Property & Trusts
A trust by the terms of which the income is to be applied exclusively charitable purposes is treated with special favour by the law. A charitable trust is a valid purpose trust. This means that it is perfectly possible to establish a trust for the achievement of a purpose, provided that the purpose in law is regarded as charitable. On the question of enforcement, it matters not that there is no human beneficiary capable of enforcing the trust because the Crown act as parens patriae through the Attorney General in order to ensure that the trustees carry out the terms of the trust.
The courts have developed the legal concept of charity over several centuries and as Lord Wilberforce said in 1967 'the law of charity is a moving subject'[1]. However, there is no statutory definition of charity, regardless of occasional proposals. The dictum of Viscount Simonds in IRC v Braddeley[2] is still true today 'no comprehensive definition of charity has been given either by the legislature or in judicial utterance'. The Nathan Committee recommended that there should be a definition based on Lord Macnaghten's classification in Income Tax Special Purposes Commissioners v Pemsel[3]. Also ignored were the recommendations of the Goodman Committee on Charity Law and Voluntary Organisations that the categories of charities should be restated. The question of a statutory definition of charity was reconsidered in the recent White Paper, Charities: A Framework for the Future, which opined that any attempt to ratify a statutory definition was fraught with difficulty and would jeopardise the flexibility of the present law which was its best and most valuable features. It also agreed with the Goodman Committee that the case law that is used as precedents should not be swept aside. It has been suggested that the advantages of a definition could be illusionary in that it might result in "a fresh spate of litigation and provide a set of undesirable distinctions[4]
Although there is no one definition of charity, it is usually accepted that before any institution can be accepted as charitable three conditions must be fulfilled. Firstly, the purpose of the institution must be within the spirit and intendment of the preamble to the Charitable Uses Act 1601. Secondly, the institution must exist for the benefit of the public and, thirdly, it must be exclusively charitable
Any argument of the various attempts at classifying charitable purposes must, unavoidably, hark back to the Preamble 1601. The courts have adopted the practice of referring to the Preamble (now repealed) for guidance as to what purposes should be regarded as charitable in law. Tudor advocates; "the preamble is still undoubtedly the accepted test, though only in a very wide and broad sense, whether a particular purpose is charitable, and the court in discharging the duty of determining what objects are and what are not charitable must have the preamble in mind"[5]. Various writers and judges throughout the centuries have said that the purposes listed in the preamble were mere examples, or a sort of index or chart that the court could refer to in differing circumstances. At the same time it was never forgotten that the 'objects there enumerated' as Lord Cranworth observes, 'are not to be taken as the only objects of charity but are given as instances'[6]. Cairns states that 'from this rag-bag of purposes the modern concept of charity has evolved'[7
Lord Macnaghten made the most influential classification of charitable purposes in Pemsel's case. His classification has traditionally been used as the basis for discussion of charitable. He regarded the preamble as enumerated to which additions could be made. This broad approach has allowed the concept of charity to be modified as times and conditions changed to include not only purposes similar to those set out in the preamble but also purposes which are considered to be within the spirit of the statute. Analysing the case law within the four categories will show this. However before that, it must be mentioned that Lord Wilberforce stated in Scottish Burial Reform and Cremation Society v Glasgow Corpn that the list was not written in stone
Nonetheless, in spite of the reservations expressed by Lord Wilberforce in Scottish Burial Reform, the main source of modern law can be taken to be Lord Macnaghten's classification in Pemsel. In addition the courts and the Charity Commissioners under s. 4 of the Charities Act 1960 have built up a great body of case law. Warbuton states that 'often it [the case law] may appear illogical and capricious. It could hardly be otherwise when its guiding principle is so vaguely stated and is liable to be so differently interpreted in different ages'[8]. This theory perfectly exhibits why the preamble is not seen as exhaustive - the objects stated in it are mere examples - and new objects may obtain charitable status as society evolves. Had the objects in preamble been the 'be all and end all' surely the preamble would have indicated this by producing a much longer list of objects. The fact it does not exemplifies that it treated the objects enumerated in preamble as instances to which additions could be made.
We must now turn to consider Lord Macnaghten's four heads of charity, which will be discussed in turn. It should be noted beforehand, that it is often arguable that the facts of a case bring it under more than one head of charity, or that it does not decisively fit into one rather than another category, and the court may well declare a trust to be charitable without making it clear exactly on what ground it does so. It will be seen that each of the four heads of Lord Macnaghten's classification involves two elements that of benefit, ...
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We must now turn to consider Lord Macnaghten's four heads of charity, which will be discussed in turn. It should be noted beforehand, that it is often arguable that the facts of a case bring it under more than one head of charity, or that it does not decisively fit into one rather than another category, and the court may well declare a trust to be charitable without making it clear exactly on what ground it does so. It will be seen that each of the four heads of Lord Macnaghten's classification involves two elements that of benefit, and the other of public benefit
The relief of poverty lies at the heart of the law of charities. Numerous cases[9] have established that poverty is a relative term, it is not confined to destitution. The term poverty is in fact as Lord Evershed once observed: 'of wide and somewhat indefinite import; it may not unfairly be paraphrased for present purposes as meaning persons who have to "go short"[10]. It was decided in Re Glyn's WT [11]that the phrase "aged, impotent and poor people" should be read disjunctively and that the relief of the aged was charitable without reference to poverty
The Charity Commissioners[12] take the view; generally speaking, that anyone who cannot afford the normal things in life which most people take for granted would qualify for help. Over the decades of the late 19th century and in the 20th a mass of case law has defined what is charitable. Homes for decayed or distressed gentlefolk[13] and hostels for working men or young girls[14] fulfil a charitable purpose. Similarly a trust to assist poor emigrants is valid[15]. This concept has been stretched today to include neighbourhood law centres formed for the purposes of giving legal aid and advice to poor persons[16] and the grant of low interest loans to enable poor people to purchase freehold or leasehold housing accommodation[17].
By contrast a gift to provide a contribution towards the holiday expenses of workpeople was held not charitable on the grounds that, although employed at a very small wage, the workpeople could not be described as poor within the meaning of the preamble[18]. Likewise a gift 'to provide or to assist in providing dwellings for the working classes and their families[19]' resident in a particular area does not create trust for the relief of poverty as it is not necessarily the case that the members of the working class are poor/
Trusts for the advancement of education have long been recognised in the preamble as charitable trusts. In order for a trust for the advancement of education to be charitable it must be for an educational purpose, fall within the spirit of the preamble and must be available to the public or a section of the community. According to Prof Moffat[20] the phrase 'advancement of education', "now constitutes a very wide category of charitable purposes". Buckley J defined the phrase as "extending to the useful branch of human knowledge and its public dissemination[21]". It can be seen from the case law in this area that particular objects that constitute education have been extended. In many cases the educational propensity or value of a particular gift will be obvious. Cases in which involved the studying of a foreign language[22], law[23], natural history[24], economics[25], geology[26] and medicine[27] are obviously charitable. On the other hand, certain objects are too frivolous to rank as educational within the meaning of the preamble. The compilation of lists of Derby winners[28], the study of racing or football 'form', the study and preservation of steam engines[29], a public exhibition of junk[30]: none of these is a charitable object. They are also clear cases.
Occasionally it will depend on the way in which the activity or faculty is run in order to fall within the spirit of the preamble. Picarda states, "Where school children are the intended beneficiaries of a gift the courts have usually shown themselves willing to stretch the concept of education to very benevolent limits".[31] This was shown in Re Mariette[32] and Re Geere's WT[33], where a bequest of £10,000 to Marlborough College for the provision of 'a proper swimming bath and hot water baths' was a valid charitable gift. In Re Mellody[34] Eve J upheld an annual treat day for school children. Tyssen[35] has commented that Re Mariette and Re Mellody 'go to the verge of the law'. However, Re Ward's Estate, a trust to provide annual outings to children of ex-servicemen was upheld.
Education" is not constrained to education in academic subjects in a school, university or college. It includes industrial training and technical training, research and cultural fields, such as music, dancing, drama and the fine arts. Purposes considered to be properly or traditionally related with formal education may fall within the 'educational umbrella' even though they are not per se educational or otherwise charitable. In IRC v McMullen[36], Lord Hailsham emphasised that a liberal interpretation should be given to the meaning of "education". He reaffirmed that "both the legal conception of charity and within it educated man's ideas about education are not static, but moving and changing. Both change with changes in ideas about social values." It should be noted that there are limits on what constitutes "educational". Political propaganda concealed as education is not charitable[37]. This was recently emphasised in Southwood v A-G[38] where S claimed, educating the public of the evils of war and advocating disarmament was a charitable nature. The appeal was dismissed, the CA held; It was not possible for the court to dictate which of the various means of securing peace were likely to result in public benefit if promoted in the manner mentioned. Nor is it "educational" to promote or attempt to encourage a particular point of view[39]. Nevertheless, both the courts and the Charity Commissioners now appear to be less prone to hold trusts concerned with international and race relations non-charitable on political grounds[40]. This highlights the diversity of what constitutes "educational" and Lord Hailsham dicta in McMullen rings true today
Whether a trust has adequate educational value is in the final analysis a question of degree for the courts. The court may be given evidence to assist it to decide whether or not a specific educational purpose is beneficial to the community, and in the absence of any evidence or of any sufficient evidence the court may settle the question in the light of its own judicial knowledge
The advancement of religion is also a charitable purpose. However, it was not mentioned in the preamble, the nearest approach to it being 'the repair of churches'. Nevertheless as it has been mentioned above the purpose of preamble was to demonstrate charitable purposes rather than draw up an exhaustive definition of charity. According to Lord Hanworth M.R the advancement of religion meant "the promotion of spiritual teaching in a wide sense, and the maintenance of the doctrines on which it rests, and the observations that serve to promote and manifest it". [41]
The subject of what constitutes religion has been significantly altered over the last three decades. This in part attributable to the growth of new religions, such as cults/spiritualists, highlighted by the Moonies case (AG v Herzer[42]). The case law in this area shows that a number on non-mainstream religions have attributed charitable status. Two trusts associated with the Unification Church have registered charitable, as has a trust for the publication of the works of Joanna Southcote[43]. Similarly with regard to organisations which exist for the advancement of religion, such as the Church Army[44], the Salvation Army[45], the Church Missionary Society[46], the Society for the Propagation of the Gospel in Foreign parts, the Sunday School Association[47] and the Protestant Alliance[48] and kindred institutions. In Gaudiya Mission v Brahmachary[49] the authorities showed that the English courts were unable to control bodies established and administered abroad, and "charity" within the 1993 Act did not include an institution incorporated under the laws of a foreign legal system, Camille and Henry Dreyfus Foundation Inc v Inland Revenue Commissioners[50] [1956] A.C. 39, [1955] C.L.Y. 304 followed. It had to be concluded, therefore, that G was not a charity under the Act, and the Attorney General could not properly be added as a party to G's action.
Outside the Christian religion, trusts for the advancement of the Jewish religion are undoubtedly charitable. Furthermore the Charity Commissioners have registered trusts for the advancement of the Hindu, Sikh, Islamic and Buddhist religions. Recently in Funnel v Stewart[51] a faith healing movement was awarded charitable status, which Fletcher[52] describes as 'a danger of the language of charity being stretched too far in pursuit of benignancy'. On the other hand there have been considerable restrictions on the objects, which are not for the advancement of religion such as the Theosophical Society[53], South Place Ethical Society[54] or the Church of Scientology[55]. Gifts for religious purposes have held to be prima facie good, a gift for missionary purposes[56], and gifts towards the spire[57], chancel[58], organ[59] and stained glass windows[60] have all been held charitable gifts
The majority of new charities come within the fourth head which according to Cairns "has provided the greatest scope for the development of charity law to meet that changing needs of society", she further adds "the attitude of the courts in taking a broad approach to the preamble...has assisted in this process". It is not sufficient under this head that a gift is for the public benefit: it must be beneficial in a way which the law regards as charitable. Under the fourth head the public benefit must be proved. It is up to the court/charity Commissioners to decide from the evidence which is admissible and relevant, whether a particular purpose is or may be beneficial to the community. According to the Charity Commissioners Report of 1983 where there was a 'substantial public benefit in the activities of an organisation they said that this raised a 'prima facie' assumption of charitability'.
The courts appear to have two distinguishing routes to determine charitable status of new purposes within the fourth head. The first and the more restrictive of the two is known as the argument for analogy or the stepping stone approach. Dillon LJ took this approach in Barralet v A-G. Using this approach the provision of a crematorium[61] was considered charitable by analogy with the upkeep of churchyards which itself was held charitable by analogy with the repair of churches mentioned in the preamble.
The second approach is more flexible and has been favoured in a number of modern decisions. It permits the court to consider whether the purpose which is under scrutiny is "within the spirit and intendment" or "within the equity" of the statute. This enables the court to hold purposes to be charitable which cannot be directly connected to one of the original purposes listed in the preamble. Sachs LJ described this wider test in the Council of Law Reporting case as having "an admirable breadth and flexibility which enables it to be reasonably applied from generation to generation to meet changing circumstances". This shows that additions could be added to the preamble and the list was not exhaustive. However, Cracknell[62] maintains that the Charity Commissioners will normally reject the wider test in favour of the argument in favour of the argument from analogy.
The wide scope of the fourth head is apparent from the accumulation of case law on the various objects. The main gifts under the fourth head are gifts for the benefit of a locality. This includes gifts for 'the common good fund of a council'[63]; erection of a public hall[64], community centre[65], recreational space and in certain circumstances the provision of a commemorative statute[66]. Certain patriotic purposes such as the promotion of the defence of the UK from attack from hostile aircraft, promotion of the efficiency of the RAF[67] and police force are seen as charitable. The promotion of industry, commerce and art was held charitable in Crystal Palace Trustees v Town and Country Planning[68] following the decision in IRC v Yorkshire Agricultural Society[69] that promotion of agriculture was charitable. Protection of life and property are considered to be charitable: Barralett v AG, Re Verral[70]. Animal charities are also valid: Re Wedgewood[71].
It should be mentioned that when a charitable trust fails, the trust property may be applied by the court for charitable purposes as near as possible (cy-pres) to those originally laid down by the settler. The principles governing cy-pres are to be found in the common law as supplemented by s. 13 of the Charities Act 1993. In essence, property, which is subject to a trust for charitable purpose may be, applied cy-pres when the charitable purpose is either impossible or impractical. The result of cy-pres is that more cases are obtaining charitable status therefore widening the definition of what is charitable.
The law of charities has developed significantly since Lord Macnaghten put forward his classification of charitable purposes. It still not possible to give an exhaustive list of charitable objects. With the passage of time, many outlines have become more apparent. The very language used by Lord Macnaghten indicates that he was not treating his classification as a 'be all and end all'. He segregated four principal divisions and said that charity in its legal sense comprised those divisions. It is feasable to identify further categories of charitable purposes from the decided cases. Such recognition may be of assistance in the duty of determining whether a purpose is charitable in the same sense as one already held to be within the equity or spirit and intendment of the preamble. While it remains true that not every object beneficial to the community is necessarily charitable, it would be seen that the courts have in modern times adopted a broad approach to the preamble. This broad approach has allowed the concept of charity to evolve as the needs of society have changed. For instance charities for the advancement of education cover physical as well as mental education. Religion has been extended to cover spiritualists and the fourth head has been extended to a very wide range of bodies, which have been established in response to new public needs. Recently there have been proposals for the definition of charity to cover the unemployed and regeneration of communities[72].
In the final analysis more purposes will obtain charitable status, as it seems that a trust will be considered charitable if a judge or a charity commissioner thinks that it accords with contemporary social ideas and policy on public good. The result, in Lord Upjohn's words, is that 'the spirit and the intendment of the preamble to the Statute of Elizabeth have been stretched almost to breaking point'[73]. Therefore Tudor's statement is an accurate statement of the current law on charities and will remain so until a comprehensive definition is adopted
Cairns, E, Charities Law & Practice, Sweet & Maxwell, 3rd Ed.
Chesterman, M, Charities, Trusts and Social Welfare, 1978
Cracknell, D,Cracknell's Law Relating to Charities, Longman, 2nd Ed, 1985
Hayton & Marshall, Comments and Cases on the Law of Trusts, Sweet and Maxwell, 10th Ed, 1999
Hanbury & Martin, Modern Equity, Sweet & Maxwell, 15th Ed, 1999
Warburton, J,Tudor On Charities, Sweet & Maxwell, 1997
Todd, P, Textbook on Trusts, Blackstone Press, 4th Ed, 1997
] Scottish Burial Reform and Cremation Society v Glasgow Corpn [1968] AC 138
[2] IRC v Braddeley [1955] AC 572
[3] IncomeTax Special Purposes Commissioners v Pemsel [1891] AC 531
4] Sachs LJ in Incorporated Council of Law Reporting v Attorney General [1971] All ER 1029
[5] Tudor on Charities, Sweet & Maxwell, 1998
[6] London University v Yarrow (1857) 1 De G & J 72 at 79
[7] Cairns, E, Charities Law & Practice, Sweet & Maxwell, 3rd Ed
[8] Warburton, J, Charitable Trusts - Unique? Conv [1999
9] Re McFee [1929] 37 OWN 266 at 268: Re Bethel [1971] 2 OR 316 at 330
0] Re Coulthurst's WT, Coutts & Co v Coulthurst [1951] 1 All ER 774
1] Re Glyn's WT [1950] 2 All ER 1150
2] Charity Commissioners Leaflet CC4
3] Re Young [1951] Ch 344
4] Re Nayazi's WT [1978] 3 All ER 785
5] Barclay v Maskelyne (1858) 32 LTOS 205; Re Tree [1945] Ch 325
6] Report 1974, p 20
8] Re Drummond [1914] 2 Ch 90
9] Re Sandler's WT, Public Trustees v McLaren [1954] 1 All ER 667
20] Moffat, G, Trusts: Cases & Materials, Butterworths, 2nd Ed
21] Incorporated Council for Law Reporting v Attorney General 3 All ER 1029
[22] Re Koettgen's WT [1954] Ch 252
23] Smith v Kerr [1902] 1 Ch 774
24] Re Mellody [1918] 1 Ch 228
25] Re Corbett (1921) 17 Tas LR 139code
26] Re Koettgen's WT [1954] Ch 252
27] Royal College of Surgeons v National Provinial Bank, Ltd [1952] AC 631
28] Brunyate (1945) 61 LQR 268
29] [1965] Ch Comm Rep 30 (Norfolk Steam Engine Club
30] Re Pinion [1965] Ch 85
7] R v Special Comrs of Income Tax [1911] 2 KB 434