The case of Re AM McClelland Estate [2025] VSC 343 (17 June 2025), involving the McClelland Trust, illustrates Trustees’ difficulty between maintaining philanthropic intentions in contemporary commercial operational realities.

The McClelland Trust

Ms Annie May McClelland’s Will directed that her estate be used to create a charitable trust for public educational purposes centred on the visual arts following her death on 24 November 1961. The deceased’s vision was to establish an art gallery to house her collection, including the works of her late brother, the artist Harry McClelland, and to make art freely accessible to the public. The Will contained detailed provisions for the creation of a gallery and cultural hall, surrounding picnic grounds, and free public admission.

The Origins of the Sculpture Park and Gallery

Probate of the estate was granted to the executors of Ms McClelland’s estate on 13 April 1962, and the trustees began developing the gallery site, including organising exhibitions in the interim. The McClelland Sculpture Park and Gallery officially opened in 1971 on a 40-acre property at Langwarrin, Victoria, as contemplated initially by Ms McClelland’s bequest. Since then, the Gallery has operated under the Trust’s terms, expanding its programs and collections in line with its educational mission.

Art Gallery

Sustaining the art gallery and surrounding sculpture park without charging admission, as initially intended, had become financially unfeasible. Approving the cy-près scheme allowed the trustee to introduce admission fees and receive donations while preserving the core spirit of the gift: public access to art, education, and the enjoyment of natural surroundings.

From the outset, however, the Trust faced financial constraints. Although generously supported by donors, including Dame Elisabeth Murdoch and various government grants, the cost of the Gallery’s operations—including its extensive sculpture garden, public programs, and educational outreach—has consistently outpaced its income. As a result, the trustees have determined that the Gallery cannot remain viable under the current trust terms, particularly the requirement that public access be entirely free of charge.

Re AM McClelland Estate [2025] VSC 343 involves two distinct legal mechanisms:

A trust deed in Victoria often defines “Custodian Trustee” as the Public Trustee of Victoria or any other corporation, trustee, or trustees that may be appointed under s 71 of the Trustee Act 1958 (Vic) to hold trust property. A managing trustee is responsible for managing and administering trust property; others handle day-to-day administration. However, the Court may terminate such an arrangement if it no longer serves a practical function.

The Court deemed the custodian trusteeship unnecessary, as McCLELLAND ARTS LTD (the corporate trustee) already had control and legal title over the trust assets. Harris J’s decision guides charities, cultural institutions, and trustees in navigating donors’ intentions and commercial viability. It underscores the Court’s crucial role in protecting charitable trusts’ legal integrity and living purpose.

Cy-près Scheme

A cy-près scheme would allow the Trust to charge admission, acquire artworks, and exercise broader administrative powers, including managing assets and securing funding to ensure the Trust’s long-term sustainability—while still honouring the spirit of Ms McClelland’s original charitable gift.

Restructuring the Trust

As part of a broader restructuring to ensure the McClelland Trust’s financial and operational sustainability, the Trustees sought orders to vest ownership of the Trust’s properties in the newly appointed Corporate Trustee and to terminate the custodian trusteeship. Detailed affidavits from Ms Lisa Byrne, the Gallery’s Artistic and Executive Director, outlined the Trust’s history, financial condition, and the governance changes already underway.

The trustees requested that the Court make a vesting order that transfers the legal ownership of trust property. Specifically, the Trustees relied on ss 51(2)(o) and 71(4)(n) of the Act. Section 51 permits the Court to make vesting orders in various circumstances, including the appointment of a new trustee or where the Court considers it “expedient” to do so. Section 71, meanwhile, empowers the Court to give directions upon the termination of a custodian trusteeship.

The Court accepted that the appointment of McClelland Arts Ltd. as Corporate Trustee and the pending retirement of the individual trustees made it appropriate and necessary for the Gallery’s two key properties—the Original Property and the adjoining Pindara Property—to be vested in the new Corporate Trustee. The objective of the Court orders was to simplify the Trust’s structure, reduce administrative complexity, and, in line with its charitable purposes, support the efficient operation of the Gallery.

Harris J concluded that the application satisfied both the legislative and practical requirements for a vesting order, which involved a change in trustee structure —a logical and essential part of modernisation —allowing the Gallery and the public benefit aims of Ms McClelland’s original bequest. With the custodian trusteeship also set to be terminated, transferring property title to the Corporate Trustee was a necessary step in consolidating legal ownership and governance.

Modernising the Trust

To secure the long-term viability of the McClelland Trust and its Gallery, the Court approved a cy-près scheme—a legal mechanism used in the context of charitable trusts where the original purpose of the Trust has become impossible, impractical, or obsolete. The scheme allows the Court to modify the Trust’s terms to ensure the funds are used for a purpose as “near as possible” to the original intent, rather than the Trust failing.

Under the Charities Act 1978 (Vic), the threshold for applying a cy-près scheme is no longer the strict test of impossibility or impracticability under general law, but whether the original purposes have ceased to provide a “suitable and effective method” of using the property, having regard to the spirit of the gift.

Drawing on precedent including Free Serbian Orthodox Church Diocese v Bishop Irinej Dobrijevic [2017] NSWCA 28, the Court reaffirmed that trust variation can be justified when original terms have become outdated, even if technically achievable.

Court orders

Harris J accepted that the Gallery’s requirement to offer free admission—while noble in intention—was financially unsustainable and hindered the Trust’s broader public benefit objectives finding that the overarching purpose, expressed in the deceased’s Will, was to support public education and access to the arts in a natural, communal setting. The “spirit of the gift” was preserved by retaining the Gallery and parkland for public enjoyment while permitting changes to how the Trust operates, ensuring its survival. For instance, while the Gallery may now charge entry fees, the land at 390 McClelland Drive—where the Gallery is situated—was expressly excluded from any future power of sale, reflecting its foundational significance to the Trust’s mission.

Cy-près scheme to modernise the Trust

  • Allowing the Gallery to charge admission fees.
  • Granting powers to acquire artworks and receive donations.
  • Providing for the sale of assets—excluding the core Gallery land—to support financial sustainability.
  • Formally naming the Trust the McClelland Arts
  • Trust to honour its founder and her family legacy.

These changes, endorsed by the Attorney-General and ordered by the Court, reflect a careful balancing of legal principle, financial reality, and enduring philanthropic purpose. In recognising the need to evolve while remaining true to its origins, the McClelland Trust offers a compelling model for how charitable institutions can adapt to new challenges while respecting the wishes of their benefactors.

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