129-131:

9. [42]

   It will be seen from this passage that Lord Greene MR’s test for when a group of persons will be a section of the community is derived from the principle that in order to be a valid charitable trust, the persons who benefit must not do so by virtue of their character as individuals.

10. [43]

    Lord Simonds in Oppenheim stated the test in similar terms at 306:

11. [44]

    These statements of the “Compton test” have been accepted as applicable in Australia in numerous cases: see Davies v Perpetual Trustee Co Ltd at 455; Thompson v Federal Commissioner of Taxation at 322; Re Evans (dec’d) [1957] St R Qd 345 at 350-351; Re Muir (dec’d) [1964] VR 529 at 534-535; Re Mills (1981) 27 SASR 200 at 208; Re Gillespie (dec’d) [1965] VR 402 at 404; Alice Springs Town Council v Mpweteyerre Aboriginal Corp & Ors (1997) 115 NTR 25 (Alice Springs) at 40-41; Shire of Derby-West Kimberley v Yungngora Association Inc [2007] WASCA 233; 157 LGERA 238 at [50]; Jacobs’ Law of Trusts in Australia at [10-06].

12. [45]

    The Compton test may not represent the only test of when a group of persons will be a section of the community: see, for example, Re Income Tax Acts (No. 1) [1930] VLR 211; Thompson v Federal Commissioner of Taxation at 323-4. However, it is sufficient for present purposes that under the Compton test, where the group of persons who may benefit are identified by a personal relationship to a single propositus or to several propositi the public benefit requirement is not met.

13. [46]

    There is an exception to the Compton test for trust for the relief of poverty where the public purpose requirement has been eroded by what are known as the “poor relations” cases. These cases stand for the proposition that in the case of trusts for the relief of poverty the distinction between a charitable trust and a private trust depends on whether as a matter of construction the gift is for the relief of poverty amongst a particular description of poor people who are identified by reference to a relationship with particular individuals (in which case it will be a charitable trust) or is merely a gift to particular poor persons, the relief of poverty among them being the motive of the gift (in which case it will not be a charitable trust): Dingle v Turner [1972] AC 601 at 617, 623; Re Scarisbrick's Will Trusts [1951] Ch 622 at 639-640 per Evershed MR and 649 and 655 per Jenkins LJ. In the latter case, Jenkins LJ summarised the position as follows:

14. [47]

    Later Jenkins LJ stated the nature of the “poor relations” exception referred to in paragraph (iv) above as follows:

15. [48]

    This statement of the “poor relations” exception was adopted by Lord Cross in Dingle v Turner at 617, 623.

16. [49]

    The “poor relations” exception does not cut across the principle that a charitable trust is a trust for a purpose and not persons, but is rather an application of it: the relief of poverty is exercised within a class of poor persons who qualify because they are both poor and have a required relationship with an individual or individuals.

17. [50]

    The “poor relations” cases are often treated as an anomalous exception to the general requirement for a public purpose, but can be explained on the basis that the relief of poverty is intrinsically altruistic in nature so that the public purpose is to be inferred: see Re Compton at 139 per Lord Greene MR and Re Scarisbrick's Will Trusts at 639 per Evershed MR.

18. [51]

    In YWCA Australia v Chief Commissioner of State Revenue [2020] NSWSC 1798, Payne JA said:

19. [52]

    As noted by Payne JA in the above passage, a purpose of relieving poverty need not be expressly stated and can be inferred from the terms of the trust instrument. One example is Downing v Federal Commissioner of Taxation (1971) 125 CLR 185; [1971] HCA 38 which concerned a testamentary gift for the “amelioration of the condition of the dependants of any member or ex-member of” the defence forces, where an intention to relieve poverty was inferred from the use of the word “amelioration” (at 194).

20. [53]

    Another example is Re Niyazi’s Will Trusts [1978] 3 All ER 785, the last of the cases referred to by Payne JA in the above passage, where a testamentary gift “for the purposes only of the construction of or as a contribution towards the cost of construction of a working mens hostel” was held to be valid charitable trust for the relief of poverty. Megarry VC said at 787 that “a gift which in terms is not confined to the relief of poverty may by inference be thus confined” and concluded that there were a number of indications in the words used in the will to confine the gift to the relief of poverty, principally the use of the word “hostel” which indicated a building of somewhat modest accommodation for those having temporary need of it and the expression “working mens” indicated a restriction to those with a relatively low income (at 788-789).

21. [54]

    Another situation where the courts are prepared in an appropriate case to infer a purpose of relieving poverty is a trust for the benefit of indigenous people who are disadvantaged and in need of financial support.

22. [55]

    In Alice Springs, the respondent associations each held leases of land in Alice Springs used for town camps for Aboriginal people. The constitution of each association stated that its “central objects” were to relieve “poverty, sickness, destitution, distress, suffering, misfortune or helplessness of Aboriginal people in Central Australia” (cl 1) including by “obtaining land, housing and other community facilities for the members of the Association and other needy Aboriginal people” (cl 2(a)). Mildren J (with whom Martin CJ agreed) held that the property of each association was held on a charitable trust for the relief of poverty and other charitable purposes. In relation to the relief of poverty, Mildren J made the following comments at 39-40:

23. [56]

    As the terms of this trust were not limited to the relief of poverty, Mildren J applied the Compton test to determine if the public benefit requirement was satisfied and held that it was.

24. [57]

    A case where the trust instrument identified “Beneficiaries” in a manner similar (but not identical) to the Deed in the present case is Groote Eylandt Aboriginal Trust Inc v Deloitte, Touche & Tohmatsu (No 2) (2017) 169 NTR 1; [2017] NTSC 4 (Groote). The plaintiff was trustee of a fund established to receive mining royalty payments. Under cl 2 of the trust deed the trustee was required to hold and apply the trust fund “exclusively for such charitable purposes (in the strict legal sense) as may be served by the provision of money property or other advantages for the benefit welfare and advancement of the Beneficiaries”. The term “Beneficiaries” was defined to mean “all Aboriginal people who are members of the traditional clans of and permanently reside on Groote Eylandt or Bickerton island and their successor generations”.

25. [58]

    Hiley J held that the trust was established to advance a variety of charitable purposes and not merely the relief of poverty: at [263], [268]. Hence it was necessary for the Compton test to be satisfied and his Honour held that it was because the Beneficiaries were a section of the community which was thought to have traditional rights and interests in the land affected by the mining operations and could not sensibly be regarded as persons having a personal relationship to one or more persons: [226], [239]-[241]. It may be noted that cl 2 of the trust deed in that case was quite different from cl 2.3 of the Deed in that while it identified “Beneficiaries” as persons to whom benefits were to be provided, it clearly stated this was to be done in effectuation of charitable purposes. There is no such qualification in cl 2.3 of the Deed. Further, the definition of “Beneficiaries” here is, in contrast, limited to particular individuals and those having a personal relationship to them.

26. [59]

    There is no dispute that a trust for providing assistance to Aboriginal people, in particular in relation to their housing needs, is capable of being a valid charitable trust. There have been many cases where trusts established to assist Aboriginal people (in particular, by improving their economic and educational status) have been held to be charitable within the fourth Pemsel category provided that the Compton test is satisfied: eg Re Mathew (deceased) [1951] VLR 226; Dareton Aboriginal Land Council v Wentworth Council (1995) 89 LGERA 120 at 125; Aboriginal Hostels Ltd v Darwin City Council (1985) 33 NTR 1 at 14; Alice Springs at 40-41; Shire of Derby-West Kimberley v Yungngora Association Inc at [54] per Newnes AJA (with whom Buss and Miller JJA concurred); Cant v Kirby [2011] NSWSC 1193 at [46]; Groote at [104]-[107].

27. [60]

    In Cant v Kirby, Gzell J said at [46] “[t]he assistance of Aboriginal persons is a charitable purpose” citing Re Mathew (deceased). In the latter case, O’Bryan J upheld a testamentary trust of property “to be used by (the trustee) in his discretion for the benefit of the Australian aborigines” as a valid charitable trust within the fourth Pemsel category, stating (at 232) that “Aboriginal Australians are notoriously in this community a class which, generally speaking, is in need of protection and assistance”.

28. [61]

    Similarly, in Aboriginal Hostels Ltd v Darwin City Council, Nader J stated (at 16) that “no right thinking person could quarrel with the general proposition that Aboriginals are in need of special consideration and assistance” and said (at 17) that the provision by the appellant of hostel accommodation for Aboriginal people in the circumstances of that case was “an attempt to meet an obvious need in Aboriginal society”.

Submissions

1. [62]

   The first plaintiff adopted the written submissions of the second plaintiff, the Attorney General.

2. [63]

   The Attorney General in written submissions contended that:

   1. (1)

      The ultimate question is to ascertain whether the intention of the settlor, DAET Council, as expressed in the Deed, properly construed in context was to create a charitable trust.

   2. (2)

      The trust is a trust for the relief of poverty and is therefore a charitable trust which is presumed to be for the public benefit.

   3. (3)

      Alternatively, the trust is beneficial for a section of the public. Accordingly, even if it is not for the relief of poverty, the Trust is still a charitable trust with other purposes beneficial to the community, falling within the fourth Pemsel category.

3. [64]

   The Attorney General accepted that two features of the Deed were against a conclusion that the trust property is held on a charitable trust, being that the Deed, on its first page, is self-described as a “Discretionary Trust Deed” and that clause 2.3 uses the term “Beneficiaries”.

4. [65]

   In relation to the first point, the Attorney General argued that this is not determinative, as trustees of a charitable trust can hold discretionary powers to determine how they will pursue a charitable purpose and the mere title “Discretionary Trust Deed” does not preclude the Trust from being a charitable trust.

5. [66]

   As to the second point, the Attorney General said that the mere use of the term “Beneficiaries” was not decisive and it was necessary to determine whether the use of that term meant that the Trust was a trust for beneficiaries or rather, was an “unfortunate drafting device” (adopting Corish v Attorney-General [2006] NSWSC 1219 at [23]) to describe a section of the public as part of the description of the charitable purpose. In Corish v Attorney-General, Campbell J (as his Honour then was) said of a differently worded trust instrument at [23]:

6. [67]

   The Attorney General submitted that the definition of “Beneficiaries” in the Deed is capable of being construed as an attempt to define a section of the community rather than a group of individuals and is part of the description of the charitable purpose of the Trust.

7. [68]

   The Attorney General submitted that, weighing in favour of a conclusion that the Trust is a purpose trust, and in particular a charitable trust, is the fact that the Trust has ‘objects’ set out at cl 1.2 of the Deed which are charitable in nature. Several of the clauses that are most significant for the purpose of determining the nature of the Trust (cll 3 (on use of the properties), 4 (disposal), 5 (proceeds from use) and 6 (proceeds from sale)) refer to the purposes and objects of the trust. Another clause said by the Attorney General to indicate a charitable intent is cl 2.8, which deals with the possibility that the Trust might fail in which case that property is held on trust for any of the objects contained in “Section 3 of the Aboriginal Housing Act or purposes in the said Act”, which the Attorney General submitted are readily characterised as charitable.

8. [69]

   The Attorney General submitted that case law has consistently found measures for the relief of Aboriginal persons to be charitable within the fourth category and that, where trusts are for the provision of housing for Aboriginal people, they can fall within the first Pemsel category (citing Alice Springs).

9. [70]

   The Attorney General also submitted that the Court leans in favour of charity so that if the text of the Deed is capable of a meaning which supports a finding of charity, that construction ordinarily should be adopted (citing Re Estate Polykarpou [2016] NSWSC 409; 16 ASTLR 400 at [64(g)]). It was also submitted that in the case of a failed charitable trust, but a general charitable intent is inferred, a cy-près scheme can be ordered (citing Attorney-General (NSW) v Perpetual Trustee Co Ltd at 225).

10. [71]

    All the defendants (except for the tenth to fourteenth defendants) filed written submissions and were represented by counsel at the hearing. They all submitted that the Court should declare that the Trust is not a charitable trust on the basis, essentially, that on the proper construction of the Deed, the Trust is not a trust for a purpose, but rather a private discretionary trust for the benefit of identified individuals being the Beneficiaries.

Consideration

1. [72]

   There is no dispute that the Deed created a valid express trust. The only issue is whether it is properly classified as a private trust or a charitable trust. That question turns on whether the trust property is held for the benefit of identified beneficiaries or rather on trust for a charitable purpose or purposes. That is to be determined by reference to the intention of the parties to the Deed. The search is not for the subjective intention but rather the intention revealed by the words used in the trust instrument read in context (i.e., the question is “what is the meaning of the words the parties have used in the instrument”), with the matter to be approached in the same way as for the construction of contracts: Byrnes v Kendle (2011) 243 CLR 253; [2011] HCA 26 at [17], [53]-[55], [59] and [102]-[105]. While Byrnes v Kendle was concerned with the existence of an “intention” to create a trust, the same principle applies to whether an express trust is to be classified as a private trust or a charitable trust because that question is also one of (objective) intention: Jacobs’ Law of Trusts in Australia at [3-03] and [3-06]; Scott, The Law of Trusts (3rd ed, 1967, Little, Brown and Company) at Vol 4, §348, 2769-2770; Scott, Fratcher and Ascher, Scott and Ascher on Trusts (5th ed, 2006, Aspen Publishers) at Vol 5, §37.2.2, 2378-2379.

2. [73]

   The determination of the objective intention of the parties to a contract turns on the text construed in light of its context and purpose: S&C Nicola Pty Ltd v Peter Holmes Investment Pty Ltd [2022] NSWCA 72 at [29] per Leeming JA. The relevant principles were summarised by French CJ, Nettle and Gordon JJ in Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104; [2015] HCA 37 at 116-117 as follows (footnotes omitted):

3. [74]

   I have taken these principles into account in construing the Deed. The question of construction can be resolved by reference to the text of the Deed, and it was not suggested by any of the parties that it was necessary to have regard to circumstances external to the Deed. However, I note that there is nothing in the background to the execution of the Deed referred to above which contradicts the conclusions I have reached based on its text.

4. [75]

   For the following reasons, on the proper construction of the Deed, the Trust is not a charitable trust.

5. [76]

   The key provision of the Deed is the declaration of trust in cl 2.3 which states that the trust property is to be held “for the benefit of the Beneficiaries or such of them as the Trustee in its discretion determines”. There are a number of points to note about this provision.

   1. (1)

      The “Beneficiaries” comprise the members of the Dunghutti Aboriginal families who (either at the date of the Deed or during the terms of the Trust) satisfy one of sub-paragraphs (i) to (iii) of the definition of “Beneficiary” in cl 1.1. Essentially, they must be either named on the list in annexure 1 to the Deed (sub-paragraph (i)) or a member of the Dunghutti Aboriginal families personally known to such a person (sub-paragraph (ii)) or a descendant of either category (sub-paragraph (iii)). The Beneficiaries are therefore an identified but fluctuating group of individuals which is defined by their personal relationship with the persons listed in annexure 1.

   2. (2)

      While the trustee has a discretion under cl 2.3 as to which of the Beneficiaries will benefit and to what extent, any of the Beneficiaries could bring an action against the trustee to enforce the terms of the Trust, for example if the trustee purported to deal with the properties or proceeds from the use or sale of the properties inconsistently with cl 3 to 6 above, because a beneficiary under a discretionary trust has a right to have his or her interest protected by a court of equity: Gartside v Inland Revenue Commissioners [1968] AC 553 at 617; Jacobs’ Law of Trusts in Australia at [23-03].

   3. (3)

      The use of the words “for the benefit of the Beneficiaries” in cl 2.3 indicates that the settlor’s intention was to benefit particular persons (the Beneficiaries) by virtue of their character as individuals rather than to benefit a class of persons identified and defined by reference to their need for charitable relief. That is a clear indication of an intention to create a non-charitable trust: see [36]-[37] above and Latimer at [29]; Re Scarisbrick's Will Trusts at 655; Re Compton at 129.

   4. (4)

      This is not a case where the term “beneficiaries” is used as part of the description of the charitable purpose; rather it is used to indicate that particular individuals are to benefit by virtue of their character as individuals, and hence cannot be regarded as a mere “unfortunate drafting device” for describing a charitable purpose (see [66] above).

   5. (5)

      Further, by stating that the property as being held for beneficiaries who are an identified group of persons, cl 2.3 uses the classic language indicating a private (discretionary) trust for persons rather than a trust for charitable purposes.

6. [77]

   That construction is confirmed by other provisions of the Deed. First, recital A indicates that the purpose of the Trust is to benefit particular persons (the Beneficiaries) rather than to advance a charitable object. While a recital to a deed is not part of the operative provisions, it may be used as an aid to construction, in particular where it provides a statement of the parties’ intention or object in entering into the transaction embodied in the deed: Lachlan v HP Mercantile Pty Ltd (2015) 89 NSWLR 198; [2015] NSWCA 130 at [52]-[53]. This is both because the recitals provide part of the context in which the operative provisions are to be construed and because the commercial purpose to be secured by the contract is relevant to its construction. As Allsop P (as his Honour then was) stated in Onesteel Manufacturing Pty Ltd v Bluescape Steel (AIS) Pty Ltd (2013) 85 NSWLR 1; [2013] NSWCA 27 at [63]:

7. [78]

   Second, cl 5 and cl 6 state that the trustee is to hold proceeds from the use (cl 5) or sale (cl 6) of the properties “upon trust … for the benefit of the beneficiaries consistent with the purposes and objects of this Trust Deed as the Trustee in its absolute discretion thinks fit”. (While the word “beneficiaries” is not capitalised, this appears to be a typographical error and I read this as an intended reference to the defined term “Beneficiaries”.) What is significant about cl 5 and cl 6 is that the trustee must hold the relevant proceeds on trust for the benefit of the Beneficiaries consistent with the purposes and objects of the Trust rather than for the purposes and objects of the Trust. The discretion conferred on the trustee as to how the beneficiaries are to be benefited is required to be guided by the “purposes and objects of the Trust”, but the clauses have been drafted with the evident intention of requiring the trustee to hold the proceeds for persons rather than for a purpose (i.e. “the purposes and objects of the Trust”). This confirms that a conscious choice has been made to establish a trust to benefit particular persons rather than a trust for a purpose.

8. [79]

   Largely as a consequence of the conclusions above, the Attorney-General’s submission that the Trust should be regarded as a charitable trust either as one for the relief of poverty or within the fourth Pemsel head cannot be accepted.

9. [80]

   It is clear from the terms of the Deed that the trust property is not to be held solely for the relief of poverty which is sufficient to preclude the Trust from being charitable within the first Pemsel head. Clauses 3, 4, 5 and 6 of the Deed require the Trustee to use the “properties”, dispose of the “properties” and hold the proceeds of use or sale of the “properties” in a manner consistent with the “purposes and objects” of the Trust deed. The manner in which those persons are to be benefited and to what extent and by what means is left entirely to the discretion of the Trustee and is not restricted or defined by whether they are in poverty. So for example, benefits could be conferred on one or more Beneficiaries by the construction of community facilities on the properties which would improve the quality of their lives but not relieve their poverty in any way. No words are found in the Deed which either expressly or inferentially limit the benefits in the relevant way to the relief of poverty. Nor is poverty of a Beneficiary a criterion for relief.

10. [81]

    Consequently, even if it be assumed that the meeting of the housing needs of the “Beneficiaries” is a purpose of relieving poverty, the Trust is not directed solely to relieving that poverty. Rather, it is directed to benefiting particular individuals selected by the trustee within the class of the “Beneficiaries” and it can be said that the relief of poverty is no more than a motive for establishing the Trust.

11. [82]

    Insofar as the fourth Pemsel head of charity is relied upon, the “Beneficiaries” do not comprise a section of the community within the Compton test. This is because they are defined by reference to a personal relationship to an individual or individuals (being the persons identified in annexure 1 to the Deed). The Deed is analogous in that regard to Davies v Perpetual Trustee Co Ltd at 456 and Re Mills at 208, and the definition of “Beneficiaries” in the Deed is distinguishable from the definition of “Beneficiaries” in Groote: see [57]-[58] above.

12. [83]

    Finally, in relation to the Attorney-General’s submission that the court “leans in favour of charity”, in Re Estate Polykarpou Lindsay J said at [64(g)] that:

13. [84]

    Both of the authorities cited by Lindsay J are properly seen as applications of the principle ut res magis valeat quam pereat (“it is better for a thing to have effect than be made void”) applicable both to trusts created by a will or by a deed inter vivos: Inland Revenue Commissioners v McMullen [1981] AC 1 at 14; G E Dal Pont, Law of Charity (3rd ed, 2021, LexisNexis) at [6.1]. So, for example, where there is a gift (by will or deed) which is capable of two constructions one of which would make it void and the other effectual as a charitable trust, the latter will be preferred if possible. In the present case, it is not necessary or appropriate to apply this principle as the meaning of the words in the Deed is clear and the trust is a valid non-charitable trust. Nor, for the same reason, is it necessary to consider the principles concerning cy-près schemes.

Conclusion

1. [85]

   For the above reasons, the Trust established by the Deed is not a charitable trust. The parties are in agreement that whatever the outcome of the proceeding, there should be no order as to costs. Accordingly I make the following orders:

   1. (1)

      The Court declares that the trust known as the “Dunghutti Aboriginal Elders Tribal Council Trust” the terms of which are contained in a trust deed dated 22 October 2001 as between the Dunghutti Aboriginal Elders Tribal Council (in liquidation) as settlor, the Aboriginal Housing Office as trustee and the then Aboriginal and Torres Strait Islander Commission (now succeeded by the Commonwealth of Australia) is not a charitable trust.

   2. (2)

      No order as to costs.