DINGLE
v.
TURNER and Others
Viscount Dilhorne
Lord MacDermott
Lord Hodson
Lord Simon of Glaisdale
Lord Cross of Chelsea
Viscount Dilhorne
MY LORDS,
I have had the advantage of reading the opinions of my noble and
learned friends. Lord Cross of Chelsea and Lord MacDermott. I agree with
Lord Cross that this appeal should be dismissed and with the reasons he
gives for that conclusion.
With Lord MacDermott. I too do not wish to extend my concurrence to
what my noble and learned friend Lord Cross has said with regard to the
fiscal privileges of a legal charity. Those privileges may be altered from time
to time by Parliament and I doubt whether their existence should be a
determining factor in deciding whether a gift or trust is charitable.
I agree that the costs of all the parties should be paid out of the fund.
Lord MacDermott
MY LORDS,
The conclusion I have reached on the facts of this case is that the gift
in question constitutes a public trust for the relief of poverty which is charit-
able in law. I would therefore dismiss the appeal.
I do not find it necessary to state my reasons for this conclusion in detail.
In the first place, the views which I expressed at some length in relation to an
educational trust in Oppenheim v. Tobacco Securities Trust Coy. Ltd. and
others, [1951] AC 297, seem to me to apply to this appeal and to mean
that it fails. It would, of course, be otherwise if the case just cited pur-
ported to rule the point now in issue. But that is not so, for it clearly left
that point undecided and open for further consideration.
And, secondly, I have had the advantage of reading the opinion prepared
by my noble and learned friend, Lord Cross of Chelsea, and find myself
in agreement with his conclusion for the reasons he has given. In particular,
I welcome his commentary on the difficulties of the phrase ” a section of the
” public “. But I would prefer not to extend my concurrence to what my
noble and learned friend goes on to say respecting the fiscal privileges
of a legal charity. This subject may be material on the question as to
whether what is alleged to be a charity is sufficiently altruistic in nature to
qualify as such, but beyond that, and without wishing to express any final
view on the matter, I doubt if these consequential privileges have much
relevance to the primary question whether a given trust or purpose should
be held charitable in law.
I agree with the order as to costs proposed by my noble and learned
friend.
Lord Hodson
MY LORDS,
I agree with my noble and learned friend, Lord Cross of Chelsea, that this
appeal should be dismissed and with his reasons for that conclusion. With
this reservation : that I share the doubts expressed by my noble and learned
friends, Lord MacDermott and Viscount Dilhorne, as to the relevance of
fiscal considerations in deciding whether a gift or trust is charitable.
2
Lord Simon of Glaisdale
my lords,
I have had the advantage of reading the opinion of my noble and learned
friend, Lord Cross of Chelsea, with which I agree.
I too would dismiss this appeal, and make the same recommendation as to
costs.
Lord Cross of Chelsea
MY LORDS,
By his will dated 10th January, 1950, Frank Hanscomb Dingle (whom I
will call the Testator) after appointing Lloyds Bank Ltd., his wife Annie
Dingle and his solicitor Henry Elliot Turner to be his executors and trustees
made the following—among other—dispositions. By clause 5 he gave to
his trustees his ordinary and preference shares in E. Dingle and Company
Ltd. upon trust to pay the income arising therefrom to his wife for her life
and after her death to hold the same in trust for such person or persons as
she should by will or codicil appoint but without any trust in default of
appointment. By clause 8 (a) he directed his trustees to pay the income of
his residuary estate after payment thereout of his debts funeral and testa-
mentary expenses to his wife for her life. By clause 8(b), (c), (d), (e) and
(f) he directed his trustees to raise various sums out of his residuary estate
after the death of his wife. Clause 8(e) was in the following terms:
” (e) To invest the sum of Ten thousand pounds in any of the invest-
” ments for the time being authorised by law for the investment of trust
” funds in the names of three persons (hereinafter referred to as ‘ the
” ‘ Pension Fund Trustees’) to be nominated for the purpose by the
” persons who at the time at which my Executors assent to this bequest
” are directors of E. Dingle & Company Limited and the Pension Fund
” Trustees shall hold the said sum and the investments for the time being
” representing the same (hereinafter referred to as ‘ the Pensions Fund ‘)
” UPON TRUST to apply the income thereof in paying pensions to poor
” employees of E. Dingle & Company Limited or of any other company
” to which upon any reconstruction or amalgamation the goodwill and
” assets of E. Dingle & Company Limited may be transferred who are
” of the age of sixty years at least or who being of the age of forty five
” years at least are incapacitated from earning their living by reason of
” some physical or mental infirmity PROVIDED ALWAYS that if at
” any time the Pension Fund Trustees shall for any reason be unable to
” apply the income of the Pensions Fund in paying such pensions to such
” employees as aforesaid the Pension Fund Trustees shall hold the pen-
” sions Fund and the income thereof UPON TRUST for the aged poor
” in the Parish of St. Andrew Plymouth.”
Finally by clause 8(g) the Testator directed his trustees to hold the ultimate
residue of his estate on the trusts set out in clause 8(e).
The Testator died on 10th January, 1950. His widow died on the 8th
October, 1966, having previously released her testamentary power of appoint-
ment over her husband’s shares in E. Dingle and Co. Ltd. which accordingly
fell into the residuary estate. When these proceedings started in October,
1970, the value of the fund held on the trusts declared by clause 8(e) was
about £320,000 producing a gross income of about £17.800 per annum.
E. Dingle and Company Ltd., was incorporated as a private company on
20th January, 1935. Its capital was owned by the Testator and one John
Russell Baker and it carried on the business of a departmental store. At the
time of the Testator’s death the Company employed over 600 persons and
there was a substantial number of ex-employees. On 23rd October. 1950,
the Company became a public company. Since the Testator’s death
its business has expanded and when these proceedings started it had 705 full
time and 189 part-time employees and was paying pensions to 89 ex-
employees.
3
The Trustees took out an Originating Summons in the Chancery Division
on the 30th July, 1970, asking the Court to determine whether the trusts
declared by clause 8(e) were valid and if so to determine various subsidiary
questions of construction—as, for example, whether part-time employees or
employees of subsidiary companies were eligible to receive benefits under
the trust. To this Summons they made defendants (1) representatives of the
various classes of employees or ex-exployees, (2) those who would be interested
on an intestacy if the trusts failed and (3) Her Majesty’s Attorney-General. It
has been common ground throughout that the trust at the end of clause 8(e)
for the aged poor in the Parish of St. Andrew Plymouth is dependant
on the preceding trust for poor employees of the Company so that although
it will catch any surplus income which the Trustees do not apply for the
benefit of poor employees it can have no application if the preceding trust
is itself void.
By his judgment given on 2nd April, 1971, Megarry J. held (inter alia),
following the decision of the Court of Appeal in Gibson v. South American
Stores (Gath & Chaves) Ltd. [1950] Ch. 177, that the trust declared by
clause 8(e) was a valid charitable trust but, on the application of the Appellant
Betty Mary Dingle, one of the persons interested under an intestacy, he
granted a certificate under section 12 of the Administration of Justice Act,
1969, enabling her to apply to this House directly for leave to appeal against
that part of his judgment and on 17th May, 1971, the House gave her leave
to appeal.
Your Lordships, therefore, are now called upon to give to the old ” poor
” relations” cases and the more modern ” poor employees” cases that
careful consideration which, in his speech in the Oppenheim case ([1951]
A.C. 297 at 313), Lord Morton of Henry ton said that they might one day
require.
The contentions of the Appellant and the Respondents may be stated
broadly as follows. The Appellant says that in the Oppenheim case this
House decided that in principle a trust ought not to be regarded as charitable
if the benefits under it are confined either to the descendants of a named
individual or individuals or the employees of a given individual or company
and that though the ” poor relations ” cases may have to be left standing as
an anomalous exception to the general rule because their validity has been
recognised for so long the exception ought not to be extended to ” poor
” employees ” trusts which had not been recognised for long before their status
as charitable trusts began to be called in question. The Respondents, on
the other hand, say, first, that the rule laid down in the Oppenheim case
with regard to educational trusts ought not to be regarded as a rule applicable
in principle to all kinds of charitable trust, and, secondly, that in any case it
is impossible to draw any logical distinction between ” poor relations ” trusts
and ” poor employees ” trusts, and, that as the former cannot be held
invalid to-day after having been recognised as valid for so long, the latter
must be regarded as valid also.
By a curious coincidence within a few months of the decision of this
House in the Oppenheim case the cases on gifts to ” poor relations ” had
to be considered by the Court of Appeal in Re Scarisbrick [1951] Ch. 622.
Most of the cases on this subject were decided in the 18th or early 19th
centuries and are very inadequately reported, but two things at least were
clear. First, that it never occurred to the judges who decided them that in
the field of ” poverty ” a trust could not be a charitable trust if the class of
beneficiaries was defined by reference to descent from a common ancestor.
Secondly, that the Courts did not treat a gift or trust as necessarily charitable
because the objects of it had to be poor in order to qualify, for in some of
the cases the trust was treated as a private trust and not a charity. The
problem in Re Scarisbrick was to determined on what basis the distinction
was drawn. Roxburgh J.,—founding himself on some words attributed to
Sir William Grant M.R. in Attorney-General v. Price (1810) 17 Ves. 371-
had held that the distinction lay in whether the gift took the form of a trust
under which capital was retained and the income only applied for the benefit
of the objects, in which case the gift was charitable, or whether the gift was
4
one under which the capital was immediately distributable among the objects.
in which case the gift was not a charity. The Court of Appeal rejected this
ground of distinction. They held that in this field the distinction between a
public or charitable trust and a private trust depended on whether as a
matter of construction the gift was for the relief of poverty amongst a
particular description of poor people or was merely a gift to particular poor
persons, the relief of poverty among them being the motive of the gift. The
fact that the gift took the form of a perpetual trust would no doubt indicate
that the intention of the donor could not have been to confer private benefits.
on particular people whose possible necessities he had in mind ; but the
fact that the capital of the gift was to be distributed at once did not
necessarily show that the gift was a private trust. The Appellant in the
instant case, while of course submitting that the judges who decided the old
cases were wrong in not appreciating that no gift for the relief of poverty
among persons tracing descent from a common ancestor could ever have a
sufficiently ” public ” quality to constitute a charity, did not dispute the
correctness of the analysis of those cases made by the Court of Appeal in
Re Scarisbrick.
Later in the 19th century came the Friendly Society cases—Spiller v.
Maude decided in 1881 but reported in a note in 32 Ch.D. at pages 158-160;
Pease v. Pattison 32 Ch.D. 154 and Re Buck [1896] 2 Ch. 727. In all these
cases the Court had to consider whether funds held on trust for the relief of
poverty among members of a voluntary association were held on charitable
trusts—such funds being derived in each case in part from subscriptions made
by the members and in part from donations or bequests by well-wishers. In
each case the Court held that the funds were held on a charitable trust but
it does not appear to have been argued in any of them that the fact that the
benefits were confined to persons who were linked by the common tie of
membership of an association prevented the trusts from being charitable. The
arguments against ” charity ” were either that the association in question was
really no more than a private mutual insurance society or that at all events
on a winding up so much of the funds as were derived from donations or
bequests should be returned to the donors or the estates of the testators and
not applied ” cy pres “.
The first of the ” poor employees ” cases was Re Gosling (1900) 48 W.R.
300. There the testator sought to establish a fund for ” pensioning off ” the
old and worn out clerks of a banking firm of which he had been a member.
It was argued by those interested in contending that the gift was not charitable,
that there was no public element in it, and that a distinction should be drawn
between the relief of poverty among employees of a firm and the relief
of poverty among inhabitants of a geographical area. In rejecting that
argument Byrne J. said (inter alia) that it was inconsistent with Attorney-
General v. The Duke of Northumberland 7 Ch. D. 745. which was one of
the ” poor relations ” cases. His judgment continued as follows: ” The fact
” that the section of the public is limited to persons born or residing in a
” particular parish, district, or county, or belonging to or connected with any
” special sect, denomination, guild, institution, firm, name, or family, does
” not of itself render that which would be otherwise charitable void for lack
” of a sufficient or satisfactory description or take it out of the category
” of charitable gifts. I therefore hold it to be a good charitable gift”. It is
to be observed that he does not confine what he says there to trusts for the
relief of poverty as opposed to other forms of charitable trust.
In Re Drummond [1914] 2 Ch. 90 the testator bequeathed some shares in
a company of which he had been a director to trustees upon trust to pay the
income to the directors of the company ” for the purposes of contribution to
” the holiday expenses of the workpeople employed in the spinning depart-
” ment of the said company in such manner as a majority of the directors
” should in their absolute discretion think fit”. There were some 500
employees in the department. It was first submitted that this was a trust
for the relief of poverty. Eve J. rejected that submission but. in doing so,
he did not suggest that if he could have held that the workpeople in question
were ” poor persons ” within the meaning of the Statute of Elizabeth the
gift would nevertheless have failed on the ground that it was confined to
5
employees of a particular company. Next it was submitted that the gift fell
under the last of the four heads of charity set out by Lord Macnaghten in
Pemsel’s case. It was a trust to secure a holiday for a substantial number
of the inhabitants of Ilkley who though not poor might in many cases not
otherwise be able to get a holiday. Such a trust—it was said—promoted
the general well being of the community; and the beneficiaries could well be
considered as constituting a ” section of the community ” for the purpose of
the law of charity. Eve J.—with some regret—rejected that contention
saying: “This is not a trust for general public purposes; it is a trust for
” private individuals, a fluctuating body of private individuals it is true, but
” still private individuals “. So Eve J., while not disagreeing with the decision
in Re Gosling, plainly thought that the words of Byrne J. which I have
quoted though true of poverty cases were not of general application in the
law of charity.
Next comes Re Laidlaw a decision of the Court of Appeal given in 1935
but not then reported and only brought to light in 1949. There the testator
had bequeathed a legacy of £2,000 upon certain trusts for the relief of poor
members or former members of the staff of Whiteway Laidlaw and Co. Ltd.
The judge of first instance having held that the gift failed as not being
charitable the Court of Appeal reversed his decision and declared that it was a
valid charitable legacy. Unfortunately neither the reasons given by the judge
for holding that the gift failed nor those given by the Court of Appeal for
holding that it was charitable have been recorded ; but the decision of the
Court of Appeal was plainly in line with Re Gosling.
In Re Compton [1945] Ch. 123 the Court of Appeal had to decide whether
a trust for the education of the descendants of three named persons was a
charitable trust. In a reserved judgment in which Finlay and Morton L.JJ.
concurred Lord Greene MR. began by stating that no trust could be
charitable unless it is directed to the benefit of the community or a section
of the community as opposed to the benefit of private individuals or a
fluctuating class of private individuals. He went on to say that in his
opinion no trust under the terms of which a claimant in order to establish his
title as a potential beneficiary has to show that he is related to some individual
or that he is or was employed by some person or company can ever be a
charitable trust since in such cases a personal relationship to individuals or
an individual which is in its essence non-public enters into the qualification.
In this connection he expressly approved the decision of Eve J. in Re
Drummond that in the law of charity a class of employees—unlike the
inhabitants of a geographical area—must be regarded as a fluctuating class
of private individuals and not a section of the public. Next Lord Greene
said that even if his view that the necessity of founding a claim upon the
fact of kinship to an individual precluded the possibility of regarding a gift
as charitable was too widely stated yet the sort of educational trust which
this testator had created must be regarded as a private family trust and not
as one for the benefit of a section of the community on any fair view of
what that phrase might mean. Finally he said of the ” poor relations ” cases
that the decisions were given at a time when the public character of charitable
gifts had not yet been clearly laid down, that if the validity of such gifts
had first come before the Courts in modern days they would very likely have
been held to be invalid and that though as they had been accepted as valid
for so long it was not possible now to overrule them, they should be regarded
as anomalous and not be extended by analogy to cover such a trust as that
with which the Court was concerned.
Next year in the Hobourn Aero Components Ltd. case [1946] Ch. 194
the Court of Appeal consisting of Greene M.R. and Morton and Somervell
L.JJ., had to consider the character of a fund built up by agreed deductions
from the wages of the employees of a company with factories at Coventry,
Market Harborough and Kettering: the purpose of the fund being at the
relevant time to relieve employees who had suffered damage and distress
from air raids. It could not be suggested that the purpose of the trust was
the relief of poverty but the Attorney-General argued that it was a charitable
trust falling within Lord Macnaghten’s fourth category. In rejecting that
submission Lord Greene relied largely on the fact that the fund was a mutual
6
insurance fund. In that connection he pointed out that the decisions in the
Friendly Society cases to which I have already referred could only be
justified—if at all—because ” poverty ” was a necessary qualification for the
receipt of benefits. But both Lord Greene and Morton L.J. were also clearly
of opinion that even if this fund had been provided by the employers or an
outside donor it would not have been held on charitable trusts since, as Eve J.
had held in Re Drummond and they had held in Re Compton, the employees
of a company were not a section of the public for the purpose of the law
of charity.
The facts in Gibson v. South American Stores (supra)—the case followed
by Megarry J. in this case—were that a company had vested in trustees a
fund derived solely from its profits to be applied at the discretion of the
directors in granting gratuities, pensions or allowances to persons “who
” are or shall be necessitous and deserving and who for the time being are
” or have been in the Company’s employ …. and the wives, widows,
” husbands, widowers, children, parents and other dependants of any person
” who for the time being is or would if living have been himself or herself
” a member of the class of beneficiaries “. The Court of Appeal held that
this trust was a valid charitable trust but it did so without expressing a view
of its own on the question of principle involved, because the case of Re
Laidlaw which was unearthed in the course of the hearing showed that the
Court of Appeal had already accepted the decision in Re Gosling as correct.
In Oppenheim v. Tobacco Securities Trust Coy. Ltd. and Others [1951]
A.C. 297 this House had to consider the principle laid down by the Court
of Appeal in Re Compton. There the trustees of a fund worth over £125,000
were directed to apply its income and also if they thought fit all or any part
of the capital ” in providing for or assisting in providing for the education
” of children of employees or former employees of British American Tobacco
” Coy. Ltd or any of its subsidiary or allied Companies “.
over 110,000 such employees. The majority of your Lordships—namely
Lord Simonds (in whose judgment Lord Oaksey concurred). Lord Normand
and Lord Morton of Henryton—in holding that the trust was not a valid
charitable trust gave unqualified approval to the Compton principle. They
held, that is to say, that although the ” poverty ” cases might afford an
anomalous exception to the rule, it was otherwise a general rule applicable
to all charitable trusts that no class of beneficiaries can constitute a ” section
” of the public ” for the purpose of the law of charity if the distinguishing
quality which links them together is relationship to a particular individual
either through common descent or common employment. My noble and
learned friend. Lord MacDermott, on the other hand, in his dissenting speech,
while not challenging the correctness of the decisions in Re Compton or in
the Hobourn Aero case said that he could not regard the principle stated by
Lord Greene as a criterion of general applicability and conclusiveness. ” I
” see much difficulty ” he said ” in dividing the qualities or attributes, which
” may serve to bind human beings into classes, into two mutually exclusive
” groups, the one involving individual status and purely personal, the other
” disregarding such status and quite impersonal. As a task this seems to
” me no less baffling and elusive than the problem to which it is directed.
” namely, the determination of what is and what is not a section of the
” public for the purposes of this branch of the law.” He thought that the
question whether any given trust was a public or a private trust was a
question of degree to be decided in the light of the facts of the particular case
and that viewed in that light the trust in the Oppenheim case was a valid
charitable trust.
In Re Cox [1955] AC 627 a Canadian testator directed his trustees to hold
the balance of his residuary estate upon trust to pay its income in perpetuity
for charitable purposes only, the persons to benefit directly in pursuance of
such charitable purposes being such as were or had been employees of a
certain company and/or the dependants of such employees. This disposition
raised, of course, a question of construction—namely whether “charitable
” purposes” was simply a compendious mode of referring to any purposes
a trust to promote which would be charitable providing that the beneficiaries
7
were the public or a section of the public or whether the words meant such
purposes only as having regard to the class of beneficiaries named could be
the subject of a valid charitable trust. It was only on the latter construction
that the question whether Gibson v. South American Stores (supra) was
rightly decided would arise and in fact both the Courts below and the Privy
Council held that the former construction was the right one. It is, however,
to be observed that the Court of Appeal in Ontario unanimously held that
even if the second construction was right the trust would still fail for want
of any possible purposes since the ” poor relations ” cases formed a class
apart and the ” poor employees ” cases could not stand with the decision in
the Oppenheim case. The Privy Council expressly refrained from expressing
any opinion on this point.
In Re Young [1955] 3 All.E.R. 689 Danckwerts J. held that a gift by a
testator of his residuary estate to the trustees of the benevolent fund of the
Savage Club to be used by them as they should think fit for the assistance
of any of his fellow members as might fall on evil days created a valid
charitable trust. In so deciding he referred to Gibson’s case and said that
he could see no distinction in principle between the employees of a limited
company and the members of a club.
Finally, we were referred to the Privy Council case of Davies v. Perpetual
Trustee Company Ltd. and Others [1959] AC 439. There a testator who
died on 21st January, 1897, after giving successive life interests in certain
property in Sydney to several life tenants, the last of whom died in 1957, gave
the property ” to the Presbyterians the descendants of those settled in the
” Colony hailing from or born in the North of Ireland to be held in trust
” for the purpose of establishing a college for the education and tuition of their
” youth in the standards of the Westminster Divines as taught in the Holy
” Scriptures”. On an originating summons issued in 1918 by the then sole
trustee for the determination of certain questions it was held (inter alia) by
the trial judge and on appeal by the Supreme Court of New South Wales that
this devise created a valid charitable trust; but after the death of the last
life tenant special leave was given to a representative of the next of kin to
appeal to the Privy Council which held the trust to be invalid. The Board
held as a matter of construction that a child would only be eligible to be
educated at the college if (i) he was descended from a Presbyterian living
on 21st January, 1897; (ii) that Presbyterian was himself descended from a
Presbyterian who had settled in the Colony and (iii) that settler either hailed
from or was born in Northern Ireland. After quoting passages from the
judgments of Lord Simonds and Lord Normand in the Oppenheim case
the Board held that this class of beneficiaries the nexus between whom was
simply their personal relationship to several propositi was not a section of
the public but merely a fluctuating class of private individuals and that
though the purposes of the trust-—being for the advancement of religion and
education—were prima facie charitable the trust did not possess the necessary
public quality and was invalid.
After this long—but I hope not unduly long-recital of the decided cases 1
turn to consider the arguments advanced by the Appellant in support of the
appeal. For this purpose I will assume that the Appellant is right in saying
that the Compton rule ought in principle to apply to all charitable trusts and
that the ” poor relations ” cases, the ” poor members ” cases and the ” poor
employees ” cases are all anomalous—in the sense that if such cases had
come before the Courts for the first time after the decision in Re Compton
the trusts in question would have been held invalid as ” private ” trusts.
Even on that assumption—as it seems to me—the appeal must fail. The
status of some of the ” poor relations ” trusts as valid charitable trusts was
recognised more than 200 years ago and a few of those then recognised are
still being administered as charities to-day. In Re Compton Lord Greene
said that it was ” quite impossible ” for the Court of Appeal to overrule
such old decisions and in the Oppenheim case Lord Simonds in speaking of
them remarked on the unwisdom of ” casting doubt on decisions of
” respectable antiquity in order to introduce a greater harmony with the law
” of charity as a whole “. Indeed counsel for the Appellant hardly ventured
8
to suggest that we should overrule the “poor relations” cases. His
submission was that which was accepted by the Court of Appeal in Ontario
in Re Cox—namely that while the ” poor relations ” cases might have to be
left as long standing anomalies there was no good reason for sparing the
” poor employees ” cases which only date from Re Gosling decided in 1900
and which have been under suspecion ever since the decision in Re Compton
in 1945. But the ” poor members ” and the ” poor employees ” decisions
were a natural development of the ” poor relations ” decisions and to draw
a distinction between different sorts of “poverty” trusts would be quite
illogical and could certainly not be said to be introducing ” greater harmony ”
into the law of charity. Moreover, though not as old as the ” poor relations ”
trusts ” poor employees ” trusts have been recognised as charities for many
years ; there are now a large number of such trusts in existence ; and assum-
ing, as one must, that they are properly administered in the sense that benefits
under them are only given to people who can fairly be said to be, according
to current standards, ” poor persons ” to treat such trusts as charities is not
open to any practical objection. So as it seems to me it must be accepted
that wherever else it may hold sway the ” Compton rule ” has no application
in the field of trusts for the relief of poverty and that there the dividing line
between a charitable trust and a private trust lies where the Court of Appeal
drew it in Re Scarisbrick.
The Oppenheim case was a case of an educational trust and though the
majority evidently agreed with the view expressed by the Court of Appeal
in the Hobourn Aero case that the Compton rule was of universal application
outside the field of poverty it would no doubt be open to this House without
overruling Oppenheim to hold that the scope of the rule was more limited.
If ever I should be called upon to pronounce on this question—which does
not arise in this appeal—I would as at present advised be inclined to draw
a distinction between the practical merits of the Compton rule and the
reasoning by which Lord Greene sought to justify it. That reasoning-
based on the distinction between personal and impersonal relationships—
has never seemed to me very satisfactory and I have always—if I may say
so—felt the force of the criticism to which my noble and learned friend Lord
MacDermott subjected it in his dissenting speech in the Oppenheim case.
For my part I would prefer to approach the problem on far broader lines
The phrase a ” section of the public ” is in truth a vague phrase which may
mean different things to different people. In the law of charity judges have
sought to elucidate its meaning by contrasting it with another phrase ” a
” fluctuating body of private individuals “. But I get little help from the
supposed contrast for as I see it one and the same aggregate of persons may
well be describable both as a section of the public and as a fluctuating
body of private individuals. The ratepayers in the Royal Borough of
Kensington and Chelsea, for example, certainly constitute a section of the
public; but would it be a misuse of language to describe them as a
” fluctuating body of private individuals “? After all, every part of the
public is composed of individuals and being susceptible of increase or
decrease is fluctuating. So at the end of the day one is left where one
started with the bare contrast between ” public ” and ” private “. No doubt
some classes are more naturally describable as sections of the public than as
private classes while other classes are more naturally describable as private
classes than as sections of the public. The blind, for example, can naturally
be described as a section of the public; but what they have in common—
their blindness—does not join them together in such a way that they could
be called a private class. On the other hand, the descendants of Mr.
Gladstone might more reasonably be described as a ” private class” than as
a section of the public, and in the field of common employment the same
might well be said of the employees in some fairly small firm. But if one
turns to large companies employing many thousands of men and women
most of whom are quite unknown to one another and to the directors the
answer is by no means so clear. One might say that in such a case the
distinction between a section of the public and a private class is not
applicable at all or even that the employees in such concerns as I.C.I, or
G.E.C. as just as much ” sections of the public ” as the residents in some
9
geographical area. In truth the question whether or not the potential bene-
ficiaries of a trust can fairly be said to constitute a section of the public is
a question of degree and cannot be by itself decisive of the question whether
the trust is a charity. Much must depend on the purpose of the trust. It
may well be that, on the one hand, a trust to promote some purpose, prima
facie charitable, will constitute a charity even though the class of potential
beneficiaries might fairly be called a private class and that, on the other hand,
a trust to promote another purpose, also prima facie charitable, will not
constitute a charity even though the class of potential beneficiaries might
seem to some people fairly describable as a section of the public. In answer-
ing the question whether any given trust is a charitable trust the Courts—as
I see it—cannot avoid having regard to the fiscal privileges accorded to
charities. As counsel for the Attorney-General remarked in the course of
the argument the law of charity is bedevilled by the fact that charitable
trusts enjoy two quite different sorts of privilege. On the one hand, they
enjoy immunity from the rules against perpetuity and uncertainty and though
individual potential beneficiaries cannot sue to enforce them the public interest
arising under them is protected by the Attorney-General. If this was all
there would be no reason for the Courts not to look favourably on the claim
of any ” purpose ” trust to be considered as a charity if it seemed calculated
to confer some real benefit on those intended to benefit by it whoever they
might be and if it would fail if not held to be a charity. But that is not all.
Charities automatically enjoy fiscal privileges which with the increased burden
of taxation have become more and more important and in deciding that such
and such a trust is a charitable trust the Court is endowing it with a
substantial annual subsidy at the expense of the taxpayer. Indeed, claims of
trusts to rank as charities are just as often challenged by the Revenue as by
those who would take the fund if the trust was invalid. It is, of course,
unfortunate that the recognition of any trust as a valid charitable trust
should automatically attract fiscal privileges, for the question whether a trust
to further some purpose is so little likely to benefit the public that it ought
to be declared invalid and the question whether it is likely to confer such
great benefits on the public that it should enjoy fiscal immunity are really
two quite different questions. The logical solution would be to separate
them and to say—as the Radcliffe Commission proposed—that only some
charities should enjoy fiscal privileges. But as things are, validity and fiscal
immunity march hand in hand and the decisions in the Compton and
Oppenheim cases were pretty obviously influenced by the consideration that
if such trusts as were there in question were held valid they would enjoy
an undeserved fiscal immunity. To establish a trust for the education of
the children of employees in a company in which you are interested is no
doubt a meritorious act; but however numerous the employees may be the
purpose which you are seeking to achieve is not a public purpose. It is a
company purpose and there is no reason why your fellow taxpayers should
contribute to a scheme which by providing ” fringe benefits” for your
employees will benefit the company by making their conditions of employ-
ment more attractive. The temptation to enlist the assistance of the law
of charity in private endeavours of this sort is considerable—witness the
recent case of the Metal Box scholarships—1.R.C. v. Educational Grants
Association Ltd. [1967] Ch. 993—and the Courts must do what they can to
discourage such attempts. In the field of poverty the danger is not so great
as in the field of education—for while people are keenly alive to the need
to give their children a good education and to the expense of doing so, they
are generally optimistic enough not to entertain serious fears of falling on
evil days much before they fall on them. Consequently the existence of
company ” Benevolent funds “, the income of which is free of tax does not
constitute a very attractive ” fringe benefit “. This is a practical justification
—though not. of course, the historical explanation—for the special treatment
accorded to poverty trusts in charity law. For the same sort of reason a trust
to promote some religion among the employees of a company might perhaps
safely be held to be charitable provided that it was clear that the benefits were
to be purely spiritual. On the other hand, many ” purpose ” trusts falling
under Lord Macnaghten’s fourth head if confined to a class of employees
10
would clearly be open to the same sort of objection as educational trusts.
As I see it, it is on these broad lines rather than for the reasons actually
given by Lord Greene that the Compton rule can best be justified.
My Lords, for the reasons given earlier in this speech I would dismiss this
appeal; but as the view was expressed in the Oppenheim case that the
question of the validity of trusts for poor relations and poor employees ought
some day to be considered by this House and as the fund in dispute in this
case is substantial, your Lordships may perhaps think it proper to direct
that the cost of all parties to the appeal be paid out of it.
Source: https://www.bailii.org/
