Express trusts - Charitable trusts- Purpose trusts Flashcards
Bowman v Secular Society [1917] AC 406
Lord Parker at 441:
‘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.’
= trust for charitable purposes are not void but upheld for the benefit to society.
Morice v Bishop of Durham (1804) 32 E.R. 656
beneficiary principle
Sir William Grant MR at 405:
‘Every other trust [which is not charitable] must have a definite object. There must be somebody in whose favour the court can decree performance’
= it is about scrutiny: someone who can complain and sn in whose favour the court can decree performance
Re Astor [1952] Ch 534
beneficiary principle
The trust was void for lack of ascertainable beneficiaries.
Roxburgh J at 541:
541-2: ‘if the purposes are not charitable, great difficulties arise both in theory and in practice. In theory, because having regard to the historical origins of equity it is difficult to visualize the growth of equitable obligations which nobody can enforce, and in practice, because it is not possible to contemplate with equanimity the creation of large funds devoted to non-charitable purposes which no court and no department of state can control, or in the case of maladministration reform.
= the devotion of such large sums without scrutiny is problematic in practice.
There was a putative trust to hold shares of a company for purposes such as the promoting understanding and cooperation between nations and the independence and integrity of newspapers
It was accepted by the parties that these purposes were not charitable
Re Osoba [1979] 1 WLR 247
construction - purpose or gift with motive
Buckley LJ at 257:
‘If a testator has given the whole of a fund, whether of capital or income, to a beneficiary, whether directly or through the medium of a trustee, he is regarded, in the absence of any contra indication, as having manifested an intention to benefit that person to the full extent of the subject matter, notwithstanding that he may have expressly stated that the gift is made for a particular purpose, which may prove to be impossible of performance or which may not exhaust the subject matter…
This is because the testator has given the whole fund; he has not given so much of the fund as will suffice or be required to achieve the purpose, nor so much of the fund as a trustee or anyone else should determine, but the whole fund. This must be reconciled with the testator’s having specified the purpose for which the gift is made. This reconciliation is achieved by treating the reference to the purpose as merely a statement of the testator’s motive in making the gift.’
= that is not a purpose trust, bc a PT does not have a bene => was held to be an outright gift with a motive.
Held: The Court of Appeal held the purpose was a motive for the gift and not a binding gift
O put a trust in his will to maintain his widow, his mother and ‘for the training of my daughter Abiola up to university grade’
The widow and mother had died and Abiola had completed her education
Money of surplus claimed by son of the testator. Abiola is entitled to the surplus
London Borough of Merton Council v Nuffield Health [2023] UKSC 18
exception to the benficiary principle
Lords Briggs and Sales
[14] ‘*charity is a legal term of art the definition of which, including the public benefit requirement, does not always accord with the general public understanding of what is and what is not charitable’ *
Lord Briggs and Lord Sales:
[64] ‘Nuffield Health plainly uses the Merton Abbey gym for the direct fulfilment of those charitable purposes … it does so at Merton Abbey only for those who are not of limited means, in short, and putting it broadly, for the rich but not the poor. But the rich are as much a part of the section of the public benefited by Nuffield Health’s charitable activities as are the poor, and it must be assumed from its registration as a charity and from the fact that it is common ground that the trustees are not in breach of their fiduciary obligations that the poor are not excluded from benefit, on a view of Nuffield Health’s activities in the round, even if they are at the Merton Abbey gym.’
dismissed the appeal unanimously, holding that Nuffield used the gym for its charitable purposes and was therefore entitled to the mandatory relief. It was irrelevant whether or not that particular gym excluded persons of ‘modest means’ because:
> “The rich are as much a part of the section of the public benefited by Nuffield Health’s charitable activities as are the poor, and it must be assumed from its registration as a charity and from the fact that it is common ground that the trustees are not in breach of their fiduciary obligations that the poor are not excluded from benefit, on a view of Nuffield Health’s activities in the round, even if they are at the Merton Abbey gym.”
- The public benefit requirement had two aspects. There must be an identifiable benefit (or benefits) and it must be made available to the public generally or to a ‘sufficient section’ of the public. The purpose for which the charity had been established satisfied the first requirement. The second was a matter of scope. It required that the specified benefit was available to a sufficient section of the public. However broadly defined, the purpose would not be for the benefit of a sufficient section of the public if it excluded those of modest means
- Where a charity operated from a large number of sites, the question whether provision for those of modest means was only token could not be answered by looking only at the sites where provision had been made for them, or only at the sites where no such provision had been made. It had been perfectly consistent with charity law for the Court of Appeal to conclude that only token provision had been made for those of modest means at the gym, without invading the irrebuttable presumption, arising from the charity’s registration, that its health-related purposes, viewed overall, satisfied the public benefit requirement> “…regard must be had to the manner in which the body fulfils the relevant purpose or purposes overall, rather than whether it does so in any particular place where its activities are carried on. Thus for example, where a body operates from a large number of sites, the question whether provision for the poor is only token or de minimis cannot be answered by looking only at the site or sites where provision is made for the poor, or only at the site or sites where no such provision is made.”
Nuffield Health is a registered charity. Its purposes are “to advance, promote and maintain health and healthcare of all descriptions and to prevent, relieve and cure sickness and ill health of any kind, all for the public benefit.” It pursues its purposes primarily through the provision of gym facilities, including the gym at Merton Abbey. It also operates private hospitals and clinics. The facilities at Merton Abbey are mainly restricted to fee-paying members. In April 2019, the standard membership fee was £80 per month. Nuffield also offers certain limited services to non-members of the gym.
S.43(5) and (6)(a) Local Government Finance Act 1988mandates an 80 per cent relief from business rates where “the ratepayer is a charity or trustees for a charity” and the premises are “wholly or mainly used for charitable purposes (whether of that charity or of that and other charities)”.
Nuffield Health claimed the mandatory relief under s.43(5) and (6)(a) from 1 August 2016, when it acquired the Merton Abbey gym. Merton Council refused the relief because, in its view, the membership fees were set at a level that excluded persons “of modest means” from enjoying the gym facilities and, therefore, the gym was not used for charitable purposes because the requirement for public benefit was not satisfied.
Chichester Diocesan Fund and Board of Finance v Simpson [1944] A.C. 341
rule of certainty
Held: The money was thus held on resulting trust by the trustees for the residuary beneficiaries
Money was left on trust for “charitable or benevolent objects”. This trust was void as ‘benevolent objects’ were not necessarily charitable
Commissioners for Special Purposes of Income Tax v Pemsel
Pemsel Classification
Lord Macnaghten at 583:
Used to be divided into four heads of charities.
‘“Charity” in its legal sense comprises 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 main significance => public benefit requirement for the charities. If you fall within the classification = Then there is presumption that these charities were for the public benefit.
Re Coulthurst [1951] Ch 661
s 3(1)(a) Prevention or relif of poverty
Lord Evershed MR at 665–666:
‘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.’
Held: It was held that this purpose was charitable because the purpose relieved poverty under s3(1)(a) Charities Act
Facts: A fund was set up for a newly widowed women and the orphans of deceased bank offices.
Re Shaw [1957] 1 WLR 729
s 3(1)(b) Advancement of Education
*‘In my opinion, if the object be merely the increase of knowledge, that is not in itself a charitable object unless it be combined with teaching or education’ *
Held (High Court)
The trust was non-charitable – its purpose was neither educational nor general utility, instead it was political
Principle: An object that aims to promote increase of knowledge is not charitable unless combined with teaching or education
George Bernard Shaw in his will directed his trustee to execute and finance various steps to provide the efficiency of an alphabet with letters corresponding to each sound and to transliterate his play into this alphabet and to publish it
Re Pinion [1965] Ch 85
s 3(1)(b) Advancement of Education
*‘I find myself on the other side of the line. I can conceive of no useful object to be served in foisting upon the public this mass of junk. It has neither public utility nor educative value. I would hold that the testator’s project ought not to be carried into effect and that his next-of-kin is entitled to the residue of his estate.’ *(Harman LJ)
The Court of Appeal unanimously reversed the decision, holding that in considering the
validity of a bequest for educational purposes, the court can consider expert evidence as to its educational value, and that the collection must be taken as a whole, so the few items of any merit
were not enough to save the gift. Harman LJ’s concise summary was “I can conceive of no useful object to be served in foisting upon the public this mass of junk.” I find that, as well as establishing some useful principles, the case
provides an outstanding example of the type of “home-made” charitable trust that can keep legal advisers tied up for hours. I am also amused by the irony of the Attorney General and next-of-kin
fighting so hard over property the value of which was dismissed in such caustic terms by the experts and judges.
The question of whether a gift is charitable can encompass a
remarkably diverse range of legal and factual inquiries. A
memorable example is Re Pinion (deceased), in which a testator left his residuary estate to his trustees to offer to the National Trust his art studio with the pictures painted by him and others, and his collection of antique furniture, to be kept intact in the studio and shown at an appointed time by the National Trust in a similar way to their other properties. The will also contained a power to appoint another body, if the National Trust refused to act. When the testator died in 1961, the contents of the studio were valued at £742. The trustees applied to the court to determine whether the bequest was charitable. Two experts gave evidence at the first-instance hearing, and were scathing about the low quality of the collection. Wilberforce J, having found that the gift was for
educational purposes and not entirely lacking in any recognisable public benefit, held that it must therefore be valid.
Regina (Hodkin) v Registrar General of Births, Deaths and Marriages
s 3(1)(c) Advancement of Religion - not a charity case
Decision of the Charity Commissioners for England and Wales on the Application for Registration as a Charity by The Church of Scientology (England and Wales), 17 November 1999 = rejected the scientology’s application to be recognised as a religion (worship of the object, public benefits, belief in a god) => not recognised under charity law
Scientology is still not recognised as a charity
The Temple of The Jedi Order—Application for Registration, Charity Commission Decision, 16 December 2016
s 3(1)(c) Advancement of Religion - new religions
Was not a religion.
‘There is scope for individuals, consistent with Jediism and the Jedi Doctrine promoted by [the Order], to pursue a spiritual path, a philosophy or way of life outside of the scope of a religion, as that term is defined in charity law. Any cogency and cohesion that is present is eroded by the individual’s ability to develop themselves within a loose framework and follow an individual experiential philosophy or way of life as a secular belief system’
The Independent Schools Council v The Charity Commission [2011] UKUT 421 (TCC):
public benefit
= independent schools are fee paying schools.
*[44] ‘The first aspect [of public benefit] is that the nature of the purpose itself must be such as to be a benefit to the community: this is public benefit in the first sense. In that sense, the advancement of education, referred to in the Preamble under the guise of “schools of learning, free schools and scholars in universities”, has the necessary element of benefit to the community…
The second aspect is that those who may benefit from the carrying out of the purpose must be sufficiently numerous, and identified in such manner as, to constitute what is described in the authorities as “a section of the public”: this is public benefit in the second sense.’ *
**= consider two things **
* The nature of the purpose itself
* Those who make benefit must be sufficiently numerous to benefit a sufficient section of the public
= They realised that the guidance was top restrictive and reissued it in 2013.
Private schools are charitable as long as they provide de minimis measures to admit non-fee payers
The Charity Commission published guidance concerning the public benefit requirement under s4 of the Charities Act 2006
Principle 2 of the guidance provided that “where benefit is to a section of the public, the opportunity to benefit must not be unreasonably restricted … by ability to pay any fees charged” and “people in poverty must not be excluded from the opportunity to benefit”
The Independent Schools Council (ISC), an association of private schools, sought judicial review for errors of law against the Charity Commission.
Gilmour v Coats [1949] AC 426
The ‘benefit aspect’ - public benefit
The purposes of the priory were not charitable due to lack of public benefit.
Principle: Private religious worship by an enclosed religious community is not charitable
A trust of money directed to serve the purposes of a Catholic priory
They would pray for others and it was suggested according to Catholic doctrine the prayers could bring about their spiritual improvement
It was also suggested that their lives would set an example for the public
IRC v Baddeley [1955] AC 572
the ‘public aspect’ - public benefit
The trust was non-charitable
Principle: A trust cannot qualify as a charity within the fourth class if beneficiaries are a class not only confined to an area but also within it according to a particular creed. This was not a sufficient section of the public.
Trustees were directed to permit property to be used by a Methodist church for ‘religious services and instruction’ and for the ‘social and physical training and recreations’ of residents of West Ham and Leyton BCs members or those likely to become members
Issue: whether stamp duty was payable, which depended on whether the conveyance was to a charitable trust
