Charitable Trusts

Question 0

Preamble to the Charitable Uses Act 1601

Answer 0

Important to the development of charities and what was considered to be a charitable purpose.

Question 1

Charitable Trusts - Charities Act 2011

Answer 1

Three conditions must be satisfied:

1) Must be for a purpose that is regarded as charitable under s177 of the Act.
2) Purposes must benefit the public or a sufficient section of the public.
3) Must be wholly and exclusively charitable.

Question 2

Commissioners for Special Purposes of Income Tax v Pensel (1891)

Answer 2

Lord McNaughten identified ‘4 heads of charity’ to assist with the definition of charitable:

1) Relief of poverty.
2) Advancement of education.
3) Advancement of religion.
4) Other purposes that are beneficial to the community.

Question 3

Charities Act 2011

Answer 3

13 descriptions of recognised charitable purposes under Act.

Question 4

Public benefit requirement and the Charity Commission 2008

Independent Schools Council v The Charity Commission for England and Wales

Answer 4

The Court tested the guidelines given by the commission, i.e. The statement in the guidance that an organisation that excluded people from the opportunity to benefit because of their ability to pay fees would not satisfy the public benefit requirement was found to be wrong, since it was sufficient that the organisation provides a more than token benefit to the poor.

This case led to the Charity Commission being advised to amend their recommendations.

Question 5

I) Public Benefit - *identifiable benefit/benefits
*what constitutes public/section of the public?
Re Hummeltenberg

Re Oppenheimer

Answer 5

Re Hummeltenberg - benefit to the public could not be identified from a training college for mediums.
(public benefit must be capable of being identified/described but it need not be measured)

Re Oppenheimer- Personal nexus: the class maybe be small but must not be numerically negligible. 
Members of the class must not be links by a contract or by a quality that depends on their relationship to a particular individual.

Question 6

ii) Prevention or relief of poverty

Answer 6

Must consist of a particular description of poor people rather than a gift to particular poor people.

Poverty does not just include people who were destitute but those who could not satisfy a basic need without assistance.

Question 7

Re Segelman

Re Coulthurst

Answer 7

S- Charitable: for the relief of poor relatives of the testator.

C- Charitable: fund for widows and orphans of officers of a bank whose financial circumstances were such that they were most deserving.

Question 8

Re Gwyon

Re Sanders wills Trust

Answer 8

G- Not charitable: a fund to provide underpants for boys in Farnham,subject to certain conditions, was held not to be charitable as was not for the relief of poverty.

SWT- Not charitable: a trust to provide dwellings for the working classes had been held not to be charitable because there was no requirement of being poor to benefit from it- working class does not = poor.

Question 9

iii) Advancement of Education

Oldest of the Pensels heads, was there in 1601 Ac

Answer 9

Has gotten broader since 1601.

Expanded from the definition that was to do with schools and scholars.

Question 10

CHARITABLE TRUSTS FOR ADVANCEMENT OF EDUCATION
Re Hopkins

Royal Choral Society v IRC

Re South Place Ethical Society

Re Shaw’s Wills Trust

Re Delius

Attorney General v Ross

Answer 10

Re Hopkins = research into Shakespeare/Francis Bacon manuscripts. Valid as charitable- purpose certain and the public would benefit from impact to history and literature.

Royal Choral Society = trusts for specific artistic purposes may be charitable - Lord Greene.

Re South Ethical Society = charitable for dissemination and study of ethical principles.

Re Shaw’s WT = charitable trust for social graces considered the advancement of educating as an artistic purpose.

Re Delius= trust left for the promotion of works of famous composer - artistic purposes.

Attorney General v Ross = students union at a polytechnic was held to be charitable as its function was to further the education of the polytechnic - ancillary purpose that helped educational function of the institution.

Question 11

Re Delius

Re Pinion

Answer 11

Re Pinion failed as a charitable trust despite it being for the promotion of artists work.
- failed, unlike Delius as the Court of Appeal held that not charitable as work was atrocious and consequently of no public benefit.

-It is the Courts and the Charity’s Commission discretion that matters, the fact that the donor thinks it is of charitable merit does not matter.

Question 12

Advancement of Religion - Charities Act 2011
*Religion which includes a belief in more than one God
*Religion which does not involve a belief in a God
(Like education it has gotten wider)

Bowman v Secular Society (1917)

Re Watson

Re Hetherington -

Funnell v Stewart (1996)

Answer 12

Bowman - Lord Parker held that the term religion was belief in one God.

Re Watson - trust for the publication of books by a leader of a non-denomination Christian group.

Re Hetherington - trust for Roman Catholic Church to hold masses for her soul; despite it being for her, it was held charitable as the public would benefit from the masses.

Funnell- faith healing movement recognised as charitable in advancing religion.

Question 13

Trusts for the advancement of Health or the Saving of lives

-includes the prevention or relief or sickness, disease or human suffering.

Re Resch’s Wills Trust 1969

Answer 13

Held that trusts for hospitals are charitable.
Trusts for private hospitals are charitable even though patients had to pay fees for admission and treatment.
Charitable so long as the hospital was not a profit making commercial entity.

• met public benefit test as although had to pay the fees were at cost price and some poor people could get discounts etc.
• token contributions for the poor.

Question 14

The advancement of Citizenship or Community Development

IRC v Oldham Training and Enterprise Council (1996)
-must satisfy the public benefit requirement and be exclusively charitable.

-includes rural or urban regeneration and the promotion of civic responsibility, volunteering, the voluntary sector, or effectiveness or efficiency of charities.

Answer 14

IRC - trust for the promotion of vocational education and training for the people of Oldham.
However despite it benefitting a sufficient portion of the public it was held not charitable.
Not charitable as it was also promoting trade and commerce so also private benefits- because of this the public benefit was too remote.
Not exclusively charitable so failed.

Question 15

Advancement of the Arts, Culture, Heritage, or Science

Re Delius

Re Pinion

Answer 15

Re Delius

Question 16

Advancement of Amateur Sport

Guild v IRC (1992)

-not seen as a charitable purpose until the Recreational Charities Act 1958

Sport is defined to mean sport to games that promote health by involving physical or mental skill or exertion.

Answer 16

Guild - a town’s sports centre was charitable.

The centre provided facilities for recreation and leisure occupation that were available to the public at large.

Question 17

Advancement of Human Rights

Answer 17

-not worth doing

Question 18

Relief of those in Need

Joseph Rowntree Memorial Housing Association Ltd v Attorney General 1983)

-for the relief of those in need either by reason of youth, age, ill-health, disability, financial hardship or any other disadvantage.

Answer 18

Rowntree - scheme to build self contained dwellings to be let on long leases to elderly people at 70% of the cost.
- although there had to be a significant financial contribution from the elderly and the fact that they could sell their lease to make a profit.
-it was confirmed that the relief of aged people did not require them to be poor but that there was an attributable need.
Held to be charitable as the charity sought to relieve the need for suitable accommodation for old people.
Vital that the charity did not economically benefit.

Question 19

Advancement of Animal Welfare

Answer 19

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Question 20

Trusts must be exclusively charitable -S1(1)(a) 2911

Latimer v CIR (2004)

Answer 20

Latimer - trust can only be regarded as charitable if all of its purposes are charitable.

Question 21

Drafting a charitable trust

-Chichester Diocesan Fund and Board of Finance Incorporated v Simpson (1994)

Answer 21

When drafting use ‘charitable and benevolent’ to validate trust.
-charitable or benevolent = invalid.

Chichester - failed as left estate ‘for such charitable institutions or benevolent object.

Question 22

Failure of a Charitable purpose

Answer 22

Where a charitable trust fails it must be considered whether the funds should be:

1) Returned to the creator of the trust by means of a resulting trust OR
2) Whether might be applied for a slightly different charitable trust by virtue of the cy-pres doctrine.

Question 23

Vital to work out whether there was an initial or subsequent failure:

Initial failure - before the trust commences

Answer 23

Only considered cy-pres if the donor can be considered to have an intention that the property should be used for the benefit of charity generally rather than a specific charity.

Question 24

Subsequent failure -

Answer 24

Once the property has been used for charitable purposes and there is a subsequent failure of those purposes then the property will be applied cy-pres irrespective of the donors intention.

Question 25

S67 Charities Act 2011

Answer 25

The courts and the Charity Commission have the power to make schemes so that the property is applied for a similar charitable purpose.

Question 26

Initial failure

Answer 26

To establish an initial failure of charitable purpose must be considered whether the identified purpose is impossible or impractical to fulfil.

Question 27

Re Faraker 1912

Answer 27

Even though a charity no longer exists in its original form the court may find that charitable purpose exists elsewhere. -cy-pres doctrine not engaged.

Question 28

Re Rymer

Answer 28

Charities will be considered to have ceased if funds no longer exist.

Question 29

Re Vernon’s Wills Trust

Answer 29

Gift to the unincorporated association was valid as charitable purpose trust - as an unincorporated trust does not have a separate legal identity so a gift to such charity must be gift for charitable purpose rather than an institution.

Question 30

Biscoe v Jackson

Answer 30

Cy-pres doctrine was used.
£10,000 left for charitable purposes, of which £4,000 was to be used for a soup kitchen for the parish of Shoreditch.
-land could not be bought but the court found a general charitable intent so the property was applied cy-pres for the purpose of benefitting the poor of Shoreditch.

Question 31

Re Harwood- difference between defunct and non-existent charities
- Remarkable decision.

Answer 31

Testarix left bequests to 2 societies-

1) which existed existed but ceased to exist at the time of her death.
2) one which had never existed.

• the association which had existed failed as there was specific intent and so the cy-pres doctrine was not applied.
• the association which had not existed, it was found that a general charitable intent existed so consequently gift was applied cy-pres.

Question 32

Re Spence - consolidated Re Harwood

Answer 32

Megarry drew 2 distinctions:

• where a particular institution or purpose is specified it is that, and only that, that will be the object of benefaction; the specific displaces the general.
• where testator has not specified any particular charitable purpose or institution then a general charitable intention can be identified

Question 33

Charity by association and cy-pres doctrine

Re Satterthwaite

Re Jenkins Wills Trust

Answer 33

Sattherwaite: testarix left her estate to several animal charities, one which did not exist when the will was made.
Held that the gift that had purportedly been made to the hospital could be applied cy-pres as she had a general charitable intention to animal kindness.

Jenkins WT: testatrix bequeathed residuary estate to several animal charities, one of which was to a charity with a political purpose. The other six were valid for animal welfare charities, however seventh failed as could not be rendered charitable simply by virtue if its association with other charitable purposes.

Question 34

Subsequent failure:

Answer 34

Once a trust has been dedicated to a charitable purpose, the fact that the purpose then fails cannot destroy the charitable nature of the fund.

Question 35

Re Wright:

Re King

Answer 35

Wright: when there is a subsequent failure of a trust the courts will find a similar charitable purpose and the fund will be transferred to it, regardless of whether the testator/settlor had a general or particular charitable intention.

King: charitable purpose considered to have failed subsequently where the purpose has been fulfilled and there is a surplus of trust funds. The surplus will be used cy-pres to install further stained glass windows.

Question 36

Cy-pres doctrine: where purpose was subject to a condition that made it impossible/impractical to achieve main purpose.

Re Dominion Students Hall Trust (1972)

Re Lysaght (1966)

Answer 36

The court as part of the cy-pres jurisdiction can sever the condition so that main purpose can be achieved - as the relevant condition was subsidiary to that purpose.

Question 37

S62 Charities Act 2011

Answer 37

S62 enables original purpose of charitable gift to be altered by Charity Commission in certain circumstances to allow some/all of donated property to be applied cy-pres.