Sharp v Attorney General of NSW

1. [1]

   Martin Ritchie Sharp (“the Testator”) was a well-known, and significant, Australian artist with a substantial body of work. His iconic images of Sydney’s Luna Park and of Tiny Tim, amongst many others (not to mention his album covers for the 1967 and 1968 Cream albums “Disraeli Gears” and “Wheels of Fire”), are well known the world over.

2. [2]

   The Testator died on 1 December 2013.

3. [3]

   The Testator made a will on 20 September 2012 which was amended by a codicil made on 21 November 2013 (together, “the Will”).

4. [4]

   Probate of the Will was granted to the executors named in the Will, the plaintiffs (“the Executors”), on 14 August 2014.

5. [5]

   The Testator was an only child. He did not marry and had no children.

6. [6]

   For much of his life, including the period prior to his death, the Testator lived in and owned a large heritage listed residence in Bellevue Hill known as “Wirian”.

7. [7]

   Wirian is the major asset of the Testator’s estate. According to an inventory of property prepared by the Executors on 17 January 2014, Wirian then had an estimated value of $8 million. The inventory stated that the total value of the Testator’s estate was in the order of $11.25 million (including some $2.1 million worth of artwork, furniture and personal effects, all or most of which is located at Wirian).

8. [8]

   By the Testator’s Will, the whole of his estate, after payment of debts and expenses, is to be held in a trust known as the “Street of Dreams Martin Sharp Trust” (“the Trust”).

9. [9]

   The matter for consideration in these proceedings is whether there is thereby constituted a valid charitable trust.

10. [10]

    The Executors seek the following:

    1. (1)

       a declaration that on the true construction of the Will and in the events that have happened, the gift of the entire estate of the Testator to the Executors constitutes a valid charitable trust known as the “Street of Dreams Martin Sharp Trust”;

    2. (2)

       a determination as to whether, on the proper construction of the Will, the Executors may sell Wirian for the purpose of furtherance of the Trust;

    3. (3)

       a determination as to whether, on the proper construction of the Will, the Executors may appoint a substitute corporate trustee to administer the Trust; and

    4. (4)

       advice pursuant to s 63 of the Trustee Act 1925 (NSW) (“the Act”) with respect to the proposed use of Wirian.

11. [11]

    The Attorney General of New South Wales is the first defendant in her role as protector of charities. The Attorney General has made submissions to assist the Court in determining what relief should be granted in the proceedings.

12. [12]

    At the date of his death, the Testator’s next of kin was his aunt, Lady Elizabeth Massy-Greene, who is the second defendant. Lady Massy-Greene, by her attorney under power (her son, Mr Roger Massy-Greene), informed the solicitors for the Executors that she did not wish be represented in the proceedings, unless I were to determine that the “will fails”.

Declarations and orders

1. [13]

   Following oral submissions, I made the declarations and orders proposed by the parties.

2. [14]

   I indicated that I would deliver reasons for making those declarations and orders. These are those reasons. I have been greatly assisted by the written submissions I received from Mr White, who appeared for the Executors, and Mr Hochroth, who appeared for the Attorney General. Much of what follows is drawn, with gratitude, from those submissions (particularly those of Mr Hochroth).

The Will

1. [15]

   By the Will, the Testator appointed the Executors as his “executors and trustees”.

2. [16]

   He also appointed Mr Luke Sciberras and Ms Marilyn Karet as his “literary or artistic executors” (“the Literary Executors”). The Testator directed the Literary Executors to:

3. [17]

   The Will provided, in cl 3:

4. [18]

   And in cl 4:

5. [19]

   By the codicil, the Testator substituted the Executors and Literary Executors (together) to be trustees of the “Street of Dreams Martin Sharp Trust” in lieu of Street of Dreams Pty Ltd.

Does the Will create a valid charitable trust?

1. [20]

   In construing the language of a will, the starting point is "the fundamental rule" stated by Viscount Simon LC in Perrin v Morgan [1943] AC 399 at 406, which is "to put on the words used the meaning which, having regard to the terms of the will, the testator intended": Hatzantonis v Lawrence [2003] NSWSC 914 per Bryson J at [6]; Parry v Haisma [2012] NSWSC 290 per White J at [52].

2. [21]

   As James LJ said in the familiar passage from Boyes v Cook (1880) 14 Ch D 53 at 56:

3. [22]

   By reason of s 32 of the Succession Act 2006 (NSW), if the language of a will is ambiguous, evidence (including of the testator’s intention) is admissible to assist in its interpretation.

4. [23]

   The court will endeavour to adopt a construction that will avoid an intestacy, so that, in ascertaining testamentary intention, the court will not presume that the testator meant to die intestate if, on a fair construction, there is reason for saying the contrary: Fell v Fell [1922] HCA 55; 31 CLR 268 per Isaacs J at 275-276, 279; G E Dal Pont and K F Mackie, Law of Succession, (2013, LexisNexis Butterworths) at [8.24], [9.4].

5. [24]

   The Trust is created by cl 4(b) of the Will.

6. [25]

   That clause states the “objects and purposes” of the Trust to be:

7. [26]

   The language of cl 4(b) is directed to the preservation of Wirian only in the context of the Testator’s own works.

8. [27]

   However, the objects of the Trust created in the Will must be determined by looking at the whole of the Will: Re Williams; Williams v Williams [1897] 2 Ch 12 at 18-19 per Lindley LJ. Thus, cl 4(b) must, in my opinion, be read in light of that part of cl 3 that I have set out at [17] above. That clause shows that the Testator intended a further “object” and “purpose” (he appears to have used those words interchangeably) of the Trust created in cl 4(b) of the Will to be that Wirian be preserved as a place where “people can be educated” not only in relation to the Testator’s own work but also “in relation to art and artists” generally.

9. [28]

   The key question in the present case is whether the Trust is for a recognised charitable purpose.

10. [29]

    The four recognised heads of charitable trusts are those set out in the decision of Lord Macnaghten in The Commissioners for Special Purposes of the Income Tax v Pemsel [1891] AC 531 at 583, being trusts for the purposes of:

11. [30]

    In my opinion, the Trust is one for the purpose of education. As Mr Hochroth submitted, in this context, "education" is construed broadly. Thus, in Lloyd v Federal Commissioner of Taxation [1955] HCA 71; 93 CLR 645 at 675, Kitto J said that education "is unquestionably much wider than mere book-learning, and wider than any category of subjects which might be thought to comprise general education as distinguished from education in specialised subjects concerned primarily with particular occupations".

12. [31]

    The advancement of cultural and artistic appreciation may fall within the charitable head of education: see for example In re Town and Country Planning Act, 1947; Crystal Palace Trustees v Minister of Town and Country Planning [1951] Ch 132 at 140; Re Chanter (dec'd) [1952] SASR 299 at 302. This can include not only the teaching or training of artists but also the encouragement of additional artistic contributions: Perpetual Trustee Co Ltd v Groth (1985) 2 NSWLR 278 at 286. Thus, in Perpetual Trustee v Groth, a bequest for the Archibald Prize competition was found to be a valid charitable trust.

13. [32]

    The purpose of the Trust in the present case is each of the matters set out at [25] and [27] above.

14. [33]

    In my opinion, each of these is properly viewed as a charitable object. The preservation of the Testator’s own work is, I infer, for the purposes of public exhibition and appreciation. The “continuation” of the Testator’s work is, the material before me establishes, a reference to the artistic collaboration that occurred at Wirian during the Testator’s lifetime. Continuation of these works is likely to encourage artistic creation and is thus to the public benefit. Education of the public in relation to art and the Testator's work is self-evidently charitable.

15. [34]

    In addition to having a recognised charitable object, in order that a trust be a valid charitable trust it must be for the public benefit. The court will ordinarily presume that advancing education is for the public benefit, and will not attempt to weigh the respective merits of particular educational methods if the purposes are generally educational in their aim and scope: Re Shaw's Will Trusts; National Provincial Bank Ltd v National City Bank Ltd [1952] Ch 163 at 168. However, the court is permitted, for example, to consider the educational merit of a trust for exhibition of particular works: Re Pinion (dec'd); Westminster Bank Ltd v Pinion [1965] Ch 85.

16. [35]

    In the present case, the merit of the opportunity to preserve the work in situ of a major Australian artist is obvious. In any event, the material before me, in the form of testimonials from leading figures in the Australian art scene, points to the merit and public benefit of preserving Wirian and its contents.

17. [36]

    In those circumstances, on 22 October 2015, I made the following declaration:

Do the trustees of the Trust have the power to sell Wirian?

1. [37]

   As Mr Hochroth pointed out, two trusts are contemplated by the Will.

2. [38]

   First, the Executors are to hold the Testator’s estate on trust to pay all debts and expenses of the kind referred to in cl 4(a) of the Will.

3. [39]

   Second, on implementation of the Trust under cl 4(b) of the Will, the trustees of that Trust (who, by reason of the codicil, are to be the Executors together with the Literary Executors) are to hold the balance of the Testator’s estate on the terms of the Trust.

4. [40]

   The Executors, in their capacity as trustees of the Testator’s estate, do, in my opinion, have the power to sell Wirian. The conferral by the Testator on the Executors of that power is reflected in the Testator’s statement in the last sentence of cl 3 concerning what is to occur should it be “not possible or practical to retain” Wirian. It is, in my opinion, implicit in those words that, if such circumstances existed (and there is no suggestion in the evidence before me that they do), the Executors would have the power to sell Wirian.

5. [41]

   However, in relation to the powers of the trustees under the Trust, I see no basis to imply from the words in the Will a power to sell Wirian. On the contrary, one of the objects of the Trust, as I found them to be, is the preservation of the house and grounds of Wirian to carry out the works in which the Testator was involved.

6. [42]

   As Mr Hochroth submitted, if it turns out that, for reasons not presently foreseeable, it does become necessary for the trustees of the Trust to sell Wirian, the appropriate course would be for those trustees to apply to the Court for cy-près orders permitting such sale.

7. [43]

   For those reasons, on 22 October 2015, I made the following further declaration:

Ambit of the provision in cl 4(b) allowing “my trustees to deal with my assets”

1. [44]

   The Executors sought judicial advice, pursuant to s 63 of the Act, as to whether the provision in cl 4(b) of the Will allowing the trustees to “deal with my assets” would permit the trustees of the Trust to use the assets of the estate for the following purposes (being those set out in question 9(C) in the Statement of Facts filed pursuant to Uniform Civil Procedure Rules r 55.1):

2. [45]

   In my opinion, each of these proposed uses of Wirian and the assets of the estate is consistent with the charitable objects of the Trust.

3. [46]

   Accordingly, on 22 October 2015 I made this order:

Can a corporate trustee of the Trust be appointed in lieu of the Executors and Literary Executors?

1. [47]

   A new trustee may be appointed in place of a trustee under s 6 of the Act. This includes where a trustee desires to be discharged: s 6(2)(d). There is no limitation in the Will on who may be a trustee of the Trust under cl 4(b), and thus no reason why the trustee could not be a corporation. Indeed, given that charitable trusts are perpetual in nature (and the present charitable trust is clearly intended to be long lasting), a corporate trustee appears desirable.

2. [48]

   The plaintiffs propose the establishment of a corporation limited by guarantee with objects consistent with the Will. This would appear to be an appropriate course.

3. [49]

   Accordingly, on 22 October 2015 I made the following further declaration:

Costs

1. [50]

   Finally, and by consent, on 22 October 2015 I made the following orders as to costs:

   1. (1)

      Order that the costs of the Plaintiffs be paid out of the assets of the estate on an indemnity basis.

   2. (2)

      Order that the costs of the First Defendant be paid out of the assets of the estate on the ordinary basis.