Supreme Court New South Wales

• Medium Neutral Citation: Kostka v The Ukrainian Council of NSW Incorporated [2013] NSWSC 222
• Hearing dates: 6 December 2012
• Decision date: 26 March 2013
• Jurisdiction: Equity Division
• Before: Young AJ

Decision

All relevant gifts held charitable; cy pres scheme approved

• Catchwords: Charities-Gift to ethnic women's association-whether charitable-whether cy-près scheme may be ordered where there is no express trust
• Legislation Cited: Charities Act 2006 (Imp)
• Cases Cited: Attorney General (NSW) v Perpetual Trustee Co Ltd [1940] HCA 12; 63 CLR 209 (Milly Milly case); Attorney-General for the State of NSW v Adams [1908] HCA 51; 7 CLR 100; Commissioner of Valuation for Northern Ireland v Fermanagh Protestant Board of education [1969] 1 WLR 1708 (HL); Commissioners for Special Purposes of the Income Tax v Pemsel [1891] AC 531; Flynn v Mamarika (1996) 130 FLR 218; Gray v Australian Cancer Foundation for Medical Research [1999] NSWSC 492 (Young J); Halpin v CR Seear [1977] Ch Com Rep at 34-36; In re Buckton [1907] 2 Ch 406; In re Wallace [1908] VLR 636; McGrath v Cohen [1978] 1 NSWLR 621; Moggridge v Thackwell (1802) 7 Ves Jr 36; 32 ER 15; Molly Varnum Chapter DAR v City of Lowell 204 Mass 487 (1910); Moran v House [1924] HCA 44; 35 CLR 60; Murdocca v Murdocca (No 2) [2002] NSWSC 505; National Society for the Prevention of Cruelty to Children v Scottish National Society for the Prevention of Cruelty to Children [1915] AC 207; Permanent Trustee Company Limited Re State of New South Wales (Santow J 23 November 1995 Unreported); Radmanovich v Nedeljovic (2001) 52 NSWLR 641; Re Bennett [1960] Ch 18; Re De Little [1943] St R Qd 31; Re Societa Unita and Town of Govenhurst (1977) 16 OR (2d) 785 affirmed (1978) 6 MPLR 172; Roche v Attorney General (Young J 11 March 1993 Unreported); Townsend v Adult Deaf & Dumb Society (Bowen CJ in Eq 26 May 1975 Unreported); Vancouver Society of Immigrant and Visible Minority Women v Minister for National Revenue (1999) 169 DLR (4th) 34; Victorian Women Lawyers Association Inc v Federal Commissioner of Taxation (2008) 170 FCR 318
• Texts Cited: 4th edition of Picarda "The Law and Practice Relating to Charities" (Bloomsbury Professional 2010); 9th edition of "Tudor on Charities"; Ford & Lee, The Law of Trusts [20.290]
• Category: Principal judgment
• Parties: Plaintiff - Wolodymyr Kostka; Defendant 1 - The Ukrainian Council Of NSW Incorporated; Defendant 2 - The Ukrainian Central School in Sydney Incorporated; Defendant 3 - Trustees of the Ukrainian Catholic Church in Australia, Eparchy of St Peter and Paul Of Melbourne ARBN 093 079 951; Defendant 4 - Veselka Ukrainian Dance Ensemble of Sydney Incorporated; Defendant 5 - Ukrainian Youth Association Of Australia (Sydney) Limited; Defendant 6 - Olesj Mykolaiovich Humenuik as representative of All Ukrainian Brotherhood of OUN -UPA; Defendant 7 - Ukrainian Women's Association (UWA) NSW; Defendant 8 - The Ukrainian Society Cooperative Limited; Defendant 9 - The State of New South Wales, Attorney General of NSW; Interested Party 1 - Shan Irene Wolody; Interested Party 2 - Odarka Brecko; Other - Krystina Hantel (Cl 11 of will); Other 1 - All Ukrainian Organisation of Invalids at War, Armed Forces and Combatants (non-party); Other 2 - Ukrainian Association of Political Prisoners and Repressed (non-party); Other 3 - Lviv Regional Organisation of the League of Political Prisoners of Ukraine (non-party); Other 4 - Ukrainian Womens' Association, Lidcombe (non-party)
• Representation: Counsel: P - M Gorrick; D1,7 - Thomas Tarmo & Co (sol); D2,8, Other1, 2, 3 - N Bilinsky; D3,4,5, Other4 - JE Armfield; D6 - O Suchowersky (sol); D9 - P Herzfeld; Other - Tomaras Lawyers (sol); Solicitors: P - Ritchie & Associates; D1,7 - Thomas Tarmo & Co; D2,8 - Horowitz & Bilinsky Solicitors; D3,5, Other 4 - Michael Parasyn Solicitor; D4 - HWL Ebsworth; D6 - Northern Suburbs Lawyers; D9 - Crown Solicitor; Other - Tomaras Lawyers; Other 1 - Olekisy Shemishan (non-party); Other 2 - Petro Franko (non-party); Other 3 - Volodymyr Horoyi (non-party)
• File Number(s): 2011/109938

Judgment

1 HIS HONOUR: These proceedings concern the true construction of the Will of Taras Bodlak who died on 2 January 2010 aged 95. Mr Bodlak made and published his last will and testament on 1 September 1996 probate whereof was granted to the plaintiff on 19 March 2010. The will so far as is relevant is as follows:

"I GIVE DEVICE (sic) AND BEQUEATH unto:

1/ Australian SHEVCHENKO TRUST, Ukrainian Studies Foundation in Australia Limited in Lidcombe NSW at 10% ten per cent.

2/ Ukrainian Youth Association of Australia LTD., in Lidcombe NSW at 10% ten per cent.

3/ Ukrainian School in Lidcombe NSW at 10% ten per cent.

4/ Ukrainian Ballet-Dancing Groups, School of Music and Arts in Lidcombe NSW at 10% ten per cent.

5/ Ukrainian Political Prisoners in Ukraine 5% five per cent.

6/ Ukrainian War Invalids in Ukraine 5% five per cent.

7/ Ukrainian Women Association in Lidcombe 5% per cent.

8/ Renovation of Ukrainian Hall - Narodnyj Dim in Lidcombe NSW at 5% five per cent.

9/ Ukrainian Catholic Church in Canberra at 5 % five per cent."

2 The will has caused a considerable number of problems because there are ambiguities in the descriptions of the intended beneficiaries. There is also no setting up of any trusts, nor any specification of purposes, rather outright gifts to institutions, including some which are unincorporated.

3 The primary rule when construing descriptions of beneficiaries is that laid down by the House of Lords in National Society for the Prevention of Cruelty to Children v Scottish National Society for the Prevention of Cruelty to Children [1915] AC 207. The basal principles from that case can be summarised as follows:

1 Is there any one body which exactly matches the description in the will? If so, that body takes and no further enquiry is made.

2 Is there any body which exactly answers the description? If not, the court can receive evidence of surrounding circumstances but not direct declarations of intention to find out who was intended.

3 If there are two or more bodies which exactly answer the description, then the court can look not only at surrounding circumstances but also direct declarations of intention.

4 The parties agree that there are no bodies which exactly answer the descriptions set out in paragraphs 3-8 of the will.

5 The present case went to mediation before the Honourable Keith Mason AC QC. At the end of the mediation all possible claimants with respect to sections 1 to 9 of the will came to an agreement as to what would be the fair way of distributing the testator's bounty.

6 In cases where a testator discloses a general charitable intent, yet the description of the beneficiaries is unclear, the Court can authorise a distribution amongst bodies whose names are close to the description used by the testator in his or her will, provided that the Attorney-General consents. There are a number of local authorities supporting that proposition including Townsend v Adult Deaf & Dumb Society (Bowen CJ in Eq 26 May 1975 Unreported); Roche v Attorney General (Young J 11 March 1993 Unreported); and Permanent Trustee Company Limited Re State of New South Wales (Santow J 23 November 1995 Unreported), Gray v Australian Cancer Foundation for Medical Research [1999] NSWSC 492 (Young J).

7 The method used by the Court to effectuate this solution is the cy-près scheme. The term "cy-près" is law French for "as nearly as possible".

As Isaacs J said in Attorney-General for the State of NSW v Adams [1908] HCA 51; 7 CLR 100 at 125, the Court makes an order to "... carry out the general paramount intention in some way as nearly as possible the same as the testator has particularly indicated without which his intention itself cannot be effectuated."

8 The Attorney General as Protector of Charities has given his imprimatur to the solution reached at the mediation.

9 I conducted directions hearings last year and also had an oral hearing last December after which I gave leave for further evidence to be presented and for final submissions to be made in writing. This occurred and I am now in a position to give reasons for my final orders.

10 In the light of the submissions made both orally and in writing, I need only deal with the following issues: -

A. Has the testator's general charitable intent been established?

B. Is the gift in paragraph 7 charitable?

C. Is the gift in paragraph 8 charitable?

D. The significance of the gifts not being behind trusts.

E. The appointment of trustees.

F. How should the costs of these proceedings be borne?

G. Can the trustees for the charity beneficiaries deduct costs from each gift?

H. What Orders must be made?

I will deal with these seriatim.

11 A. The evidence was by affidavits of the plaintiff and some of the claimants. There were over 20 affidavits read in the proceedings.

12 The evidence shows that the testator was born in the Ukraine, but had lived in Australia for 61 years prior to his death aged 95. He never married and never sired any children.

13 The evidence shows that the deceased was baptised in the Catholic faith, joined the Ukrainian army in 1942, came to Australia in approximately 1949, and worshipped thereafter at St Andrew's Catholic War memorial Church at Lidcombe. He had a godson, Andrew Kostka, with whom he was close. Andrew was educated at St Andrew's Catholic Church School, attended the Ukrainian Youth Association (a Catholic Ukrainian group) and had been a member of the Zahrava Dancing Group.

14 The testator spent a considerable amount of his time in and around the Ukrainian Church in Lidcombe. He told his friends that the Catholic Church stood up against communism and that he intended to benefit Catholic Ukrainian organisations. I do not consider that that piece of evidence offends against the exclusion of direct declarations of intention.

15 In the Milly Milly case (Attorney General (NSW) v Perpetual Trustee Co Ltd) [1940] HCA 12; 63 CLR 209 at 225 Dixon and Evatt JJ said,

"The question is often stated to be whether the trust instrument discloses a general intention of charity or a particular intention only. But, in its application to cases where some particular direction or directions have proved impracticable, the doctrine requires no more than the execution of a specific plan involving the particular direction which has failed. In other words 'general intention of charity' means only an intention which, while not going beyond the bounds of the legal conception of charity, is more general than a bare intention that the impracticable direction be carried into execution as an indispensable part of the trust declared."

16 The scheme of this will shows an intention to benefit a series of groups with Ukrainian or church connections in a way such that there is clear benefit to the Ukrainian community. Although Lidcombe is specified, it is not uncommon for groups of people coming to Australia from Europe or Asia to group together in particular localities, whose influence nevertheless spreads throughout the State of the Nation. I thus do not see this reference as a barrier to a finding that the gifts may benefit the community generally.

17 It is quite clear that all counsel and solicitors consider that, with the possible exception of the gift in paragraph 7 to the Ukrainian Women Association in Lidcombe and that respecting the hall in paragraph 8, all the gifts in 1 to 9 are charitable as that term is understood in Australian law. I do not need to worry that some of the bodies or most of the bodies appear to be unincorporated associations as the evidence which was dealt with in the mediation show that either there are corporations or trustees or other reasons why there is no problem in the unincorporated association being designated.

18 I agree with this view, as does the Attorney General's representative.

19 Accordingly, I find that the testator expressed a general charitable intent (with the possible exception of paragraphs 7 & 8). Thus, as I consider that the compromises reached at the mediation were wise and in the interests of charity generally, and the Attorney General agrees, I can make orders which will give effect to the agreement reached at the mediation.

20 B. Accordingly, I must focus on the gift to the Ukrainian Women and, later, on the gift to renovate the hall. The agreement is that there are two possible bodies which could be described by the will (Ukrainian Women's Association and Ukrainian Women's Association in Australia, State Executive of NSW) and that both are in a similar situation.

21 Under the received doctrine stemming from Commissioners for Special Purposes of the Income Tax v Pemsel [1891] AC 531, one looks to see whether the trust falls into one of the four principal divisions of charitable trusts, viz: trust for the relief of poverty; trust for the advancement of education; trust for the advancement of religion; and trust for other purposes beneficial to the community, not falling under any other preceding heads. The gift does not fall under any of the three preceding heads, so I must consider whether it is for the benefit of the community.

22 There may in some cases be a suggestion that a gift to a group of women is for the relief of poverty, but again in the twenty-first century one cannot make that assumption without evidence, and I am told that this particular group of women is not a group of poor women at all. Thus I cannot uphold this gift as one for the relief of poverty.

23 Mrs Borec, who swore an affidavit on behalf of the Ukrainian Women's Association - Lidcombe branch, indicated that the Ukrainian Women's Association in Australia is an organisation which initially focussed on promoting Ukrainian culture, but since Ukrainian independence in 1961 changed its emphasis to fund raising for needy Ukrainians in the Ukraine and supporting the Ukrainian community in Australia.

24 Mrs Borec has been a member of the Association for at least 40 years. The Lidcombe branch has 45 members; however, at the time when Mrs Borec joined it in 1970, it had 95 members.

25 The constitution of the Association provides that its principal object is to unite all women of Ukrainian origin who support the Ukrainian language, culture and traditions and who support the creation and development of an independent Ukrainian nation.

26 Sub-objects include "to raise the status of women in the Ukraine and in community life in Australia and to develop the intellectual social and economic status of Ukrainian women. To foster educational work. To participate in charity work, to give moral and material assistance to Ukrainians in Ukraine in Australia and abroad." Most of those objects have a charitable flavour.

27 However, Mrs Borec also gives evidence as to the actual activity currently of the Lidcombe branch. It makes a large series of donations to Ukrainian based bodies here and overseas including donations to the Ukrainian School at Lidcombe to assist needy children in Sokal Ukraine, to send clothing to the poor of Ukraine, and to donate to the veterans of the Ukrainian Partisan Army living in the Ukraine who do not receive a veteran's pension and are in poor circumstances. The branch also endeavours to provide support for elderly past members.

28 In Victorian Women Lawyers Association Inc v Federal Commissioner of Taxation (2008) 170 FCR 318, French J, then a member of the Federal Court, upheld a trust for the Women Lawyers Association in Victoria as charitable. His Honour said,

"The characterisation of the VWL is to be assessed holistically. In making that assessment the primary focus must fall on its formal objects as stated in its constitution. But they are to be read in the light of the history of its formation, together with the activities it has taken since its formation."

29 I respectfully agree. I can look both at the constitution and the way in which the activities of the body have developed and been practised over the years.

30 Neither the researches of counsel nor the researches of my staff and myself have found much in the way of case law to assist in deciding whether the gift in paragraph 7 is charitable. However, what there is tends to suggest that it is charitable.

31 This tendency is reinforced by the fact that the gift appears within a group of gifts which are clearly charitable.

32 The 4th edition of the Picarda "The Law and Practice Relating to Charities" (Bloomsbury Professional, 2010) deals with the current situation in England where the Charity Commissioners have re-examined what should be a charity under twenty-first century conditions. Chapter 7 of that book deals with charitable purposes under the Charities Act 2006 (Imp) not falling within the relief of poverty, or the advancement of education or religion. It suggests that charities under the Act include charities that provide comforts, items, services and facilities for people who are sick, convalescent, disabled or infirm, i.e.: hospital radio; advancement of community development, responsibility and good citizenship; promoting or volunteering for local and national history societies and art societies; preservation of heritage buildings and community amateur sports clubs, multi sports centres; and charities promoting good relations between people of different racial groups.

33 It would seem to me that within the ambit of what is being considered in forming that list would include a group of women meeting together with the common aim of promoting Ukrainian culture and looking to care for persons of Ukrainian origin in needy circumstances.

34 So far as cases are concerned, as I have said, there are very few good analogies. Paragraph 1 is the case in Massachusetts of the Molly Varnum Chapter DAR v City of Lowell 204 Mass 487 (1910) (DAR is the abbreviation for Daughters of the American Revolution). In that case, a trust to stimulate or inculcate patriotism was held to be charitable. The Judge remarked at 494 "the prospering of love of country and of respect for our civil institutions... tends to raise the standard and improve the quality of citizenship, and not only relieves the burden of government but advances the public good." Picarda says of this case at page 203, "in this country the courts have not yet pronounced on trusts, to stimulate patriotism, but it is submitted that such trusts as have the effect of stimulating patriotism will be upheld."

35 In the Northern Territory case of Flynn v Mamarika (1996) 130 FLR 218, the judge proceeded to deal with trusts affecting the Aboriginal people of Groote Island. One of the trusts (see page 228) was a proposed grant to enable Aboriginal elders within the community to perform ceremonies which are culturally necessary, including house-smoking and clearing a place of a curse. His Honour ruled that "ceremony grants may charitable if being for the advancement of religion or Aboriginal culture."

36 A gift to benefit new arrivals in this country or to sponsor suitable immigrants may be charitable, see In re Wallace [1908] VLR 636. However, that case was clearly decided under the head of "relief of poverty" and so does not assist the solution of the present problem. Likewise, in the Ontario decision of Re Societa Unita and Town of Govenhurst (1977) 16 OR (2d) 785 (affirmed (1978) 6 MPLR 172), a summer camp for children aimed at instructing them in their Italian heritage was upheld as an educational trust.

37 On the other side of the line, trusts for recreation or social intercourse, even if they involve ethnic groups, are usually not held to be charitable, see Radmanovich v Nedeljovic (2001) 52 NSWLR 641, 665 [135]. However, as I noted in that case, the trend of authority appears to be moving in the direction of upholding such gifts where there are some additional features, see too Re De Little [1943] St R Qd 31.

38 Counsel for the Attorney General has referred to the 9th edition of "Tudor on Charities". At [1-010] Tudor states "a trust to relieve the need of members of a particular ethnic group in a geographical area is charitable even if the number of members of that ethnic group is small." Again at [2-103] to [2-106] the learned author includes within the fourth head of charity as referred to in Pemsel's case trusts to support equal rights for women and cites Halpin v CR Seear [1977] Ch Com Rep at 34-36, a decision of the English Charity Commissioners.

39 Counsel have also referred to the decision of the Supreme Court of Canada in Vancouver Society of Immigrant and Visible Minority Women v Minister for National Revenue (1999) 169 DLR (4th) 34.

40 In that case the Supreme Court granted charitable status to a group whose purposes were to provide educational fora and seminars to immigrant women to enable them to secure employment as well as to carry on political activities incidental and ancillary thereto. All Judges considered that the purpose of the gift was for the advancement of education, but the Court divided over whether it could also be upheld as a gift for the benefit of the public.

41 Iacobucci J (with whom Cory, Major and Bastarche JJ agreed) denied that any analogy could be drawn with certain other cases falling under the fourth head, such as Re Stone (1970) 91 WN (NSW) 704 (trust for the promotion of Jewish settlement in Israel), Verge v Somerville [1924] AC 496 (trust for the resettlement of ex-servicemen in their homeland), Re Cohen [1954] NZLR 1097 and Re Morrison (1967) 111 SJ 758 (trusts for the assistance of refugees). The integration of immigrants generally lacked the elements of relief from hardship or persecution which rendered charitable the assistance of these other groups (at [181], [184]).

42 By contrast, Gonthier J in dissent (with whom L'Heureux-Dubé and McLachlin JJ agreed) found no relevant distinction between groups, all of which were constituted by "individuals need[ing] assistance in integrating into national life" (at [85]). He went on, at [95]:

Clearly, a direct benefit redounds to the individuals receiving assistance from the Society. Yet the nation as a whole gains from the integration of those individuals into its fabric. That is the public benefit at issue here. I have no hesitation in concluding that the Society's purpose is charitable under the second or fourth heads of the Special Commissioners of Income Tax classification.

43 Accordingly, no clear principle emerges as to the fourth head of charity. Picarda does not consider the case favourably as a decision of a "divided and discrepant court", but as a decision of Canada's highest court, it must be respected.

44 It must be acknowledged that there is no decision in the common law world which goes quite as far as what I have to decide in the present case. Further, I noted ten years ago in Radmanovich v Nedeljovic that this appeared to be an unwholesome gap in charity law. It seems to me now, however, that that gap is gradually being reduced.

45 I now consider, in the light of the material I have reviewed, that in twenty-first century New South Wales a trust in favour of a group of women of a particular ethnicity, who seek more than mere recreation and social intercourse, but also to assist people of the same ethnic group and spread that culture to further the community purposes of a group of Australians of a certain ethnic origin, is a charitable gift.

46 C. The gift in paragraph 8 was not considered during the mediation. There is no difficulty in identifying the hall. Rather, the difficulty is that the gift does not designate any charitable purpose, but merely that the money is to be used for renovation.

47 The evidence shows that the hall is principally used as a venue for Ukrainian cultural activities or activities connected with local Ukrainian Catholic school.

48 Mr Gorrick for the plaintiff submits that there must be doubts as to whether charitable intent is disclosed by this gift.

49 Mr Herzfeld, for the Attorney-General submits that this gift is a purpose gift and that with the evidence showing such a close connection with other charitable activities, especially the school, the gift comes into the class of gifts for the maintenance of school buildings which are usually charitable, see, e.g., McGrath v Cohen [1978] 1 NSWLR 621; Commissioner of Valuation for Northern Ireland v Fermanagh Protestant Board of Education [1969] 1 WLR 1708 (HL).

50 Mr Bilinsky for the eighth defendant, who controls the hall, makes the same type of submissions.

51 I prefer the submissions of Mr Herzfeld and Mr Bilinsky.

52 D. Mr Herzfeld has reminded me that there is some doubt as to whether the court can deal with an outright gift to an institution in the same way as a purported charitable trust. He noted that, in England, it has been held that there is no power to order a cy-près scheme where there is no express trust, see, e.g. Moggridge v Thackwell (1802) 7 Ves Jr 36; 32 ER 15, Re Bennett [1960] Ch 18 and Tudor on Charities (9th ed) at [1-019], [10-002] and [10-006]. However, he also noted another route is available.

53 The rationale for these cases was that, "The jurisdiction of the court [being] founded on the existence of a trust; where there was no trust the application of the fund was beyond the jurisdiction of the court..." (Tudor on Charities (9th ed) at [10-002]).

54 That proposition presumed that the primary jurisdiction of the Crown over the application of charitable property had not otherwise been delegated to the Courts. It has been almost universally disregarded by Australian cases dealing with outright gifts applied cy-près: see Re Kerr (decd) [1957] St R Qd 292; Re Daniels [1970] VR 72; McCormack v Stevens (1978) 2 NSWLR 517; cf. Re Marsden (dec'd), Re Winning (dec'd) & Re Thomas (dec'd) [1998] QSC 37.

55 The distinction may have had validity prior to the passing of the Charitable Trusts Act 1993, but in my view it has not survived. Indeed, it is questionable whether it was ever applicable in those Australian jurisdictions where all bequests involve property which devolves to the executor and later to the same person as trustee for the benefit of the named beneficiaries or charitable purposes. This accords with the views expressed in Ford & Lee, The Law of Trusts at [20.290]. Accordingly, in my view the Court has jurisdiction to make a cy-près scheme with respect to the gift in clause 8.

56 If the principle in Moggridge v Thackwell does remain part of the law of New South Wales, it poses no insurmountable obstacle to the ordering of a scheme in this case. The Attorney General may always invite the court to apply the gift cy-près, and the same result will be reached, see Beggs v Kirkpatrick [1961] VR 764. Interestingly, in the Canadian case of Re Conroy (1973) 35 DLR (3d) 752, Macfarlane J was prepared to order a scheme absent any trust even as he purported to apply Moggridge v Thackwell. He commented at [18]:

Tudor on Charities [6th ed] at p 305...says that the court, having declared that the property belongs to charity, will preserve the property and later decree its disposal in accordance with the wishes of the Crown. In my opinion there should be no difference in principle between that procedure and one where the court gives directions, with the concurrence of the Attorney General, who has been represented by counsel upon the hearing of the application.

57 Thus, I do not consider that this point affects the result, but I thank Mr Herzfeld for bringing it to my attention.

58 E. Trustees obviously have to be appointed for there to be persons who can give proper receipt to the plaintiff for their institution's gift. I understand that most of this work has already been done, but will leave this to the parties, to complete it. I will merely reserve liberty to apply in case of glitches.

59 F. There are disputes as to what is the proper order for costs.

60 The testator's estate consisted only of his substantial house and some cash, amounting to some 1.7 million dollars. There was an application made under the Family Provision Act which was settled and costs were provided for in the settlement.

61 The matter of costs falls into a number of sections, viz:

(1) The plaintiff's costs;

(2) The costs of the first defendant who only appeared in the mediation;

(3) The Attorney-General's costs; and

(4) The claimants' costs.

62 The agreement reached at the mediation included a provision that the plaintiff's costs come out of the estate on an indemnity basis, with defendants (other than the first) and non-party participants to pay their own costs, and the first defendant's costs in the sum of $14,000 to be paid out of the estate.

63 The plaintiff's costs are part of the testamentary expenses. He is entitled to be indemnified against them out of the estate. The Attorney General is also entitled to his costs. The question is whether the charities alone should bear the cost, or whether the estate as a whole should bear them.

64 The will provided that the executor was to pay the funeral and testamentary expenses and all his debts as soon as convenient after his decease. The will did not say out of what fund these were to be paid, but it is relevant that that provision occurs immediately prior to the gifts of the 100 shares.

65 Under the will, the estate is split into 100 parts. 65 parts go to the charities, 20 to the testator's godson, five to the executor and his wife, and, in the events which have occurred, 10 to Mrs Krystyna Hantel. This was affected by the result of the Family Provision proceedings.

66 Although not a party, Mr Mackey, solicitor, was granted leave to put submissions on behalf of Mrs Hantel on the question of costs.

67 Mr Gorrick, for the plaintiff, submitted that although the will does not use the term "residue", the gifts of the 100 shares are indeed residuary gifts. He suggests that the plaintiff's costs should come out of the assets before distribution of the 100 shares and, with a little doubt, also the costs of the first defendant.

68 Mr Mackey submitted that those costs should not come out of Mrs Hantel's entitlement. He puts that it is incorrect to class the 100 shares as residuary gifts. He puts that the proper order for costs is that the costs be borne by that part of the estate which passes unde paragraphs 3,4,5,6,7 & 8, being 45%.

69 Counsel for the Attorney General broadly agrees with Mr Mackey's submission in that he seeks the Attorney's costs on a party-and-party basis out of the shares nominated by Mr Mackey.

70 In accordance with the agreement made at the mediation, the other defendants are to bear their own costs.

71 I have been referred to authority, particularly In re Buckton [1907] 2 Ch 406 at 414-5 (Kekewich J), the High Court's decision in Moran v House [1924] HCA 44; 35 CLR 60, and the decision of Campbell J in Murdocca v Murdocca (No 2) [2002] NSWSC 505.

72 There is no doubt as to the general principle that the decision on costs is in the discretion of the court and that, ordinarily, if the testator has caused the problem, his or her estate should bear the costs. If the problem only concerns a particular gift, then, ordinarily, the discretion should be exercised by ordering the costs to be paid out of the fund held to discharge that gift.

73 It seems to me that, although had the claimants been seeking costs it would have been appropriate to order the costs to come out of the 45% given to the relevant charities, the executor's costs do seem to cover administration of the estate generally.

74 Thus, I favour the position put by Mr Gorrick with respect to the costs of the plaintiff and the first defendant and I agree with the position taken by Mr Herzfeld with respect to the costs of the Attorney General.

75 G. I now turn to the question as to how the trustees for the charities can set off the costs they need to pay their legal representative in connection with this case out of the benefit received from the executor.

76 Mr Armfield for various charity beneficiaries put that, unless proper provision was made in the scheme for such trustees to deduct their costs, if they did so they could be in breach of trust.

77 I have doubts as to the validity of this fear, but there is no problem in wording the scheme so that the fear becomes groundless, and no-one objects to this being done.

78 H. Accordingly, I find that all the first nine gifts are charitable, that there has been a mediation between all possible claimants for which a resolution sensibly has been worked out as to who should take the testator's benefaction, and that the Attorney General consents to the result. Accordingly, I make the orders set out below which are basically in the form of the Short Minutes furnished by counsel for the Attorney General.

79 I thank all counsel for their scholarship in their submissions. I note that charitable gifts have sometimes been eaten up with very technical legal arguments. It is commendable that in this case such a practical way of dealing with the matter has been found.

80 Accordingly, I make the following orders: -

1. Order that the Attorney General for the State of New South Wales be substituted as the ninth defendant.

2. Declare that there is no single body in existence answering the description "Ukrainian School in Lidcombe, New South Wales" in Clause 3 of the will.

3. Declare that the gift in Clause 3 of the will evinces a general charitable intention and is a valid gift for charitable purposes.

4. Order that the gift in Clause 3 of the will be administered cy-près by way of a scheme whereby the gift be divided between the second and third defendants as follows:

a. 62.5% to the second defendant to be used to fund the Ukrainian Central School Sydney at 51 Joseph Street, Lidcombe; and

b. 37.5% to the third defendant to be used to fund the St Andrews Ukrainian Ethnic School at 57 Church Street, Lidcombe.

5. Declare that there is no single body in existence answering the description "Ukrainian Ballet-Dancing Groups, School of Music and Arts in Lidcombe, New South Wales" in Clause 4 of the will.

6. Declare that the gift in Clause 4 of the will evinces a general charitable intention and is a valid gift for charitable purposes.

7. Order that the gift in Clause 4 of the will be administered cy-près by way of a scheme whereby:

a. subject to b, the gift be divided equally between the fourth and fifth defendants to be used at their several discretions for the purpose of advancing education about Ukrainian dance, music and arts;

b. each of the fourth and fifth defendants must contribute $5,000 to a joint fund of $10,000 to be administered by their executive committees and to be used to fund successful applications made within the five years from the date of this order by Ukrainian music and arts organisations for the teaching and promulgation of Ukrainian music and arts in Sydney.

8. Declare that the gift in Clause 5 of the will is a valid gift for charitable purposes.

9. Declare that the gift in Clause 6 of the will is a valid gift for charitable purposes.

10. Order that the gifts in Clauses 5 and 6 of the will be administered by way of a scheme whereby the gift be divided equally between the sixth defendant, the Ukrainian Association of Political Prisoners and Repressed, the Lviv Regional Union of Political Prisoners of Ukraine, and the All-Ukrainian Organisation of Invalids of War, Armed Forces and Combatants to be held on trust and applied at their several discretions for the purpose of the relief, support or welfare of Ukrainian political prisoners or war invalids in the Ukraine.

11. Declare that there is no single body in existence answering the description "Ukrainian Women Association in Lidcombe" in Clause 7 of the will.

12. Declare that the gift in Clause 7 of the will evinces a general charitable intention and is a valid gift for charitable purposes.

13. Order that the subject matter of the gift in Clause 7 of the Will of the late Taras Bodlak be administered cy-près by way of a scheme that the subject gift be divided equally between the Ukrainian Women's Association in Australia State Executive of new South Wales and the Ukrainian Women's Association Lidcombe Branch.

14. Declare that the gift in Clause 8 of the said will is a valid gift to the 8th defendant for charitable purposes.

15. Order that the gift in Clause 8 of the will be administered by way of a scheme whereby the gift be given to the eighth defendant on trust for purpose of paying for the renovation of the Ukrainian Hall - Narodnyj Dim at 59 Joseph Street, Lidcombe, New South Wales.

16. Order that the costs of the plaintiff and those for the first defendant (the latter assessed at $14,000) be paid out of the said estate before calculation of the amount of the 100 shares given tho the beneficiaries.

17. Order that the costs of the ninth defendant be paid out of that part of the estate which passes under clauses 3-8 of the said will.

18. Declare that the trustees for any of the charities benefited under the said will are to be at liberty to deduct their costs and proper expenses from monies received from the plaintiff before using the balance for the relevant charitable purpose.

19. Liberty to apply generally on 5 days' notice.

20. Direct that these orders are not to be entered or considered as entered until 12 April 2013 and in the interim, liberty to any party to apply for a variation or elucidation. Any such application may be made returnable before me at 9:30 on any day on or after 29 April 2013.

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Decision last updated: 30 April 2013