Sometimes, an entity can change the purpose of their charitable trust. Housing Choices Australia Limited v Attorney General for the State of Victoria [2024] VSC 107 (Housing Choices) was a case heard in the Victorian Supreme Court that focussed on this exact scenario.
Facts
Housing Choices Australia Ltd (HCAL) is the current trustee of the Baxter Homes Trust, and the registered proprietor of Baxter Homes, and is the plaintiff in this case. The defendant is the Attorney General of Victoria. Baxter Homes consisted of 16 individual houses, originally created for the purposes of housing ‘age deserving or infirm’ persons. In an effort to redevelop Baxter Homes, HCAL sought funding from Homes Victoria, however this presented an issue when funding could not be obtained due to their insistence of Baxter Homes accommodating a particular tenancy profile, one which did not line up with the original purposes of the Baxter Homes Trust.
Issue
In Housing Choices, the court had to consider whether the original purposes of the Baxter Homes Trust could still be carried out effectively, or if they had ceased to provide a suitable and effective method of using the property available by virtue of the gift.[1] The court needed to determine if the original purposes of the trust should be altered, and if the cy-près doctrine should be applied to vary the trust’s purposes for the benefit of the inhabitants of Victoria.[2] Under these claims, HCAL sought to change some phrases held within clause 1 of the Trust (i.e. the clauses setting out the purposes of the Trust): that the words ‘aged deserving or infirm’ be altered to ‘aged or deserving or infirm,’ and that ‘inhabitants of Geelong Victoria or its neighbourhood’ be altered to ‘inhabitants of the State of Victoria.’ They held that these phrases in the Trust had bcome impractical and ineffective, further compounded by the defunct status of the Ladies Benevolent Association, which was initially involved in the trust’s administration.
Additionally, the court considered whether certain documents should remain confidential and not be made publicly available.
Ruling
The court considered the Charities Act 1978 (Vic), the Supreme Court (General Civil Procedure) Rules 2015 (Vic), and the Housing Act 1983 (Vic) in their ruling.
The proposal of the use of a cy-pres scheme to alter the original purpose of the Trust was approved by the court, as it would guarantee HCAL’s compliance with the funding deed to redevelop Baxter Homes. It also considered that if a cy-pres scheme were not applied and HCAL’s application rejected, the consequences could be significant. Additionally, HCAL’s purposes outlined in its constitution closely align with the purposes of the Trust, and the proposed alteration to the charitable purpose of the Trust would serve the spirit of the gift.[3]
Therefore, the court ruled that the original wording in clause 1, ‘aged deserving or infirm,’ could be changed, as it is ambiguous, and the term does not necessarily align with contemporary social and economic conditions which affect housing need.[4] Additionally, Baxter Homes, together with all other property and funds of the Trust, for its general purposes and objects, would be held for the benefit of the inhabitants of the State of Victoria.[5]
Certain affidavits and exhibits remain confidential to the parties and to any future trustee of the Baxter Homes Trust, subject to further order of the Court.[6]
Significance
The court’s decision ensures that the trust property can be used effectively for charitable purposes in line with contemporary needs, while also providing HCAL with the flexibility to manage the trust property in accordance with its broader mission.
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[1] Housing Choices, [5a]
[2] Housing Choices, [5b]
[3] Housing Choices, [38]
[4] Housing Choices, [37]
[5] Housing Choices, [39]
[6] Housing Choices, [42]
