Chapter 6: Purpose Trusts

Question 1

1. Introduction to purpose trusts

Answer 1

In this chapter we will explore the key exceptions to the beneficiary principle, namely charitable purpose trusts and non-charitable purpose trusts.

Question 2

Charitable purpose trusts

Answer 2

(a) Charitable purpose trusts are recognised despite the absence of ascertainable beneficiaries
because they are for the public benefit.

Question 3

Non-charitable purpose trusts

Answer 3

(b) Non-charitable purpose trusts have been recognised as valid in specific, exceptional cases.
These are known as the Endacott exceptions. This section introduces and compares these two types of trust. They are then considered in more detail later in the chapter.

Question 4

1.1 Charitable purpose trusts

Answer 4

Charitable purpose trusts are not void for infringement of the beneficiary principle because there
is a mechanism for their enforcement. They are enforceable by the attorney general, with
practical responsibility for enforcement lying with the Charity Commission.

Question 5

Charity

Answer 5

Charity is a status, not a legal form or structure. A charitable organisation can be established via various legal structures of which a charitable purpose trust is one option. For example, a charity could be established by way of a limited company. This Workbook focuses
only on charitable purpose trusts, but it is important in practice to be aware that charities can take other forms

Question 6

1.1.1 Benefits of charitable status

Answer 6

There are a number of key benefits to trusts having charitable status. These include:
(a) No requirement to comply with the beneficiary principle
(b) More flexible rules on certainty of objects (ie certainty of purpose)
(c) No limit on their duration (ie they can exist in perpetuity)
(d) A rule known as the cy-près doctrine which allows the trust property to be applied for other
charitable purposes even if the specific trust fails
(e) Tax benefits: These are outside the scope of the module but are a major practical advantage
to having charitable status

Question 7

1.2 Non-charitable purpose trusts

Answer 7

In order to be valid, the purpose of a non-charitable purpose trust must fall within a recognised
exception to the beneficiary principle. These exceptions apply only when a trust is created in a will
and were classified in the case of Re Endacott [1960] Ch 232.

The trusts recognised in Re Endacott are anomalous exceptions to the beneficiary principle. Only
very limited types of trust fall within this category and it is a closed class which is narrowly construed. No further exceptions are likely to be recognised. Unlike charitable purpose trusts, there is no recognised method of enforcement for non-charitable purpose trusts. They are therefore known as ‘trusts of imperfect obligation’.

Question 8

1.3 Key differences between charitable and non-charitable purpose trusts

Answer 8

It is also important to be aware of the following differences between the two categories of purpose
trust:
(a) Enforceability: As we have already seen, charitable purpose trusts are legally enforceable while non-charitable purpose trusts are ‘trusts of imperfect obligation’.
(b) Certainty of objects (ie certainty of purpose): Charitable purpose trusts benefit from relaxed
rules of certainty of purpose.
(c) Perpetuity: Charitable purpose trusts can last indefinitely while non-charitable purpose trusts are restricted in duration by the common law perpetuity rules (discussed in the chapter
on ‘Perpetuity’).

Question 9

1.3.1 Perpetuity

Answer 9

In general terms the law prevents people from tying up their assets on trust in perpetuity (indefinitely). This is for policy reasons – it prevents people with wealth locking their assets away on trust and therefore out of circulation in the wider economy. If they were able to lock assets away on trust in this way, they could effectively control their assets for many generations into the
future from beyond the grave.

Question 10

Two related rules

Answer 10

There are two related rules in this area:
(a) The rule against remoteness of vesting: This applies to trusts with beneficiaries or charitable purposes as their objects.
(b) The rule against inalienability: This only applies to non-charitable purpose trusts.

Question 11

1.3.2 Certainty of purpose

Answer 11

The rules in relation to certainty are much more flexible for charitable purpose trusts than for private trusts:
* It is sufficient that there is an intention to apply property for a charitable purpose.
* If there is uncertainty as to how this intention is to be carried out the trustees can direct that
the property be applied for such charitable purposes as they select.

Question 12

1.3.2 Certainty of purpose

Answer 12

For charitable purpose trusts, the court will strive to resolve any uncertainty and hold the trust
valid once it has established charitable intent.
* The Charity Commission or the court can provide a ‘scheme’ to specify the charitable
purposes the property should be applied to. This is not true of non-charitable purpose trusts. Such trusts will be void for uncertainty of objects if the purpose (or means of achieving the purpose) is unclear.

Question 13

Key case: Re Astor’s Settlement Trusts [1952] Ch 534

Answer 13

Re Astor’s Settlement Trusts is an example of a case where an attempted non-charitable purpose
trust was found to be void in part because the intended purposes were too uncertain.

Question 14

Key case: Re Astor’s Settlement Trusts [1952] Ch 534

Answer 14

Facts: A trust of substantially all the shares in The Observer Ltd were held on trust for various noncharitable purposes including:
* ‘The maintenance […] of good understanding sympathy and co-operation between nations’
* ‘The preservation of the independence and integrity of newspapers’
* ‘The control, publication […] financing or management of any newspapers, periodicals, books,
pamphlets or publications’
* ‘The protection of newspapers […] from being absorbed […] or being tied by finance or
otherwise to special […] views […] inconsistent with the highest integrity and independence.’

Question 15

Key case: Re Astor’s Settlement Trusts [1952] Ch 534 Judgement

Answer 15

Held: Roxburgh J considered the purposes too inherently uncertain to be performed and rejected
the argument that the trustees could simply disregard those purposes which were insufficiently defined.

Counsel’s argument that the trustees could apply to the court for a ‘scheme’ for the administration of the trust, as is available for charitable purpose trusts, was rejected on the basis that such a scheme would require a ‘custodian’ equivalent to the attorney general, but there is no
such equivalent for non-charitable purpose trusts.

Question 16

Endacott exception, leading Roxburgh J to conclude

Answer 16

The trust also failed for not falling within a recognised Endacott exception, leading Roxburgh J to
conclude:
[…] while I have reached my decision on two separate grounds, both, I think, have their origin in a single principle, namely, that a court of equity does not recognise as valid a trust which it cannot both enforce and control. This seems to me to be good equity and good sense

Question 17

2. Charitable purpose trusts

2.1 Introduction to charitable purpose trusts

Answer 17

To have charitable status a trust must:
(a) Be for a charitable purpose;
(b) Satisfy the public benefit test; and
(c) Be wholly and exclusively charitable.

Question 18

2.2 Charitable purposes

Answer 18

There is an extensive body of case law on charitable purposes, much of which refers to the charitable purposes listed in the preamble to the Charitable Uses Act 1601. Although the law on charities was codified in the Charities Act 2006 and consolidated in the Charities Act 2011, the history of the case law is important because many modern cases will still be interpreted by
reference to the cases predating the legislation

Question 19

Heads of charity

Answer 19

For around 300 years, the case law on charitable purposes developed with reference to the preamble to the 1601 Act, with four traditional ‘heads of charity’ emerging:
(a) The relief of poverty
(b) The advancement of education
(c) The advancement of religion
(d) Other purposes beneficial to the community

These were subsequently recognised to be a ‘checklist’ only, with other purposes capable of being
charitable as long as they fell within the spirit of the preamble.

Question 20

s 2 of the Charities Act 2011

Answer 20

The law has now been codified, with s 2 of the Charities Act 2011 providing that a charitable
purpose is a purpose which:
(a) Falls within s 3(1); and
(b) Is for the public benefit.
There are 12 specific heads of charity set out under s 3(1) as well as a wide additional head of charity which codifies the common law principle of recognising additional charitable purposes falling within the spirit of the law.

Question 21

Heads of charity

Answer 21

The 12 specific heads of charity are:
(a) The prevention or relief of poverty
(b) The advancement of education
(c) The advancement of religion
(d) The advancement of health or the saving of lives
(e) The advancement of citizenship or community development
(f) The advancement of the arts, culture, heritage or science
(g) The advancement of amateur sport

Question 22

Heads of charity

Answer 22

(h) The advancement of human rights, conflict resolution or reconciliation or the promotion of
religious or racial harmony or equality and diversity
(i) The advancement of environmental protection or improvement
(j) The relief of those in need because of youth, age, ill-health, disability, financial hardship or
other disadvantage
(k) The advancement of animal welfare
(l) The promotion of the efficiency of the armed forces of the Crown or of the efficiency of the
police, fire and rescue services or ambulance services

Question 23

2.2.1 The prevention or relief of poverty

Answer 23

There is no definition of ‘poverty’ in the Charities Act 2011 and it is therefore interpreted using
existing case law from which some key principles can be derived.

Question 24

Poverty means ‘going short’

Answer 24

This idea from Re Coulthurst is now reflected in Charity Commission guidance which provides
that:
it is likely to be charitable to relieve the poverty or financial hardship of anyone who does not
have the resources to provide themselves […] with the normal things of life which most people
take for granted.

Question 25

Poverty does not mean destitution

Answer 25

‘There are degrees of poverty less acute than abject poverty or destitution, but poverty nonetheless.’ (Re Gardom)

Question 26

Poverty is a relative concept

Answer 26

It is judged against a person’s ‘status in life’. Trusts for the following have been found to be charitable:
* ‘distressed gentlefolk’ (Re Young)
* ‘ladies of limited means’ (Re Gardom)

Question 27

The purpose must not benefit the rich

Answer 27

Otherwise it will not be ‘wholly and exclusively charitable’ - see Re Gwyon in which a trust for the
provision of clothing to boys was void on the basis that it did not require the boys to be poor and
so would benefit rich boys too.

Question 28

Poverty can be temporary

Answer 28

The Charity Commission’s decision to grant charitable status to the AITC Foundation which provided relief for those who suffered as a result of the collapse of investment companies noted that ‘someone suffering a temporary period of financial hardship due to a sudden change in
circumstances might also be eligible for assistance’.

Question 29

Poverty can be inferred

Answer 29

For example, the provision of a soup kitchen was implicitly for the alleviation of poverty (Biscoe v
Jackson). In contrast, a trust to provides dwellings for the ‘working classes’ was not charitable as
‘working class’ did not indicate poor persons (Re Sanders’ WT).

Question 30

2.2.2 The advancement of education

Answer 30

Charity Commission guidance indicates that the advancement of education is not confined to formal instruction in an educational institution and could include training, research or broader education in the development of individual capabilities, competencies, skills and understanding. Case law has confirmed that the following are charitable purposes

Question 31

2.2.2 The advancement of education

Answer 31

• The support of learning such as scholarships to support students (Re Gott) and funding of lectureships (AG v Margaret and Regius Professors in Cambridge).
• Ancillary organisations in educational institutions eg a students’ union, provided it exists to
  further the educational purposes of the institution (London Hospital Medical College v IRC).
• The dissemination of knowledge, as in Incorporated Council of Law Reporting for England and Wales v AG in which a trust for the publication of law reports was considered charitable as it
  assisted research into the law

Question 32

The case law on advancement of education is not entirely consistent on what constitutes education. Compare the following cases:

Answer 32

Re Shaw: George Bernard Shaw left a gift for the purpose of developing a 40-letter phonetic alphabet. The purpose was held to be an increase in knowledge, but this was not a charitable object because there was no element of teaching or education.

Question 33

The case law on advancement of education is not entirely consistent on what constitutes education. Compare the following cases:

Answer 33

• Re Hopkins’ Will Trust: A gift was left on trust for the purpose of researching whether plays attributed to Shakespeare may have been authored by Francis Bacon. Wilberforce J did not find himself to be constrained by the requirement of ‘an element of teaching or education’ and was unwilling to treat these words as meaning that the promotion of academic research could not be charitable. He held that the research must ‘either be of educational value to the researcher or must be so directed as to lead to something which will pass into the store of educational material, or so as to improve the sum of communicable knowledge’.

Question 34

Both cases predate the statutory requirement

Answer 34

Note, however, that both cases predate the statutory requirement to prove public benefit (which was previously presumed). It is unclear whether research of value to the researcher would be sufficient to satisfy the statutory public benefit test.

Question 35

The Charity Commission

Answer 35

The Charity Commission guidance also recognises that a wide range of organisations qualify as charitable under this heading, including:
* Museums, galleries, libraries, scientific institutes
* Pre-schools, playgroups, summer schools and homework clubs
* Organisations supporting the work of educational establishments such as parent-teacher associations, teacher training organisations or exam boards
* Organisations providing life skills training such as the Duke of Edinburgh award schemes,
Scouts and Guides

The above is not an exhaustive list

Question 36

2.2.3 The advancement of religion

Answer 36

Section 3(2)(a) Charities Act 2011 provides that ‘religion’ includes:
(a) A religion which involves belief in more than one god; and
(b) A religion which does not involve a belief in a god.

Question 37

Charity Commission guidance consolidates further case law requirements describing a religious
belief as follows:

Answer 37

• Belief in a god (or gods) or goddess (or goddesses), or supreme being, or divine or transcendental being or entity or spiritual principle (‘supreme being or entity’) which is the object or focus of the religion
• A relationship between the believer and the supreme being or entity by showing worship of,
  reverence for or veneration of the supreme being or entity
• A degree of cogency, cohesion, seriousness and importance
• An identifiable positive, beneficial, moral or ethical framework

Question 38

2.2.3 The advancement of religion

Answer 38

Although the advancement of religion was a recognised head of charity before the enactment of
the Charities Act 2011, the earlier case law now needs to be considered in light of the statutory definition and Charity Commission guidance, which provides that it should be considered ‘in the context of current social and economic circumstances’.

Question 39

2.2.3 The advancement of religion

Answer 39

Under the common law it was unclear whether groups which did not recognise a god could be
charitable. A prominent example was Buddhism, which was recognised by Lord Denning in R v
Registrar General Ex p Segerdal as an exception to the general rule requiring belief in a god.
Following the Charities Act 2011 it is clear that the charitable head of the advancement of religion
includes religions which do not involve belief in a god.Under the common law it was unclear whether groups which did not recognise a god could be charitable. A prominent example was Buddhism, which was recognised by Lord Denning in R v
Registrar General Ex p Segerdal as an exception to the general rule requiring belief in a god. Following the Charities Act 2011 it is clear that the charitable head of the advancement of religion includes religions which do not involve belief in a god.

Question 40

R v Registrar General of Births, Deaths and Marriages the Supreme Court

Answer 40

Unless there is some compelling reason for holding otherwise, religion should not be confined to
religions which recognise a supreme deity. First and foremost, to do so would be a form of religious discrimination unacceptable in today’s society.

Question 41

Definition of ‘religion’

Answer 41

Advancement of religion has been defined as meaning ‘to promote it, to spread its message ever wider among mankind; to take some positive steps to sustain and increase religious belief’ (United Grand Lodge of Ancient Free and Accepted Masons of England v Holborn Borough Council). This can be achieved by way of religious services, pastoral or missionary work.

Question 42

Trusts for the following purposes have also been found to fall within this head:

Answer 42

• Support of a religious order such as a monastery or convent (Re Banfield)
• Public masses celebrating the dead (Re Hetherington)
• The repair of churchyards or burial grounds (Re Douglas)

Question 43

2.2.4 The advancement of health/saving of lives

Answer 43

The advancement of health includes the prevention or relief of sickness, disease or human suffering, as well as the promotion of health. The Charity Commission takes a broad view of advancing health including complementary, alternative or holistic methods as well as conventional methods, though to be charitable there must be sufficient evidence for the claimed benefits of the method used (see Charity Commission Operational Guidance (OG) 304).

Question 44

2.2.4 The advancement of health/saving of lives

Answer 44

The relief of the sick has long been considered charitable. It can include, for example, the provision of hospitals (Re Resch’s Will Trust) or healthcare advice (British Pregnancy Advisory Service). The saving of lives includes rescue services such as lifeboat associations, mountain rescue and cave rescue

Question 45

2.2.5 Citizenship/community development

Answer 45

Section 3(2)(c) provides that this head includes:
(a) Rural and urban regeneration
(b) The promotion of civic responsibility, volunteering, the voluntary sector or the effectiveness or efficiency of charities

Question 46

Broad group of charitable purposes

Answer 46

It covers a broad group of charitable purposes directed towards support for social and community infrastructure which is focused on the community rather than the individual. As always, the purpose must be wholly and exclusively charitable.

This was demonstrated in IRC v Oldham Training and Enterprise Council where an organisation was held not to be a charity because, in addition to providing vocational training for the unemployed, it also promoted trade, commerce and enterprise and provided advice to new businesses.

Question 47

2.2.6 Arts, culture, heritage or science

Answer 47

Before 2006 these purposes could only be upheld as charitable under the head of advancement of education. A trust to promote the practice and performance of choral works was therefore established as being charitable on the basis that ‘a body of persons established for the purpose of raising the artistic taste of the country […] is established for educational purposes’ (Royal Choral
Society v IRC)

Question 48

Charity Commission guidance

Answer 48

Provides that to be charitable the art needs to be of ‘merit’, the assessment of which may require expert evidence.

Question 49

Compare the cases of Re Delius

Answer 49

in relation to promoting the music of the composer Delius) and
Re Pinion (in relation to the settlor’s art collection). The former was considered charitable, though
the judge left open the question as to the consequence if the trust had related to a lesser composer. In contrast the art collection in Re Pinion was described by the Court of Appeal as ‘junk’ and the trust was not charitable. These cases were decided under the old law (ie on whether they could be considered educational) but it can be presumed that similar considerations would
apply under the Act.

Question 50

Monuments

Answer 50

Can be charitable under this head if they are of cultural or historical importance. Monuments to private individuals are therefore unlikely to be charitable (but may be recognised
as a non-charitable purpose trust).

Question 51

Charity Commission guidance on heritage

Answer 51

Might be regarded as part of a country’s local or national history and traditions which are passed down through successive generations. It includes charities for the preservation of historic land and buildings and might also include
activities concerned with preserving or maintaining a tradition (where the benefit to the public in preserving it can be shown).

Question 52

Williams’ Trustees v IRC

Answer 52

This means that the purposes of the trust which failed in Williams’ Trustees v IRC might now be
considered charitable under the Charities Act 2011. In that case, the court rejected the argument that a trust to foster the study of the Wels
language, history, music, literature and art was charitable. (To satisfy the requirements of the Charities Act 2011, other changes would also be needed to the trust in that case ie the exclusion of other non-charitable purposes such as providing a meeting place for recreation and refreshment.)

Question 53

2.2.7 The advancement of amateur sport

Answer 53

Section 3(2)(d) of the Charities Act 2011 defines ‘sport’ as sports or games which promote health
by involving physical or mental skill or exertion. There is uncertainty as to the types of games and sports which might qualify, and the level of
physical or mental exertion required to promote health. It clearly includes physical sports such as football and athletics but also includes chess due to the mental skill involved. Other games and activities will be more borderline

Question 54

Compare

Answer 54

Compare the Charity Commission decisions in Cambridgeshire Target Shooting Association and
Hitchen Bridge Club:
* The Bridge Club was found to be charitable on the basis that it involves logical and lateral
thinking skills, planning, memory, sequencing, initiation and other higher order functions.
* In contrast while the Commission accepted that it was necessary to be physically and mentally fit to succeed in target shooting it was not convinced that these health benefits were gained from the activity itself.

Question 55

2.2.8 The advancement of human rights

Answer 55

Section 3(1)(h) provides for the advancement of human rights, conflict resolution or reconciliation
or the promotion of religious or racial harmony or equality and diversity. In order to be charitable under this head the purpose must not stray into political objectives such as seeking to procure changes to the law.

Question 56

Charity Commission Guidance

Answer 56

Includes in its examples of the sorts of purposes falling within this head:
* Raising awareness of human rights issues, relieving the victims and securing the enforcement
of human rights laws; and
* The promotion of restorative justice and other forms of conflict resolution or reconciliation.

Question 57

2.2.9 Environmental protection

Answer 57

Section 3(1)(i) provides that this head includes both the protection and improvement of the environment. Charity Commission guidance provides that the advancement of environmental protection and improvement includes preservation and conservation of the natural environment and the promotion of sustainable development.

Question 58

Conservation of the environment

Answer 58

Includes the conservation of a particular animal, bird or other
species of ‘wildlife’ in general; a specific plant species, habitat or area of land, including areas of natural beauty and scientific interest; flora, fauna and the environment generally. Charities may need to produce independent expert evidence to show that the particular species, land or habitat to be conserved is worthy of conservation

Question 59

2.2.10 The relief of those in need

Answer 59

This charitable purpose is for the relief of those in need because of youth, age, ill-health, disability, financial hardship or other disadvantage. Section 3(2)(e) provides that this includes
relief given by the provision of accommodation or care. The relief of those in need is a separate head of charity from the relief of poverty. It is therefore clear that a person does not need to be poor to be in need. However, it is necessary to show that
they have a specific need.

Question 60

2.2.10 The relief of those in need

Answer 60

These issues are both demonstrated in Joseph Rowntree Memorial Trust Housing Association v Attorney General in which accommodation was provided for the elderly without a poverty requirement. In fact the tenants could sell their leases and make a profit. The purpose was found to be charitable on the basis that the tenants had a need (for suitable/accessible accommodation) which the charity sought to relieve by providing suitable accommodation (eg with communal services and a warden).

Question 61

2.2.11 The advancement of animal welfare

Answer 61

Before the welfare of animals was added as a separate head of charity trusts for this purpose
were upheld on the basis that they promoted human morality by discouraging cruelty to animals
by humans. The purpose of the advancement of animal welfare includes providing for the welfare of particular types of animal (eg cats and kittens in Re Moss) as well as animals generally. It has also included improving methods for slaughtering animals (Re Wedgewood).

Question 62

2.2.11 The advancement of animal welfare

Answer 62

Trusts for the care of particular animals (eg the testator’s pet dog) are not included, although
such trusts might exceptionally be upheld as non-charitable purpose trusts.

The purpose of pursuing the abolition of vivisection has also been found not to be charitable since
this would be a political purpose seeking a change in the law (as well as failing to meet the public
benefit requirement) (National Anti-Vivisection Society v IRC).

Question 63

2.2.12 The efficiency of public services

Answer 63

Section 3(1)(l) provides that this purpose relates to the efficiency of the armed forces, the police,
fire and rescue services or ambulance services. This head of charity traditionally related to the armed forces before it was extended by statute to also include eg the police and fire services. Case law has upheld a fund for the promotion of physical fitness (Re Gray) and for the provision of a library (Re Good) in respect of an army regiment as charitable.

Question 64

Case Law Charity Commission

Answer 64

In addition to the existing case law Charity Commission guidance suggests a series of examples
of purposes which would be considered charitable under this head including:
* Increasing technical knowledge of members of the services through the provision of educational resources, competitions and prizes
* Providing opportunities for services personnel to gain additional experience relevant to their jobs

Question 65

2.2.13 General purpose

Answer 65

There is also a wide, additional category in s 3(1)(m) which recognises that some charitable
purposes may not have been captured within the previous 12 heads of charity. This provision covers purposes which would have been recognised as charitable under the previous law, or purposes which are analogous to or within the spirit of the statutory heads of charity and earlier case law.

This principle of recognising charitable purposes by analogy is a long-standing principle of charity law. It ensures that the law on charitable purposes is flexible and can evolve to include additional purposes that were not specifically envisaged when the Act was drafted but nonetheless merit charitable status.

Question 66

2.3 Wholly and exclusively charitable

Answer 66

For a trust to have charitable status, its purposes must be wholly and exclusively charitable. In other words, all its purposes must be charitable. If a trust has a mixture of charitable and non-charitable purposes, the consequences depend on the precise situation:

Question 67

2.3 Wholly and exclusively charitable

Answer 67

(a) As a basic rule, the trust will be void unless the non-charitable purpose falls within a recognised category of non-charitable purpose trusts. If the trust fails, the property will return to the settlor on a resulting trust.

(b) If the non-charitable purpose can be construed as ‘incidental or subsidiary’ to the main,
charitable purpose, the trust will remain effective (Latimer v IRC).

(c) If the charitable and non-charitable purposes can be separated, and a portion of the fund
allocated to each, the court will ‘sever’ the trust and recognise the charitable part. This will only be possible if the trust language contemplates severance of the fund (Salusbury v Denton). This requires the amount allocated to each purpose to be quantifiable (Re Coxen).

Question 68

2.4 Public benefit

Answer 68

There is no definition of ‘public benefit’ in the Act, but it does provide that:
* There is no presumption of public benefit (s 4(2))
* Charity trustees must have regard to any guidance published by the Charity Commission in
pursuance of its public benefit objective (s 17(5)). There are two elements to the public benefit requirement:
(a) Whether there is an identifiable benefit; and
(b) What constitutes the public, or a section of the public.

Question 69

2.4.1 Identifiable benefit

Answer 69

The question of whether there is an identifiable benefit is a separate question from whether the trust is for a charitable purpose as a matter of law. It is a question of fact as to whether there is a benefit to the public having regard to all the evidence in the particular case. The settlor’s belief as to benefit is not relevant.

Question 70

2.4.1 Identifiable benefit

Answer 70

Benefit is balanced against any detriment or harm arising from the purpose. The benefit must be
capable of being identified and described even if it cannot be quantified or measured. If it is not
obvious that the purpose is beneficial, the Charity Commission may require evidence.

Question 71

2.4.1 Identifiable benefit

Answer 71

• Re Hummeltenberg: A benefit could not be identified in relation to a training college for mediums notwithstanding the settlor’s belief that it was beneficial.
• National Anti-Vivisection Society v IRC: The adverse effect on medical research outweighed the benefit arising to the welfare of animals of abolishing vivisection.

Question 72

2.4.2 Public or section of the public

Answer 72

The purpose must be beneficial to the public or section of the public, not to a private class of individuals. This is for policy reasons: a settlor should not benefit from the advantages of charitable status in respect of a trust which in fact benefits only eg the settlor’s family and friends.

Question 73

To satisfy the test:

Answer 73

(a) The possible beneficiaries must not be negligible in number; and
(b) The quality which distinguishes them from other members of the community must be a quality which does not depend on their relationship to a particular individual (Oppenheim v Tobacco Securities Trust Co Ltd).

Question 74

It is not simply a question of numbers

Answer 74

In Oppenheim a trust for the education of children of the
employees of a company which employed over 100,000 staff was held not to be charitable on the
basis that the beneficiaries were defined by reference to their personal relationship with the
employer.

Question 75

Charity Commission

Answer 75

Guidance provides that charities can choose to focus on certain beneficiaries provided that:

(a) They have proper reasons for doing so
(b) The poor are not excluded from benefit
(c) The people focused on are a sufficient section of the public for the charity’s purpose. What constitutes a section of the public is therefore related to the purpose of the charity.

Question 76

IRC v Baddeley Viscount Simonds

Answer 76

In IRC v Baddeley Viscount Simonds gave an analogy: a bridge may be charitable and it does not
matter how many people actually use it. But confine its use to a selected number of persons,
however numerous or important, and it is not charitable. Charities can charge for the services or facilities they offer. They can even make a profit provided this is reasonable and necessary to carry out the charity’s aims eg used to fund the facilities provided by a private school or hospital.

Question 77

Opportunity to Benefit

Answer 77

The opportunity to benefit must not be unreasonably restricted. For example if fees restrict the benefit to only those who can afford the fees it may be that the benefits are not available to a sufficiently large section of the public.

If charges are of a level which the poor cannot afford, the trustees must make sure that the poor
can otherwise benefit. This is always a matter of degree and will be considered further in the context of the advancement of education.

Question 78

2.4.3 Political objectives

Answer 78

Charities cannot pursue political objectives ie seek to change the law or government policy or promote the views of a political party. This is on the basis that the courts/Charity Commission are unwilling to consider whether such a purpose is for the public benefit, preferring to be politically neutral.

Question 79

Distinction to be drawn

Answer 79

A distinction can be drawn between a political purpose (which will not be charitable on public benefit grounds) and the use of political means to achieve a non-political objective (which can be charitable). This distinction may be very difficult to draw in practice, as illustrated by the
examples below

Question 80

Amnesty International

Answer 80

A trust set up by Amnesty International included the objective (among others) of securing the
release of prisoners of conscience by procuring the reversal of government policy (McGovern v
Attorney General). This was held to be non-charitable.

Question 81

Organisation set up

Answer 81

An organisation set up to protect the environment carries out a range of activities including political activity aimed at changing government policy in relation to airports (Charity Commission Guidance). This was held to be charitable.

Question 82

2.5 Application of public benefit test to specific charitable purposes

Answer 82

The application of the public benefit requirement differs as between the different charitable purposes. In the remainder of this chapter, we will consider examples of the application of the public benefit requirement in the context of the following purposes:
(a) The prevention or relief of poverty
(b) The advancement of education
(c) The advancement of religion
(d) The advancement of human rights

Question 83

2.5.1 The prevention or relief of poverty

Answer 83

The requirement that the class of beneficiaries must not be defined by reference to their relationship with a single person is relaxed in the case of the relief or prevention of poverty.
However, the purpose must still be for the benefit of a particular description of poor persons, as
opposed to the benefit of particular poor persons (which would be a private trust).

Question 84

Re Scarisbrick’s Will Trusts

Answer 84

In Re Scarisbrick’s Will Trusts it was considered that trusts for ‘poor relations’ are ‘of so altruistic a
character’ that the public element may be inferred, or they can otherwise be accepted as being a
‘hallowed, if illogical, exception’.

Question 85

Benefit is easily established

Answer 85

The benefit is easily established for a purpose to relieve poverty, and the relaxation of the ‘public’ element means that trusts for such purposes can have pools of beneficiaries where there is a family or other personal connection to the settlor (such as to an employer in Dingle v Turner), or restricted to a smaller geographical area where this would not be allowed for other charitable
purposes.

Question 86

2.5.2 Advancement of education

Answer 86

Fee-paying schools have been an issue of particular difficulty in relation to the public benefit
requirement. As noted above, charities can charge fees but must not by doing so exclude the poor
from benefitting from the charitable purpose. Both elements of the public benefit requirement were considered in The Independent Schools Council v The Charity Commission

Question 87

Identifiable benefit

Answer 87

The benefit of providing education was not outweighed by the social
mobility implications of the requirement to pay fees

Question 88

Section of the public

Answer 88

Although the accessibility of the benefit can be restricted by a
requirement to pay fees, if fees are of a level which the poor cannot afford the trustees must make provision so that the poor can otherwise benefit. This benefit must be more than a de minimis or ‘token’ benefit

Question 89

Section of the public

Answer 89

However, once that hurdle is met it is for the trustees to determine
how this requirement might be met in the particular circumstances. Examples suggested included the provision of scholarships or making teaching materials or other facilities (such as swimming pools or sports grounds) available

Question 90

2.5.3 Advancement of religion

Answer 90

Before the Charities Act 2006 there was a presumption that charitable trusts for the advancement
of religion were for the public benefit. Now the presumption has been abolished the public benefit
must be proven in each case.

Question 91

No public benefit

Answer 91

Could be proved in respect of a gift on trust to a community of cloistered nuns. The efficacy of prayer in itself could not be proved. It would have been different if the nuns had
gone out to benefit the community (Gilmour v Coats).

Question 92

Neville Estates v Madden

Answer 92

In contrast, land held by the Catford Synagogue was found to be held for charitable purposes. The key difference was that the court considered that a benefit to the public derived from mixing with others in a place of worship, in contrast with the nuns who lived in seclusion (Neville Estates v Madden).

Question 93

2.5.4 Advancement of human rights

Answer 93

A key difficulty in relation to intended charitable trusts for the advancement of human rights is
distinguishing between trusts with political objectives (which would not meet the public benefit requirement) and those which are pursuing a political activity as a means of achieving a charitable end (which can satisfy the requirement)

Question 94

2.5.4 Advancement of human rights

Answer 94

For example, a trust by Amnesty International has been held not to be charitable because its objectives included securing the release of prisoners of conscience and the abolition of torture and inhuman or degrading treatment. The court did not consider that it could judge whether procuring a change of law in a foreign country would be to the public benefit in the UK. (Other
objectives of the trust were charitable, but the trust could not be charitable as it was not wholly
and exclusively charitable.)

Question 95

2.6 The cy-près doctrine

Answer 95

Where a private trust fails there is usually a resulting trust to the settlor. Where a charitable purpose trust fails, however, a resulting trust would defeat the intention of the
person who had dedicated their property to a charitable purpose.
Charitable trusts are therefore subject to the cy-près doctrine.
This provides that where a charitable purpose trust fails, any surplus funds will be applied to another charitable purpose by way of a scheme established by the Charity Commission or court.

Question 96

2.6 The cy-près doctrine

Answer 96

A person who donates property to a charitable purpose therefore knows that it will be used for charitable purposes, even if the particular purpose fails. Under s 62 of the Charities Act 2011 there are five grounds on which the original purpose of a charitable gift can be altered

Question 97

Five grounds on which the original purpose is altered

Answer 97

(a) The original purpose has been fulfilled or cannot be carried out.
(b) The original purpose may still be workable but does not provide a use for all the property available to the trust ie there are surplus funds.
(c) The property from similar trusts is combined so as to be used more effectively.
(d) The original purpose referred to an area or class of persons which is no longer relevant or suitable.
(e) The purpose has:
(i) Been adequately provided for by other means;
(ii) Ceased to be charitable in law; or
(iii) Ceased to provide a suitable and effective method of using the property.

Question 98

Applied cy-près

Answer 98

Once property has been given to charity it is given for all time, so where there is a subsequent
failure the gift cannot go back on a resulting trust, it will be applied cy-près. However, where there is an initial failure ie property cannot be applied to the specific purpose
from the beginning, it will only be applied cy-près if the settlor has shown a general charitable
intention

Question 99

Question of court

Answer 99

The question for the court to decide in construing the document is whether there was a specific
intention to benefit a particular object, or an intention to give effect to a general mode of charity
(notwithstanding a reference to a more specific object). Only in the latter case can the property be applied cy-près on the failure of the initial purpose. A gift expressed as being dedicated to a charitable purpose but which fails to specify the mode of application would show general charitable intent eg ‘£5,000 for the relief of poverty’.

Question 100

Key case: Biscoe v Jackson (1887) 35 Ch 460

Answer 100

The intended purpose was the provision of a soup kitchen and cottage hospital for the parish of
Shoreditch. Suitable land could not be found and so the purpose failed. However, the court found that there was a general charitable intention to benefit the sick and poor of the parish. The impossibility only related to the form of the gift, and the general charitable purpose could be
executed cy-près.

Question 101

Key case: Re Good’s Will Trusts [1950] 2 All ER 653

Answer 101

A trust to provide rest homes in Hull was found to be too specific to demonstrate a general charitable intention. The testator had created detailed plans relating to the management of the homes which the court found to be inconsistent with a general charitable intention. There could therefore be no cy-près application of the funds when they transpired to be insufficient for the intended purpose.

Question 102

2.7 Summary

Answer 102

• The law on charitable purposes has developed over hundreds of years, before codification in the Charities Act 2006 and consolidation in the Charities Act 2011.
• There are 12 specific heads of charity set out under s 3(1) Charities Act 2011, which expand the
  four traditional heads of charity recognised at common law.
• There is also a further head of charity in this section, allowing the recognition of further
  charitable purposes by reference to the previous case law and by analogy to recognised charitable purposes.

Question 103

2.7 Summary

Answer 103

• The purposes of a charitable trust must be wholly and exclusively charitable, otherwise the
  trust may fail (unless it is a recognised non-charitable purpose trust, the non-charitable
  purposes are ancillary or it is possible to sever the fund and save the charitable component).
• Charitable trusts must satisfy the public benefit test set out in the Charities Act 2011.
• There is no presumption of public benefit and it is necessary to demonstrate that the trust
  satisfies this requirement.
• Trustees must consider Charity Commission guidance on the meaning of public benefit.

Question 104

2.7 Summary

Answer 104

• The question of public benefit is separate to that of whether the purposes are charitable. It
  must be shown that the trust provides some ascertainable benefit.
• The purposes of a trust must be for the public or a section of the public. The trust must not be restricted to a private class of individuals.
• Charities may charge for their services but such fees must not act so as to restrict the poor from benefitting from the trust.
• If the purposes of a charitable trust fail, the cy-près doctrine applies, allowing the property to
  continue to be used for other charitable purposes.

Question 105

3. Non-charitable purpose trusts

Answer 105

In this section we will explore the requirements for non-charitable purpose trusts, focusing on the
anomalous categories of trust identified in Re Endacott.

Question 106

3.1 The Endacott exceptions

Answer 106

In order to be valid, the purpose of a non-charitable purpose trust must fall within a recognised exception to the beneficiary principle.
These exceptions apply only when a trust is created in a will and were classified in the case of Re
Endacott [1960] Ch 232. They are:
(a) Trusts for the maintenance of particular animals
(b) Trusts for the erection and maintenance of monuments and graves
(c) Trusts for the saying of private masses

Question 107

3.1 The Endacott exceptions

Answer 107

Note that there are a few further miscellaneous exceptions, the continuing validity of which is
doubtful. The court also classified gifts to unincorporated associations as a further exception, but
there is a separate body of case law dealing with such gifts. This Workbook focuses only on the
three exceptions recognised above.

Question 108

3.1.1 Maintenance of particular animals

Answer 108

A trust for the welfare of animals generally would be charitable. However, a trust for the care of a
particular animal would not be charitable, as it would not pass the public benefit test. Nonetheless, trusts for the maintenance of particular animals have been upheld as valid (provided they comply with certainty and perpetuity requirements)

Question 109

Example: Trust for maintenance of testator’s two dogs

Answer 109

A testator wishes to create a trust by their will for the care of their two dogs.

Question 110

3.1.2 Monuments and graves 3.1.2 Monuments and graves

Answer 110

A trust for the purpose of constructing or maintaining a monument could be charitable if it is of cultural or historical importance.
However, monuments and graves in respect of private individuals will not be charitable. Nonetheless, trusts for the erection and maintenance of monuments and graves have been upheld as valid (provided they comply with certainty and perpetuity requirements).

Question 111

Example: Trust to maintain family grave

Answer 111

A testator wishes to leave property on trust to maintain a family grave and decorate it with flowers.

Question 112

3.1.3 Private masses

Answer 112

A trust for the purpose of conducting religious ceremonies may be charitable if it passes the public benefit test. However, a ceremony that takes place in private will not pass the public benefit test and will therefore not be charitable. Nonetheless, trusts for the saying of private masses have been upheld as valid (provided they comply with certainty and perpetuity requirements).

Question 113

Example: Trust to secure private masses

Answer 113

A testator wishes to create a trust by their will for the saying of a private family mass in their memory

Question 114

Example: Trust to secure private masses

Answer 114

It is worth looking more closely at the case of Re Endacott itself. Before this case, the law on purpose trusts had developed in a piecemeal and not particularly principled way. In Endacott, Lord Evershed reviewed the case law and summarised the approach that should be taken to the
recognition of non-charitable purpose trusts.

Question 115

Key case: Re Endacott [1960] Ch 232

Answer 115

Facts: A testator gave his residuary estate ‘for the purpose of providing some useful memorial to
myself’.

Held: The provision was held to be void. The purpose was too uncertain to be charitable and did
not fall within a recognised class of non-charitable purpose trusts. In reaching this conclusion
Lord Evershed said:
No principle perhaps has greater sanction of authority behind it than the general proposition that a trust by English law, not being a charitable trust, in order to be effective, must have ascertained or ascertainable beneficiaries.

Question 116

In relation to the exceptions, he said that:

Answer 116

[…] the scope of these cases […] ought not to be extended. So to do would be to validate almost limitless heads of non-charitable trusts […]; and, in my judgment, that result would be out of harmony with the principles of our law.

Question 117

3.2 Trusts of imperfect obligation

Answer 117

Following Endacott, it is apparent that the exceptions are anomalous and difficult to justify other
than as ‘concessions to human weakness or sentiment’. The intended purpose must fall squarely
within a recognised exception to be valid. Unlike charitable purposes, the exceptions will not be extended by analogy.

Question 118

Trusts of imperfect obligations

Answer 118

Non-charitable purpose trusts falling within an Endacott exception are sometimes referred to as
trusts of imperfect obligation because although the court recognises their validity (meaning they will not fail if included in a will) they are not enforceable.

Question 119

Willing to carry out terms

Answer 119

As a practical point it is therefore prudent to check that the appointed trustee is willing to carry out the terms of the trust. If they are, the court will make what is known as a Pettingall order. This requires the trustee to give an undertaking to comply with the trust. If they do not, the testator’s residuary legatees (who would otherwise receive the property) can sue to enforce the undertaking and prevent a misapplication of the fund.

Question 120

3.3 Perpetuity

Answer 120

Because of their anomalous status, non-charitable purpose trusts are subject to more restrictive
perpetuity rules (limiting the duration of the trust) than other trusts. These rules are discussed in
detail in the chapter on ‘Perpetuity’ but, broadly, a non-charitable purpose trust should be drafted with an express perpetuity clause to ensure it does not fail for want of perpetuity.

Question 121

3.4 Summary

Answer 121

In order to be valid the purpose of a non-charitable purpose trust must fall within one of the recognised Endacott exceptions to the beneficiary principle. These are:
(i) Trusts for the maintenance of particular animals
(ii) Trusts for the erection and maintenance of monuments and graves
(iii) Trusts for the saying of private masses

Question 122

3.4 Summary

Answer 122

• The class of exceptions is anomalous and cannot be extended, even by analogy.
• It is essential to include an express perpetuity period as the perpetuity rules are strict.
• Non-charitable purpose trusts are technically unenforceable although if the trustee is willing to
  act, the court will grant a Pettingall order, effectively securing enforcement.