Guernsey: What is a Charitable Trust ? (Continued)

Last Updated: 19 March 2003
Article by Norson B Harris

In the first part of this discussion,1 I explored the first two of the four areas under the preamble to the Statute of Elizabeth where a trust will be held to have charitable objects. In this continuation of that discussion we will look at the remaining two areas; Trusts for the advancement of Religion and Trusts for other purposes beneficial to the community.

It is probably not surprising when looking at the multi-ethnic world we live in that under common law there is no actual definition of what "religion" is when considering this aspect of charitable law. It is such therefore, that any gifts to an organisation, or indeed to individuals, who have a belief in God, provided that the gift does not offend the public benefit requirement, discussed in the previous article, should be held to be charitable. This would of course not be too radical a step when considering the historical starting point of this area of law and of the early charitable trusts and the medieval ecclesiastical courts, but whose God? There are many examples where gifts to Christian denominations have received charitable status, for example, gifts to the Roman Catholic Church,2 The Society of Friends (Quakers),3 Baptists 4 and the Salvation Army 5 . Does this however mean that other religions, for example, Judaism, Islam and Buddhism are not able to receive such gifts? The Courts have of course readily accepted for many years that "religion" is to include faiths other than Christianity. For those minded to, reference may be made to the dicta of Lord Parker of Waddington in Bowman v Secular Society Ltd,6 in which he discusses this question. Similarly the distinction between ethics and religion was explored in Re South Place Ethical Society 7 where Dillon J gave further insight as to how the Courts look upon the nature of "religion":

"Religion, as I see it is concerned with a man’s relations with god, and ethics are concerned with man’s relations with man."

What is of significance is that in the preamble to the Statute of Elizabeth, it is a requirement that for the gift to be determined charitable it must be for the "advancement of religion". Accordingly any such gift must advance some religious doctrine, whether that be directly or indirectly. We can see an exploration of this aspect in the workings of Freemasonry. In United Grand Lodge of Ancient Free and AcceptedMasons v Holborn Borough Council, a case considered in 1957, Freemasonry was held to be non-charitable as it did not advance religion but merely required its members to believe in a Supreme Creator and lead a good moral life. In reaching his decision in this case Donovan J elaborated as to what "advancement" meant:

"To advance religion means to promote it, to spread its message even wider among mankind; to take some positive steps to sustain and increase religious belief; and these things are done in a variety of ways which are described as pastoral or missionary."

It is also well established that gifts to Missions or for the aid and support of the clergy are charitable as this allows them to advance religion. It is important when considering this last aspect, that any gifts to a particular member of the clergy are to his office and not to him personally as this would not be held to be charitable. This can be seen in two contrasting cases. In Farley v National Westminster Bank 8 the gift in equal shares to the vicar and churchwardens "for parish work" was held to be non-charitable. It was held that there are many tasks which are "parish works" which are clearly not charitable and accordingly the gift could be construed as merely offering assistance. This is contrasted in the later case Re Simson 9

where a gift "to the vicar of St Luke’s Church…..for his work in the parish" was held to be charitable. It may seem to many that there is little difference between these two and I must confess, that the interpretation in Farley seems very literal and certainly strict in its definition.

In now turning our attention to the last remaining heading, under the preamble to the Statute of Elizabeth, we must consider what is beneficial to the community. This is a very wide doctrine and one that has exercised the courts on many occasions, accordingly there seems little merit in merely reciting a series of cases for consideration. I believe it is probably of more interest to explore the wider picture, punctuated, with the occasional reference, to avoid tedium. This aspect of charitable law, as one would imagine, has changed overtime with social conditions and movements in social mores. It would be inconceivable to our earlier forebears that social housing would be common or that the humane treatment of animals should be advanced, in some circumstances, ahead of similar conduct to our fellow man. It is this area that social historians find great interest and indeed this is the case for legal scholars.

In exploring, what is beneficial to the community, as a test to determine whether some act or gift is charitable, it is essential to appreciate that the courts have held that not all trusts that benefit the community are charitable. There has been a consensus followed by the courts since the early 1970s that trusts will be held to be charitable, unless there is some reason to exclude it 10 . This seems to be a far more sensible approach to a prescriptive list of benefits as the court would necessarily seem to be involved in a routine of challenges to expand such a list. It is inevitably Revenue Authorities or disinherited heirs and relatives who seek to challenge a charitable gift and accordingly, it is to them that the onus now rests as to showing that a gift is charitable or otherwise. This position had been earlier examined and accepted at the turn of the 19 th Century, a period of considerable social benefit and charitable works 11 .

There have been several "classes" of trusts for other purposes beneficial to the community and these can almost be looked at as separate categories, albeit that they all fall under the same heading of the Statute.

In looking at these, we can see the general overriding principal that there must be some benefit to the community and how the courts construct their argument. This is particularly so when we look at the trusts for animals.

Whilst clearly there is a benefit to the animal if a trust is created in its interest, this in itself is not sufficient for the trust to be held charitable. The decisions approving such gifts, particularly in the Victorian era, were considered upon the morality of man. It follows that in improving the existence of animals this is a benefit to the morality of mankind, as cruelty to animals was degrading to the spirit of man. In Re Wedgwood 12 where the testatrix left her residuary estate to her brother upon secret trusts to apply it for the protection and benefit of animals this was held to be charitable. The testatrix had been concerned to find a more humane way of slaughtering animals. The case progressed to the Court of Appeal in London in 1915 and the then Master of the Rolls, Cozens-Hardy MR, in confirming that the trust was charitable held:

"…it tends to promote public morality checking the innate tendency to cruelty, ameliorating the condition of brute creation and stimulating humane sentiments in men towards the lower animals, thereby elevating the human race."

The benefit to human kind, it seems to the author, is essential in determining these gifts as charitable. This proposition is supported in another case that appeared before the Court of Appeal.13 In this case the testatrix left her residuary estate on trust to purchase parcels of land, "for the purpose of providing a refuge or refuges for the preservation of all animals, birds or other creatures not humans…. so that all such animals, birds or other creatures not human shall be safe from molestation or destruction by man." The Court of Appeal found that if the objects of the trust were carried out to the letter, no animal could be destroyed by man, no matter how necessary that destruction may be or indeed, even if it benefited the remaining animals, or to mankind itself. It was held therefore, that this could not be a benefit to the community and the trust failed.

This case lends itself to the consideration of a matter that appeared before the House of Lords where the Inland Revenue challenged the status of a gift to a trust whose objects were to seek the abolition of vivisection 14 . The National Anti-Vivisection Society had sought exemption from income tax upon a gift they had received, the Inland Revenue held that the gift was taxable. In looking at the ratio of their Lordships it is clear that they considered the matter on two grounds, both important to the discussion of whether a gift is charitable. The decision was not unanimous with Lord Porter, one of the five Law Lords sitting, dissenting. The matter was considered firstly as to whether the gift was within the test of being beneficial to the community. Lord Simonds held that any consideration as to the assumed public benefit in the direction of the advancement of morals and education was far outweighed by the detriment to medical science and research and accordingly, the trust failed on this point. The second consideration was as to whether the object of the trust were in fact political. Their Lordships, decided, with Lord Porter again dissenting, held that as the purpose was to change the law in relation to vivisection, the trusts objects were essentially political and the trust failed on that ground also.

This latter point is the footnote to this article in that a trust that has a political motive behind its object will fail to be regarded as charitable. This has been a long established principle and it can be inclusive of any trusts whose sole remit is to seek a change in the law. These aspects were explored by Justice Slade in the significant case of McGovern v Attorney-General 15 heard before the Chancery Division of the High Court. In 1977 Amnesty International was set up as an unincorporated, non profit making body to ensure that prisoners of conscience throughout the world were treated in accordance with the United Nations declaration on human rights. Amnesty International set up a trust to provide for the administration of those of its object considered to be charitable:

i) the relief of prisoners of conscience

ii) attempting to secure the release of prisoners of conscience

iii) procuring the abolition of torture or inhuman or degrading treatment or punishment

iv) research into the maintenance and observance of human rights

v) the dissemination of the results of such research

vi) doing all such other things that as would promote these charitable objects.

Amnesty International applied to the Charity Commissioners for registration and this was refused and thereafter, an application was made to court seeking a declaration as to whether the objects of the trust were charitable. It was held that charitable status could not be granted as the objects in i), ii) and iii) above were essentially political, but although iv) and v) were charitable the trust must fail as it was not "wholly and exclusively" charitable. The ratio in Justice Slade’s decision is worth considering for the scholar and lawyer alike but, for the sake of brevity, I have sought to paraphrase his judgement. Slade J gave several reasons for his decision and these are:

1. The court will have no adequate means of judging whether a proposed change in the law is for the benefit of the public.

2. Even if the evidence enabled the court to form an opinion that a change in the law was desirable, it must still decide a case on the principle that the law is right as it stands, since to do otherwise would be to usurp the functions of the legislature.

3. The court would risk prejudicing its reputation for political impartiality, if it promoted political objects.

4. Where the trust was to secure a change in foreign law the court was bound to consider, as a matter of public policy, the risk of prejudicing the relations of this country with the foreign country.

It is upon these foundations that gifts to political parties have always been refused charitable status. Other cases in the author’s opinion have been decided on a basis of very strict interpretation and it may be argued that the establishment has on occasions fallen behind public opinion, but that discussion falls beyond the scope of this article.

The history of charity law is rich and gives us an insight into the evolving social conditions of mankind and our place in society. Philanthropy is increasing exponentially year on year and it is a question for social scientists to determine whether we have become more moral, or simply richer.

"More and more I come to value charity and love of one's fellow being above everything else... All our lauded technological progress--our very civilization--is like the axe in the hand of the pathological criminal."

Albert Einstein (1875-1955)

1 "The Profiler" August 2002

2 Dunne v Byrne [1912] AC 407

3 Re Manser [1905] 1 Ch 68

4 Re Strickland [1936] 3 All ER 769

5 Re Fowler (1914) 31 TLR 102

6 [1917] AC 406

7 [1980] 1 WLR 1565

8 [1939] AC 430

9 [1946] Ch 299

10 Incorporated Council of Law v Attorney-General [1972] Ch 73 particularly the dicta of Russell LJ

11 Re Foveuax [1895] 2 Ch 501

12 [1915] 1 Ch 113

13 Re Grove-Grady [1929] 1 Ch 557 particularly the dicta of Russell LJ

14 National Anti-Vivisection Society v IRC [1948] AC 31

15 [1982] Ch 321

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances

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