There is scant litigation between charitable foundations and donees in Australia and even less where a potential donee brings the action. In a recent Queensland Supreme Court case that has yet to fully proceed to trial, a preliminary action dismissed a claim against one of the defendants, the founder of the foundation.

The Events

The Trustees of the Australia Islamic Educational Trust (Trustees) had plans to build 2 schools in Queensland.

Sheikh Mohammed bin Rashid Al Maktoum became ruler of Dubai, and vice-president and prime minister of the UAE in 2006, after his elder brother, Sheikh Maktoum Bin Rashid Al-Maktoum died during a visit to Australia. In a 2006 letter, the Trustees briefly outlined a proposal to build 2 schools at Brisbane and the Gold Coast in the name of the recently deceased Sheikh Maktoum.  It did not make a request for any funding.  The letter proposed one school would be built in Brisbane and the other at the Gold Coast, but provided no concrete proposal and stated:

hence, in the light of the above fact and information we would like to request for you to consider the above proposal favourably“.

The personal Secretary of Sheikh Hamdan bin Rashid Al Maktoum, the Chairman of the Al Maktoum Foundation (Foundation), sent the following letter some 2 weeks later to the Trustees (at[ 32]):

Sheikh Hamdan has also approved in principal [sic] your request to build two schools, one in Brisbane and the second on the Gold Coast.

Is [sic] Highness’s charity organisation, The Al Maktoum Foundation in Dubai, has been instructed to follow up with you on how we should proceed.

I would therefore like full information on your Academy, including but not limited to the following items:

  1. Number of Students
  2. Methods of funding at present and in the future
  3. Are there any Government Grants provided
  4. Names of board of directors and treasurer
  5. Site plans for schools in Brisbane and Gold Coast.

Please note that the schools, to be named after Sheikh Maktoum Al Maktoum and Sheikh Hamdan Al Maktoum will retain this title forever, and will be run both financially and administratively by you after completion, in line with the laws and regulations prevailing in Australia.

I will be in England until 23rd April 2006 after which I shall return to Dubai for approximately one week before returning again to England, I would be grateful if you would visit me in Dubai in order to discuss any further details, which will be a [sic] documented in an official agreement between your academy and The Al Maktoum Foundation.”

The Trustees replied two weeks later in a letter addressed to the personal Secretary of the Sheikh and the Foundation (at [37]):

Thank you for your kind letter and your in principal [sic] approval to build two schools, one in Brisbane and the second on the Gold Coast.

We would be happy to work with the conditions stipulated in your letter and ensure that our trust deeds reflect that the name of our educational complex will permanently acknowledge the generous contribution of his Highness, the late Sh. Maktoum Bin Rashid Al Maktoum. We would propose to your good self to name the 30 acre complex in Brisbane the Sh. Maktoum Al Maktoum Educational Complex and use the same name for the complex in the Gold Coast.”

Between April 2006 and December 2012, the Trustees claimed to have had meetings with representatives of the Foundation and lawyers acting on behalf of the personal Secretary of the Sheikh, but never the Sheikh. In 2007 a memorandum of understanding (MOU) was drafted by the Trustees between them and the Foundation including statements such as “Al Maktoum Foundation and the Academy have agreed to enter into this legally binding MOU” and included a term to make provision for the Foundation being very generous in making donations with the amount left blank to be inserted (at [44]).

Further, it was claimed that there was a meeting between the personal Secretary of the Sheikh, a director of the Foundation, and the Chairman of the Trustees in Dubai, where the Trustee Chairman explained the financial costs incurred and hardship experienced by the plaintiffs. The personal Secretary of the Sheikh allegedly stated (at [55]):

“Yes, it is a bit late and too long, we should start and proceed with the project. Tonight I will meet with [the Sheik]. I will personally take charge of this matter and see to it that all payments and issues are settled without further delay.”

Various further correspondence was claimed to have been carried on in the same vein until 2016, but no formal agreement was entered into by the parties.

The Claim

The Trustees claimed that, either by reason of conventional estoppel or promissory estoppel, the Sheik and the Foundation were estopped from departing from a common understanding, or denying their liability to reimburse the plaintiffs for the cost of the acquisition of land and construction of the schools. Further, there was a claim for breach of warranty against the personal Secretary of the Sheikh.

Summary Judgment

The Sheik contended that he was entitled to summary judgment as the facts, and the pleaded documents did not provide a basis for the claims made against him. He argued that the pleaded material did not establish that the Trustees held or could reasonably hold an assumption or expectation that he would pay certain costs of constructing the schools or was obliged to reimburse those costs.

The Court considered arguments that all parties understood that it was to be the Foundation that would be the body funding or reimbursing the Trustees, not the Sheik personally. Approval in principle on its plain meaning meant a non-binding arrangement and that an official agreement was yet to be reached. It also indicated that the personal Secretary of the Sheikh was involved throughout, and that as the personal Secretary of the Sheik, he had authority to bind the Sheik personally.

As to the claim that the actions of the personal Secretary to the Sheik could be attributed to the Sheik himself, the Court found that there was no claim that he represented that the Sheik would personally fund the schools rather than have the Foundation do so. The fact that the Sheik may have been in a position to influence the Foundation and the personal Secretary to the Sheik in relation to the provision of funding by the Foundation did not advance the Trustees’ case.

The Court gave summary judgment and struck out the claim against the Sheik as it did not have any real prospect of succeeding.

Al Azahri, Azhari and Azhari as trustees of the Australia Islamic Educational Trust v Sheik Al-Maktoum [2020] QSC 297

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