The relief of poverty
Charitable trusts for the relief of poverty are not confined to those trusts which alleviate starvation, homelessness, unemployment and all the hardships of being a “person decayed”.
In Re Coulthurst [1] Ch 661, Evershed MR observed:
Poverty does not mean destitution … it may, not unfairly, be paraphrased for present purposes as meaning persons who have to “go short” in the ordinary acceptance of that term, due regard being had to their status in life and so forth.
The reference to “status in life” is an important one, since “charity” is not the same thing as “social engineering”. It is not the policy of the law to create a village of rich widows where, prior to some disaster, there was a community of modest working folk, or to augment with a vast windfall “the wistful savings of a vanished hand”. It is an act of caprice, not charity, to promote persons made poor by adversity to a Sardanapalian life-style.
Although the concept of “poverty” must be measured against the individual’s legitimate expectations, having regard to his alloted “status in life”, the idea of “going short” is something that cannot apply to the rich man in his castle if, at the same time, there could be a poor man at his gate. This is illustrated by a case which gives considerable guidance on the problem of whether or not housing associations are charitable: Over Seventies Housing Association v City of Westminster (1974) 230 EG 1593. This case makes it clear that “comfortably off” people cannot demonstrate that they have created a charitable trust merely by showing that they are living more comfortably off together than they could ever hope to do apart.
In that case a house had been converted by a housing association into five self-contained flats with a communal kitchen and lounge. The main benefactor of the housing association (Sir Roy Pinsent) himself became one of the residential licensees in the house and it transpired that his total income in 1974 was nearly £4,000 (ie more than a polytechnic lecturer’s salary at that time). The other residents of the house were chosen as being “elderly people of limited means”, but they were all able to pay the outgoings on the property and to make repayments on money lent to the housing association.
Caulfield J interpreted this arrangement as being the provision of housing “by way of bargaining, and not by way of bounty”. He held that the Charity Commissioners had been correct to “cold shoulder” the housing association and that the City of Westminster was within its rights to refuse to grant the association 50% relief from rates. (This relief is extended to premises occupied “wholly or mainly for charitable purposes” whether the occupier is registered with the Charity Commissioners or not.) Although Caulfield J accepted that “those who were poor were not necessarily destitute”, he could not assess Sir Roy Pinsent as “poor”.
If the phrase “limited means” is not synonymous with the phrase “going short”, it might, perhaps, be thought that the phrase “the working classes” would (at least in the 1950s) have had a better chance of success. However, in Re Sanders’ Will Trusts [4] 1 All ER 667 Harman J (admittedly, a strict judge) ruled against a will which gave money “to provide … dwellings for the working classes and their families resident in the area of Pembroke Dock …”. His lordship held that the phrase the “working classes” was too vague and too wide. To belong to the “working classes” was not synonymous with “going short” and to be outside the “working classes” was not necessarily to be beyond the reach of poverty.
Having referred to these difficulties, it should, nevertheless, be noted that a charitable trust for the relief of poverty is not prohibited from charging for the benefits which it bestows, provided that this does not infringe the rule that the essence of a charity is “bounty” and not “bargaining”. Thus in Re Cottam [5] 1 WLR 1299, a trust to provide flats at “economic rents” for poor and aged persons was held to be a charitable trust, and in Re Niyazi’s Will Trusts [1978] 3 All ER 785 Megarry V-C upheld a trust as a charitable trust because its purpose was to provide a “working men’s hostel”. The Vice-Chancellor described the purpose of such a hostel as being the provision of “modest accommodation for those who have some temporary need for it … [but] not the need of the better paid working men who can afford something superior to mere hostel accommodation, but the need of the lower end of the financial scale …”. His lordship distinguished the decision of Harman J in Re Sanders (above) because, it seemed to him that the word “hostel” was significantly different from the word used in that case — “dwellings” (ie “ordinary houses in which the well-to-do may live, as well as the relatively poor”).
Another case which has distinguished Re Sanders is Joseph Rowntree Memorial Trust Housing Association Ltd v Attorney-General [3] 1 All ER 288. In that case, Peter Gibson J overruled the Charity Commissioners and declared that five schemes based on the National Federation of Housing Associations’ standard scheme for leasehold sales to the elderly were charitable trusts. Under these five schemes tenants over 65 (if men) or over 60 (if women) would be able to buy self-contained dwellings on long leases at subsidised prices, provided that they stood in need of such accommodation. The leases contained covenants against assignment and the housing association had the right to buy back the leasehold interest on the death or incapacity of the tenant. (There was also a right for spouses and other resident relatives to succeed to the leases.) Service charges were payable by the leaseholders. The Charity Commissioners refused to register these schemes because, among other reasons, they felt that the housing association was providing for the aged “only by way of bargain … rather than by way of bounty”.
Peter Gibson J rejected this argument by drawing a distinction between a charitable trust and a housing co-operative. In a housing co-operative the persons requiring dwellings had pre-existing contractual rights to be allocated dwellings under the constitution of the housing association. Such a co-operative could not be charitable. But, if a housing association were set up in the manner of a trust, and the applicants had no right to any dwellings which they applied for, then the fact that contractual rights were afterwards granted to them was immaterial. Such a trust could be a charitable trust. His lordship also took the view that such a trust did not cease to be charitable merely because there was no provision in the leases for recovery of possession if, for example, the tenants’ financial circumstances significantly improved. The existence of such a covenant would be detrimental to all the elderly leaseholders because it would have an unsettling effect on them in the twilight of their days.
The advancement of education
Education, almost by definition, implies an element of public benefit. But research which benefits only the researcher, and does not add to the sum of communicable knowledge, cannot be viewed as charitable. However, the courts will be inclined to assume that funds for “research” impliedly involve the dissemination of the results of that research: McGovern v Attorney-General [2] Ch 321. However, political propaganda, even if dressed up as research or educational provision, is not charitable: Re Hopkinson [1949] 1 All ER 346. This is an aspect of the rule that political parties are not charitable: Bonar Law Memorial Trust v IRC (1933) 49 TLR 220. By a parity of reasoning, pressure groups and organisations agitating for the repeal or amendment of particular laws are not charities: National Anti-Vivisection Society v IRC [1948] AC 31. In Re Shaw [1957] 1 WLR 729, Harman J (as he then was) was prepared to extend this prohibition to the will of George Bernard Shaw, who had left funds to encourage the adoption of a new English alphabet and to finance propaganda against the existing alphabet (“To persuade the public that the adoption of the new script would be a ‘good thing’ … is not education” — per Harman J). Although specific propaganda is not considered to be charitable, funds for the encouragement of “law reform” in general or the publication of law reports or other legal information on a non-profit-making basis are clearly recognised as a charitable exercise: Incorporated Council of Law Reporting for England and Wales v Attorney-General [1971] 3 All ER 1029. (The Institute of Rent Officers Education Trust appears to be an organisation which has taken advantage of this rule.)
There seems no reason, in principle, why “education” should be limited to purely academic studies. In Patel v Immigration Appeal Tribunal [3] Imm AR 76 Dillon LJ took the view that the word “studies” (in the context of the Immigration Rules) could include recognised vocational training following academic studies, and Lawton LJ stated that it could cover practical experience in factories or on engineering sites where this was part of a university (or polytechnic) course.
As to the use of land for museums, art galleries, stately homes and so on, these are all capable of being charitable activities in that they have an educational value. However, such uses will not be charitable if they have a profit-making objective(*) or if they seek to preserve things which are devoid of artistic merit or educational value (as was the case in Re Pinion [5] Ch 85: “I can conceive of no useful object to be served in foisting upon the public this mass of junk” — Harman LJ).
The advancement of religion
The courts are prepared to accept that it is axiomatic that the preaching and practising of the Christian faith, and certain other religious faiths, secures for society an element of public benefit. “As between different religions the law stands neutral … [but] any religion is at least likely to be better than none” (per Cross J in Neville Estates Ltd v Madden [1] 3 All ER 769). Thus, gifts for the building or repair of churches are valid charitable trusts even though, on the first face of things, they do not seem to bring about any direct benefit to identifiable individuals.
However, this is not to say that the courts will decide issues of this nature upon the basis of religious faith without requiring proof. In Gilmour v Coates [9] AC 426 the House of Lords refused to uphold as charitable a gift to a contemplative order of Carmelite nuns who held no public services and did not do any works of charity other than to pray constantly in the belief that intercessory prayers did, through the power of God, bestow a benefit on mankind. Lord Simonds drew a distinction between the personal faith of the judge and his obligation to decide cases only according to what could be proved (or presumed) under the laws of evidence:
… in this House which daily commences its proceedings with intercessory prayers, how can I deny that the Divine Being may in His wisdom think fit to answer them? But, my Lords, whether I affirm or deny, whether I believe or disbelieve, what has that got to do with the proof which the court demands that a particular purpose satisfies the test of benefit to the community? … The faithful must embrace their faith, believing where they cannot prove; the court can act only on proof.
Gilmour v Coates was, however, distinguished by Sir Nicolas Browne-Wilkinson V-C in Re Hetherington [9] 2 All ER 129. In that case, the deceased left money to the Roman Catholic Church for the saying of masses for the repose of her soul and the souls of her family. The gift was held to be charitable because, as a matter of practice (although not of Canon Law) such masses were held as public services, and the money paid to the priests for this purpose assisted the Church by relieving it, in part, of the stipends it would otherwise have to pay to them.
Wide and tolerant though the law is towards different religions, there are limitations implicit in the concept of a “religion”. Thus, in Re South Place Ethical Society [0] 1 WLR 1565 Dillon J refused to accept a non-theistic ethical society as a valid religious charity because “two of the essential attributes of religion are … faith in a God and worship of that God”. However, his lordship held that the society was a valid educational charity, and also charitable as being in the residual category of “other purposes beneficial to the community”.
Other purposes beneficial to the community
The preamble to the Statute of Elizabeth expressly listed certain well-recognised charitable objects which Lord Macnaghten (in Pemsel’s case) was unable to categorise under any nominate heading. (Examples are the repairing of bridges, ports, havens and sea-banks.) The category, of course, is not a closed one, as the South Place Ethical Society case shows. For estate managers, however, the most interesting inclusion in this vestigial category is a statutory innovation — the Recreational Charities Act 1958. This is a sufficiently significant topic to justify, at some future date, a separate article in “Mainly for Students”.
(*) An educational trust is not to be treated as profit-making merely because it consistently accumulates a surplus of income over expenditure with a view to creating a contingency fund or spending the money on educational purposes in the future: Customs and Excise Commissioners v Bell Concord Educational Trust Ltd [9] 2 All ER 217.
