Grain Technology Australia Ltd v Rosewood Research Pty Ltd (No 3) [2023] NSWSC 238 is a case that revolves around the management and purpose of assets held by certain companies, specifically whether these assets were held on trust for charitable purposes.
Background
The case arose due to disputes concerning the affairs of three proprietary companies based in Sydney. These companies were involved in research and development to aid the manufacture of bread and related products. The principal asset in question was a property at North Ryde, valued at approximately $40 million. The first defendant company had been originally incorporated in 1948 under the name “The Bread Research Institute of New South Wales Limited”, with its objects being set out in a memorandum of association. The company adopted new objects in a 1995 constitution, which were claimed to be exclusively charitable.
The plaintiffs sought declarations that the assets of these companies were held on trust for charitable purposes, which would ensure that the companies’ affairs were conducted to advance these purposes in the future.
Jurisdiction
Supreme Court of New South Wales
Facts
The first defendant, Rosewood Research Pty Limited, originally known as The Bread Research Institute of New South Wales Limited (BRI), was incorporated in 1948. It underwent several structural changes over the years, including becoming a proprietary company limited by shares in 2010.
The second defendant, Pathway Properties Pty Limited, is a wholly-owned subsidiary of Rosewood and holds the North Ryde property as trustee of a unit trust.
The third defendant, Asia Pacific Technologies Pty Limited, is another proprietary company limited by shares and a subsidiary of Rosewood.
Key Issues and Determinations
The court examined whether the assets of the companies were held on trust for charitable purposes. The charitable purposes involved research and development in aid of the manufacture of bread and related products, including improvements in wheat and other grains and manufacturing processes.
The court found that even if a trust had been created in 1995 or 1948, it would not have been a valid charitable trust. The adoption of the new constitution in 1995 did not constitute a declaration of trust over its assets for charitable purposes. The resolution merely adopted new corporate governance rules, without manifesting a clear intention to devote the property to charitable purposes. The objects set out in BRI’s 1995 constitution, while containing some elements that might be charitable, were not solely charitable in nature. Therefore, the BRI property was not subject to a constructive charitable trust, and its property was not held on terms of a charitable trust cognisable in equity.
The court did not find sufficient legal grounds to classify the property as being held under a charitable trust, and determined that BRI’s objects were not solely charitable in the legal sense. Thus, BRI was not subject to the jurisdiction that the court might have over charitable corporations with exclusively charitable objects.
Key Findings
The court concluded that the trust purportedly created in 1995 or 1948 was not a valid charitable trust. Therefore, the property of BRI (Bread Research Institute of Australia Limited) is not held on the terms of a charitable trust cognisable in equity. The court found that BRI could be seen as an ‘institution’ but not as a trustee for charitable purposes.
The court dismissed the claims for declarations of trust and left open the question of whether there was another basis for making orders about the administration of BRI’s affairs or the destination of its property on winding up.
This case highlights the complexities involved in determining the nature of trusts and the specific legal requirements for a trust to be considered charitable under the law.
If you need any legal assistance, please get in touch with Warlows Legal today using the contact information below.
