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June Shirley Overall v Family Voice Australia Incorporated [2014] NSWSC 736 (Supreme Court of New South Wales, Darke J, 5 June 2014)

This was a case concerning a gift in a will. Malcolm Charles Smith (the testator) left a net estate of $700,000. Clause 3 in his will provided:

I GIVE DEVISE AND BEQUEATH to my Trustee all my real and personal estate of whatsoever nature and wheresoever situate UPON TRUST after payment thereout all my just debts funeral and testamentary expenses and all death probate and estate succession and other like duties payable in respect of my estate TO HOLD the balance as follows:

(a) as to 30% thereof:

(i) a 1/3 share for the Australian Festival of Light of 115 Liverpool Road, Enfield;

(ii) a 1/3 share for Anglicare of 18 Parkes Street, Parramatta; and

(iii) a 1/3 share for the Christian Democratic Party (Fred Nile Group) of Parliament House, Macquarie Street, Sydney,

PROVIDED THAT if any of the organisations referred to have ceased to exist as at the date of my death, then such of the said organisations that remain in existence as at my death shall take the share or shares which otherwise would have been held for the organisation or organisations which have ceased to exist as aforesaid and, if more than one, in equal shares as tenants in common.

The central question in the case was whether the organisation described as the Australian Festival of Light of 115 Liverpool Road, Enfield, had ‘ceased to exist’ within the meaning of the proviso to clause 3(a) as at 4 June 2010, the date of the testator’s death. Two defendants claimed to be successors to the defunct Australian Festival of Light. These were Family Voice Australia Incorporated and Australian Christian Nation Association Incorporated. The other two defendants were Anglicare and the Christian Democratic Party (Fred Nile Group) as claimants of the possibly unclaimed share.

The Festival of Light was an unincorporated association which had commenced operation in Australia in 1972 with branches in each of the six States. It had aims which were stated in a magazine publication of January 1975 as follows:

  1. To mobilize Australians in support of purity, love and family life;
  2. To proclaim the value of Christian standards of behaviour for family and community life;
  3. To persuade national and community leaders to strengthen the family as the basic unit of society;
  4. To resist influences that lower moral standards and threaten human dignity;
  5. To research the social implications of Biblical ethics and the effects of modern trends on family and community life.

However, in 1977, after an energetic start in Australia, the National Council and the National Executive of the organisation ceased to operate, due to difficulties in co-ordinating the branches across Australia, and cost. Some of the state branches became moribund, but the South Australian and the New South Wales branches continued in existence. From at least 1977, the testator was actively involved in the activities of the New South Wales branch, and he remained involved until shortly prior to his death in 2010.

Although the South Australian branch became incorporated, the New South Wales branch remained unincorporated. This body apparently had no constitution, and no stated aims other than those in the magazine publication of 1975. In 1979 the Australian Festival of Light in New South Wales merged with another organisation, the Community Standards Organisation, but the new body remained unincorporated.

In November 2004, the unincorporated association made an application to the Office of Fair Trading to become incorporated under the Associations Incorporation Act 1984 (NSW). The application form which was submitted gave 115 Liverpool Road, Enfield as the address of the unincorporated association. The application was successful and a body by the name of Australian Festival of Light – Community Standards Organisation Incorporated (FOL-CSO) came into being on 11 November 2004. In 2007, the organisation became the Festival of Light Australia Incorporated (FOLA). FOL-CSO Inc was subsequently wound up. In 2008 FOLA changed its name to Family Voice Australia Inc. FOLA was subsequently wound up in December 2008.

Was there a valid gift in the will to the unincorporated Australian Festival of Light or its successors? His Honour said that there was. The gift should be construed as one for the benefit of the purposes of the unincorporated association (at [42]):

...the purposes of the unincorporated association, as expressed in its objects (which I have found were those that were agreed upon in 1974 and set forth in the first issue of "Light" [the magazine]) are all charitable in law. The third object does involve political activity but (in the absence of full argument on the point) I would not conclude that the necessary element of public benefit is lacking such that it should not be regarded as charitable (see Aid/Watch Incorporated v Commissioner of Taxation [2010] HCA 42; (2010) 241 CLR 539 at [47]–[49]).

Did the charitable gift fail because the unincorporated association was no longer in existence at the time of the testator’s death in 2010? Normally, a gift in a will in these circumstances will lapse. His Honour said that it did not in this case.  The history of the organisation and its successors was clear, as was the testator’s intention (at [46]–[47]):

The unincorporated association (and the incorporated association which came after it) has undoubtedly ceased to exist as a legal entity. In that sense, the beneficiary described in the gift, and ‘the organisation’ so referred to, has ceased to exist. However, it seems to me that, properly construed, clause 3(a) of the will calls for a wider view of that which must cease to exist before there is a lapsing of a gift. As noted earlier, the gift (indeed all of the gifts made by clause 3(a) of the will) should be construed as a gift, not to the described body or organisation itself, but as a gift for the benefit of the purposes of the described body or organisation. In those circumstances, I do not think that it would be in accordance with the testator’s intention to construe the clause in such a way that a gift would lapse merely because the described body or organisation ceased to exist. That would tend to cause the validity of gifts to depend not so much upon whether the objects to be benefited are being pursued as of the date of the testator’s death, as upon the formal organisational structures by which the objects to be benefited are pursued as at the date of death. In my opinion, the clause should be construed in such a way that there will be no lapse if, as at the date of the testator’s death, there is a successor organisation in existence which is carrying on activity in pursuit of the same purposes formerly possessed by the described organisation.

Therefore, although the described association had ceased to exist at the time of the testator’s death, there was an obvious successor to receive the gift. Thus, the gift did not lapse and was valid.

The case may be viewed at: http://www.austlii.edu.au/au/cases/nsw/NSWSC/2014/736.html

Implications of this case

This case again illustrates the need for keeping an updated will, especially where gifts to charity are involved. Charities can change their name, merge, become moribund or be wound up over time. All of these issues arose in this case. However, His Honour took the view that, although the original unincorporated association had ceased to exist, there was a clear line of succession which would allow the intention of the testator to be carried out. As such, the gift in the will did not lapse, and there was no need for the first defendant to apply for an application of the gift cy-près.

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