CHARITABLE TRUSTS Flashcards
EXCEPTIONS TO GENERAL RULES
Trusts for purposes
Rule of certainty
Charitable trusts may be perpetual in duration
Tax Benefits
Charity Commission
Trusts for purposes
- General rule: “Every other trust [which is not charitable] must have a definite object. There must be somebody in whose favour the court can decree performance” [Morice v Bishop of Durham]
- Exception for charities: “a trust to be valid must be for the benefit of individuals . . . or must be in that class of gifts for the benefit of the public which the courts in this country recognise as charitable in the legal as opposed to the popular sense of that term” [Bowman v Secular Society]
Rule of certainty
- The objects of a trust must be certain
- The only requirement in respect of certainty is for the trust to be exclusively charitable [s1 Charities Act 2011; Chichester Diocesan Fund and Board of Finance v Simpson]
- Test for certainty of object
- If there is more than one purpose identified, each of them must be identifiable
Charitable trusts and perpetuity
- Charitable trusts may last forever
- The rule of remoteness of vesting does still apply
- Subject to gift over from one charity to another [s2 Perpetuities and Accumulations Act]
Tax benefits
- There are various tax benefits that come with charitable trusts
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Dingle v Turner: you cannot take into account the fact in determining what counts as charitable of the consequence of finding that a trust is charitable that it will be to various tax benefits
- Just apply the law as laid out in statute and the cases
Exceptions to general rules
Charity commission
- Statutory regulator of charities
- Has the ability to decide whether something meets the test for a charity as a matter of law
- It is only applying the law to the facts presented to it, they are not making political or moral judgments
Preamble to Charitable Uses Act 1602
- The Statute of Elizabeth I
- Identified a host of purposes that were thought to be for the public benefit and thus were suitable as objects of charity
- Purposes that were expressly identified in this preamble, or were within the spirit and intendment of those purposes (analogous purposes to those expressly listed)
Pemsel Classification
- ‘Charity’ in its legal sense comprises of four principal divisions
- Trusts for the relief of poverty
- Trusts for the advancement of education;
- Trusts for the advancement of religion;
- And trusts for other purposes beneficial to the community’
- The first three heads used to have public benefit presumed
Charities Act 2006 and 2011
- 2006 major reform and consolidation
- 2011 tidying up and further consolidation of 2006 Act
What is a charity?
S1(1) Charities Act 2011
“For the purposes of the law of England and Wales, “charity” means an institution which—
(a) is established for charitable purposes only, and
(b) falls to be subject to the control of the High Court in the exercise of its jurisdiction with respect to charities”
* It must be exclusively for charitable purposes
What is a charitable purpose?
s2(1) Charities Act 2011
For the purposes of the law of England and Wales, a charitable purpose is a purpose which—
(a) falls within section 3(1), and
(b) is for the public benefit (see section 4).
Purposes recognised by the 2011 Charities Act
S3(1)
- Lists all of the recognised purposes
- All the previously recognised purposes are listed
(m) any other purposes—
- that are not within paragraphs (a) to (l) but are recognised as charitable purposes by virtue of section 5 (recreational and similar trusts, etc.) or under the old law,
- that may reasonably be regarded as analogous to, or within the spirit of, any purposes falling within any of paragraphs (a) to (l) or sub-paragraph (i), or
- that may reasonably be regarded as analogous to, or within the spirit of, any purposes which have been recognised, under the law relating to charities in England and Wales, as falling within sub-paragraph (ii) or this sub-paragraph.
- Expressly leaves open space for development
- A charitable purpose is one that falls within this section and is for the public benefit
Definitions and clarifications of s3(1) purposes
S3(2)
- Deals with controversies that were in the law prior to the 2006 act, and offers some definitions or clarifications
- The law prior to the 2006/2011 Acts is still relevant (except as modified by the Acts)
Law prior to the Charities Acts
- s3(3): “Where any of the terms used in any of paragraphs (a) to (l) of subsection (1), or in subsection (2), has a particular meaning under the law relating to charities in England and Wales, the term is to be taken as having the same meaning where it appears in that provision.”
- s3(4): “In subsection (1)(m)(i), “the old law” means the law relating to charities in England and Wales as in force immediately before 1 April 2008”
- Prior cases continue to apply subject to modifications by the Act and subsequent case law
General structure for problem questions
- s1: Exclusively charitable?
- s2: What are charitable purposes?
- s3: Is it a purpose from the s3(1) list?
- Any clarification in s3(2)?
- Old authorities?
- Post-Act authorities?
- s4: public benefit
- A purpose could fall under multiple provisions of s3(1)
Specific s3(1) purposes
- Virtually all of the purposes refer to ‘advancement’
- It is not enough to show that X is involved, it must be advancing it
- Prevention of relief of poverty
- Advancement of education
- Advancement of religion
Prevention or relief of poverty
- “It is quite clearly established that poverty does not mean destitution; it is a word of wide and somewhat indefinite import; it may not unfairly be paraphrased for present purposes as meaning persons who have to “go short” in the ordinary acceptation of that term, due regard being had to their status in life, and so forth” [Re Coulthurst]
- Those who are struggling to make ends meet and go short in a broader sense
- Note that it is the prevention or relief of poverty
Advancement of education
- Re Hopkins: the word education is not just the investigation in and of itself
- It must engage the wider society
- Pure public engagement with no educational value does not count [Re Pinion]
- We need to sure that it is adding to the store of shared human knowledge
Re Shaw
- Shaw wanted to fund investigations into whether a 40-letter alphabet would be viable, as opposed to the advancement of this study, and so the objects failed
- Even though it would have increased the knowledge of society in a broad sense, there was no provision of teaching or education or otherwise dissemination of the information
- The advancement of education is not simply adding to the store of human knowledge, it involves in the dissemination of the information
Advancement of religion
s3(2)(1)
- in paragraph (c), “religion” includes –
- a religion which involves belief in more than one god, and
- a religion which does not involve belief in a god
Charity Commission, The Advancement of Religion for the Public Benefit
“Belief in a god (or gods) or goddess (or goddesses)**, or supreme being, or divine or transcendental being or entity or spiritual principle, which is the object or focus of the religion;
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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;
- Requirement of worship and engagement
- a degree of cogency, cohesion, seriousness and importance;
- an identifiable positive, beneficial, moral or ethical framework”
- These together establish what is a religion for charity law
Scientology
- Declined to register the church of scientology as a church in 1999 applying the previous criteria (before the 2006 and 2011 Acts)
- Because of the element of payment and exclusivity, it does not qualify as a religion under the requirements
- The Supreme Court in Regina (Hodkin) v Registrar General of Births, Deaths and Marriages considered as to whether the scientology chapels were places of worship that would qualify to hold weddings (not on charities)
- It was held as a place of worship, but not necessarily a religion
- In engaging with the church of scientology, it can be seen how carefully the Charity Commission engages with the question as to whether or not a belief system qualifies as a religion
- You are now required to show that each religious charity operates for the public benefit
Application for Registration, Charity Commission Decision
Temple of the Jedi Order
- The Temple of the Jedi Order applied to be registered as a religious charity
- It was held that it was not entitled to be registered as a religion because, although it did advance a way of life in a broad sense, it did not meet the requirements (belief in a god, worship, cogency and a moral framework)
Public benefit
What is a charitable purpose
- S.2(1) For the purposes of the law of England and Wales, a charitable purpose is a purpose which—
- (a) falls within section 3(1), and
- (b) is for the public benefit (see section 4).