Street of Dreams Martin Sharp Ltd v Attorney General for NSW

1. [1]

   These proceedings concern a charitable trust. The trustee of the trust considers that it has become impracticable, or seriously inconvenient, to carry out the trust in accordance with its objects as originally defined, and seeks to have the Court exercise its power to resettle the terms of the trust cy-près. The application is supported by the Attorney General as protector of charities. But the Court must of course be persuaded that it is justified.

2. [2]

   The trust the subject of the proceedings is known as the “Street of Dreams Martin Sharp Trust” (“the Trust”). It was established pursuant to the terms of the will of the well-known Sydney artist Martin Sharp (“the Testator”), who died in December 2013.

3. [3]

   In his will, the Testator appointed Ms Roslyn Sharp and five other nominated individuals as his executors and trustees (“the Executors”) and gave his property to them for them to apply it for particular purposes. The purposes will be described in more detail below but essentially involved retaining the Testator’s house and art collection as a venue for ongoing collaborative artistic work, including the completion of the testator’s unfinished artistic projects.

4. [4]

   The will was the subject of previous proceedings in this Court in 2015. The primary question for determination in those proceedings was whether the will’s gift of property to the Executors created a valid charitable trust. Stevenson J held that it did and made a declaration accordingly; his Honour also determined various other questions concerning the administration of the Trust: Sharp v Attorney General of NSW [2015] NSWSC 1580 (“J1”).

5. [5]

   Ms Sharp and three of the other Executors were the plaintiffs in the 2015 proceedings before Stevenson J. One of the ancillary questions for determination was whether it was open to the Executors to have the Trust (if valid) administered by a corporate trustee (as the Testator had himself proposed in his will). His Honour concluded that it was: J1 [47]-[49].

6. [6]

   The corporate trustee proposed by the Testator was the present plaintiff, Street of Dreams Martin Sharp Limited (“the Trustee Company”). It had been incorporated in 1981 as a proprietary company under the name “Street of Dreams Pty Limited”. For the purpose of constituting it as trustee, it was converted to a public company limited by guarantee and its current name was adopted. Pursuant to a deed of trust between the Executors and the Company in December 2018 (“the Trust Deed”), the deceased’s property was formally transferred to the Company for it to administer the Trust.

Background and procedural history

1. [7]

   The findings made by Stevenson J in the 2015 judgment were accepted in full by the parties to these proceedings. The facts canvassed in that judgment will only be referred to in outline in the present judgment.

2. [8]

   The Testator was born in Sydney in January 1942 and grew up in Bellevue Hill in Sydney’s Eastern Suburbs. His family home was a large house, now heritage listed, known as “Wirian”. He was an only child and never married or had children.

3. [9]

   The Testator’s artistic career and interests are not easily categorised. His work included song lyrics and filmmaking. But he is probably best known as a graphic artist. In this capacity he produced not only paintings and prints but also album covers and posters, some of which are among his best-known works.

4. [10]

   The Testator’s artistic interests took him to London in the 1960s and early 1970s, where he was one of those responsible for the production of the counter-culture magazine Oz. He befriended, and worked with, a number of figures who became well known for their involvement in the music, art and literature of the day.

5. [11]

   One of the Testator’s friends and collaborators was the rock guitarist, Eric Clapton. When Clapton was a member of the band Cream, the Testator designed album covers for two of Cream’s records which became very well known for their artistic qualities in their own right (J1 [1]). He was also credited as a co-writer of two of Cream’s songs (he provided the lyrics and Clapton wrote the music).

6. [12]

   In the early 1970s the Testator returned to Sydney. While in London, he had lived in a share-house known as “the Pheasantry” with others having similar cultural interests. These included, at various times, Clapton and Germaine Greer (later to become well known as a polemicist and academic). When the Testator returned to Sydney, he lived in a similar collaborative artistic environment in a share-house known as the “Yellow House” at Potts Point.

7. [13]

   In 1978, the Testator inherited Wirian. He lived there for the rest of his life and used it in a similarly collaborative way, inviting friends and acquaintances to stay and work there for extended periods. Many well-known artists, including painters, photographers and musicians, were guests at Wirian and contributed to the creative atmosphere encouraged by the Testator. This continued up until his death in December 2013, at the age of 71.

8. [14]

   From the 1970s onwards, the Testator became increasingly involved with efforts to preserve the Luna Park amusement park on Sydney’s North Shore from redevelopment. In doing so he became fascinated with the aesthetic qualities of Luna Park itself. He also developed an interest in the American singer and entertainer Tiny Tim. Images of Luna Park and of Tiny Tim (sometimes in the same work) became a prominent feature of the Testator’s artistic endeavours from this point onwards.

9. [15]

   The Testator had been interested in filmmaking since the 1960s. During his time at Wirian, he initiated a film project known as Street of Dreams. The idea appears to have been to bring together some of his recurring artistic interests, including Luna Park and Tiny Tim, in the medium of a film. Many others collaborated with him on the work, which was undertaken at Wirian and completed in 1990.

10. [16]

    The major asset in the Testator’s estate at his death was Wirian. According to a valuation obtained by the Executors shortly afterwards, the total value of the estate was $11.25 million. Wirian itself was worth $8 million and there was a further $2.1 million in artwork, furniture and personal effects, mainly or entirely located at Wirian (J1 [7]). The Testator appears to have subsisted on limited income and to have had relatively few liquid assets.

11. [17]

    Wirian during the Testator’s lifetime was, and remains, one of only a few privately owned homes on a large block which is mainly occupied by Cranbrook School, a well known Sydney independent school (Wirian in fact adjoined Cranbrook’s western boundary). The school was always looking to extend its campus, and acquired some of the nearby properties for this purpose. But the Testator was always firmly against any co-operation with Cranbrook in this regard.

12. [18]

    The Testator had himself been educated at Cranbrook. Despite this, he had later developed somewhat of an animus against the school (or at least towards its council and senior management: there were regular visits by art students from Cranbrook to Wirian at the Testator’s invitation). It seems that Cranbrook received a bequest of family money which the Testator thought should have come to him, and which, had it done so, might have allowed him to endow Wirian as he had wished.

13. [19]

    In cl 3 of the will (J1 [17]), the Testator set out to summarise his intentions. He described “[his] wishes and the objects of [his] will” as:

14. [20]

    The question for his Honour so far as the validity of the Trust was concerned depended on the interpretation of cl 4(b). He observed (J1 [25]):

15. [21]

    His Honour continued (J1 [26]-[27]):

16. [22]

    Applying the classification of charities set out by Lord Macnaghten in The Commissioners for Special Purposes of the Income Tax v Pemsel [1891] AC 531, his Honour found that the Trust was one for the advancement, or purpose, of education (J1 [29]-[31]). He reasoned (J1 [33], [35]), by reference to the objects identified in J1 [25] and [27] which I have quoted above, as follows:

17. [23]

    Another question which arose was whether the Executors had power to sell Wirian. His Honour concluded that prior to the establishment of the Trust they did, but upon the Trust being established (in the sense that its charitable status had been accepted) they did not. His reasoning was (at [40]-[42]):

18. [24]

    As already stated, the present proceedings come before me because the directors of the Trustee Company consider that it is no longer practicable to retain Wirian in the manner contemplated by the Testator and in the judgment of Stevenson J. As applicant, the Company is the plaintiff. The Attorney General has been joined as the defendant.

19. [25]

    The proceedings were commenced last year and since they were commenced, the form of the orders sought has been varied as a result of negotiation between the legal representatives of the Trustee Company and the Attorney General. Both the Company and the Attorney were represented on the application and I am indebted to counsel for both parties for their comprehensive and helpful submissions.

Cy-près application

1. [26]

   The application sought approval from the Court for the Trustee Company to execute a deed poll varying the terms of the Trust. As already mentioned, negotiations took place between representatives of the Company and the Attorney General about the terms of the proposed deed poll, which resulted in amendments being made to the initial proposal. I will describe the terms of the final proposed deed poll in more detail below.

2. [27]

   The Trustee Company’s originating summons was accompanied by a statement of facts prepared by its solicitors. In its final form, the application was supported by an affidavit from Mr Donald Grieve KC dated 29 October 2024. Mr Grieve is one of the directors for the Company and gave evidence on behalf of his co-directors as well as himself. Among other things, he verified the statement of facts which had accompanied the summons.

3. [28]

   The evidence was supplemented by an affidavit from Mr Simon Cooper, a director and the interim Chief Executive Officer of the National Art School (“NAS”). This is an institution which, subject to approval, will receive some of the Testator’s collection currently held at Wirian, and some of whose students may be funded out of income derived by the Trust, as will be seen below.

4. [29]

   There was valuation evidence of Wirian itself from a real estate valuer, Mr Malcolm Gunning, and of certain of the contents of the house which the Trustee Company intends, subject to approval from the Court, to sell. The latter evidence came from Mr Andrew Shapiro, who has experience in valuing artworks and collectables.

5. [30]

   Some of the affidavits which were in evidence in the 2015 proceedings were tendered in these proceedings. Those affidavits were relevant to the intentions behind the Testator’s will. This subject is sufficiently covered by what I have said earlier, and it is unnecessary to refer to the 2015 affidavits in any more detail.

6. [31]

   The statement of facts included a description of the circumstances which have led the Trustee Company to make the present application:

7. [32]

   Wirian has greatly increased in value since 2015. Mr Gunning valued it, as at August last year, at $33 million. In a supplementary email, Mr Gunning expressed the opinion that excluding Cranbrook school as a potential purchaser would be detrimental to achieving the maximum sale price for the property. I agree with Mr Grieve in thinking that is a conclusion which would probably have been drawn as a matter of common sense in any event.

8. [33]

   As already mentioned, the proposed amendments are set out in a deed poll varying the existing Trust Deed. The deed poll has been executed, but has no effect unless it is approved by the Court. It was drafted Mr Grieve, who retains a practising certificate despite having retired from full time practice at the Bar.

9. [34]

   Counsel for the Trustee Company summarised the proposal as involving the following elements:

10. [35]

    The key amendment proposed to the Trust Deed is the introduction of an amended set of purposes for the Trust which provides:

11. [36]

    The deed poll also contains a provision requiring the trustee to sell Wirian “for the best price reasonably attainable at the earliest practicable opportunity” and to apply the net proceeds of its sale to the Trust purposes (in their amended form). The deaccessioning policy currently adopted in the Trust Deed is to be changed so as to permit the sale by the Trustee of the remainder of the artworks and other contents of Wirian which have not been accepted for donation.

12. [37]

    The proposed deed also empowers the trustee to borrow money to defray the costs of these proceedings, the cost of the sale of Wirian, and the costs of any incidental costs (including removal and storage of chattels at Wirian) up to a limit of $100,000, or, if the Court directs, a higher amount. It provides for the change of the Trust’s rather unwieldy existing name to “The Martin Sharp Trust”.

13. [38]

    Other amendments are proposed to the Trust Deed but they are consequential or mechanical in nature and do not call for any separate description.

14. [39]

    In his affidavit, Mr Grieve set out the reasons why he and his co-directors consider that the amendments to the Trust Deed proposed in the deed poll are necessary and desirable. He stated that, for the reasons given in the statement of facts, it is no longer practicable for the Trustee Company to retain Wirian. He considered that there is no alternative to donating the Testator’s art collection to one or more institutions who will be capable of looking after and displaying it, selling Wirian, and using the proceeds to fund an endowment. This could be used to achieve the purposes identified in the Testator’s will as best as can be done without maintaining Wirian in its current form. Mr Grieve described the extensive negotiations which have been undertaken with the three institutions who are, subject to the Court’s approval, to receive the bulk of the Testator’s art collection. Mr Shapiro has valued the remaining contents of Wirian, which are to be sold, at $350,000.

15. [40]

    So far as the use of the endowment fund for the support of artists is concerned (subparagraph b of the proposed amended purposes of the Trust), Mr Grieve emphasised that, from the use of the words “such as”, the NAS would not necessarily be the sole institution whose students would be supported by the fund. Rather, the directors’ intention would be to promote the fund and encourage applications from artists and aspiring artists all over Australia. This does not, of course, detract from Mr Cooper’s evidence, in which he described NAS as the leading independent fine arts school in Australia and sets out the courses and facilities which it offers.

16. [41]

    The Charitable Trusts Act 1993 (“CTA”) recognises, but liberalises, the pre-existing cy-près doctrine as it had developed in the Chancery Courts. Under that doctrine, there were two conditions to be satisfied before the Court’s power to amend the purposes of a charitable trust were enlivened. The first was that it was impossible or impracticable to fulfill the purposes in their current form. The second was that the settlor or testator had exhibited a “general charitable intention”.

17. [42]

    CTA s 9 liberalises the requirement, which had been perceived as a strict one, that the fulfilment of the existing trust purposes be “impossible or impracticable”. It relevantly provides:

18. [43]

    CTA s 10 facilitates satisfaction of the requirement to prove a general charitable intention:

19. [44]

    In Perpetual Trustee Company Ltd v Attorney General for the State of New South Wales (The Will of the Hon George Nesbitt) [2018] NSWSC 1456 (“Perpetual”), Leeming JA, sitting at first instance, analysed the meaning of the phrase “the spirit of the trust” in s 9 of the CTA: at [56]-[70]. I respectfully adopt his Honour’s analysis.

20. [45]

    It is traditional in the law of charitable trusts to identify trust “purposes” which are more fundamental than the totality of the terms of the trust, some of which may be mechanical or inessential to achieving those “purposes”. The “spirit of the trust” involves an identification of the aim or objectives of the trust at a still more fundamental level.

21. [46]

    Counsel both for the Trustee Company and the Attorney General submitted that the requirements of CTA s 9(1) were satisfied in the present case. Building on the objects identified by Stevenson J at J1 [25] and [27], counsel identified the “spirit of the trust” as:

    1. (1)

       preserving, and, where possible, enhancing the Testator’s artistic legacy for appreciation by members of the public; and

    2. (2)

       encouraging the creativity of artists and aspiring artists, particularly in areas in which the Testator was interested, and in a collaborative environment.

22. [47]

    Counsel submitted that, owing to the circumstances set out in the statement of facts, pursuing the purposes declared in the Trust Deed in its current form was no longer a suitable and effective method of using the Testator’s estate. Counsel noted that even if it was not completely impossible to continue to retain Wirian for the moment, the time was rapidly approaching when it would be. Counsel noted that in Hunter Region SLSA Helicopter Rescue Service Limited v Attorney-General of New South Wales [2013] NSWSC 1749, White J held (at [37]) that the power under CTA s 9 can be applied proleptically in such circumstances. And, on the conclusions reached by Stevenson J, there was clearly a general charitable intention in the present case.

23. [48]

    I accept these submissions, including the analysis by Stevenson J of the Testator’s intentions as expressed in the will on which they are based. Indeed, the circumstance that it is not possible to open to Wirian to members of the public because of a lack of insurance means, I think, that the case would probably fit within the traditional requirement that the effectuation of the purposes be “impossible or impracticable”.

24. [49]

    In Perpetual at [70], Leeming JA noted that a question might arise as to whether reference to the “spirit of the trust” provided for by CTA s 9(1) was available in cases which satisfied the traditional test. His Honour’s tentative view was that it would. I respectfully agree. Furthermore, as his Honour’s analysis demonstrates, the idea of a “spirit of the trust” can be traced back to cases decided under the traditional rule. The concept would thus guide the outcome in any event.

25. [50]

    As Stevenson J found, it was clearly the Testator’s fervent wish that Wirian would be preserved, along with his art collection, in situ, to allow for public enjoyment of his works and to create a location for ongoing creative endeavour. Equally clearly, however, the Testator himself recognised that this might not be possible. There is no suggestion that the Testator considered that, if Wirian could not be preserved in its current form, then his property should be devoted to some objective of a different type.

26. [51]

    In short, the Testator saw Wirian as the setting within which the objectives of the Trust as identified above, would be achieved. Its retention was not an end in itself and was not essential to the “spirit” of the Trust.

27. [52]

    I therefore conclude that the Court’s power to vary the purposes of the Trust is engaged.

28. [53]

    It is plain from Mr Grieve’s evidence that the proposal advanced for amendment of the Trust Deed has been carefully crafted so as to preserve what I have accepted to be the “spirit “of the Trust. Mr Grieve has provided a description of the preliminary work already undertaken on behalf of the Trustee Company, and of the plans which have been adopted for how it would discharge its obligations under the revised terms of the Trust Deed, should the application be approved. Clearly, considerable effort has gone into devising a scheme which is a realistic and achievable way of maintaining the “spirit” of the Trust in the terms which I have accepted.

29. [54]

    At one point I asked counsel whether, given the Testator’s focus on artists living together in a share-house to spur their artistic creativity, it would not have been possible to sell Wirian and use the proceeds to establish some form of shared residence for artists and aspiring artists where property prices are lower. On the valuation evidence before me, a property could be purchased elsewhere while still leaving ample monies by way of endowment to continue the housing of the collection and the provision of a place for artists to work collaboratively.

30. [55]

    In response, counsel referred me to the observations of Bryson J in Attorney General for New South Wales v Fulham [2002] NSWSC 629 at [18]:

31. [56]

    I again accept counsel’s submission. In an application such as the present, the Court is not obliged to reject a proposal falling within the “spirit of the trust” merely because it considers that some other proposal might be identified which is in some way closer to that “spirit”.

32. [57]

    Furthermore, on reflection the idea has its difficulties. The creative atmosphere which existed at Wirian has now, with the death of the Testator, passed into history. The directors of the Trustee Company cannot realistically be expected to recreate it. Requiring them to set up some form of artistic colony elsewhere would (to say the least) hardly be certain to be successful. The risk would be that, sooner or later, the venture would prove unworkable, and the Court would be faced with a fresh application to approve, in substance, what it is being asked to approve now.

33. [58]

    For these reasons I am satisfied that the proposal in its current form should be approved.

34. [59]

    Counsel for the Attorney General raised a concern that in the event of approval of the application, the provision in the will directing the Testator’s trustees not to deal with Cranbrook might prevent the Trustee Company from accepting a bid from the school to buy Wirian, thus potentially reducing its value on the open market. Counsel’s suggestion, which was tentative, was that some form of provision could be made in the scheme, or an order could be made under s 81 of the Trustee Act 1925, to put the Trustee Company’s power to accept a bid from Cranbrook beyond doubt.

35. [60]

    Counsel’s concern was not shared by Mr Grieve. His view was that a construction of the terms of the Trust which would prevent the Trustee Company from accepting a bid for Wirian was not tenable. He stated that he and his co-directors would not feel themselves precluded, if approval for the proposed amendments to the Trust Deed is granted, from accepting a bid from Cranbrook if they considered that that would be in the best financial interests of the Trust.

36. [61]

    While I would not express myself in quite the same way as Mr Grieve, I agree with his conclusion. The direction in the Testator’s will was a direction which applied to actions taken by the Trustee “in the administration of” the trusts declared by it. As Stevenson J found, in the events which happened, the Trustee had no power to sell Wirian. Clearly the Testator was not contemplating the situation which has now arisen.

37. [62]

    In my view, the Testator’s direction is limited to the administration of the Trust as it then stood, and the word “deal” should be understood in that sense. Once the terms of the Trust have been varied by the Court so as to provide for the sale of Wirian, the direction would not prevent the directors of the Trustee Company from accepting an arm’s length bid from Cranbrook. Indeed, once the amendments have been approved, the Trustee Company will be obliged to do everything reasonably possible to obtain the best price. If Cranbrook’s participation in the sale process is likely to maximise the return to the Trust, the directors will be duty-bound to facilitate it.

38. [63]

    Counsel for the Trustee Company did not ask me to make any formal order on this question. Counsel intimated that if I agreed with Mr Grieve’s conclusions, then it would be sufficient for me to state my views in this judgment as I have done.

39. [64]

    Counsel for the Trustee advanced two alternatives to an approval under CTA s 9. One was the making of an order under s 81 of the Trustee Act 1925 empowering the Trustees to sell Wirian. The other was judicial advice concerning the dispersal of the Testator’s art collection. In view of the conclusions which I have reached, it is not necessary to consider these alternatives.

40. [65]

    In accordance with the usual practice which prevails in applications of the present type, the parties should both receive orders for their costs to be paid out of the assets of the Trust. The Attorney General sought that his costs only be paid on a party-party basis.

Orders

1. [66]

   The orders of the Court are:

   1. (1)

      Declare pursuant to section 9 of the Charitable Trusts Act 1993 (NSW) that the original purposes of the trust constituted by the late Martin Ritchie Sharp in his last will dated 20 September 2012 amended by codicil on 21 November 2013, probate of which was granted on 14 October 2014, and thereafter the subject of an undated deed of trust executed on or about 14 December 2018 ("the deed of appointment"), have, wholly or partly, ceased to provide a suitable and effective method of using the trust property.

   2. (2)

      Order approving a cy-près scheme in the terms set out in the amended deed poll which is annexed to the plaintiff’s amended summons dated 31 March 2025.

   3. (3)

      Order that the costs of the parties be paid from the Trust assets, the plaintiff’s costs on the indemnity basis and the defendant's costs on the ordinary basis.