Charitable trusts Flashcards
What is the general rule in equity re: trusts for a purpose?
Equity does not enforce a trust for a purpose as opposed to a trust for a person. The most important exception to this general rule arises in respect of trusts for a charitable purpose.
What are the two key elements required for a charitable trust ?
- Charitable purpose + public benefit
- s 3(2) 2009 Act: Purpose shall not be a charitable purpose unless it is of public benefit
What are the categories of charitable purposes?
Lord McNaughton in Pemsell/ s.3 of the Charities Act 2009
1. Relief from poverty/ The prevention or relief of poverty or economic hardship
2. The advancement of education
3. The advancement of religion
4. Advancement for trust for/ Any other purposes of benefit to the community
How is the purpose of ‘relief from poverty’ changed by the 2009 Act?
- Used to be known as simply ‘relief from poverty
- S 3(1) Charities Act 2009 redefined it as ‘the prevention or relief of poverty or economic hardship’
- This did not broaden it’s scope as ‘poverty’ had already been interpreted to include ‘mere’ economic hardship as seen in:
- Re Coulthurst: not necessary for a class or persons to be destitute for a trust for their relief to be considered charitable
What is the poor relations rule? Give the UK/ pre 2009 position
Re Compton
- ‘a gift under which the beneficiaries are defined by reference to a purely personal relationship to a named propositus cannot on principle be a valid charitable gift’
- logic was that there was not a public benefit
The public benefit aspect of trusts for a relief of poverty has now almost disappeared from case law as seen in the following cases where charitable trusts were allowed notwithstanding the apparent lack of public benefit
Re Scarisbrick
- justified on the basis that the relief of poverty is so altruistic a character that the public element may necessarily be inferred thereby
Dingle v Turner (UK case)
- trust for the benefit of poor employees of a small firm was upheld as charitable
How was the poor relations rule been affected in Ireland by the 2009 Charities Act?
s. 3(7)
- in determining whether a gift is of public benefit account shall be taken of any limitation imposed by the doner on the class or person who may benefit, and whether or not such limitation is justified by the nature and purpose of the gift
s. 3(8)
- such a limitation will not be justified if all or a significant number of the intended beneficiaries have a personal connection with the donor of the gift
s. 2(2)(a)
i) - personal connection includes parent, brother, sister, spouse, grandparent, or grandchild of the individual or a child of their spouse
iv) - a person is connected with any person by whom they are employed under a contract of service
Effect of these provisions is to overrule the poor relations and poor employees cases, as noted by Biehler
How is the concept of what is educational in the context of the charitable purpose ‘advancement of education’ defined by the courts?
Biehler - recent authorities have established that the ambit of trusts recognized as being for the advancement of education is not confined to those of which are educational in the formal sense of the word
Re Shaw
- strict view requiring teaching and learning not the mere increase of knowledge
- did not consider a trust for research into the alphabetic reform of the English language charitable
Re Hopkins’ Will Trusts
- broader view which included research (into whether Bacon was in fact the author of some of Shakespeare’s plays)
How have the courts dealt with trusts for the promotion of arts?
Trusts or the promotion of works of art and the establishment of theatres etc. have been upheld as having the charitable purpose of advancement of education
Re Delius
- trust upheld for the purpose of promoting the music of the late husband of a widow as the court found his music worth appreciating
Re Pinion
- a trust was not upheld for a museum to promote an artist’s own work which was described as atrociously bad as there would be ‘no useful object in foisting upon the public this mass of junk. it has neither public utility nor educative value’
Re the Worth Library
- upheld trusts for the establishment of theatres, art galleries, and museums and the promotion of literature and music
How have the courts dealt the the establishment of trusts for sports?
Advancement of education
IRC v McMullen
- education includes the advancement of physical education including the promotion of sport in a school or college
Re Marriette
- upheld a trust for squash courts in Eden
Other purposes beneficial to the community
National tourism Development Authority v Coughlan and Others
- advancement of amateur sport will not qualify as a legally charitable purpose
Re Morgan/ Shillington v Portadown UDC
- gifts for the purpose of providing facilities for recreational purposes have been upheld as charitable
How is the charitable purpose ‘advancement of religion’ dealt with under Irish law?
S3(4) of the 2009 Act: It shall be presumed, unless the contrary is proved, that a gift for the advancement of religion is of public benefit.
S3(10): A gift is not a gift for the
advancement of religion if it is made to or for the benefit of an organisation or cult.
Gifts for the celebration of mass
AG v Delaney
- held that it must be stipulated that a mass be said in public for it to be charitable
O’Hanlon v Logue
- made clear that a bequest for the saying of mass, public or not, constituted a valid gift of charitable nature
- subsequently enacted in s45(2) Charities Act 1961
What is considered ‘any other purposes of benefit to the community’?
s 3(11) 2009 Act (non exhaustive)
a) advancement of community welfare, including the relief of those in need by reason of youth, age (Re Dunlop), ill health or disability(Re Lewis)
b) advancement of community development, including rural or urban regeneration
c) promotion of civic responsibility or voluntary work
d) promotion of health including the prevention or relief of sickness, disease, or human suffering (Barringtons Hospital v Commissioner of Valuation)
e) the advancement of conflict resolution or reconciliation
f) the promotion of religious or racial harmony
g) the protection of the natural environment
h) the advancement of envirommental sustainability
i) adv. of efficient and effective use of the property of charitable organisations
j) the prevention or relief of suffering of animals (Re Cranston - promotion of vegetarianism)
k) advancement of arts, culture, heritage, or sciences
l) integration of the disadvantaged and the promotion of their full participation in society
Ireland - subjective test applied, if the settlor was of the view it was beneficial to the community so long as it is rational and not against any laws it is charitable (eg Re Cranston and Re Worth Library)
England - objective test applied, court decides on the basis of evidence before it ( Re Hummeltenberg
Can a trust for the advancement of political purposes be charitable?
Bowman v Secular Society Ltd
- a trust for the attainment of political objects has always been held as invalid because the court has no means of judging whether a proposed change in the law will or will not be for the public benefit and therefore cannot say whether a gift to secure the change is a charitable gift
McGovern v Attorney General
- a trust for political purposes can never be regarded as being for the public benefit in the manner which the law regards as charitable
- this includes trusts whose purpose is to further the interest of a political party, procure changes in law in this or a foreign country, and trusts to procure a reversal in government policy or of a particular government decision
How was the public benefit requirement assessed pre 2009?
1) Relief of poverty
- negligible relevance
- Re Scarisbrick - purpose is of so altruistic a character that the public element may necessarily be inferred thereby, or they may be accepted as a hallowed if illogical exception
2) Advancement of education/ other purposes
Re Worth Library
- is the number of potential beneficiaries negligible?
- is entitlement to the benefit contingent on a person’s relationship with a particular individual?
3) Advancement of religion
- presumed against evidence to the contrary under s3(4) of the 2009 act , totally presumed under s 45(1) 1961 Act
How is the public benefit requirement fulfilled post 2009?
s. 3(3)
- a gift shall not be of public benefit unless it is intended to benefit the public or a section of the public
