Summary Notes on Law of Trust & Equity : Charitable Trust

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Law on Trust & Equity : Charitable Trust

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CHAPTER : CHARITABLE TRUST

è  General Concept

Ì  SECTION 9 GOVT. PROCEEDING ORDINANCE 1956

§        Claim is being brought forward by AG as it for the benefits of the public.

§        Claim also may be bring forward by any 2 or more individuals that has locus standi in the trust & has obtained a written consent of the AG.

Ì  REQUIREMENT OF CHARI. TRUST

1.       Aim for specific purpose such as : Poverty, Religion, Edu. And etc.

2.       It is made for public benefit.

3.       It is made for the purpose which is exclusively charitable.

Ì  ADVANTAGES OF CHARI. TRUST

1.       No need to complied with the strictness of the ‘Certainty Test’ like in the express trust, as long as the trust is for charitable purposes it is valid.

2.       Got Doctrine of Cypress to defeat the issue of ‘Lapse of Time’.

3.       Trust is indefinites - perpetuity rule like the one applies in private trust not applicable here.

4.       Tax free for the testator.

Р 2^nd ELEMENT : It is made for PUBLIC BENEFIT?

è  Case : Verge v Somerville

Issue : Validity of a gift given to the trustee on certain class of fund that is to benefit the returned soldier.

Held : Whether the above constituted for a ‘public benefit’, once must asked : QS

♥        Whether it is for the benefit of a community or of an appreciably important class of the community.

♥        If it for public as general or any inhabitants of a town (certain class that part of the public) but if it is for any private indi / certain body of private indi, it cannot be subjected to the chari. purposes.

Ì  PUBLIC BENEFIT TEST?

è  Case : Oppenheim v Tobacco Securities Trust

Facts : The income of a trust fund was used for “the education of children of employees or former employees’ of a company or any of its associated employees.” The total number of employees was in excess of 100,000 people.

Held : The trust failed in the case itself because the members of the public to benefit in this case were tied by a common nexus of being children of employees or ex-employees of the donor company. (Contractual nexus). The principle in this case applied to all heads of charity except relief to poverty.

♥        TEST : Nexus Test

Ø  Gift was made to benefit section of public :

1.       Look at the size of the section.

2.       Look whether there is any blood relationship among the giver and the receiver as to make this chari. purpose valid, it can’t condone with any blood related parties. (Exception to : Relief of Poverty)

Ì  EXCEPTION ON NEXUS TEST : RELIEF TO POVERTY

§        But the trust cannot be made upon a specific indi, the ‘public benefit’ test applied, except in the below type of  situations.

è  Case : Re Scarisbrick

Held : Blood ties of relative doesn’t estopped the chari. trust for relief of poverty to be validly made.

è  Case : Dingle v Turner

Facts : Chari. trust was created to provide a pension for poor employees of a particular co. where no. of potential beneficiary is less than 50.

Held : The chari. trust is validly made.

Ì  OTHER ISSUES RELATED

ü  Need to have a ‘PUBLIC CONTACT’

è  Case : Gilmour v Coats

Facts : A gift has been given to a group of nuns who prays in isolated place.

Held : The trust failed as for it to be chari. purpose, the beneficiary must have the ‘public contact’ / give benefits to public. In this case, the beneficiaries only pray isolated from the society.

ü  Need to have a ‘PUBLIC BENEFIT’

è  Case : Re Pinion

Facts : The testator left an art studio which contained sculptures and paintings with direction it be converted to a museum open to public.

Held : This was regarded by the  court as a heap of junk and was refused chari. status.

è  Case : Re Delius

Facts : The wife of composer Delius gave her residuary estate to trustees in trust for the advancement of her husband musical works .

Held : On the question whether it is a chari. trust it was held the purpose was to spread knowledge and appreciation of the works  of Delius to the world- enhance artistic appreciation, which is considered as a chari. purposes.

ü  Need not be ‘POLITIC’.

è  Case : Bowman v Secular Society

Held : Chari. purpose can’t be used for political purposes as judge reluctant to decide whether such purposes is beneficial to the public as a whole or only for some private interest such as political party and etc.

è  Case : National Anti Vivisection Society v IRC Society

Held : The act of abolition of law in creating the chari. trust not validate such trust as it was fully political motivated.

Р 3^RD ELEMENT : It is made for EXCLUSIVELY CHARITABLE

§        Gen. rule is that if the related chari. trust is designed by including some other purposes such as allowing the trustee without being in breach of trust to use the trust for any non-chari. purpose will render such chari. trust to be void.

è  Case : Chichester v Simspon

Facts : The gift was said to be applied either for any chari. purpose or benevolent object or objects in England.

Held : The trust failed as the wording of either for benevolent (good – Scope it too wide) / chari. purposes make it be uncertain trust.

è  Case : Morice v Bishop of Durham

Facts : The trust is vested on wording of “such objects of benevolence and liberality as the Bishop in his own discretion shall approve.”

Held : The trust failed as no ascertainable beneficiaries and it was completely can’t be considered as chari. trust.

ü  Exception for the rule having 2 purposes in 1 chari.. trust :

è  Case : Blair v Duncan

Held : Court will never accepts if the chari. trust contains any more than one purposes which any of them is not chari. one. But court will come into a diff. decision if instead of the wording ‘or’ for the purposes, the word ‘and’ is being used. (Mean = If both of the purposes are chari. one, ct will accept).

è  Case : Re Sutton

Held : The wording of “charitable and deserving objects” was held valid purposes within category of chari. purpose. The chari. trust was valid in this case.

è  Case : Re Eades

Held : The wording of “religious, charitable and philanthropic” was held not exclusively chari. as the ‘,’ used in the wording constitute the word ‘or’,

ü  Mixed purposes – not exclusively chari. :

è  Case : IRC v Glasgow Police Association

Issue : Whether the association can be exempted from tax as they have created a chari. trust?

Held : There was 2 dimensions in this trust, the chari. one (it promote for improving the efficiency of police) & non-chari. one (for social / recreational needs of members). The question is whether this non charitable purpose is incidental (x penting) to the public charitable purposes. If the answer is yes that the non-chari purpose is incidental to the chari one, it is still valid, and this work vice versa if it not incidental.

ü  EXCEPTION TO THE 3^rd ELEMENT :

1.     Possibility of Severance / apportionment (Distribution)

♥        If it is proven that a specified part of funds is to be applied for chari purposes and the rest to non chari purposes , the gift may be saved under chari purpose by separating the part relevant to chari purpose.

♥        Where an executor or trustee is directed to divide property between chari and non chari objects , the trust will not fail as court will separate if the trustee fails to do so.

è  Case : Salubury v Denton

Facts : In a will of of a widow, part of the trust went to a charity school and the rest towards the benefit of the testator relatives. Widow died without making apportionment / distribution.

Held : The court applying the maxim equity in equality saved the charitable trust by divided the fund into 50:50 between both of the purposes.

2.     Ancillary (Subsidiary) Purpose

1)       This refer to the situation where the non-chari aspects of the trust was merely incidental to the main chari. object.

è  Case : Law Reporting v AG

Held : The subsidiary purpose such as printing and publishing statutes , the provision of a noting-up service and so forth are ancillary to this primary object and do not detract from its exclusively chari character. So the trust is valid.

2)       This refer to the situation where the chari object of the trust is facilitated by non-chari pusposes

è  Case : Re Coxen

Facts : A testator gave the residue of his estate amounting to more than 200,000 pounds to the Court of Aldermen of the City of London for charitable purposes providing 1)100 for a dinner at their annual meeting to discuss the affairs of the trust & 1:1 s to each alderman for attendance‘ and 2) The balance to be applied by them for them in support of a specified medical charity.

Held : Ct held that the admins provision were regarded as being ancillary for the bettwe admins of the charity & hence it is charitable.

Р 1^st ELEMENT : Definiton of ‘Charity’

è  Case : Income Tax v Pemsel (Applied in Local Case of Titular Roman Catholic Bishop of KL)

Facts : The case concerned a trust involving real property where part of the rent was directed to assist missionary (preacher) work of the Moravian Church  in “heathen” nations. If this was a charitable purpose then the tax would be reduced.

Held : In deciding whether it is chari. or not, ct defined ‘Charity’ in its legal sense comprises of 4 principal divisions:

1.       Trust for the relief of poverty.

2.       Trust for the advancement of education.

3.       Trust for the advancement of religion.

4.       Trusts for other purposes beneficial to the community, not falling under the preceding heads.

ü  Other issue : It must within the spirit & intendment of preamble.

§        Preamble to the Charitable Uses Act 1961 (also referred to as the Statute of Elizabeth I).

§        A gift must be written within the letter or spirit or intendment  of the Preamble.

è  Case : Scottish Burial Reform v Glasgow Corp.

Facts : The company was established for the purpose of cremation methods of disposal of the dead which was inexpensive and sanitary and for purpose to encourage and promoting cremation claimed to be a charity for relief from tax rates on their premises.

Held : Purpose was held too be beneficial to the community and charitable within the spirit and intendment of the Preamble.

ü  4 DIVISION OF CHARITY : ADVANCEMENT OF EDUCATION

§        The Statute of Elizabeth 1 refers Edu. to “schools of learning, free schools & scholar in universities… & the edu. and preferment (advancement) of orphans”.

è  Case : Re Shaw

Facts : The trust was set up for research of finding 40 letter alphabets.

Held : Not charitable as it was a mere increase of knowledge without any teaching / edu.. *But this change throughout the time with extension on certain matters within education.

è  Case : Law Reporting for England & Wales v AG

Held : The edu. now extends to ‘the improvement of a useful branch of knowledge & its public dissemination  (research)’.

è  Case : Re Hopkins

Facts : The testator left 1/3 of his prop. to research in finding the Bacon – Shakespeare manuscripts & after his death to the general purpose & work of the Francis Bacon Society Inc which is registered as chari. trust.

Held : The edu. as before this which only comprised the teaching and researching must now be extended to include an artistic type of edu., that are literary taste & appreciation.

è  Case : Mc Govern v Att. Gen.

Held : The trust for ‘research’ must fulfilled the following elements :  

1.       Subject matter of the research is a useful subject of study.

2.       It is certain that the knowledge acquired from such research will be disseminated to others.

3.       The trust is for the benefit of the public / sufficient section of the public.

Ø  ACTIVITIES WITHIN THE SCOPE OF EDUCATION

1)       Formation of taste & literary appreciation.

è  Case : Royal Choral Society v IRC

Held : Choral singing in London.

è  Case : Re Delius

Held : Advancement of the music of Delius.

2)       Sports

è  Case : Re Nottage

Facts : The trust consists with provision of a cup for the best yatch of the season to promote sailing.

Held : Sport of itself is not chari. but it can be chari. if it is linked with edu..

è  Case : Re Mariette

Held : Provision of 4 courts of Eton & squash racket courts at Aldenham School is within the scope of edu..

3)       Recreation linked to education.

è  Case : Re Webber

Held : Gifts to Boys Scouts Movement is counted as within the scope of edu..

è  Case : Re Mellody

Held : Sports & pastime – Provide an annual field day for school children is within the scope of edu..

4)       Publication of educational material.

è  Case : Council of Law Reporting v AG

Held : A non profit making body which engaged in publishing law reports was held to be charitable.

5)       Museum

è  Case : British Museums Trustees v White

Held : The foundation & maintenance of such amenities like museums, libraries is counted as edu. enough to be regarded as charitable.

6)       Learned / professional bodies

è  Case : Royal College of Surgeons v National Provincial Bank

Held : The Ct held that main purpose of Royal Surgeons  was the “due promotion and encouragement of the study and practice of art and science [of surgery]“ other activities included professional protection of members of association were incidental . The trust in this case is chari.

7)       Student Unions

è  Case : London Hospital Medical College v IRC

Held : A student union was held to be a charitable trust where its predominant object was to advance the educational purpose of the college even though one of its objects was to confer private and personal benefit on union members.

ü  4 DIVISION OF CHARITY : ADVANCEMENT OF RELIGION

§        The Statute of Elizabeth 1 refers it indirectly as ‘repair of churches’.

è  Case : United Grand Lodge v Holborn

Held : Religion’s scope is defined as :

1.       Belief in a supreme being.

2.       The belief leads to a moral and upright life.

3.       Steps should be taken to promote the belief to mankind in general.

4.       Steps taken to increase belief by rituals, pastoral and missionary methods (related to preach & etc).

è  Case : Middleton v Clitheroe

Held : A purpose to upkeep of the clergy (pirest) is held within the scope of religion.

è  Case : Re Hetherington

Held : Saying of masses for the dead is regarded as within the scope of religion.

è  Case : Re Kow Kim Pong ‘s Trust Settlements

Facts : This case concerned a gift to a Buddhist priest a gift of 12 acres of land for the construction of a temple to worship  & the balance of said land for growing orchard or other purposes deemed fit by the priest or successors .

Held : The court held the gift as charitable.

Ø  GIFTS HELD NOT CHARITABLE UNDER ADVANCEMENT OF RELIGION

è  Case : Yeap Cheah Neo

Held : Ancestral worship is not charitable under the advancement of religion as usually there will be no public element as this ceremony is conducted within the families members only.

è  Case : AG v Thirpoore Soonderee

Held : Gifts to a person for benefit of a temple is good charitable gifts but a gift to an idol (diety) for benefit of a temple is void.

ü  4 DIVISION OF CHARITY : RELIEF OF POVERTY

§        The Statute of Elizabeth 1 refers it as relief of the aged, impotent or poor people.

§        It is exempted from the nexus test. (Dingle v Turner)

§        However, this exemption not extends to the aged / impotent people.

è  Joseph Rowntree v Att- Gen ( This case is about dwellings for sale to elderly at 70 % cost) – where nexus test was applied and the trust was found to be charitable for aged.

è  Case : Re Sanders

Held : The trust provision of the dwellings for the working classes failed as not all working classes are necessarily poor.

è  Case : Re Niyazi Will Trusts

Held : The £15k that were left for the construction or contribution towards the cost of a working men’s hostel is regarded as chari. purpose under this class. This is diff. from the Re Sanders case as for this house, there is relatively poor people living in.

ü  4 DIVISION OF CHARITY : OTHER PURPOSES BENEFICIAL

1)       Animals (In gen. or specific class of animals)

è  Case : Re Wedgewood

Facts : A testator provided that her residue estate be held upon trust for the protection and benefit of animals.

Held : It was held as a charitable trust as it was aimed to calculate morality and check in born human tendency to cruelty .

è  Case : Re Grove Grady

Held : A gift to a society whose objects included establishing a refuge for animals ( away from public- as public excluded) was held to be not charitable.

2)       Recreation & Sports (Improve to National Security Army)

§        Sports related to edu. purposes has done earlier, please refer.

è  Case : Re Gray

Facts : A promotion of sports in a regiment 6TH Dragoon Guards to promote shooting fishing cricket etc.

Held : Charitable.

3)       Relief of Distress

§        Under this scope, it includes maintenance of an old folks home, hospital or fire brigade can be charitable or the relief of disasters.

è  Case : Re North Devon

Held : An appeal fund launched in response to Lynmouth flood disaster by soliciting public donation was charitable.

4)       Provision & maintenance of public works & amenities.

§        Under this scope, the purpose will be held as charitable.

è  Case : Re Spence

Held : A provision of a hall for the public.

5)       Preservation of places of historical importance / beauty.

§        Under this scope, the purpose will be held as charitable.

è  Case : Cranstones Will Trust

6)       Locality cases

§        Under this scope, it refer to the chari. dedicated to one’s state / land or country.

è  Case : Re Smith

Held : A testator gift of his residuary estate “unto my country England – own use and benefit absolutely” was held to be charitable.

7)       Publication of law reports

è  Case : Council for law Reporting v AG

Held : Refer discussion before this.

8)       Encouragement of good citizenship / moral welfare.

§        Under this scope, the purpose will be held as charitable.

è  Case : Re South Place Ethical Society