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THE EXCLUSIVE NATURE OF CHARITY


In the UK subject to the Charitable Trusts (Validation) Act 1954 it is essential that the Trustees be bound to devote the trust property or the trust fund to charitable purposes exclusively and in the case of Hunter V Attorney General [1899] A.C. 309 it was held that a gift does not create a valid charitable trust unless every object or purpose is wholly charitable.  Therefore if there are joint purposes or alternative purposes which are non-charitable the gift will not succeed as a charitable trust.

AND/OR 


The settlor may for example join the word charitable with another adjective such as benevolent or philanthropic.  It has been argued that if the joining word used is ‘and’ for example for charitable and benevolent purposes the gift will succeed as it can only be applied to such benevolent purposes as are charitable.  It might also be argued that if the joining word used is ‘or’ the gift may fail because the property can be applied to benevolent purposes that are not charitable.  Therefore a gift “for such charitable or disserving purposes which my executor may select” will fail because the executor without committing any breach of trust may apply the property either partly or wholly to a non-charitable object.  It is all a question of construction however and the word ‘and’ may have been used disjunctively and the word ‘or’ conjunctively.

In the case of Houston V. Burns [1918]AC 337 the gift was made for “public benevolent or charitable purposes” in a Scottish Parish and according to the House of Lords the gift failed as not being charitable because the words were wide enough to justify the trustees in disposing of the fund to non-charitable purposes.  

A similar result occurred in Chichester Diocesan Fund & Board of Finance (Inc) V Simpson [1944] AC 341 by the use of the words charitable or benevolent.  In this case the trustees had paid the money which was considerable to various charities not anticipating litigation by the next of kin which in fact occurred.  Their case to recover the money from the charities themselves also went to the House of Lords in the leading case of Re Diplock [1948] Ch. 465

In the case of AG of Bahamas V. Royal Trust Co. [1986]3 All E.R. 323  the privy Council held not charitable a bequest for “any purposes for and or connected with the education and welfare of Bahamian Children and Young People on the grounds that education and welfare should be interpreted disjunctively and that a trust for welfare was not necessarily charitable.

In Webb V. O’Doherty The Times 11th February 91  Officers of a Students Union were restrained from making any payments to the National Students Committee to stop war in the Gulf or to the Cambridge Committee to  stop war in the Gulf whose purposes were said not to be charitable.  The Union was an educational charity and the officers were therefore only entitled to use its property for charitable purposes.

Article in 56 L’QR 458 when and means or by Khanna

Compound charitable purposes are valid for example a gift for educational or religious or charitable purposes because each of these items is exclusively charitable.  Refer to Public Trustee V. Ward [1941] Ch. 308 

(profit making) 
Generally it is not compatible with charitable status to seek profit as primary objective.  Fees may however be charged and incidental acquisition of profit arising therefrom will not disqualify the trust.  Refer to Scottish Burial Reform   in which it was held in relevant part that the charging of fees by the society did not disqualify it and the society whose main object was the promotion of sanitary methods of disposing of the dead was held charitable. 

There are exceptions to the exclusively charitable rule as follows:

1.            Apportionment – the trustees may be given power or may be under a duty to apportion the property between charitable and non-charitable purposes.  Such a power or duty will not disqualify the trust.  If the trustees fail to apportion the court will apply the maxim equality is equity and divide equally between charitable and non-charitable.

2.            Power of variation:         Where the trustees have the power to revoke charitable trust and to declare substitute non-charitable ones the mere existence of this unexercised power does not render the original trust non-charitable.

3.            Incidental or Ancillary purposes:        If a purpose is incidental to the achievement of a purpose which is charitable, it will not destroy the gift.   Refer to Royal College of Surgeons V. National Provincial Bank Ltd [1952] A.C. 631 in which the House of Lords held that the college in law was a charity since its objects as recited in the Charter was “the advancement, promotion and encouragement of the study and practice of surgery” the professional protection of its members provided for in the bylaws was held to be merely ancillary to that object.

In the case of Re Coxen [1948] Ch. 747 the testator entrusted to the court of Aldermen of the City of London the management of a large fund for the benefit of orthopaedic hospitals and directed that an annual sum not exceeding a hundred pounds be applied for a dinner for the court upon meeting for the trust business.  The dinner was held by the Judge to be purely ancillary to the primary charitable trust and for the better administration of the trust.

Ancillary or Incidental purposes must be distinguished from purposes which are subsidiary and not merely incidental.  Thus in the case of Oxford Group V IRC [1949]2 All E R 537 The Court of Appeal held that one of the objects set out in the groups memorandum of association namely “to support any charitable or benevolent association” actually conferred powers which were so wide that they could not be regarded as charitable.  They were not merely ancillary to the main objects which were admittedly charitable and set out elsewhere in the Memorandum and the group did not therefore constitute a charity. 

As a result of this decision which was thought to affect a large number of charities a committee was appointed known as the Nathan Committee which recommended some amendment to the law resulting in the Charitable Trust (Validation) Act 1954 which Act did not however go as far as completely reversing the decision.  The general intendment of the Act is to allow variation of a vague gift so that it becomes wholly charitable.  Refer to Re Chitty’s Wills Trust (1970) Ch. 254.
Section 62 of the Civil Procedure Act and the Cy Près Doctrine

Under Section 62 of the CPA the High Court is given the supervisory jurisdiction over charitable trusts.  Section 62 can be invoked

(a)          Where there is an alleged breach of trust;
(b)          Where a direction of the court is deemed necessary for the administration of such a trust.

Proceedings can be brought by either the Attorney General or by two or more persons who have an interest in the Trust, they have to show locus with the express consent of the AG.  On the question of who is sued, it is normally the trustees who are sued but sometimes the suit may be non-contentious e.g. where only a direction is being sought in which case the trustee themselves can bring the proceedings and that would be a Declaratory Suit under Order 3 Rule 9 of the Civil Procedure Rules.  By virtue of Section 62 such proceedings can only be brought in the High Court and under Section 62 various remedies can be sought as follows:
(a)          Removal of any trustee;
(b)          Appointment of a new trustee;
(c)          Vesting of property in the trustee;
(d)          An order directing accounts and inquiries – this stems from the fact that the trustee is accountable to the beneficiaries and conversely the beneficiaries themselves are entitled to accounts and information;
(e)          Declaring what proportion of the fund shall be allocated to any particular object of the trust;
(f)           Authorising the whole or any part of the trust property to be let, sold, mortgaged or exchanged;
(g)          Setting up a scheme – this arises under the Cy-Près doctrine.

 
 
 

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