07 Charitable Trust (ChT)
Learning Outcome
1. Introduction
2. Historical Background
3. Interpretation
• At the end of the lecture, students will be able to:-
1.Identify and list down the concept of charity.
2.Distinguish and affirm the relevant principles
that constitute charity.
3.Differentiate between Private Trust and
Charitable Trust.
Introduction
• Charitable trusts are public trust.
• The settlor/testator will create certain purposes
which are so beneficial to the community at large.
• There is no formal statutory definition of charity
but its definition is important.
Benefit of Charitable Trust
a. Validity
b. Cy près
c. Tax and rates
d. Public enforcement
• Since there is no statutory definition of charity,
courts used the Preamble to the Statute of
Charitable Uses 1601 or sometimes referred as
the Statute of Elizabeth.
Preamble to the Statute of Charitable Uses 1601
• Whereas lands, chattels, money have been given by
sundry well-disposed persons, some for the relief
of aged, impotent and poor people, the
maintenance of sick and maimed soldiers and
mariners, schools of learning, free schools and
scholars in universities, the repair of bridges,
port, haven, causeway, churches, sea banks and
highways, the education and preferment of
orphans; the relief, stock maintenance for houses.
• of correction; the marriage of poor maids; the
supportation aid and help of young tradesmen,
handicraftsmen and person’s decayed; the relief or
redemption of prisoners or captives, the aid or
ease of any poor inhabitants concerning payments
of fifteens, setting out of soldiers and other taxes
Law 3711 Equity and Trust II
which lands, chattels and money have not been
employed according to the charitable intent of the
givers by reasons of frauds, breaches of trust and
negligence.
• Does not explain/define the word charity.
• Remedy abuses in the administration of charities.
• Purpose of the charitable trust will have to be
within “spirit and intendment of the Preamble.”
Scottish Burial Reform and Cremation Society-
Glasgow Corporation [1968] AC 138
- Lord Wilberforce: “The Appellant must show …
that the public benefit is of a kind within the
spirit and intendment of the statute of
Elizabeth.”
- Preamble recognised a number of object as
charitable.
Mortmain and Charitable Use Act 1888
• The Statute of Charitable Uses 1601 was repealed
by section 13(1) the 1888 Act.
• Section 13(2) preserved the preamble.
Commissioners of Income Tax v Pemsel (1891)
AC 531
- 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.”
Nathan Committee 1952
• The Committees on the law and the Practice
relating to Charitable Trust 1952.
• Recommended new statutory definition of charity.
Charities Act 1960
• Repealed 1888 Act.
• Section 38(4): Any reference in any enactment or
document to a charity within the meaning, purview
and interpretation of Charitable Uses 1601, or of
preamble to it, shall be construed as a reference to
a charity within the meaning which the words
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bears as a legal term according to the law of
England and Wales.
Charities Act 1993
• S96(1): ‘charity’ means any institution, corporate
or not, which is established for charitable purposes
and is subject to the control of the High Court in
the exercise of the court’s jurisdiction with respect
to charities.
• S97(1): ‘charitable purposes’ means purposes
which are exclusively charitable according to the
law of England and Wales.
Goodman Committee 1976
• Restated the categories of charity in simple and
modern language.
1980 & 1981
• Government decided not the promote a legislative
definition.
• Scope based on decision of court and charity
Commissioner.
Lord McNaughten’s Classification
• Charity in its legal sense comprises four principal
divisions;
1. Trust for the relief of poverty;
2. Trust for advancement of education;
3. Trust for advancement of religion; and
4. Trust for other purposes beneficial to the
community.
Halsbury’s Law: General meaning of Charity
• To be charitable a purpose must satisfy certain
tests: it must either fall in the preamble to the
ancient statute of Elizabeth I ( sometimes referred
to as the Statute of Charitable Uses Act 1601) or
within one of the of categories of charitable
purposes laid down by Lord MacNagthen and
derived from the preamble, and in the case of the
fourth of those categories it must be within
ancient.
• statute, either directly or by analogy with decided
cases on the same point, or it must have been
declared to be charitable by some other statute. In
addition, it must be for the public benefit, that is to
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say, it must be both beneficial and available to a
sufficient section of community.
Scottish Burial Reform and Cremation Society-
Glasgow Corporation [1968] AC 138
• Lord Wilberforce :
1. Since it is a classification of convenience, they
may well be purposes which do not fit neatly
into one or other of the heading
2. The words used must not be given the force of
a statute to be construed
3. The law of charity is a moving subject which
may well be evolved even since 1891.
• Each heads must involves 2 elements:
a. An element of benefit; and
b. An element of public benefit (except for relief
of poverty).
• The requirements of public benefit varies from
head to head.
• It must be exclusively for charitable purposes.
Public Elements
Oppenheim v Tobacco Securities Trust Co Ltd
[1951] AC 297
• Certain trust for the education of children of
employees of former employees of British
American Tobacco Co Ltd or any of its subsidiary
or allied companies.
• Held: No Charitable Trust.
Statutory Definition in Malaysia
• Charity Law in Malaysia derived from English Law.
• No equivalent of Charities Act 1960 or Charities
Act 1993 in Malaysia.
• Sarawak: Charitable Trust Ordinance (Cap 102)
deals with administration of charitable trust in that
states.
The Sarawak Charitable Trust Ordinance
• ‘Charitable trust’: any trust or grant of, or
endowment . . . for any religious, educational or
other charitable purposes.
• It leaves the meaning of ‘charitable’ to judicial
interpretation.
Law 3711 Equity and Trust II
1. Relief of Poverty.
2. Advancement of Education.
3. Advancement of Religion.
4. Other Purposes Beneficial to the Community.
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 v
A.G [1983] Ch. 159
Peter Gibson J :
“The words ” aged, impotent and poor must
be read disjunctively. 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.”
Joseph Rowntree Memorial Trust Housing v
A.G [1983] Ch. 159
• The plaintiffs, a charitable housing association
and the trustees of a charitable housing trust,
wished to build small self-contained dwellings
for sale to elderly people on long leases in
consideration of a capital payment.
• They designed five schemes to provide
accommodation to meet the disabilities and
requirements of the elderly.
• All five schemes required the applicants to
have attained the age of 65 if male, and 60 if
female, to be able to pay the service charge, to
lead an independent life and to be in need of
the type of accommodation provided.
• The Charity Commissioners considered that the
schemes would not be charitable in law
because they provided benefits by contract not
bounty which were not capable of being
withdrawn if the beneficiary ceased to qualify
and because they benefited private individuals
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not a charitable class, and were a commercial
enterprise capable of producing profit for the
beneficiary.
Held:
1. the words describing the beneficiaries of the
first set of charitable purposes in the
preamble to the Statute of Elizabeth had to be
read disjunctively so that beneficiaries could
be either aged, impotent or poor but that in
order to be considered charitable the gift to
such people had to have as its purpose the
"relief" of a need attributable to the condition
of the beneficiaries; that, since the provision
of special accommodation relieved a
particular need of the elderly, whether poor
or not, attributable to their aged condition,
the schemes were within the scope of the
charitable purpose of providing relief to the
aged
2. That it was not essential that a charitable gift
was made solely by way of bounty and the
beneficiary could be required to contribute
towards its cost; that, therefore, the fact that
the schemes made provision for special
housing for the elderly on a contractual
basis did not prevent the purpose of the
schemes from being charitable.
3. it was necessary to meet the needs of a
particular class of beneficiary that the benefit
should not be withdrawn if a beneficiary
ceased to qualify for relief then the omission
of a provision for termination of the gift in
such circumstances did not prevent it from
being charitable; and that, accordingly, since
security of tenure might be a necessary part
of the need of the elderly for accommodation,
the charitable status of the schemes would
not be affected by the fact that there was no
provision for termination of the tenancy in
the event of a beneficiary ceasing to qualify
for accommodation.
4. The schemes were for the benefit of a
charitable class and, although a beneficiary
might profit by an increase in the value of his
equity, it was a matter incidental to the
objective of the schemes and it was not a
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profit at the expense of the charity; that,
accordingly, the possibility of a beneficiary
profiting from the schemes did not alter the
fact that it was in law charitable for the
plaintiffs to carry out each of the five
schemes.
B. Attributable Condition
• “What is essential to the charitable purpose is
that it should relieve aged, impotent and poor
people. The word ‘relief’ implies that the persons
in question have a need attributable to their
condition as aged, impotent or poor people . . .”
• For g : Aids sufferer, cancer patient etc
C. Poverty is not destitution
• 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.
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.
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.
Law 3711 Equity and Trust II
Buckeley LJ: “It now extends to improvement of
useful branch of human knowledge and public
dissemination”
Held:
• The council was entitled to registration as a
charity, on the grounds that publication of law
reports to enable judge-made law to be properly
developed and administered by the courts was a
purpose beneficial to the community.
• The council was established for exclusively
charitable purposes since its purpose was to
further the development and administration of
the law and to make it known or accessible to all
members of the community, which was a
purpose beneficial to the community and of
general public utility and came within the equity
of the Statute of Elizabeth I; that it was
immaterial that publication also supplied
professional men with the tools of their trade;
and that the trade or business carried on by the
council was not inconsistent with a charitable
character in its objects since its profits were not
payable to its members and the element of
unselfishness was an important and well-
recognised aspect of charity.
• The council's purposes were charitable as being
for the advancement of education since the
purpose of the law reports was to provide
essential material for the study of the law, which
was a learned profession and a science, and that
remained its substantially exclusive purpose
even though professional men used the
knowledge acquired to earn their living.
• Now the category has grown to cover a very wide
range of educational,
• eg: schools, universities, nursery, museums, zoos,
public libraries and cultural activities such as
drama, literature and fine arts.
a. Research
• Requires more than mere accumulation of
knowledge.
• Sharing or teaching : must show that public will
benefit.
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• What about other than scientific or medical
research ; will it be considered as charitable?
Re Hopkins’ Will Trust [1965] Ch 669
- A gift to the Francis Bacon Society: to be
earmarked and applied towards finding the
bacon Shakespeare manuscripts.
- Held: Valid charitable trust.
- a bequest for search, or research, for the
original manuscripts of England's greatest
dramatist (whoever he might be) was a
charitable purpose, because such a revelation
would probably contribute decisively to a
solution of the authorship problem and might
lead to improvements in the text and to more
accurate dating.
- That research, to be charitable within the
accepted heading of educational, must not be of
a private character and must be either of
educational value to the researcher, or must
be directed to lead to something which will
pass into the store of educational material
or so as to improve the sum of
communicable knowledge in an area which
may be covered by education - including the
relevant aspects of the formation of literary
taste and appreciation, and that research which
produced benefit in the intellectual or artistic
field would also be charitable because it was
beneficial to the community.
b. Artistic and Aesthetic Education
Royal Choral Society v IRC [1943] 2 All ER
101.
- 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.
- Held: Charitable society. The society was a
body established for the promotion of aesthetic
education. Its objects were charitable and its
income was exclusively applied for the
purposes of charity. The society was, therefore,
entitled to exemption from income tax.
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c. Extra-Curricular Activities
London Hospital Medical College v IRC [1976]
2 All ER 113
• Students union is considered as charitable –
part of educational purpose of college and
university.
• Held: The union existed solely to further, and
did further, the educational purposes of the
college. It was heavily dependent on the college
which fostered and sponsored the union
because it realised the importance of the union
to the success of its own educational activities.
The benefits given to the members of the union
were only given with a view to giving
encouragement to and to carrying out the main
purpose of the college, which was charitable.
d. 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 Ltd [1917] AC 406
• 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.’
e. 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.
f. Education and Public Benefit.
Law 3711 Equity and Trust II
• 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.
• Though the group of persons indicated was
numerous, the nexus between them was
employment by particular employers, and
accordingly the trust did not satisfy the test of
public benefit requisite to establish it as
charitable.
Re Koettgen’s Will Trust ( 1954) Ch 252
• Trust 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: The gift to the primary class from whom
the trustees could select beneficiaries
contained the necessary element of benefit to
the public and that as to 75 per cent. of the
income, a limited class did not affect the
validity of the trust, which was accordingly a
valid and effective charitable trust.
Advancement of Religion
• No absolute definition of religion.
• It basically refers to the higher unseen power.
• 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, a recognition of some higher
unseen power which is entitled to worship. It may
include (bit greater than) morality or
recommended way of life.”
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• 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.”
• Held: The society's present objects, while
possessing the necessary element of benefit to
the public in that they were not devoted merely
to self-improvement of the society's members,
were not for the advancement of religion, but
that they were for the advancement of education
or, by analogy with decided cases, were
charitable as being for the public benefit
United Grand Lodge of Ancient Free and
Accepted Mansons of England and Wales v
Holborn Borough Council (1957) 1 WLR 1080
• An organisation known as masonry: directed
towards the leading of a good moral life and at
the same time insisted on the belief in supreme
creator.
• 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.”
• Held: on a consideration of the constitution and
work of freemasonry its main objects were not
for the advancement of religion: there was no
religious instruction, no programme for the
persuasion of unbelievers, no religious
supervision to see that its members remained
constant in the various religions which they
might profess, no holding of religious services
and no pastoral or missionary work of any kind;
nor did it seem that a mason need practise any
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religion, for provided that he believed in a
Supreme Being and lived a moral life he might be
and remain a mason. The United Grand Lodge,
therefore, were not entitled to the relief claimed.
Karen Kayemeth Le Jisroel Ltd. v. I.R.C. [1932]
A.C. 650
• Held: An organisation set up to facilitate the
settlement of Jews in Palestine and neighbouring
lands was not considered as advancement of
religion.
Position in the 17th 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 1472
• Trust 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, but it assumes that any religion is at least
likely better than none.
Satellite Purposes
• 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.
Law 3711 Equity and Trust II
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 religious rites.
• Held: Charitable. It does confer a sufficient public
benefit and improves those who attend it.
• A gift for the saying of Masses was prima facie
charitable because it was for a religious purpose
and contained the necessary element of public
benefit, since in practice the Masses would be
celebrated in public.
Bourne v Keane [1919] AC 815
• An Irish Roman Catholic testator, domiciled in
England, bequeathed 200l. to Westminster
Cathedral for masses, and 200l. and his residuary
personal estate to "the Jesuit Fathers, Farm Street,"
for masses.
• Held: the bequests were not void as superstitious.
The contention of the next of kin as to the bequests
to the Jesuit Fathers failed for insufficiency of
evidence as to the constitution of the community.
These bequests were given, not to a monastic
order, but to individual members of a particular
order resident at a named place, and were
impressed with no trust for the benefit of the
order.
• Held, therefore, that all the bequests were valid.
Gilmour v Coats [1949] 1 All ER 848
• 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.
5
• Held : a gift to a community which was similar to
the Carmelite convent in this case was not a gift on
a charitable trust as it lacked of the element of
public benefit.
Nerville Estates v Madden (1962) Ch 852
• A 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 Inland
Revenue Commissioner [1948] AC 31
• A 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
a. The protection of animals from cruelty is a
charitable purposes
b. Vivisection a necessary part of medical
research : it will benefit the community
• Held : 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.”
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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 113
• A 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
72
• A trust to establish a hospital in which animal
useful to mankind will be treated and cured.
Re Grove Grady [1929] 1 Ch 557
• A trust for the benefit of birds and other
animal to build a sanctuary for them; this is to
free them from human molestation.
Facts:
• Testatrix, who died in 1925, by clause 12 of her
will gave her residuary estate to her trustees to
form a trust for the founding, establishing and
maintaining of a charitable institution to be
called "The Beaumont Animals Benevolent
Society" under such rules and regulations and
under such committee of management not
exceeding ten members and otherwise in all
respects as her trustees should in their
absolute discretion think fit, and having regard
to her wish that the expense of management
should be kept as low as possible; provided
that all members of the committee and of the
governing body and all officials of the said
society should be and always have been
Law 3711 Equity and Trust II 6
declared anti-vivisectionists and opponents of efficiency of the force for the advantage of the
all sport involving the pursuit or death of any public was charitable, the purpose of providing
stag, deer, fox, hare, rabbit, bird, fish, or any recreation for the members was non-charitable
other animal. and was not merely incidental to the charitable
purposes.
• Held:
- Although a trust in perpetuity for animals Others
might be a good charitable trust if in its • Trust for promotion of efficiency of the fighting
execution there was necessarily involved a forces through promotion of physical efficiency, a
benefit to the community, yet where that gift to my country, promotion for a voluntary fire
element was wanting, the trust would be bad. brigade, a gift for the general promotion of
- Therefore, that trusts in the present case not agriculture have all been held as valid charitable
having been shown to be for purposes trust under the fourth head.
beneficial to the community they were not
good and valid charitable trusts.
- It is merely a trust to secure that all animals
within the area shall be free from molestation
or destruction by man. It is not a trust
directed to ensure absence or diminution of
pain or cruelty in the destruction of animal
life.
- It is unable to say that any benefit to the
community will necessarily result from
applying the trust fund to the purposes
indicated in the first object.
Social Sporting and Recreational Trust
IRC v City of Glasgow Police Athletic Association
[1953] AC 380.
• A police athletic association claimed exemption
from income tax under Sch. D on the profits of their
annual sports meeting.
• An association was established and the object is to
encourage and promote all forms of athletic sports
and general pastimes.
• 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.
• Held:
- The exemption could not be granted because the
association was not "established for charitable
purposes only" within section 30 of the Finance
Act, 1921. Though the Commissioners were
entitled to find that the purpose of increasing the