CHARITABLE TRUST

In Commissioner of income Tax v Pemsel, Lord McNaughten summarised the scope of charity.

“Charity in its legal sense comprises four principal divisions; trusts for the relief of poverty, trust for the advancement of education; trust for the advancement of religion; and trust for other purposes beneficial to the community, not falling under any of the preceding heads.”

1) Relief Of Poverty2) Advancement of Education3) Advancement of religion4) Other purposes beneficial to the

community

1- RELIEF OF POVERTY No definition of poverty. It does not mean

destitution. It means that there is a want, that a person has ‘to go short’ of something.

The trust must be within the spirit and intendment of the Preamble.

It must be for the relief of such persons and not merely their benefit.

A) Disjunctive construction :

Joseph Rowntree Memeorial Trust Housing Vs AGHeld: “The words “ aged, impotent and poor must be read disjunctively, ie. separately. It would be absurd to require that the aged must be impotent as it would be require to impotent to be aged or poor to be aged or impotent.”

B) Attributable Condition

What is essential to the charitable purpose is that it should relieve aged, impotent and poor people. Ex.: Aids sufferer, cancer patient etc

Re Lewis ( 1955) Ch 104 : A testator made a bequest : “I leave to 10 blind girls, Tottenham residents if possible the sum of £100 each. I leave to each 10 blind boys Tottenham residents if possible the sum of £100.

Held : A valid charitable bequest

Re Bradbury (1950) 2 All ER 1150A trust for the maintenance of aged persons in a nursing home. Held : charitable

C) Poverty is not destitution

Poor is a relative term. An individual need not be destitute in order to qualify as a poor person within the preamble.

Re Coulthurst (1951) Ch 661A fund to b applied for the benefit of the widows and orphaned children of deceased officers and deceased ex-officers of Coutts and Com.

Held : It is a relative term. The court will look at the lifestyle of the people who will benefit.

Re Niyazi ‘s Will Trust (1978) 1 WLR 910.£15,000 for the construction of or as a contribution towards the cost of working men’s hostel, to be created in Famagusta Cyprus

Held : Charitable trust

Re Sander’s Will Trust ( 1954) Ch. 265A codicil “to provide or assist in providing dwellings for the working classes and their families resident in the area of Pembroke Dock . . . Or within a radius 5 miles there from.

Held: Not charitable. “Working class” did not indicate poor person.

d) Not subject to Public Benefit.

Trust for the relief of poverty form an exception to the principle that every charitable trust must be for the public benefit.

The exception covers both the poor employer and their families.

However there must be primary intent to relieve poverty amongst a particular class of person. If primary intent is to benefit particular person the trust is a private one and not charitable.

Dingle v Turner (1972) AC 601Trust to apply income in paying pensions to poor employees of a company.

HOL reaffirmed the Court of Appeal’s decision that it was charitable.

If the trust is one to relieve poverty among named persons it is not charitable

2- ADVANCEMENT OF EDUCATION

Preamble 1601 : “the maintenance of schools of learning, free school and scholars in universities and the education and preferment of orphans.”

Does not limit to poor classroom teaching. Broad definition : teaching of ethic,

research arts etc.

Incorporated Council of Law of Reporting From England and Wales v AG (1972) Ch. 73.

Buckeley LJ : It now extends to improvement of useful branch of human knowledge and public dissemination.”

Now the category has grown to cover a very wide range of educational, eg : schools, universities, nursery, museums, zoos, public libraries and and cultural activities such as drama, literature and fine arts.

a) Research

Requires more than mere accumulation of knowledge. But sharing or teaching : must show that public will benefit.

What about other than scientific or medical research ; Will it be considered as charitable

Re Hopkins (1965) Ch 669A gift to the Francis Bacon Society : to be earmarked and applied towards finding the bacon Shakespeare manuscripts. H: Valid Charitable trust

Re Shaw ( 1957) 1 WLR 729.Residuary of George Bernard Shaw to be devoted for the research : Advantages to be gained by substituting the present 26 letter by a new proposed British alphabet of 40 letters.

Held :Gift not charitable

b) Artistic and Aesthetic Education

Royal Choral Society v IRC (1943) 2 All ER 613.Society to form and maintain a choir in order to promote the practice and performance of choral works by way of concert or choral pageant in the Royal Albert Hall. H: Charitable society.

Re Delius (1957) Ch 299.Widow of a composer – Frederick Delius gave her residuary estate for the advancement of Delius’s musical works “.. To apply the royalties income and income form the residual trust fund towards the advancement of musical works of my late husband..” H: A valid charitable trust.

d) Extra Curricular Activities

London Hospital Medical College v IRC (1976) 1 WLR 613

Held: Students union is considered as charitable – part of educational purpose of college and university.

e) Political Propaganda in Subtle Form

Trust for political purposes is not charitable

Trust for advancement of education must not be political at all.

Eg: Trust for the release of prisoners of conscience, for alteration of the law relating marriage and also to promote the principles of a political party are not charitable

Bowman v Secular Society [1945] Ch 16

Lord Parker : ‘a trust for the attainment of political object has always been held invalid not because it is illegal . . . but because the court has no means of judging whether a proposed change in law will or will not be for the public benefit

Re Hopkinson ( 1949) 1 All R 346Vaisey J : ‘political propaganda masquerading . . . As education is not education for the purpose of charity.

Re Scowcroft (1898) Ch 638The gift of income to be applied for the furtherance of conservative principles and religious and mental improvement.

Held: Charitable Trust

Re Koepller’s Will Trust ( 1986) Ch 423A gift to further the work of educational project was held charitable even though the testators express aspiration were not regarded as charitable.

The project involved conferences with political flavour but it did not further the interest of a particular political party.

f) Sports as part of Education

Promotion of sports per se is not regarded as charitable.

Except if the promotion takes place in school and universities.

In Re Marriette (1915) 2 Ch 284£ 1000 for building a squash court in a school and £ 100 to provide price money in the school for athletic events. Held : Charitable

IRC v Mac Mullen (1915) 2 Ch 284Trust for the furtherance of education in schools and university in UK and encouraging and facilitating the students playing football and other games and sports at such institution.

Held : A Valid Charitable Trust. Education is not restricted to classroom teaching

Trust of sport outside educational facilities and are not charitable unless they come within the scope of the Recreational Charities Act 1958

Re Duprees Deed Trust (1945) Ch 16 £ 5000 to establish annual chess tournament for young boys under 21

Held : CT. Purposeful activities for the young

e) Education and Public Benefit.

The Court will not allow the trust if some people to be escaped from tax in order to educate their children.

OPPENHEIM V TOBACCO SECURITIES LTD (1951) AC 297

Trust for the education of children of employee of British American Tobacco Co Ltd and any of its subsidiaries.Held: Not charitable. No connection with the public

RE KOETTGEN’S WILL TRUST ( 1954) Ch 252Trust for the promotion of commercial education for those who could not afford to pay it for themselves, with a preference to be given of up to 75% of the income to the employees of a particular firm. Held: Charitable

3- ADVANCEMENT OF RELIGION

No absolute definition of religion. Monotheistic belief was an essential qualification.

Meaning of Religion

Bowman v Secular Society ( 1917) AC 406 : Lord Parker: “any form of monotheistic theism will be recognised as religion. Religion requires a spiritual belief, a faith, and recognition of some higher unseen power which is entitled to worship. It may include (bit greater than) morality or recommended way of life.”

Ethic is not religion.

RE SOUTH PLACE ETHICAL SOCIETY (1980) 1 WLR 1565.The Society’s object: the study and dissemination of ethical principles and cultivation of a rational religious sentiment.

Issue: whether it is charitable?

Dillon J: “Religion is concerned with man’s religion with God and ethics concerned with man’s relations with man…. It seems to me that two of the essential attributes of religion are faith and worship.”

UNITED GRND LODGE OF ANCIENT FREE AND ACCEPTED MANSONS OF ENGLAND AND WALES V HOLBORN BOROUGH COUNCIL (1957) 1 WLR 1080

Donovan J: “to advance religion means ‘to promote it, to spread its message ever wider among mankind; to take positive steps to sustain and increase religious belief”

KAREN KAYEMETH LE JISROL V IRC [1932] AC 650An organisation set up to facilitate the settlement of Jews in Palestine and neighbouring lands was not considered as advancement of religion.

Position in the 17 th century: Recognition of other Christine Sects such as Catholic, Baptists, Methodists and Executive Brethren

All these come under/ within Christianity

RE WATSON (1973) 1 WLR 1472Trust for the continuance of the work of God in propagating the Holy Truth as in the Bible by financing the continued publication of the work of Hobbs – a leading member of a small group of undenominal Christians.

Held : It is charitable

THORNTON V HOWE (1862) 31 Beav. 14

A trust for the publication of the writing of Joanna Southcott who claimed that she was pregnant

with a child by the Holy Ghost and would give birth to the new Prophet.

Held: Charitable and the object was for the advancement of religion.

No Priority Among Various Religions

NEVILLE ESTATES LTD V MADDEN (1962) Ch 832.As between different religions, the law stands neutral. SATELLITE PUTPOSES

Refers to the main activity of the advancement of religion. Eg: trusts for the upkeep and maintenance of religious building.

Trust for benefit of priests, provision of church bells, for retired missionaries, sick and aged clergy.

Public Benefit and Religious Trust

It can be fulfilled by 2 ways, namely;

A) Provide activities which are available to the public

B) The presence among the public at a place of worship have been improved.

Re Hetherington Gibbs v Mc Donnell (1989) 2 All ER 129.A trust for the celebration of a religious rites.

Held: Charitable. It does confer a sufficient public benefit and improves those who attend it.

Gilmour Coats [1949] AC 426.A trust of £500 for the benefit of Carmelite Priory convent at Notting Hill.

The Priory was a community of strictly cloistered nuns which devoted their lives to prayer, contemplation and self-sanctification. The nuns had no contact with the outside world.

Held : Lacked of the element of public benefit.

Nerville Estates v Madden (1962) Ch 852A trust for a synagogue which was not open to the public, only to the member of Catford Synagogue.

Held : Charitable for the advancement of religion.

OTHER PURPOSES BENEFICIAL TO THE COMMUNITY

This is a very wide category. The list is not exhaustive. It comprises trust which the Court have

held charitable but do not come within the other three heads.

The test: The test is what the law treats as charitable NOT what the testator thought was charitable.

Need to be within the spirit and intendment of the Preamble.

Benefit

1) Anti-vivisection

National Anti Vivisection Society v IRC (1948) AC 31A society claimed exemption from tax. The object was the suppression of vivisection. In England there was a strong lobby to stop the elements of experimenting on animals

The Court had to consider two things

1) The protection of animals from cruelty is a charitable purposes.2)Vivisection a necessary part of medical research; it will benefit the communityHeld: The society was not established for charitable purposes

Lord Simmonds : “in order to abolish vivisection it would be necessary to repeal the Cruelty of Animals Act 1876 and replace it with a new enactment prohibiting vivisection altogether.”

2) Protection and benefit of animals

Trust for the welfare of animals generally are charitable except if it is made for specified animals.

The charitable status of gifts to animals was originally limited to the welfare of animals which were useful to man.

Re Wedgwood (1915) 1 Ch 113A testatrix by her will gave her residue upon trust to be applied for the protection and benefit of animals.

Held : There was a charitable trust. To promote public morality and prevent cruelty to animal

London University v Yarlow (1857) 1 DE & G 72A trust to establish a hospital in which animal useful to mankind will be treated and cured.

Re Grove Grady [1929] 1 Ch 557A trust for the benefit of birds and other animal to build a sanctuary for them ; this is to free them from human molestation.

SOCIAL SPORTING AND RECREATIONAL TRUST

IRC v City of Glasgow Police A.S (1953) AC 380.An association was established and the object is to encourage and promote all forms of atheletic sports and general pastimes.Issue: Whether the Association was entitled to exception form income tax on the ground that it was a body of persons established for charitable purposes only.

OTHERS

Trust for promotion of efficiency of the fighting forces through promotion of physical efficiency, a gift to my country, promotion for a voluntary fire brigade, a gift for the general promotion of agriculture have all been held as valid charitable trust under the fourth head.