Charitable And Purpose Trusts

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Problems with Purpose Trusts

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1 Lack of human beneficiaries (ie lack of enforcement);

2 Lack of certainties;

3 Indefinitely tying up land.

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Non-charitable purpose trusts

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generally invalid because of the lack of human beneficiaries to ensure performance

Re Astor's Settlement Trusts [1952] Ch 534, trustee only subj ‘to an equitable obligation unless there wassomebody who could enforce a correlative equitable right.’

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Re Kelly [1932] IR 255

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Ire puts a 21 yr limit on validity of trust for the welfare of the animals

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ReLipinski's Will Trusts[1976] Ch 235

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Purpose trust was for a good cause but not a charitable one.

Court allowed the money to kept as an absolute gift

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Hayton (2001) 117 LQR 96

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suggests that an enforcer be appt under the terms of the trust in order to oversee enforcement. Brown agrees with this in his article.

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Pawlowksi and Summers [2007] Conv 440

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Hope for legislation to allow for a consistent application of the law.

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Advantages of Charitable trusts

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1 do not need human beneficiaries (AG used to enforce but now the Charities Reg)

2 do not require same certainty of objects

3 may be perpetual ie inalienability does not apply to them but initial vesting must take place within relevant perpetuity period (pp) - but gift from one charity to anor not subj to pp see Christ's Hospital v Grainger 1848

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Definition of Charity

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Before Charity Act 2009 relied on Commissioners for Special Purposes of Income Taxv Pemsel [1891] AC 531 which gave 4 categories

1 relief of poverty (or economic hardship)

2 advancement of ed

3 advancement of RE

4 (any) other purposes beneficial to community

These categories were incorp into s 3 of Act additions are in brackets.

s 3(11) lists purposes for no 4

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What 2 hurdles must all Charitable Trusts overcome?

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Public Benefit Test:

1 element of benefit (eg poverty)

2 element of public benefit

s 3(2) of Charities Act ctns this

s 3(3) has to benefit the public or a section of the public

s 3(7) provides that will take account of limitations placed by the donor on the class of persons who may benefit and if it is justified and reasonable with regard to nature and purpose of the gift and charges for services provided to further the purpose.

s 3(8) will fail public benefit test if all in the class of persons to benefit have a personal connection with the donor.

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Re Coulthurst [1951] Ch 661

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Poor can have broad meaning can be those who have to go short. Trust was for poor employees of a bank and was upheld

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Re Segelman deceased [1996] Ch 171

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poverty can mean those who 'need a helping hand from time to time'

Histed 1996 Conv 379 commented that the court came perilously close to implying that occasional expenditure problems = poverty

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Re Scarisbrick [1951] Ch 622

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Poor relations type trust. Insinuated that if no-one else did it the govern would have to look after them.

'reliefof poverty is of soaltruistic a character that the public element may necessarily be inferred'

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Re Segelman deceased [1996] Ch 171

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Pushes the boundaries. Trust saved because extended to persons who were not born yet and therefore didn't have to close 21 yrs after death

Histed thinks that trust saved because testator didn't know who all the beneficiaries were

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Dingle v Turner [1972] AC 601

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Benefit employees of a firm that were 65yrs old or disabled45yrs + allowed. Remarkable lack of challenge.

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Attorney General v Charity Commission for England and Wales [2012] UKUT 420 (TCC)

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CCEW is on collision with judiciary. It is trying to clampdown on who claims charitable status.

Tribunal said that there could be a trust for poverty even if confined to class def by personal r/ship or contract of employment and added that 'logic and coherence must prevail'

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Ire and Poverty

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These decisions must be read in light of s 3(7), (8) --> more rigorously app public benefit test

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Trusts for advancement of Ed

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Earlier cases like Re Shaw v res but now have v broad scope.

S 3(1)(b) Charities Act 2009, s 3(11)(k) recog arts, culture, heritage or sciences.

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Re Shaw [1957] 1WLR 729

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V narrow interp of Ed.

Direction in will by George Bernard Shaw to conduct research into alphabet. Considered research but not ed

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Re Worth Library [1995] 2 IR 301

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Collection of v valuable books left to hosp. Kept in part room and use by part people. HSE bought over hosp. TCD got in interim, wanted to keep. HSE wanted to leave them in room. Because of value HC had to rule.

Keane J needed to be satisfied that orig was charitable (q abt ltd people who could use). Held ed had broader meaning than just schools incld museums

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Oppenheim vTobaccoSecurities Trust Co. Ltd[1951] AC 297

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110k employees and their children = a lot of people whocould potentially benefit. Fail on charitable status

Maj held beneficiaries if 1 must not be numerically negligible and 2 the disting factor bet them and others must not depend on their r/ship to a part individ.

Lord Macdermott dissents stating: 'the Compton test may often prove of value and lend to a correct determination.' BUT 'find myself unable to regard it as a criterion of general applicability and conclusiveness'

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R (Independent Schools Council) vCharity Commission [2012] Ch 214

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Charitycommission was really trying to weed out all the schools that took a charitablestatus. Private school in this case claiming charitable status.

concernis that they must be seen to be doing enough for those who cannot afford fees

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O’Connell v AG [1941] IR 323

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intention of the testator was to benefit specificindividuals

Trust failed

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Re Worth Library [1995] 2 IR 301

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Only 3 people allowed to use but hosp benefited from this but could arg that those persons would greatly benefit the hosp in general as a result of the books?

cannot benefit a numerically negligible section of society

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Observations from Keane 'Equity and the Law of Trusts in the Republic of Ireland'

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Notes that it is more difficult now for fee paying schools to qualify for charitable status in part because of s 3(7)(b)

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s 3(4) of Charities Act 2009

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presumes that advancement of religion has public benefit but this is no longer conclusive

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Giftsto Ecclesiastical Office Holders

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gift to the role OK

gift to person not OK

see Gibson vRepresentative Church Body(1881) 9 LR Ir 1

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Gifts for the Celebration of Masses, praying and tombstones

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O'Hanlonv Logue [1906] 1 IR 247 - whether in pub or private = charitable

Re Hetherington [1990] Ch 1 - only public masses = charitable

Praying is a public benefit Maguire v AG in Ire. In eng not Gilmour v Coates.

Erection/maintenance of building, churchyard, cemetery Re Vaughan

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Breen 'Neighbouringperspectives: legal and practical implications of charity regulatory reform inIreland and Northern Ireland' (2008) 59 NILQ 223

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Both Eng and Ire (have taken positive steps to prevent fraud but suggests that mutual recog of reg charities would lessen the burden of those charities that operate in multiple jurs

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Delany ‘The law relatingto charitable trusts: Judicial guidance and statutory intervention’ (2011)33 DULJ 196

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Likes that MacNaughten's 4 categories are kept but thinks amateur sport should have been incld in other purposes as should HR and social justice

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Jaconelli ‘Adjudicating onCharitable Status - a reconsideration of the elements’ [2013] Conv 96

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'only area of law the fundamental purpose of which is the enhancement of what is beneficial in society rather than the elimination of that which is harmful. '