Charitable Trusts

Question 1

Under the 2009 Act, there is a 2-stage test for whether a valid purpose trust is present;

Answer 1

1. Is the trust for a purpose contained in section 3(1)(a), (b) (c)
2. Does it prove a public benefit, as per section 3(2), as confirmed in re williams trust.

Question 2

Pemsel heads of charity

Answer 2

1. The relief of poverty.
2. The advancement of education.
3. The advancement of religion.
4. Any other purposes beneficial to the community, not falling under the preceding heads.

PERC

Question 3

As set out in section 3, what must a purpose be in order to be charitable?

Answer 3

As set out in s3 a purpose shall not be a charitable purpose unless it is of public benefit.

Question 4

P: Re Gardom

Answer 4

Concerning a provision of temporary residence for ‘ladies of limited means’ it was held that there are degrees of poverty less acute than destitution.

Question 5

P: Re Sanders Will Trusts

Answer 5

A bequest to provide housing for the “working classes” and their families resident in a certain district was not for the relief of poverty and therefore not charitable.

Question 6

P: Brett v AG

Answer 6

A trust for such persons as the executor shall select and consider worthy of assistance. Sc held that the fact that discretion is conferred on a trustee to select those who will benefit does not affect the charitable nature of the trust.

Question 7

Re Segelman Deceased

Answer 7

An important modern authority on the degree of poverty required. The case concerned a gift to the poor and needy members of a class of the testators relatives. Chadwick j demonstrated a liberal approach being taken to the meaning of poverty as the gift was accepted as being charitable for the relief of poverty.

Question 8

Consequently poverty appears to encompass more than:

Answer 8

“Mere economic hardship”

Question 9

E: Re Shaw

Answer 9

Originally for a trust to be valid for the advancement of education, some element of teaching was required. Here a strict view of education was taken, when the court refused a trust for researching a new form of alphabet on this basis, as it was not combined with teaching or education.

Question 10

E: Re Hopkins Wills Trust

Answer 10

However, that stance has since changed and it appears that a trust will be deemed valid for the advancement of education if it will “improve the sum of communicable knowledge”. This concerned a gift to a society that was devoted to locating the bacon-shakespeare papers.

Question 11

E: Re Worth Library

Answer 11

Keane J gave education a broad meaning as he preferred the interpretation in Re Hopkins over the narrow approach in Re shaw. This would include gifts for the establishment of theatres, art galleries, museums and the promotion of literature and music. He highlighted that in every case however, the element of public benefit must be present.

Question 12

E: Maguire v AG

Answer 12

Lavern J referred to the dicta of Keane J in saying that the activities carried on in a local community hall, which mainly consisted of the running of a number of self-held groups, must be deemed as ‘educational’ in nature.

Question 13

E: Re Mariette

Answer 13

A gift to be used for the purpose of creating squash courts in Eton was held to be charitable as a gift for the advancement of education. The court noted the concept of education included “both mental and bodily education.

Question 14

Definition of religion

Question 15

R: Re Stratton

Question 17

Public benefit of religion

Question 19

Celebration of masses

Answer 19

AG v Delaney: gift for celebrations of masses was not charitable. This was
overturned in O’Hanlon v Logue.

Question 20

Section 45(2) Charities Act 1961:

Answer 20

a gift for the celebration of
masses whether in public or private was a charitable gift for the advancement of religion. This
section was repealed by Section 11 2009 Act and Schedule 2 2009 Act. This does not mean that
such a gift is no longer charitable: Re Howley.

Question 21

Beneficial to the community as outlined under s3(11) 2009 Act provides a non-exhaustive list on purposes that are of benefit to the community, such as:

Answer 21

the advancement of community welfare, advancement of community development, promotion of health, advancement of arts, culture, heritage etc.

Question 22

C: McDuff

Answer 22

it was said that a trust that benefits rich people only will not be accorded charitable status under this heading

Question 24

C: Incorporated council for law reporting for England and Wales v AG

Answer 24

Russell LJ suggested that the test should be that if a purpose is shown to be of sufficient benefit or utility to the community, it is prima facie charitable in law.

Question 25

C: National tourism development authority

Answer 25

Sport has never been recognised to be an object of sufficiently wide benefit to the community as to enjoy charitable status. The law has traditionally regarded sport as a form of recreation and, in consequence, trusts and bequests for sporting purposes are not recognised as charitable.” Golf course was said not to be charitable purpose (exception might arise if the setting up of the trust was for example for people with disabilities)- the more particular the benefit the less likely it is a charitable enterprise. However it could be suggested a more generous approach could be taken nowadays, as sport in itself ought to be regarded as beneficial to the community.

Question 26

S.2 Charities Act 2009

Answer 26

Under s2 Charities act 2009 political parties are deemed to be excluded parties from benefiting from charitable trusts.

Question 27

C: Re Hopkinson

Answer 27

Particular emphasis on education of labour party not awarded charitable status.

Question 28

C: Bowman v Secular Society

Answer 28

A trust for the advancement of political objects has always been held invalid, not because it is illegal, as everyone is free to promote changes in the law, but because the court has no means of judging whether a proposed change in the law will nor will not be for the public benefit, and therefore cannot say that a gift to secure the change is a charitable gift.

Question 29

Public benefit requirement

Answer 29

Traditionally the public benefit requirement did not exist, which meant that if a person created a trust to relieve the poverty of persons with whom he had a personal tie, it would have been accorded charitable status notwithstanding the apparent lack of public benefit. This personal tie may have been one of blood (Re Scarisbrick) or one of contract (Dingle v Turner).

Question 30

However section 3 charities act 2009 now requires that the public-benefit requirement is not satisfied unless;

Answer 30

1. the gift is intended to benefit the public or a section of the public, and 2. in a case where it confers a benefit on a person other than in his or her capacity as a member of the public or a section of the public, any such benefit is reasonable in all of the circumstances, and is ancillary to, and necessary, for the furtherance of the public benefit.

Question 31

Further, according to 3(7) of the 2009 Act, in determining whether a gift is of public benefit or not, account shall be taken of;

Answer 31

a) Any limitation imposed by the donor of the gift on the class of persons who may benefit from the gift and whether such limitation is justified and reasonable b) The amount of any charge payable for any service provided in the gift and whether this is likely to limit the number of persons or classes of person who will benefit from the gift. *The limitation here- if all of the intended beneficiaries of the gift or a significant number of them have a personal connection with the donor of the gift.

Question 32

Re Cranston

Answer 32

A subjective test is applied in Ireland, as opposed to the stricter objective test in uk. A purpose is of benefit to the community if the settlor himself was of the opinion that it is.

Question 33

Doctrine of Cy Pres

Answer 33

The doctrine of cy-pres can be exercised in respect of charitable trusts, where it has become impossible/impractical to apply the trust property to the charitable purpose specified by the settlor. When the court exercises this jurisdiction, it applies the property cy-pres, as near as possible to, the charitable purpose specified by the donor. S47 Charities Act broadened the circumstances where a cy-pres doctrine can be used.

Question 34

With Cy Pres the law distinguishes between:.

Answer 34

initial impossibility and supervening impossibility.

Question 35

Initial impossibility

Answer 35

A case involves initial impossibility if it was impossible or impractical to apply the property to the charitable purpose specified by the donor on the date on which the gift became effective (usually the date of the donors death).

Question 36

Charitable intention

Answer 36

Before the court will exercise their jurisdiction in the case of an initial impossibility, it must discern a general charitable intention on the part of the donor. If the donor intended to specifically benefit a particular charitable organisation and no other, there is no general charitable intention on his part. A general charitable intention may be discerned if the donor’s paramount intention was to effect charity, and he just chose a particular organisation through which to effect it.

Question 37

Irish approach to charitable intention

Answer 37

There have been a number of definitions of what amounts to a general charitable intention, and it appears the Irish courts have favoured a fairly flexible approach.

Question 38

Re Prescott

Answer 38

Where the names institution has never existed, the stated object has normally failed. The gift will therefore lapse, here a gift failed as the body did not exist at the time when the will was made.

Question 39

Re Worth

Answer 39

Keane J emphasises the importance of adhering to the testators original intention. In that case, it was found there was no general intention as the donor intended to benefit Dr.stevens hospital only. However,it was held that as the gift was an absolute gift to charity, which only failed due to a supervening act of the closure of the hospital, the gift could be applied cy-pres.

Question 40

Re Jordan

Answer 40

The testator he had left part of his estate to a memorial fund and the other part to a charity which had been wound up after the will had been made but before the testators death. It was said the words used were insufficient to infer general charitable intention.

Question 41

Supervening Impossibility

Answer 41

A case involves supervening impossibility if it became impossible/impractical to apply the trust property to the charitable purposes specified by the donor after the date on which the gift became effective.

Question 42

Re McGrath

Answer 42

Where the institution has ceased to exist or has been replaced by another, the gift may be construed as a misdescription of the latter institution

Question 43

Doyle v AG

Answer 43

A fund had been set up to benefit a child who suffered from a rare genetic skin disease. When the child died, the trustees proposed a scheme whereby the remaining funds would be used to fund seven charities in the area. However the AG objected on the basis that it was not sufficiently close to the original purposes of the fund. She directed a proportion of the funds would be used to set up a specialised clinic to treat the disease.

Question 44

What happens if the gift is upheld as charitable?

Answer 44

Therefore it seems that if the gift is upheld as charitable, it will then be classed as an initial failure and the court could draw up a cy-pres scheme to be applied in a manner as close as possible to that what was intended by the testator.