Oppenheim v. Tobacco Securities Trust Co Ltd and Others
[1951] 1 All ER 31(Decision by: Lord MacDermott)
Between: Oppenheim
And: Tobacco Securities Trust Co Ltd and Others
Judges:
Lord Simonds
Lord Normand
Lord Oaksey
Lord Morton of Henryton
Lord MacDermott
Subject References:
Charity
Education
Public character
Public nature of bond between beneficiaries
Gift for the education of the children of past and present members of limited company
Case References:
Re Compton - [1945] 1 All ER 198; [1945] Ch 123; 114 LJCh 99; 172 LT 158; 2nd Digest Supp
Re Hobourn Aero Components Ltd's Air Raid Distress Fund - [1946] 1 All ER 501; [1946] Ch 194; 115 LJCh 158; 174 LT 428; 2nd Digest Supp
Gilmour v Coats - [1949] 1 All ER 848; [1949] AC 426; [1949] LJR 1034; 2nd Digest Supp
Jones v Williams - (1767), Amb 651; 27 ER 422; 8 Digest 244, 36
Income Tax Special Purposes Comrs v Pemsel - [1891] AC 531; 61 LJQB 265; 65 LT 621; 55 JP 805; 3 Tax Cas 53; 8 Digest 241, 1
Re Grove Grady - [1929] 1 Ch 557; Digest Supp
Re Drummond - [1914] 2 Ch 90; 83 LJCh 817; 111 LT 156; 8 Digest 244, 28
Re Rayner - (1920), 89 LJCh 369; 122 LT 577; 84 JP 61; Digest Supp
Admiralty Comrs v Valverda (Owners) - [1938] 1 All ER 162; [1938] AC 173; 107 LJKB 99; 158 LT 281; Digest Supp
Hall v Derby Sanitary Authority - (1885), 16 QBD 163; 55 LJMC 21; 54 LT 175; 50 JP 278; 8 Digest 243, 26
Isaac v Defriez - (1754), Amb 595; 27 ER 387; 44 Digest 890, 7479
Gibson v South American Stores (Gath and Chaves) Ltd - [1949] 2 All ER 18; [1949] Ch 572; [1949] LJR 1228; affd in part and revsd in part; [1949] 2 All ER 985; [1950] Ch 117; 2nd Digest Supp
Spiller v Maude - (1881), 32 ChD 158 n; 8 Digest 348, 1412
Re Gosling - (1900), 48 WR 300; 8 Digest 244, 27
Re Buck - [1896] 2 Ch 727; 65 LJCh 881; 75 LT 312; 60 JP 775; 8 Digest 262, 246
Re Sir Robert Laidlaw's Will Trusts - (1935), unreported
Verge v Somerville - [1924] AC 496; 131 LT 107; sub nom A-G for Australia v Somerville; 93 LJPC 173; Digest Supp
Judgment date: 13 December 1950
Decision by:
Lord MacDermott
My Lords, it is not disputed that this trust is for the advancement of education. The question is whether it is of a public nature-whether, in the words of Lord Wrenbury in Verge v Somerville ([1924] AC 499):
"... it is for the benefit of the community or of an appreciably important class of the community."
The relevant class here is that from which those to be educated are to be selected. The appellant contends that this class is public in character; the respondent bank (as personal representative of the last surviving settlor) denies this and says that the class is no more than a group of private individuals.
Until comparatively recently the usual way of approaching an issue of this sort, at any rate where educational trusts were concerned, was, I believe, to regard the facts of each case and to treat the matter very much as one of degree. No definition of what constituted a sufficient section of the public for the purpose was applied, for none existed, and the process seems to have been one of reaching a conclusion on a general survey of the circumstances and considerations regarded as relevant rather than of making a single, conclusive test. The investigation left the course of the dividing line between what was and what was not a section of the community unexplored, and was concluded when it had gone far enough to establish to the satisfaction of the court whether or not the trust was public, and the decision as to that was, I think, very often reached by determining whether or not the trust was private. Now, if it is still permissible to conduct the present inquiry on these broad, if imprecise, lines, I would hold with the appellant. The numerical strength of the class is considerable on any showing. The employees concerned number over 110,000, and it may reasonably be assumed that the children, who constitute the class in question, are no fewer. The large size of the class is not, of course, decisive, but, in my view, it cannot be left out of account when the problem is approached in this way. Then it must be observed that the propositi are not limited to those presently employed. They include former employees (not reckoned in the figure I have given), and are, therefore, a more stable category than would otherwise be the case. And, further, the employees concerned are not limited to those in the service of the "British-American Tobacco Co., Ltd., or any of its subsidiary or allied companies"-itself a description of great width-but include the employees, in the event of the British-American Tobacco Co being re-constructed or merged on amalgamation, of the re-constructed or amalgamated company or any of its subsidiary companies. No doubt, the settlors here had a special interest in the welfare of the class they described, but, apart from the fact that this may serve to explain the particular form of their bounty, I do not think it material to the question in hand. What is material, as I regard the matter, is that they have chosen to benefit a class which is, in fact, substantial in point of size and importance and have done so in a manner which, to my mind, manifests an intention to advance the interests of the class described as a class rather than as a collection or succession of particular individuals.
Proceeding on the basis I have mentioned, I find no difficulty in distinguishing this trust from that considered by Eve J in Re Drummond. There the class was narrowly defined by reference to the workpeople employed in a particular department in a particular business. I do not question the correctness of the decision that that was a trust for private individuals, and, therefore, not public in the relevant sense, but I do not think there is anything in the judgment of the learned judge to warrant the view that the conclusion he reached should prevail in all cases where, in the qualifications for admission to the class of beneficiaries, there has somewhere to be found, it may be at one remove or more, the fact of employment by one of a number of designated employers. There is another difference to be noted between that case and the present one. Apart from the marked contrast in the scope of the respective trusts, the trust purpose in Re Drummond was not, prima facie, within any of the well-known classes of legal charity. Here it is otherwise, for the trust is plainly one for the advancement of education. Had Eve J been able to hold in Re Drummond that the trust was for the relief of poverty I think it is clear from his subsequent decision in Re Rayner that he would have reached a different conclusion. It may be that in this respect the relief of poverty and the advancement of education do not stand on precisely the same footing. I confess I do not see why in principle there should be such a distinction, but, even if there is, it is none the less true to say that in both fields the actual work of the trust advances the public interest in some degree. If, then, the class of potential beneficiaries in an educational trust is substantial, and not obviously private in nature, I think one may reasonably commence, in the kind of investigation I am considering, by assuming, until the contrary appears, that the trust is for the benefit of the community.
The respondent bank, however, contends that the inquiry should be of quite a different character from that which I have been discussing. It advances as the sole criterion a narrower test derived from the decisions of the Court of Appeal in Re Compton and Re Hobourn Aero Components Ltd's Air Raid Distress Fund. The basis and nature of this test appear from the passage in the judgment of the court in Re Compton where Lord Greene MR says ([1945] 1 All ER 201):
"In the case of many charitable gifts it is possible to identify the individuals who are to benefit or who at any given moment constitute the class from which the beneficiaries are to be selected. This circumstance does not, however, deprive the gift of its public character. Thus, if there is a gift to relieve the poor inhabitants of a parish the class to benefit is readily ascertainable. But they do not enjoy the benefit when they receive it by virtue of their character as individuals but by virtue of their membership of the specified class. In such a case the common quality which unites the potential beneficiaries into a class is essentially an impersonal one. It is definable by reference to what each has in common with the others and that is something into which their status as individuals does not enter. Persons claiming to belong to the class do so not because they are A.B., C.D., and E.F., but because they are poor inhabitants of the parish. If in asserting their claim it were necessary for them to establish the fact that they were the individuals A.B., C.D., and E.F., I cannot help thinking that on principle the gift ought not to be held to be a charitable gift, since the introduction into their qualification of a purely personal element would deprive the gift of its necessary public character. It seems to me that the same principle ought to apply when the claimants, in order to establish their status, have to assert and prove, not that they themselves are A.B., C.D., and E.F., but that they stand in some specified relationship to the individuals A.B., C.D., and E.F., such as that of children or employees. In such a case, too, a purely personal element enters into and is an essential part of the qualification, which is defined by reference to something, i.e., a personal relationship to individuals or an individual which is in its essence non-public."
The test thus propounded focuses on the common quality which unites those within the class concerned and asks whether that quality is essentially impersonal or essentially personal. If the former, the class will rank as a section of the public and the trust will have the element common to and necessary for all legal charities, but, if the latter, the trust will be private and not charitable. It is suggested in the passage just quoted, and made clear beyond doubt in Re Hobourn, that, in the opinion of the Court of Appeal, employment by a designated employer must be regarded for this purpose as a personal and not as an impersonal bond of union. In this connection, and as illustrating the discriminating character of what I may call "the Compton test," reference should be made to that part of the judgment of Lord Greene MR in Re Hobourn in which he speaks of the decision in Hall v Derby Sanitary Authority. He says ([1946] 1 All ER 509) that the latter case
"... was a trust for railway servants. It was said that if a trust for railway servants could be a good charity, why should not a trust for railway servants in the employment of a particular railway company be a good charity? The reason, I think, is that in the one case it would be for railway servants in general and in the other case it would be for employees of a particular company, a fact which would limit the potential beneficiaries to a class ascertained on a purely personal basis."
My Lords, I do not quarrel with the result arrived at in the Compton and Hobourn cases, and I do not doubt that the "Compton test" may often prove of value and lead to a correct determination, but, with the great respect due to those who have formulated this test, I find myself unable to regard it as a criterion of general applicability and conclusiveness. In the first place, I see much difficulty in dividing the qualities or attributes which may serve to bind human begins into classes into two mutualyl 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. After all, what is more personal than poverty or blindness or ignorance? Yet none would deny that a gift for the education of the children of the poor or blind was charitable, and I doubt if there is any less certainty about the charitable nature of a gift for, say, the education of children who satisfy a specified examining body that they need and would benefit by a course of special instruction designed to remedy their educational defects. But can any really fundamental distinction, as respects the personal or impersonal nature of the common link, be drawn between those employed, for example, by a particular university and those whom the same university has put in a certain category as the result of individual examination and assessment? Again, if the bond between those employed by a particular railway is purely personal, why should the bond between those who are employed as railwaymen be so essentially different? Is a distinction to be drawn in this respect between those who are employed in a particular industry before it is nationalised and those who are employed therein after that process has been completed and one employer has taken the place of many? Are miners in the service of the National Coal Board now in one category and miners at a particular pit or of a particular district in another? Is the relationship between those in the service of the Crown to be distinguished from that obtaining between those in the service of some other employer? Or, if not, are the children of, say, soldiers or civil servants to be regarded as not constituting a sufficient section of the public to make a trust for their education charitable? It was conceded in the course of the argument that, had the present trust been framed so as to provide for the education of the children of those engaged in the tobacco industry in a named county or town, it would have been a good charitable disposition, and that even though the class to be benefited would have been appreciably smaller and no more important than is the class here. That concession follows from what the Court of Appeal has said. But if it is sound, and a personal or impersonal relationship remains the universal criterion, I think it shows, no less than the queries I have just raised in indicating some of the difficulties of the problem, that the "Compton test" is a very arbitrary and artificial rule.
This leads me to the second difficulty I have regarding it. If I understand it aright, it necessarily makes the quantum of public benefit a consideration of little moment. The size of the class become immaterial and the need of its members and the public advantage of having that need met appear alike to be irrelevant. To my mind, these are considerations of some account in the sphere of educational trusts for, as already indicated, I think the educational value and scope of the work actually to be done must have a bearing on the question of public benefit.
Finally, it seems to me that, far from settling the state of the law on this particular subject, the "Compton test" is more likely to create confusion and doubt in the case of many trusts and institutions of a character whose legal standing as charities has never been in question. I have particularly in mind gifts for the education of certain special classes, such, for example, as the daughters of missionaries, the children of those professing a particular faith or accepted as ministers of a particular denomination, or those whose parents have sent them to a particular school for the earlier stages of their training. I cannot but think that in cases of this sort an analysis of the common quality binding the class to be benefited may reveal a relationship no less personal than that existing between an employer and those in his service. Take, for instance, a trust for the provision of university education for boys coming from a particular school. The common quality binding the members of that class seems to reside in the fact that their parents or guardians all contracted for their schooling with the same establishment or body. That the school in such a case may itself be a charitable foundation seems altogether beside the point and quite insufficient to hold the "Compton test" at bay if it is well founded in law.
My Lords, counsel for the appellant and for the Attorney General adumbrated several other tests for establishing the presence or absence of the necessary public element. I have given these my careful consideration and I do not find them any more sound or satisfactory than the "Compton test." I, therefore, return to what I think was the process followed before the decision in Compton's case, and, for the reasons already given, I would hold the present trust charitable and allow the appeal. I have only to add that I recognise the imperfections and uncertainties of that process. They are as evident as the difficulties of finding something better, but I venture to doubt if it is in the power of the courts to resolve those difficulties satisfactorily as matters stand. It is a long cry to the age of Elizabeth and I think what is needed is a fresh start from a new statute.