Charities Flashcards
Substantive requirements of an express trust
- A trust
- words used sufficient
- sham intentions
- trusts > gift
- trust > power of appointment
- trust > no trust (domestic & commercial cases) - Certainty of subject matter
- Trusts property (Re Ellenborough)
- which one if multiple? (Boyce)
- past property?
- segregated or intangible? - Certainty of object
- McPhail v Doulton (cardinal principle)
Fixed trusts –> Conceptual and Evidential
Burrough DTs–> Conceptual and Evidential
Baden DT–> Conceptual and Admin workability
POA–> Conceptual
Obstacles to validity of non-charitable purpose trusts
- Un-enforceability
- Uncertainty
- Perpetuity (last too long)
- Capriciousness (useless)
Morice v Bishop of Durham 1804
(Un-enforceability of non-charitable trust)
Facts: Left all personal property to Bishop “for such objects of benevolence and liberality as B in own discretion approves”
Invalid!
Starting point of human beneficiary principle (HBP):
Non-charitable trusts are invalid because by definition, they lack the only possible enforcement agent (a human B)
Is the Human Beneficiary Principle justified?
The notion that a human beneficiary is required for a valid trust has been challenged.
- Subsequent cases exist where private purpose trusts were held valid without a human B to enforce them
- Logically, only method of control is a B who can complain to courts for trustee failing to meet obligations under trust. But this assumption that this is the only form of control may be wrong –> residuary Bs.
Re Astor’s settlement 1952
Facts: Trust for “establishment of improvement of good understanding between nations, preservation of integrity of newspapers and promotion of free press”
- Not charitable
Held: Cannot have a trust for obligation without human to enforce it
3 exceptions noted: care of particular animal, maintenance of particular graces, saying masses for the dead.
Re Denley’s Trust Deed 1969
Challenged orthodox HBP:
“The land shall be maintained and used for purpose of recreation ground …primarily for the benefit of the employees of the company, and secondarily for benefit of such other persons as trustees may allow to use..”
Held: Valid (fell outside mischief of HBP)
- HBP confined to purpose/obj trusts which are abstract or impersonal.
- when trust expressed as purpose which is directly/indirectly for the benefit of individuals, not void.
- Contrast with Leahy which had an abstract purpose.
Le Lipsinki 1976
Challenged orthodox HBP
“for Maccabi association in memory of my late wife, to be used solely in work of constructing/improving buildings”
Held: Gift to an association with motive of providing a gift to the members who could choose what to do with it, as long as it fell within their rules
Oliver J: clear distinction between case where purpose is prescribed which is clearly intended for benefit of ascertained Bs- where they have power to make capital of their own, and the case where no B is intended or Bs not ascertainable
Re Grant’s will trusts 1979
Challenged orthodox HBP
“for the purposes of Labour Party HQ”
- Re Denley falls outside categories of purpose trusts as was merely a normal trust for individuals.
Why are non-charitable trusts uncertain?
- Purpose needs to be defined with sufficient certainty whereas in these cases there seems to be v wide terms and no purpose
- Re Astor: certainty problem even outside of enforceability
- Re Denley: Bs need to be defined with certainty
why are non-charitable trusts criticised for being perpetual?
Excessive duration:
- Unlimited time, so capital fund must be retained to continue producing income
- charitable trusts not subject to this restriction as they are in pursuit of worthy purposes whereas non-charitable will only be valid if within perpetuity period (21 years after death of last survivor of nominated persons).
In what situations has the HBP been challenged for capriciousness?
Brown v Burdett 1882
Trusts left property to trustees and demanded that upon death of the person, the Ts must do household chores etc.
Void as completely useless.
What is a charity?
List of charitable purposes in s3(1) CA 2011 replacing 1958 list of 4 purposes.
What are the privileges of a charitable status?
Tax privileges: stamp duty exemption, no corporation tax for charitable companies, no income tax (all £3billion/year)
HBP exemption: perpetual duration, not for 1 individual
Requirements for charities
- Must be for public benefit
- Not substantially political
- No profit distribution
- Purely and wholly charitable purposes
Public benefit requirement
s4 CA 2011
purpose falling within this req must be for charitable purpose. Not presumed to be of particular description
Independent Schools Council v Commission 2011:
- Nature of the purpose itself must benefit community
- those who may benefit from the purpose must be numerous and identified as “a section of the public”
What are the current categories of charity?
A) PREVENTION/RELIEF OF POVERTY
B) ADVANCEMENT OF EDUCATION + RESEARCH
C) ADVANCEMENT OF RELIGION
D) ADVANCEMENT OF HEALTH/SAVING LIVES
E) ADVANCEMENT OF CITIZENSHIP/COMMUNITY DEV
F) ADVANCEMENT OF ARTS, CULTURE, HERITAGE, SCIENCE
G) ADVANCEMENT OF AMATEUR SPORT
H) ADVANCEMENT OF HR, CONFLICT RESOLUTION/RECONCILIATION OR PROMOTION OF RELIGIOUS/RACIAL HARMONY, EQUALITY, DIVERSITY
I) ADVANCEMENT OF ENVIRONMENTAL PROTECTION/IMPROVEMENT
J) RELIEF OF THOSE IN NEED BY REASON OF YOUTH, AGE, HEALTH, DISABILITY, FINANCIAL HARDSHIP OR OTHER DISADVANTAGE
K) ADVANCEMENT OF ANIMAL WELFARE
L) PROMOTE EFFICIENCY OF ARMED FORCES OF CROWN OR EFFICIENCY OF POLICE/FIRE/AMBULANCE
M) ANY OTHER PURPOSES WHICH ARE
recognised as charitable by virtue of s5 or old law OR analogous to those above
PREVENTION/RELIEF FROM POVERTY
- Broad interpretation of ‘poverty’ (more than mere destitution)
Charity Commission: People in poverty means:
- Those who lack something in nature of a necessity which majority of population would regard as necessary for modest but adequate standard of living.
- Irrelevant as to whether eligible for state benefits
- Relief and prevention are generally interchangeable terms
Re Coulthurst 1951
Trust ‘to or for the benefit of [such persons] as the [trustee] shall in its absolute discretion consider by reason of … their financial circumstances to be most deserving of such assistance …’
Held: despite no mention of poverty, sufficient.
Re Sander’s Will Trust 1954
‘to provide dwellings for the working classes and their families’
Held: nothing pointing directly to poverty. not charitable
Re Niyazi’s Will Trust 1978
‘for the purposes of the construction of or as a contribution towards the construction of a working men’s hostel [in Famagusta]’
Look to general meaning: yes for poverty (just about- fine line)
Cawdron v Merchant Taylors school 2009
‘(1) paying for the education at the School of any son of an Old Merchant Taylor who has fallen in the war or who has been thereby disabled … or (2) assisting any relative of such Old Merchant Taylor as may be dependent upon him; and in every case the decision as to the eligibility of the candidate and the extent and method of the assistance to be in the sole discretion of the Committee’
Trust geared towards assistance so yes.
Re Gwyon 1930
‘for the purpose of providing boys … with knickers’
Held: not sufficiently geared towards benefit of poor.
Advancement of education
goes beyond formal, institutional education
Re Koettgen’s Will Trusts [1954]
‘for the promotion and furtherance of commercial education… typing, banking, modern languages etc’
Held: charitable (wide ambit- more than traditional institutional education)
Incorporated Council of Law Reporting v Attorney-General [1972] Ch 73
‘the preparation and publication … at a moderate price … of reports of judicial decisions of the superior and appellate courts in England’
- No profit from it
- Essential for learning the law
Re South Place
“study of ethical principles and cultivation of rational religious sentiment”
charitable trust:
Studying subjects and disseminating those subjects are subject of advancement of education.
Re Hopkins
“encourage study of works of Francis Bacon”
- within sphere of trust for charitable purposes
- education must be used in wide sense
McGovern v AG
‘the relief of needy persons who are or recently have been prisoners of conscience and their families, attempting to secure the release of prisoners of conscience, procuring the abolition of torture or inhumane treatment or punishment, the promotion of research into the observance of human rights and the dissemination of the results of such research’
Slade J:
1) subject matter proposed for research must
a) be useful
b) contemplated that knowledge acquired as result of search will be disseminated to others
c) trust for benefit of public/some of it
2) In absence of contrary context, court readily inclined to construe trust for research as doing so
3) if trust for research is to constitute a valid trust… not necessary that teacher/pupil relationship at hand or that persons to benefit from it should be persons already receiving education
Held: although research purposes could add to human knowledge, NOT charitable status as research merely aside to political purposes
McNaughten category
included “promotion of almost any form of intellectual or cultural activity” (s3(1)(f) CA))
Re Shakespeare memorial trust
for benefit of British museum: charitable trust (ed)
Royal Choral Society
‘to provide a national theatre as a memorial to Shakespeare with the following
objects: to keep the plays of Shakespeare in repertory; to revive … English classical drama; … to produce new plays and to further the development of modern drama; … to stimulate the art of acting’
charitable (ed) even entertainment can qualify.
Re Mariette
building eton fives courts/squash racket courts… provide prize in schools sports
Charitable: (mental and bodily occupation)
London Hospital Medical College v IRC [1976] 1 WLR 613
‘to promote, encourage and co-ordinate social, cultural and athletic activities amongst the members [of the students’ union] and to add to the comfort and enjoyment of the students’
approved
IRC v McMullen [1981] AC 1
‘to provide facilities which will enable and encourage pupils at schools and universities .., to play association football or other games or sports and thereby to assist in ensuring that due attention is given to the physical education and development and occupation of their minds’
Upheld: advancement of education (wide)
Re Bushnell
mere propaganda not education
Southwood v AG
‘the advancement of the education of the public in the subject of militarism and disarmament and related fields by all charitable means’
Mere assertion of education not sufficient
Re Pinion
art studio and content with intention to set up museum
utility of museum challenged– inquire as to whether it educates public?
failed- merely wanted to enhance own reputation!
ADVANCEMENT OF RELIGION
Required some theistic element element, but since s3(2)(a) CA 2011:
(i) a religion which involves belief in more than one god, and
(ii) a religion which does not involve belief in a god
Re South Place Ethical Society 1980
‘the study and dissemination of ethical principles and the cultivation of a rational religious sentiment’
- No distinction between diff religions- any sincere belief in ethical principles suffices.
Neville v Madden
“For the purpose of maintaining places of working for… persons of the Jewish religion”
- Advancement of religion. all religions covered by the head.
Thornton v Howe
‘for printing, publishing and propagating the sacred writings of Joanna Southcote’
Readings have religious tendency, approved. irrelevant who wrote them
Re Watson
‘for the continuance of the work of God as it has been maintained by Hobbs’
- Hobbs was a builder who retired to devote himself to religion and wrote large works. some experts felt they displayed religious tendency but unlikely to extend it.
sufficient–> purposes of religious nature + public benefit.
Funnell v Stewart
“To promote faith healing” - sufficient
Gilmour v Coats
“for the purpose of a community of cloistered nuns”
- engaged in no external activities, just a life of prayer
Held: Belief that the prayers of these nuns would benefit outside world is not enough, no proof of the impact but a mere statement of faith.
Purpose must actively ADVANCE religion
Freemasons v Holborn
“To promote and advance virtues of freemasons is charged to cultivate: good citizenship, honest work, morality and wisdom, brotherly love…”
Pemsel
Not allowed to try and persuade people to swap from one religion to another
Re Grove-Grady
(advancement of animal welfare)
“for purpose of refuge for preservation of all animals, birds etc not human… s all such animals shall be safe from molestation or destruction by man”
upheld but if animals health etc v humans, humans.
“Any other purposes” (M)
3 conditions:
- purposes not within preceding categories
- purposes are beneficial to community
- purposes recognised by law as charitable
AG v national provincial
“for such patriotic purposes and such charitable objects as trustees shall select”
Just because the trust benefits community in some way does not make it charitable
AG of Cayman Islands v Wahr-Hansen
“to any one or more religious, charitable or educational institution.. or any organisation operating to public good”
Upheld
Scottish Burial reform
TEST: find in preamble, an analogous purpose or a case which has made analogy with preamble.
National Anti-Vivisection society v IRC
“Total suppression of vivisection” (experimental on live animals)
- Was main purpose of political character (not charitable)?
- Did benefits of moral advancement and ed, outweigh detriment to science and research?
Held: Determination of charitable status involves balancing of competing purposes.
Recreational trusts
s5 CA 2011
- Shall be charitable to provide/assist in provision of facilities for recreation or other leisure activities provided
1. Facilities provided with object of improving conditions of life for persons for whom facilities are primarily intended AND
2. Those persons have need for the facilities/
Facilities are to be available to members of public at large or to male/female members of public at large
Williams Trustees
“promotion of moral, social, ed welfare of welsh people”
NOT charitable just social club
IRC v Glasgow Police Athletic
“For purpose of Glasgow police athletic association”
- Officers enjoyed athletic activity- failed on charitable status
IRC v McMullen
Football association set up as CH trust to ‘provide facilities which will enable and encourage pupils at schools and universities .., to play association football or other games or sports and thereby to assist in ensuring that due attention is given to the physical education and development and occupation of their minds’
Held: not charitable trust- sporting facilities could not improve conditions of life, unless persons using facilities were somehow deprived.
REQUIREMENT OF PUBLIC BENEFIT
- s4: Purpose falling within s3(1) must be for public benefit, not presumed that a purpose of particular description is of public benefit
- It must be demonstrated that the purpose is beneficial to the public and that the class of persons eligible to derive benefit directly from the purpose must constitute the public as a whole or a section of the public
- The requirement has differed in respect of the different categories of charity
ISC v Charity Commission 2011
2 requirements for public benefit (2 types)
- Purpose directly/indirectly beneficial to public
- Class of persons eligible to derive direct benefit from purpose, must constitute the public as a whole or sufficient section of the public.
Prevention of relief of poverty: Public benefit
Re Scarisbrick
“For such relations of my son & daughters as in the opinion of the survivor or my son/daughters shall be in needy circumstances.”
- Trusts for relief of poverty will almost always be for the public benefit
- For relief amongst a certain class, so met second requirement.
Re Segelman "To be used for assistance of the poor and needy of a class of persons" (6 members of fam). - Met requirement of particular class (not trust to particular members but showed aim to relieve poverty within that group of extended fam) - Public benefit req not negatived where class of potential Bs is defined by "some personal nexus" (employees of a company/members of a fam)
Dingle v Turner:
“Apply income in paying pensions to poor employers of testator’s company”
Held: principle of poor relations cases applicable to poor employees
AG v Charity commission 2011:
Law has not changed since 2006 act. For poverty, only public benefit in 1st sense necessary
Advancement of education : public benefit
- Courts tend to insist on reasonable large section of public benefitting from the ed.
Personal nexus cases in education
Re Compton: for the education of lawful descendants of 3 named persons.
Personal nexus fatal to trust.
Was a family trust rather than public trust, did not constitute a sufficient section of the public.
Opponheim:
Also failed for personal nexus in context of relationship of employment.
Dissent: numbers cannot be ignored.
Dingle v Turner:
Application of personal nexus rule too blunt, courts should take a broader view as to whether public or private trust.
- Lord Cross: previous decisions focused merely on preventing undeserved fiscal immunity. whether it was a company perk in hiding that society should not pay for.
Re Koettgen: (compromised previous rules)
Charitable status to be judged by main class of potential Bs. Added preference to personal nexus did not take away from validity of trust.
Independent schools council v charity commission
(private schools)- does this benefit a large enough group of people, as the level of fees is likely to exclude poor
- Is private ed a benefit, or does it harm society?
- Balancing act: If poor were wholly excluded, trust could not be charitable. had to more than token benefit to poor.
- Provided school not deliberately setting fees to keep people out, enough.
- What other resources are available to non-student?
Advancement of religion
Gilmour v Coats
- for purposes of community of cloistered nuns
- no public benefit: they never leave the community to practice/help etc
Neville
- for purposes of providing places of worship for Jewish persons.
- contrast with Gilmour (members of synagogue have wider community interaction, intend to advance jewish faith)
- Public benefit found
Residual category: Public benefit
- The requirement of PB has been most strict under residual cases
- Class of potential Bs must not be numerically negligible (insignificant)
Re Duffy:
no PB if category is defined by a personal nexus
Re Grove Grady:
Must benefit human beings (this one rejected as dealt with only humans)
Re Hobourn Aero Components Air Raid Distress Fund
“for the employees of” (named company)
IRC v Baddeley: Public benefit req is not satisfied where class of Bs is a class within a class.
s17(1) CA 2011
Charities commission
- Must be identifiable benefits
- Bs approrpiate to aims
- benefit for public/section of it
- opp to benefit not unreasonable restricted by ability to pay fees (private school)
- poor not excluded from opp to benefit (geog, personal characteristic)
- any personal benefits incidental
- changes in social condition and science can change view of public benefit
Independent schools v Charity commission
- Upper tribunal found 2 of charity commission principles too strict and void
- A matter for tribunal and court to decide whether potential Bs in objects is sufficient section of public
- Requires overall assessment not just reasonableness
POLITICAL PURPOSES
McGovern v AG per slade J:
Even if otherwise appears to fall within charities, a trust for political purposes can never be regarded as being for public benefit in the manner which law sees charitable.
(Incompatible)
- Further interest of political party
- procure change in law of this/other country
- procure reversal of govt policy
(not exhaustive)
The mere fact that trustees may be at liberty to employ political means to further non-political purpose does not render it charitable. Only void if the purpose itself is political.
Bonar law v IRC
Trusts for promotion of ONE political party- not charitable
Re Bushnell
Trusts for promotion of particular political doctrine- not charitable
National Anti-Vivisection
Trusts for promotion of change in law not charitable UNLESS purpose is merely ancillary
R v Radio Authority
attempt to persuade foreign countries to comply with HR obligations is inherently political
Charity commission guidance ? campaigning and political activities CC(
- Political activity permitted only if within and subordinate to charitable purpose
- charitable organisations may inform and educate public on issues related to state charitable purposes
- campaigning permitted subject to above
- charitable organisations may enter into dialogue with Govt and respond to policy papers
- charitable organisations may actively support apolicy on issues supporting their charitable status but cannot support particular party/ candidate
Critique (pearce, stevens, barr)
- Hard for judges to identify whether something like change in law political.
- taking sides problematic- can be overcome by adopting policy of accepting purposes for PB if not immoral/illegal/subversive, and adopted by significant proportion of public.
FEE CHARGING
- Charitable status of trust/institution is not necessarily negatived by charging fees (should not matter if it excluded the poor, unless the aim is for prevention of poverty)
Re Resch:
Private hospital charging fees operating as adjunct to public hospital.
This was still charitable trust: hospital more/less charged cost price and any profit was invested back in the hospital.
Costs low but cannot be said that poor are excluded.
Poor does not mean completely destitute.
Independent schools council v CC
- School charging high fees
- could still constitute charity- needs to be in some ways accessible to members of the public. as long as school not purposely setting fees to keep people out, will suffice.
Also aim to provide form of bursaries
WHOLLY AND EXCLUSIVELY CHARITABLE
- Charitable status requires that all purposes of the trust be charitable, except where non charitable purposes are merely incidental or can be properly severed.
Morice v Bishop of Durham
- statement of terms extended wider than charity
- not charitable, as aims of benevolence not merely ancillary
IRC v Glasgow Police
- Purposes clearly to benefit police by making them fitter
- Enjoyment element too great to be merely ancillary
London Hospital Medical College v IRC
activities for purposes of students union- merely ancillary to ed purpose of college
Which areas of law on charity need reform?
- Fiscal privileges
- Definition of charity
