Charities Flashcards
Whats the test for the public benefit criterion? Under what section is this laid out under? Case?
Charitable trusts must benefit the public or a section of the public.
Case: Re Scarisbrack
Section 4
What was the old test for charitable purposes? Case?
The Pemsel Heads of Charity
Case: Commissioners for Special Purposes of Income Tax v Pemsel [1981]
Charitable trusts are exempt from the certainty of objects requirement. What case is the authority for this?
Morice v Bishop of Durham (1805)
What is the test for a valid charitable trust?
The test: A valid charitable trust must:
- Have a recognised charitable purpose;
- Be for the ‘public benefit’; and
- Have exclusively charitable purposes.
What is the test to determine what a charitable purpose is? Under what Act and section is this defined in?
The Charities Act 2011
S.2(1): A charitable purpose is one which:
(a) falls within one of the purposes set out in s.3(1) of the 2011 Act; and
(b) is for the ‘public benefit’.
“A purpose will not be for the benefit of the public or a section of the public if the people who can benefit from that purpose are defined by reference to some personal tie or personal connection to a particular individual; usually the settlor.”
What case is the authority for this? What is this in reference to?
Oppenheim v Tobacco Securities Trust Ltd [1951] AC 297
H of L majority held that because the qualification for benefit was based upon the personal connection of employees with their employer, the class was not a section of the public and so the trust was void.
Lord McDermott dissented and thought that the question should be one of degree , depending on the facts of each case.
This is referring to one of the limitations of the public benefit criterions.
In order to fulfill the public benefit criterion what must be done? Case?
It will be necessary for those who propose the validity of the trust to show that it is for the public benefit
- Gilmour v Coats [1949];
Facts: Concerned a trust for the Carmelite Prior – a community of strictly cloistered nuns who devoted their lives to prayer, contemplation, penance and self-sanctification. The Priory argued that its activities were for the public benefit because of the value of its prayers and because the public would benefit from observing the way the nuns lived their lives
Decision: First argument was rejected because it was ‘manifestly not susceptible of proof’; the second because edification by example was ‘too vague and intangible’ where the nuns did not mix with the outside world.
- Neville Estates Ltd v Madden [1962];
Facts: A trust for the Catford Synagogue was in issue.
Decision: Cross J distinguished Gilmour on the basis that the members of the Synagogue spent their lives in the world, whereas the members of the Priory did not. ‘The court is entitled to assume that some benefit accrues to the public from the attendance at places of worship of persons who live in this world and mix with their fellow citizens.’
- Re Hetherington [1990];
Decision: The public benefit test was satisfied where a trust for the saying of masses for the settlor and her late husband was upheld because the masses would be said in public and therefore be for the benefit of those members of the public who attended’.
What are the 5 limitations to the public benefit criterion?
- A purpose will not be for the benefit of the public or a section of the public if the people who can benefit from that purpose are defined by reference to some personal tie or personal connection to a particular individual; usually the settlor (Oppenheim v Tobacco Securities Trust Ltd [1951] AC 297)
- It will be necessary for those who propose the validity of the trust to show that it is for the public benefit Gilmour v Coats [1949]
- There is a doctrine that a ‘class within a class’ will not be charitable. IRC v Baddeley [1955];There was a trust for the promotion of education and religion in favour of the ‘Methodists of West Ham and Layton’. Decision was that it was invalid on the basis that an insufficiently wide section of the public could benefit from it
- A charitable trust cannot distribute profits to private individuals (Re Resch).
- Charitable purposes should not be positively harmful to the public.
- National Anti-Vivisection Society v IRC [1948];
Decision: The society had the object of suppressing vivisection and so was denied a tax exemption on the basis that its work was not charitable. H of L identified that there would be ‘detriment to medical science and research and consequently to public health’ if the society succeeded in achieving its object. It was ‘gravely injurious’ to the public interest.
The trust must have exclusively charitable purposes. Case authority? (According to Law Express, this point is often forgotten)
The purposes of a trust must be exclusively charitable in order for the trust as a whole to attract charitable status.
This rule goes as far as excluding trusts of property for ‘charitable or benevolent’ purposes.
These were held not to be charitable in Chichester Diocesan Fund v Simpson [1944] on the basis that not every benevolent purpose is necessarily charitable.
- Re Atkinson’s Will Trust [1978]; A gift to be divided amongst ‘worthy causes’ was held to be void because ‘worthy causes’ could not be said to be limited to exclusively charitable purposes.
Trusts for political purposes. What is the rule surrounding this? Whats the main case?
Political purposes cannot be charitable.
McGovern v AG [1982]
Facts: Amnesty International created a trust for purposes including:
a) the relief of prisoners of conscience and those associated with them;
b) attempting to secure the release of prisoners of conscience;
c) procuring the abolition of torture or inhuman treatment; and
d) research into human rights.
Decision: Slade J held purposes b) and c) of the trust were political so the trust could not be charitable because the court will have no adequate means of judging whether a proposed change in the law of a foreign country is for the public benefit.
Also the enforcement of a trust for a foreign political purpose would carry a substantial risk of prejudicing relations of the UK and the country concerned.
Principle: Slade set down a useful, but non-exhaustive, list of purposes that would be regarded as political, namely:
• Supporting a political party;
• Procuring changes to the
laws of this or any other country;
• Procuring the reversal of gov policy or particular governmental decisions.
NB. If the main objects of the trust are exclusively charitable, the trust will not be rendered invalid merely because it may have incidental powers to employ political means for furtherance of those charitable purposes (i.e. Oxfam for lobbying govs over third world debt).
What is the Cy-pres doctrine? What Act and Section is it dealt under?
Translates to “So near”.
It allows the gift to be applied for purposes cy-prés (as near as possible) to the original purpose.
Where a charitable purpose fails because, for example, that purpose ceases to be charitable, it is necessary to consider whether they might be applied for a slightly different charitable purpose, for example, by virtue of the cy-près doctrine.Cy-près can intervene when a charitable trust is failing. There are two different types of failure:
- initial failure;
- subsequent failure.
The doctrine applies differently depending on which one it is.
LEGISLATION:
Charities Act 2011 S.61
S61: Where any property given for charitable purposes is applicable cy-pres, the court or the Commission may make a scheme providing for the property given to be applied –
a) for such charitable purposes, and
b) (if the scheme provides for the property to be transferred to another charity) by or on trust for such other charity
…as it considers appropriate, having regard to the matter set out in subsection (3).
Section 62 Charities Act 2011 lists the circumstances in which cy-rès can be used. These include situations where it is impossible, impracticable, illegal, or inefficient to carry out the purposes of the trust.
S62. The cy-pres doctrine may be directed in any of five sets of circumstances:
(a) where the original purposes, in whole or in part—
(i) have been as far as may be fulfilled; or
(ii) cannot be carried out, or not according to the directions given and to the spirit of the gift; or
(b) where the original purposes provide a use for part only of the property available by virtue of the gift; or
(c) where the property available by virtue of the gift and other property applicable for similar purposes can be more effectively used in conjunction, and to that end can suitably, regard being had to the spirit of the gift, be made applicable to common purposes; or
(d) where the original purposes were laid down by reference to an area which then was but has since ceased to be a unit for some other purpose, or by reference to a class of persons or to an area which has for any reason since ceased to be suitable, regard being had to the spirit of the gift, or to be practical in administering the gift; or
(e) where the original purposes, in whole or in part, have, since they were laid down, —
(i) been adequately provided for by other means; or
(ii) ceased, as being useless or harmful to the community or for other reasons, to be in law charitable; or
(iii) ceased in any other way to provide a suitable and effective method of using the property available by virtue of the gift, regard being had to the appropriate circumstances.
A charitable trust cannot distribute profits to private individuals (One of the 5 limitations to the public benefit criterion)
What is the case authority for this?
Re Resch
Charitable purposes should not be positively harmful to the public (one of the 5 limitations of the public benefit criterion).
What is the case authority for this?
- National Anti-Vivisection Society v IRC [1948];
Decision: The society had the object of suppressing vivisection and so was denied a tax exemption on the basis that its work was not charitable. H of L identified that there would be ‘detriment to medical science and research and consequently to public health’ if the society succeeded in achieving its object. It was ‘gravely injurious’ to the public interest.
If a gift is made for several purposes, what is crucial in determining whether it is for charitable purposes?
The use of ‘and’ or ‘or can be crucial in determining whether it is for charitable purposes.
- Re Best [1904]; If a gift is for ‘charitable and benevolent’ purposes, the use of the word ‘and’ allows the courts to interpret the second word as being included within the meaning of ‘charitable’.
- Re MacDuff [1896]; Where a gift is left for ‘charitable or other purposes’, this will not be exclusively charitable, as the use of ‘or’ implies that the other purposes will be something other than charitable.
What are the court’s justifications for not allowing political purposes to be charitable?
Political purposes cannot be charitable. Courts have provided three justifications:
- By upholding a trust for a particular political purpose, the court would have to hold that purpose was for the public benefit. They have noted that they are, ‘in no position to determine that promotion of the one view rather than the other is for the public benefit. To attempt to do this would be to usurp the role of government (Chadwick LJ in Southwood v AG(2000)).
- Political purposes often seek to bring about a change in the law so, in making a decision, the court could ‘stultify itself’. Deciding the validity of a gift must be made on ‘the principle that the law is right as it stands’ (National Anti-Vivisection Society).
- Court do not want to put the AG in the awkward position where he would be forced to intervene to secure the proper administration of a charitable trust which he and the gov viewed as prejudicial to the welfare of the state.
