CHARITABLE TRUST

Week 7

DR ZATI ILHAM ABDUL MANAF

 WEEK 8 & 9

CHARITABLE CY-PRÈS
TRUST DOCTRINE

CHARITABLE TRUST VS NON-CHARITABLE

WAQF PURPOSE TRUST
 CHARITABLE TRUST
1 INTRODUCTION & HISTORY

2 STATUTORY DEFINITION IN MALAYSIA

3 THE HEADS OF CHARITY

A RELIEF OF POVERTY B ADVANCEMENT OF

EDUCATION

C
ADVANCEMENT OF
RELIGION D OTHER PURPOSES BENEFICIAL
TO THE SOCIETY
INTRODUCTION & HISTORY
INTRODUCTION

Charitable trust:
A form of express trust dedicated to charitable goals

Subjected to formalities; 3 certainties

(Intention, Subject matter, object)

*Normally, the law does not allow trusts for a purpose, but charities
are an exception.

Example: Trust for the purpose of relieving poverty in Gombak

HISTORY: CHARITY The term ‘charity’ has not been statutorily
defined in West Malaysia.

The relief of aged, impotent and poor people; the maintenance of sick
and maimed soldiers and mariners, schools of learning, free schools and
Education
scholars of universities; the repair of bridges, ports, haven, causeways,
churches, sea banks and highways; the education and preferment of
Religion orphans; the relief, stock or maintenance of houses of correction; the
marriages of poor maids; the supportation, aid and help of young
tradesmen, handicapped men and persons decayed; the relief or Relief of
poverty
redemption or prisoners or captives; and the aid or care of any poor
inhabitants concerning the payment of fifteens, setting out of soldiers
and other taxes.

Preamble to the English Statute of Charitable Uses 1601

PREAMBLE OF CHARITABLE USES ACT 1601

• Does not define the word charity.

• List of purposes or activities which the State believed were
of general benefit to the society.
• Purpose of the charitable trust will have to be within the
‘spirit and intendment of the Preamble’.

Name of Case Scottish Burial Reform and Cremation Society-

Glasgow Corporation (1968] AC 138
Principle “The Appellant must show.. That the public benefit is
of a kind within the spirit and intendment of the
statute of Elizabeth
MEANING OF CHARITY 4 HEADS OF CHARITY

Charity in its legal sense comprises four principal

divisions: trusts for the relief of poverty; trusts for the
advancement of education; trusts for the
advancement of religion; and trusts for other purposes
beneficial to the community, not falling under any of
the preceding heads.

Lord McNaughten in Income Tax Special Purposes Commissioners v Pemsel [1891]AC 531

Meaning adopted in the local case of Veerasamy Krishnasamy v Janakki Ammal [1947] 1 MLJ 157 &
Re Abdul Guny Abdullasa [1936] MLJ 140
EVOLUTION OF THE LAW

 1601 Act was repealed by Mortmain and Charitable Uses Act 1888 however
the preamble was preserved.

The 1888 was then repealed and replaced by the Charities Act 1960,1993,
2006, 2011 & 2022.

3 of the Charities Act 2011 lists down the description of charitable purposes.

Example: Arts, culture, heritage, science, sports, human rights, environment,

animal welfare etc.
HALSBURY’S LAW: GENERAL MEANING

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 McNaughten 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 say, it must be both
beneficial and available to a sufficient section of community.
Name of Case Scottish Burial Reform and Cremation Society v Glasgow Corp
(1968) AC 138

Ratio Lord Wilberforce:

• Since it is a classification of convenience, they may well be
purposes which do not fit neatly into one or other of the
heading
• The word used must not be given the force of a statute to be
construed
• Each head involves 2 elements:

1) Element of benefit (Public benefit).

2) Exclusively for charitable purposes.
‘PUBLIC BENEFIT’

Name of Case Oppenheim v Tobacco Securities Trust Co. [1951] A.C. 297

Facts Involved a trust to “provide for the education of children of employees

or former employees of the British American Tobacco Co. Ltd.”
However, altogether there were 110,000 employees and former-
employees.
Issue Whether the trust was charitable or not.

Decision Establishing a trust to pay for the school fees of the children of the
company’s employees was not a public benefit. Furthermore, Lord
Simmonds held that there could not be a public benefit if there was a
connection between the people who established the charity and the
people who were intended to benefit.

Test: Whether or not those who stood to benefit from the trust
constituted a sufficient ‘section of the community’.
STATUTORY DEFINITION IN
MALAYSIA
STATUTORY DEFINITION IN MALAYSIA
West Malaysia: No equivalent interpretation as provided in the Charities
Act 1960 or 1993 (UK)

Sarawak: Charitable Trust Ordinance deals with administration of

charitable trust in the state.
TERM INTERPRETATION
Charitable trust Any trust or endowment over movable or
immovable property which is held, administered or
managed for the furtherance of any charitable
purpose
Charitable purpose Any purpose relating to the support and
advancement of education, religion or sports and
for the relief of poverty and the aged and for the
purposes which are exclusively charitable and for
the public benefit according to the laws of
Malaysia
INCOME TAX ACT 1967
Institution: An institution in Malaysia which is not operated or
conducted primarily for profit and include:

1) A hospital
2) A public or benevolent institution
3) A university or other educational institution
4) Public authority or society engaged solely in research..cure of
disease in human beings
5) Government assisted institution engaged in socio-economic
research
LABUAN TRUST ACT 1996
Section 11B:

A trust shall be regarded as a trust for charitable purposes under this Act where the
trust is made for any one or more following purposes and where the fulfillment of
such purpose or purposes is for the benefit of the community or a substantial section
of the community having regard to the type and nature of the purpose:

a) Relief or eradication of poverty

b) Advancement of education
c) Promotion of art, science and religion
d) Protection of the environment;
e) Advancement of human rights and fundamental freedom
f) Any other purposes which are beneficial to the community.
HEAD OF CHARITY:
RELIEF OF POVERTY
THE DEFINITION OF POVERTY
“ ..Poverty does not mean destitution; It is a word of wide and
somewhat indefinite import…meaning persons who have to ‘go
short’ in the ordinary acceptation of that term, due regard being
had to their status in life and so forth.”

Evershed MR in Re Coulthurt’s Will Trust [1951] Ch 661

• No definition of poverty.

• Court has accepted that it extends to cover a person that has ‘to go
short’ of something.

• It must be for the relief of such persons and not merely their benefit.
Name of Case Re Coulthurt’s Will Trust [1951] Ch 661
Facts John Coulthurst declared a discretionary trust of £20,000 in his will and directed
that his trustee should pay an allowance to any widows and orphaned children
of either officers or ex-officers of Coutts & Co as the trustees thought were ‘most
deserving of assistance’, according to their financial circumstances.

Whether the trust was charitable?

Decision The Court of Appeal held that the trust was charitable, as it existed to relieve
poverty. It did not matter that the trust did not precisely spell out that its
objective was to relieve poverty. The court would look at the purpose of the
trust as a whole and, if its aim was to relieve poverty, that would be sufficient to
ensure that it could attain charitable status.
THE DEFINITION OF POVERTY
Lord Simmonds discussed the case of Re Coulthurt’s Will Trust [1951] Ch 661 and laid some
limitations:

Name of Case IRC v Baddeley [1955] 1 All ER 525

Decision Lord Simmonds:

There may be a good charity for the relief of persons who are not in grinding
need or utter destitution... but relief connotes need of some sort, either need for
a home, or for the means to provide for some necessity or quasi-necessity, and
not merely for an amusement, however healthy.
INTERPRETING THE TERM ‘RELIEF OF POVERTY’
A) DISJUNCTIVE CONSTRUCTION
Name of Case Joseph Rowntree Memorial Trust Housing v A.G [1983] 2 WLR 284
Ratio It was not necessary under the Preamble to the Statute of
Charitable Uses that beneficiaries should have to prove that
they were aged, impotent and poor. Those words had to be
read disjunctively. It was enough that beneficiaries fell into one
of those three categories. Peter Gibson J defined ‘relief’ as
meaning:

‘the persons in question have a need attributable to their

condition as aged, impotent or poor persons which requires
alleviating and which those persons could not alleviate, or
would find difficulty in alleviating, themselves from their own
resources.’
INTERPRETING THE TERM ‘RELIEF OF POVERTY’
B) 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.

CASES:

1) Re Gardom (1914) 1 Ch 662

2) Re Coulthurst (1951) Ch 661
3) Re Niyazi’s Will Trust (1978) 1 WLR 910
 CASES (POVERTY IS NOT DESTITUTION)
Name of Case Re Gardom [1914] 1 Ch 662
The will of Eliza Gandom set up a trust for the maintenance of a
Facts temporary house of residence for ladies of ‘limited means’

Court decided that it is was acceptable as a charity for the relief of

poverty
Ratio Eve J:

It is true that ladies of limited means are not destitute, and that the
expression ‘limited means’ may vary in its signification according to the
standard by which the means are measured, but these arguments
provoke the rejoinder that there are degrees of poverty less acute than
abject poverty or destitution, but poverty nevertheless.. In other words,
the objects to be benefited by the bequest are ladies too poor to
provide themselves with a temporary home without outside assistance.

The court however must be satisfied that the benefits of the charity are
aimed exclusively at the poor.
 CASES (POVERTY IS NOT DESTITUTION)
Name of Case Re Niyazi [1978]1 WLR 910
Niyazi left property, which turned out to be worth £15,000, for the
Facts construction of or as contribution towards the cost of a working men’s
hostel in Famagusta, Cyprus.

Court held that the trust is charitable.

Ratio Megarry VC:

‘.. Where the trust is to erect a building in a particular area, I think it is

legitimate, in construing the trust, to have some regard to the physical
conditions existing in the area. Quite apart from any question of the size
of the gift, I think that a trust to erect a hostel in a slum or in an area of
acute housing need may have to be construed differently from a trust to
erect a hostel in an area of housing affluency or plenty. Where there is a
grave housing shortage, it is plain that the poor are likely to suffer more
than the prosperous, and that the provision of a ‘working men’s hostel’ is
likely to help the poor and not the rich.’
INTERPRETING THE TERM ‘RELIEF OF POVERTY’
B) RELIEF OF POVERTY 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 benefit of the public

 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.
CASES:
1) Re Scarisbrick [1951]Ch 622
2) Re Sanders’ Will Trusts [1954]Ch 265
3) Dingle v Turner [1972] AC 601
4) Re Segelman [1996] Ch 171
 CASES (NOT SUBJECT TO PUBLIC BENEFIT)
Name of Case Re Scarisbrick [1951]Ch 622

The testatrix’s will provided that, the residue of her estate should be held
Facts
upon trust ‘for such relations of my said son and daughters as in the
opinion of the survivor of my said son and daughters shall be in needy
circumstances’.

Ratio Jenkins LJ:

This is a trust for the relief of poverty in the charitable sense amongst the
class of relations described, and, being a trust for the relief of poverty, is in
view of the exception above stated, not disqualified from ranking as a
legally charitable trust by the circumstances that its application is
confined to a class of relations [albeit a wide class]..

I think the true question in each case has really been whether the gift was
for the relief of poverty amongst a class of persons, or rather..a particular
description of poor, or was merely a gift to individuals..
 CASES (NOT SUBJECT TO PUBLIC BENEFIT)

Name of Case Re Sanders’ Will Trusts [1954]Ch 265

Facts A codicil to the will established funds ‘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 of 5 miles therefrom’.

Ratio
Harman J.

The phrase ‘working classes’ did not necessarily indicate poor people
and therefore this trust was not charitable.
 CASES (NOT SUBJECT TO PUBLIC BENEFIT)

Name of Case Dingle v Turner [1972] AC 601

Frank Dingle established a trust in his will in which pensions will be paid to
Facts the poor employees of E Dingle & Co Ltd, who were aged and
incapacitated. The Company had over 600 employees and a substantial
number of ex-employees.

Ratio The purpose will not be charitable if the intention is to make a gift to a
specified person, even if it is a gift to alleviate poverty. Here, the intention
of the gift was to benefit the poor generally who fell within a certain
description, rather than certain individuals. Since they were a ‘section of
the public’, the gift was charitable and did not fail.
 CASES (NOT SUBJECT TO PUBLIC BENEFIT)

Name of Case Re Segelman [1996] Ch 171

The will of Gerald Segelman set up a trust for 21 years, for poor and needy
Facts
members of his relations, naming 6 individuals and their issue. Not all the
members of the class were poor.

Ratio
The basis of disqualification as a charitable gift must be that the restricted
nature of the class leads to the conclusion that the gift is really a gift to
the individual members of the class.
 TO BE CONTINUED-
ADVANCEMENT OF EDUCATION