Australia, June 2 -- New South Wales Land and Environment Court issued text of the following judgement on May 2:

1. Before the Court is an amended summons seeking judicial advice under s 63 or, in the alternative, orders pursuant to s 81 of the Trustee Act 1925 (NSW). The question for judicial advice is whether the plaintiff, BaptistCare Community Housing Ltd (BCHL), as trustee of a charitable trust called the Kitty Doyle Home Units Trust (Trust), would be justified in proceeding on the basis that it is empowered, under the Amended Scheme referred to below, to grant security over the Trust's property to secure borrowings made for the purposes of the Trust.

2. Relief under s 81 of the Trustee Act will only arise if the answer to that question is 'no'. In that event, BCHL seeks an order which, in essence, confers the relevant power in general terms or, in the alternative, an order authorising it to give the particular form of security identified in the proposed order.

3. The Attorney General of New South Wales authorised these proceedings under s 6 of the Charitable Trusts Act 1993 (NSW) and, while acting in the role of contradictor, did not oppose BCHL having the power to make borrowings secured against Trust assets.

Background

4. BCHL relies on two affidavits of Neville Zammit, Chief Financial Officer of BaptistCare NSW & ACT (BaptistCare), setting out in some detail the history of the Trust and the proposed transaction which has led to this application. By way of background, it is sufficient to note the following facts in order to understand the issues which arise.

5.The Trust's constituent document is contained in the orders made by Young AJ on 3 May 2013 establishing a scheme to administer the Trust known as the 'Amended Scheme': Baptist Community Services v Attorney General of New South Wales [2013] NSWSC 500. At the time those orders were made BaptistCare (then called 'Baptist Community Services - NSW & ACT') was the trustee of the Trust. One of the reasons why orders establishing the Amended Scheme were made was that if changes were not made to the Trust's administration, it would become necessary to sell some or all of the Trust's real property. Young AJ said in his reasons at [6]:

... The situation now is that the annual expenses exceed the income and it is quite clear that this situation cannot continue because if it does the properties would need to be sold and a cy pres scheme put in for the moneys that would be generated.

6. As BCHL notes, the reference to a cy-pres scheme in this passage appears to reflect an assumption that, in this scenario, the remaining proceeds of sale, after the Trust's liabilities were satisfied, would be insufficient to purchase alternative housing suitable for the existing purposes of the Trust.

7. BaptistCare is a large and established charitable organisation that provides a range of care, accommodation and support services for seniors and people living with disadvantage. The current trustee of the Trust, BCHL, is a subsidiary of BaptistCare and is a special purpose vehicle, established in 2023, which now owns and operates BaptistCare's social and affordable housing assets. Among those assets is a 79-dwelling complex at Five Dock (Five Dock site) which is the principal asset of the Trust.

8. At the time the Amended Scheme was established, the assets of the Trust comprised 32 bedsit style units and two cottages at the Five Dock site as well as cash. As some units were located on the second storey of the building, without lift access, they were becoming unsuitable for accommodating seniors. In 2017 BaptistCare (the then trustee of the Trust) was awarded a social and affordable housing contract by the New South Wales Government, a requirement of which was that BaptistCare redevelop the Five Dock site. It did so over the following three years by demolishing the two cottages and 32 bedsit units and creating a new apartment complex comprising 79 dwellings across two blocks. The new dwellings have been occupied since 7 September 2020 and as at 30 June 2024 housed 89 social and affordable housing tenants over the age of 55.

*Rest of the document can be viewed at: (https://www.caselaw.nsw.gov.au/decision/1968ea2ef59cdb4af93fbee8)

Disclaimer: Curated by HT Syndication.