On Monday 25 May 2020, the Supreme Court of New South Wales published its decision in response to an application to the Court for advice by the trustees of the New South Wales Rural Fire Service & Brigades Donations Fund ("the RFS Fund").
The Supreme Court was asked to provide advice on whether the proceeds of Celeste Barber's Bushfire Appeal could be used for a variety of purposes. Of these purposes, one that attracted significant public interest was whether the proceeds could be given to interstate charities and rural fire services, or could be used to provide relief to people and animals affected by bushfires.
What did the Court say?
The Supreme Court of New South Wales decided that the proceeds could not be given to interstate charities and fire services, and could not be used to provide relief to people and animals affected by bushfires.
The Court did say, however, that the other purposes (which included support funds the families of injured and deceased rural firefighters, trauma counselling, and support funds for skill training for volunteer firefighters) were all authorised.
How did the Court reach this decision?
The Court's decision is quite nuanced and considers numerous pieces of legislation which apply specifically to the RFS Fund. However, even from a general principles perspective, the decision the Court made was the only decision available at law.
In essence, a trust occurs where one entity (the trustee) holds property (the trust fund) for the benefit of another person (the beneficiary) or for a particular purpose. To create a trust, the law requires that there are three certainties:
Certainty of intention – it must be intended that a trust be created over property;
Certainty of subject matter – the property of the trust must be defined, and must be identifiable; and
Certainty of object – the purpose of the trust must be certain (that is, is the trust to benefit a particular person or group of people (the beneficiaries), or a particular charitable purpose).
The main consideration of the Court was whether the proposed use of the proceeds was within the objects of the RFS Fund. That is, were the proposed uses part of the purpose for which the RFS Fund was established?
After reviewing the RFS Fund's trust deed (which sets out the rules and the purpose of the trust) and certain legislation which relates specifically to the RFS Fund, the Court found it would be outside the objects of the RFS Fund to use proceeds for the benefit of interstate charities and fire services, or for the benefit of people and animals affected by bushfires.
Why couldn't the Court decide otherwise?
While the decision is unfortunate in its effect, it was the only decision available to the Court based on the law of trusts.
Some commentators have suggested that the Court should have authorised the use of the proceeds on moral grounds. The nature of a trustee's role as a controller of property for the benefit of others means that the trustee holds considerable power. As such, the law imposes significant obligations on trustees to ensure that a trustee cannot misuse that power. The most paramount of these obligations is that a trustee must always act in the interest of the objects of the trust. Accordingly, the trustee does not have the authority to use the trust fund in a way that is outside the scope of the objects of the trust.
The Court has very limited powers to "redirect" a gift to a trust. These powers only arise where it is impossible, impracticable or illegal for a gift to be made to a trust. This is known as a "cy-pres" scheme, and usually only applies where a person leaves a gift in a Will to a charitable trust which no longer exists at the time of a person's death.
If you have would like to discuss donations to charitable trusts during your lifetime or in your Will, please contact our Succession Planning and Estates team.