On Monday 25 May 2020, the Supreme Court of NSW upheld the long established principles of trust law which govern the use and distribution of trust money. In the high profile case relating to Celeste Barber’s bush fire appeal, the comedian established a Facebook fundraiser and nominated the Trustee for NSW Rural Fire Service Brigade as the recipient of the funds raised. Ms Barber states in the Facebook appeal “Want to join me in supporting a good cause? I’m raising money for the Trustee for NSW Rural Fire Service & Brigade”. The response was overwhelming with a whopping $51.3 million raised for the charity, which was significantly greater than Barber’s initial goal of $30,000. Ms Barber’s first reaction was to share the overwhelming donations around to other charities giving aid to victims of the bush fires, wildlife and RFS in other states and territories, but the issue for the Court to determine was whether this was achievable according to the NSW RFS Trust Deed. To appreciate the decision of the Court, it is important to understand what a trust is, and what a Trust Deed will establish.
What is a trust?
A “trust” is the relationship which arises when a person or entity holds property or rights on behalf of and for the benefit of another. For example, A is the legal owner of property and is a “trustee” for the property held on behalf of B, the “beneficiary”. Although A is the legal owner of the relevant property, the property must only be used for the benefit of B (known as a “fiduciary duty”).
A trustee can be an individual, group of individuals, or a company. There may also be more than one beneficiary or more than on class of beneficiaries that may benefit under the terms of a trust.
What is a Trust Deed?
A Trust Deed is a formal document which outlines the rights and obligations of the trust. The Trust Deed sets out the powers for the appointment and removal of the trustee, what the trustee can do, how the trustee can invest, transfer or grow the assets of the trust and the identity of the beneficiaries or class of beneficiaries who are able to receive a benefit from the trust funds.
In relation to Ms Barber’s fundraiser, the NSW RFS commenced a matter in the NSW Supreme Court to seek guidance on whether the fire service could distribute funds to other charities and for other purposes in line with what Mr Barber had hoped to achieve. It is reported that the Trust Deed for the NSW RFS which was established in April 2012 states that income is to be spent “to or for the brigades” to assist them with “purchasing or maintaining fire-fighting equipment and facilities” as well as providing training and administrative expenses.
The Supreme Court decision
Although Ms Barber had hoped the unprecedented amount of donations could be shared amongst other charities, Justice Michael Slattery ruled that this was unachievable. Justice Slattery confirmed that the terms of the trust did not allow the money to be shared with other charities, RFS or wildlife campaigns.
His Honour held that some donors may have intended or hoped that their donation would be used for purposes beyond those which the Court advised were permissible, but despite the trustees’ wish to carry out those intentions the principles of trust law must be applied.
However, Justice Slattery did confirm that the trustees can set up or contribute to a fund to support families of fallen firefighters and support firefighters who were injured with assistance such as trauma counselling.
If you would like advice on the most suitable trust for you and your family or business, please contact a member of the Cheney Suthers team.