Charitable trusts

Question 1

Statute of Charitable Uses 1601

Answer 1

Preamble → set out a list of charitable purposes.

Now repealed but parts are still enshrined in case law

Question 2

Advantages of charitable status

Answer 2

→ Exemption from tax
→ For the public benefit - do not have to comply with rule against inalienability of capital because charities can last forever
→ Exempt from certainty of object - need to meet definition of charity
→ No requirement of administrative responsibility
→ If it fails - Cy-pres doctrine

Question 3

What act are charities regulated by?

Answer 3

Charities Act 2001 - s13-17, 110

→ NOW Charities Act 2011

Question 4

What powers to charities commission have?

Answer 4

→Statutory powers to investigate and deal with mal-administration
→ Remove charitable status
→ Decide if charity is a charity or not

Question 5

Requirements for charitable status under Charities Act

Answer 5

1. Show exclusive charitable purpose
2. Purpose benefits an explicit section of society (public benefit test) → different rules for different heads of charity

Question 6

Income Tax Special Purpose Commrs v Pemsel

Answer 6

Lord McNorton est. 4 heads of charity: Relief of poverty, advancement of education, advancement of religion and ‘other purposes’
→ Now 13 purposes under Charities Act 2011

Question 7

Public benefit test rule → Re Resch’s WT

Answer 7

No charity can distribute property into private hands
→ Does not mean they can’t charge for their services, but cannot exclude the poor - all have to be able to afford/benefit and can’t go to private hands
→ Was a private hospital that charged for its services more than normal rate

Question 8

Re Harding

Answer 8

→ Charities are not allowed to unlawfully discriminate
→ Trust for benefit of black community of Hackney. Was positive discrimination on skin colour - court said they would remove the reference to skin colour - but does this undermine what charity were trying to do? Need an EXCLUSIVE charitable purpose
→ Can discriminate based on sex

Question 9

Chichester Diocesan Fund v Simpson

Answer 9

→ Needs to be exclusive charitable purpose
→ Said purpose was for charitable and benevolent purposes - not enough, money could be spent solely on benevolent sides and not charitable

Question 10

How do you get charitable status?

Answer 10

Need to be on charities register → Charities commission
See if purpose matches with an existing purpose. If not → try find an analogy with existing purpose.
→ If novel - go back to PREAMBLE - now use ‘Other purposes’ section

Question 11

Re Segelman (1996)

Answer 11

→ Prevention or relief of poverty
→ Poverty is a broad concept
→ Do not have to show that people benefit from what you do, just that they fall below poverty line

Question 12

Re Gwyon (1930)

Answer 12

Cannot have a trust that also benefits the rich, needs to be limited to the poor - exclusively relieve the poor

Question 13

Public benefit test → Prevention or relief of poverty

Answer 13

CAN limit to a social/contractual nexis (can’t do with other charitable heads)
→ Re Scarisbrick → Can set up a trust and limit to poor members of your family
→ Dingle v Turner → OR poor employees of a company

Question 14

IRC v McMullen (1981)

Answer 14

→ Advancement of education is not limited to traditional academic activities to a specific institution, can include extra-curricular activities like amateur sport
→ Can also include museums, art galleries etc.

Question 15

Re Hopkin’s Trust (1874)

Answer 15

→ Advancement of education
→ Not enough to accumulate info for info’s sake - needs to be a point to it.
→ A request to set up a trust for purpose of discovering the original manuscripts of plays that attributed to Shakespeare but discretion as to authentication. Held: genuine value to literature and history so was allowed

Question 16

Re Koeppler’s WT (1986)

Answer 16

Legitimate to educate about political issues, but must be objective and impartial

Question 17

Public benefit test → Advancement of Education

Answer 17

Oppenheim v Tobacco Securities Trust (1951)
→ Trust to educate children of employees and ex-employees of Tobacco company. Tens of thousand’s in class of B’s. Court said this is not a section of public because linked through employment.
→ Court held 2 things: 1) Section of public must be numerically negligible and 2) no personal or contractual nexis is leading your B’s

Question 18

Re Koettgen (1954)

Answer 18

Ok to prefer private class (children) over public → Doubted in IRC v EGA Ltd but not overruled
→ Trust created for the promotion and furtherance of commercial education of British-born subjects, preference to be given to employees of a company

Question 19

Re South Place Ethical Society (1980)

Answer 19

To advance religion, have to show 1) belief in a supreme being, and 2) show your believers worship that being
→ Overruled in Hodkin

Question 20

Definition of religion → Charities Act 2011

Answer 20

Does not require a belief in God
→ Church of Scientology been told they do not fall under advancement of religion - even if they did meet newer definition of religion - wouldn’t meet public benefit test as too much of religion is behind closed doors

Question 21

R (Hodkin) v Registrar General (2014)

Answer 21

→ Whether a scientology chapel counted as a place of worship for purposes of marriage registration. Court said it did count for this purpose. Overrules definition in Re South Place + Lord Toulson new approach to general approach to religion

Question 22

Thornton v Howe (1862)

Answer 22

Trust to promote writings of Joanna Southcote → accumulated followers who believed she would birth the second coming of Christ. Court said she was foolish, but followers worshipped her and believed in God. Court allowed it. Seen as anti-charity as it was made during mormain period - would fail today

Question 23

Public benefit test → Advancement of religion

Answer 23

If detrimental to public or confers no benefit - not charitable
→ Cannot just benefit a private class of people
→ Gilmour v Coates - refused to recognise public benefit in activities of closed order of nuns - no contact with outside world

Question 24

Public benefit test → Other charitable purposes

Answer 24

IRC v Braddley → public benefit test is strict. If it restricts a group, must be NO personal nexus nor class within a class - must satisfy a sufficient section of public

Question 25

Other purposes → Novel charitable purposes → IRC v Oldham Training and Enterprise Council

Answer 25

Trust for unemployed in trade/business was held charitable - relief of poverty because it was trust for the improvement of the conditions in life

Question 26

Provision of facilities under Charities act

Answer 26

S5 Charities Act 2011 - interests of social welfare
2 requirements:
→ Person: Youth/age/disability/poverty/social/economic circs with object of improving conditions for whom facilities are intended
→ Facilities available to members of public at large to improve conditions of life

Question 27

Re Grove Grady

Answer 27

Purpose of preserving refuges for animals - held: not charitable as public gained no benefit from this
→ Commission said acquisition of land to preserve endangered species of flora/fauna is allowed PROVIDED info is disseminated

Question 28

What happens when charities go wrong?

Answer 28

Cy-pres doctrine - ‘as near as possible’ - find another charitable purpose that is similar

Question 29

What happens when purpose doesn’t meet charitable purpose?

Answer 29

Fails

Question 30

Points of Cy-Pres (2)

Answer 30

1. Initial failure of a charitable trust → before cy-pres you need evidence of a general intention on behalf of settlor
2. Subsequent failure → where you have set up charitable trust but fails at some subsequent point (e.g. purpose frustrated) → Cypres always kicks in - only wouldn’t if settlor had not given 100% of equity to trustee in first place

Question 31

Re Lysaght (1966)

Answer 31

Need a charitable intention before Cy-pres. The more abstract the purpose, the easier it is to show a general charitable intention

Question 32

How is a charitable company different to charitable trust?

Answer 32

Company → legal personality

→ Easier to interpret a charitable trust to charitable company as they can own assets

Question 33

Cy-pres in Charities Act 2011

Answer 33

S 67 (3)
→ Spirit of original gift
→ Charitable purpose close to original purpose

Question 34

Justification for Cy-Pres

Answer 34

1. Spiritual → First deemed as salvation to settlor’s soul → A-G v Downing: ‘Charity was an expiation of sin and to be rewarded in another state’
2. Giving effect to donor’s original wishes/intention → Varsani v Jesani - may have specified something in will
3. Resource allocation - public good should be encouraged

Question 35

Giving effect to donor’s intention or making it up? → A-G v The Iron-monger’s Company

Answer 35

Subsequent failure, chose random ‘close’ new purpose

Question 36

Scholarships with discriminatory provisions

Answer 36

Re Dominion Student’s Hall Trust → hall of residence restricted based on skin colour → settlor set up trust many years prior - not discrim at the time

Question 37

Costa v De Pas (1754)

Answer 37

Trust to advance Judaism (outlawed in UK at time), but recognised was a charitable purpose, so said will find an ew similar purpose - said was to advance Christianity. → Are they really similar?

Question 38

Bowman v Secular Society

Answer 38

Prohibition on political purposes - will fail if purpose is political

Question 39

National Anti-Vivisection Society v IRC

Answer 39

Object of repealing an act of parliament to do with animal testing. Even though for welfare of animal - held to be for political purpose, campaigning for change of law. Political not charitable purpose

Question 40

Justification for prohibition on political purposes

Answer 40

1) Not able to ascertain public benefit
2) If we say change of law is a good thing - undermine Parlia?
3) Conflict of interest → A-G role is to protect charities. Gov position changed if political position/charitable purpose conflict
4) Woodfield Committee - no political policy because tax → against public policy to say no tax for political reasons - is it really charitable?

Question 41

Independent Schools Council Charity Commission (2012)

Answer 41

Charity Commission were required to re-look at guidelines to private schools having charitable status
→ Need to not set fees which exclude the poor
→ Presumption of public benefit never really existed
→ Charity Commission could not lay down rules saying what charity had to do - up to discretion of trustee
→

Question 42

Why do we want to regulate a charity?

Answer 42

→ Ensure trust between charity and people willing to donate - people who fund not ones who benefit & may not be able to adequately evaluate activity of charity
→ Encourage people to donate
→ Resource insufficiency

Question 43

Challenging orthodoxy (5)

Answer 43

1. Looking at ACTIVITY to understand purpose of trust? Every charity has written constitution to see purpose → Re Resch, no constitution so had to look at practices to determine purpose
2. Novel purposes - use purposes to see if it falls in head - activities are not pertinent to see what purpose was - → Southwood v AG - using activities to see if written purpose reflects what they are actually doing
3. Where clear from precedent - activities cannot be relevant → Re Shaw
4. Further requirements - still need to meet public benefit even if have charitable purpose → Oppenheim
5. Interpretation - lack of line between purpose and activity

Question 44

Re Macduff

Answer 44

Trust for charitable/philanthropic purposes will fail - not the same thing. Macduff strengthened idea charity can’t have political purposes
→ Philanthropy = desire to promote welfare of others/benevolence
→ Preamble described as containing contemporary examples of philanthropy