A housing trust’s modernisation requires Court approval

Background

The Baxter Homes Trust (Trust), was a charitable trust established in Victoria by a deed executed in 1960.

Its purpose was to provide aged inhabitants of Geelong Victoria or its neighbourhood with housing as administered by The Geelong and Western District Ladies Benevolent Association’ incorporated under the Hospitals and Charities Act 1890.

The Trust comprised approximately 16 small individual dwellings, each approximately 35m², constructed in the 1960s. They were not accessible to individuals with significant physical disabilities.  Baxter Homes required renovation works of over $860,000 to bring the property into an acceptable condition.

The trustees changed until it was proposed that Housing Choices Australia Ltd (HCAL) take over responsibility for the dwellings and their renovation. HCAL’s purpose was to “provide affordable housing and related support to people in Australia who are disadvantaged through homelessness, disability, mental illness, ageing, low income or other factors“.

HCAL then applied for government funding for the project and stated that it intended to apply for a cy près order[1] to vary the purposes of the Trust to include social and affordable housing not restricted to ‘aged deserving or infirm’ persons as currently specified in the trust deed.

The government granted funding on the condition that HCAL obtain the cy près order.

In 2023, HCAL sought judicial advice[2] and orders to settle a cy près scheme whereby HCAL “holds Baxter Homes, together with all other property and funds of the Baxter Homes Trust, for its general purposes and objects, for the benefit of the inhabitants of the State of Victoria“.

The Court found that the original purposes of the Trust had ceased to provide a suitable and effective method of using the property available by the gift, regard being had to the spirit of the gift.

The Court agreed that the original purposes of the Trust should be varied by way of cy près scheme so that HCAL holds Baxter Homes, together with all other property and funds of the Trust, for its general purposes and objects, for the benefit of the inhabitants of the State of Victoria.

This is not the usual practice of Australian Courts, as trust property is given for the purposes of a company rather than for a charitable trust.

However, this property transfer was subject to a requirement that HCAL notify the Attorney-General of any substantial change to HCAL’s general purposes and objects, and orders were made to that effect. This was to mitigate the risk that HCAL would evolve into an organisation that does not align with the spirit of the cy près

The order assumes that a company such as HCAL could, by law, change its objects if its members followed the approved processes and even convert to a proprietary limited for-profit company: refer to Grain Technology[3] as to whether a non-profit research company held its assets for charitable purposes as set out in its corporate objects, and whether the Court had jurisdiction over ‘charitable corporations’ with the power to enforce ‘trust-like’ obligations.

There is perhaps a good case for consideration of statutory reform to facilitate the Court and Attorney General’s supervision of charitable companies under State law.

[1] The cy-près doctrine is a legal doctrine which allows a court to amend a legal document to enforce it “as near as possible” to the original intent of the instrument, in situations where it becomes impossible, impracticable, or illegal to enforce it under its original terms. The doctrine first arose in the English courts of equity, originating in the law of charitable trusts.

[2] Housing Choices Australia Limited v Attorney General for the State of Victoria [2024] VSC 107

[3] Grain Technology Australia Ltd v Rosewood Research Pty Ltd (No 3) [2023] NSWSC 238