Oppenheim v. Tobacco Securities Trust Co Ltd and Others
[1951] 1 All ER 31(Decision by: Lord Normand)
Between: Oppenheim
And: Tobacco Securities Trust Co Ltd and Others
Judges:
Lord Simonds
Lord NormandLord 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 Normand
My Lords, the trust is an educational trust, and, therefore, it satisfies one of the conditions for acceptance as a charitable trust. But there is another condition which must also be satisfied, namely, that it is a trust beneficial to the community or to a section of the community. No general rule has yet been formulated by which to distinguish trusts which have this essential element of public benefit and those which have not, and the valiant attempts of counsel to arrive at a rule have failed to convince me. I am, however, satisfied that the element of public benefit must be found in the definition of the class of persons selected by the truster as the objects of his bounty. That seems to me to follow from the principle that the trust purpose must be directed to the benefit of the community or a section of the community: TUDOR ON CHARITIES, 5th ed, p 11, approved by Lord Greene MR in Re Compton. The truster may have selected a class of persons which forms an aggregate that is not a section of the community, and if he has done that the trust will fail for perpetuity. All depends on the attribute by which the selection of the class is determined. It is on the difficulty of defining the attribute or qualification which differentiates a section of the public from an aggregate of persons which is not a section of the public that all attempts to define the public element in charitable trusts have foundered.
I will confine myself to educational trusts. It is not obvious a priori that a trust for the education of persons having the common qualification that they have already had part of their education at a named school is public. Yet there is no doubt that such trusts are public charitable trusts and are among the most securely established charitable trusts known to the law. On the other hand, a trust for the education of the descendants of A B, however numerous they may be, is not a charitable trust: Re Compton, per Lord Greene MR ([1945] 1 All ER 201). These difficulties come from the historical development of the law of charity. I remind your lordships of the observations of Lord Simonds in Gilmour v Coats, that the law of charity has been built up, not logically, but empirically. It is this empirical development which has so often baffled efforts to reduce the law to systematized definitions. In the present instance this House has for the first time to declare whether a trust for the education of the children of the employees of named employers is a charitable trust. If there had been a long and uniform trend of authority in favour of receiving such a trust as a charity, I apprehend that your lordships would have been willing to decide the appeal in accordance with that trend, but, as I shall later show, the authorities are with one exception against the acceptance of trusts of this kind as a charity.
If the issue is to be decided on principle and without reference to authority the question is whether a class with the common attribute that the members are the children of the employees of the same employer is a section of the public or merely an aggregate of persons without public significance. The fact that the children of the employees and not the employees themselves are the beneficiaries does not help the appellants, for there is no public element in the relationship of parent and child. The common attribute that each parent has a contract of service with the same employer remains for consideration. A contract of service is in a high degree personal, and it constitutes a personal and private relationship between the parties. Whatever the number of the employees in the service of the same employer, each still stands independently in this personal and private relationship to the employer. For certain purposes they are in relationship to one another, the relation of common employment with the rights and duties which arise from that relationship. These are private rights and duties and have no public element, except the interest that the community has in the harmonious and efficient operation of its industries and commerce and in the securing of good and safe conditions of labour. But that interest is not concerned with the employees of particular employers as such, but with employees at large or employees generally in particular occupations and is not an element relevant to this issue.
In principle I am unable to say that any public element can be born out of the several private contracts between a particular employer and his employees. The appellant would not boldly submit that when the common employer employed two servants the public element at once emerged. He said it was a question of degree and the courts must take account of the number of employees, the magnitude of the sum settled by the truster, the size of the employers' undertaking, the non-contractual personal relationships (or their absence) between the employer and his employees, and other circumstances. I am unable to find any logical principle in these submissions. If there is no public element to be found in the bare nexus of common employment, all attempts to build up the public element out of circumstances which have no necessary relation with it, but are adventitious, accidental and variable, must be unavailing when the truster has chosen to define the selected class solely by the attribute of common employment. I would add that the appellant's argument would lead to a degree of uncertainty in this branch of the law which only compelling authority or logical necessity would induce me to accept. It may be conceded that the distinction inherent in the view I have taken between an educational trust for the children of all employees in the tobacco industry (see Hall v Derby Sanitary Authority and the present trust may appear to many over-refined and unpractical, but, unless it is accepted that all trusts for education are charitable, that is a criticism which cannot be avoided. If a line must be drawn between public trusts and trusts that are not public, there will always be marginal cases and the appearance of over-refinement.
Of the authorities Re Drummond, a case on the fourth of Lord Macnaghten's classes, is adverse to the appellant. Re Rayner is the only case which supports the appellant's contention. It was assumed rather than decided by the same learned judge, Eve J, who decided Re Drummond, that a bequest to the governors of a commercial company of shares in the company with a direction to apply the income to the education of children of persons who for five years and upwards had been in the employment of the company was a charitable trust. Both these cases were considered in Re Compton, and Re Drummond was approved and Re Rayner was disapproved. I respectfully agree with the comments of Lord Greene MR on both these cases ([1945] 1 All ER 204). Re Hobourn Aero Components Ltd's Air Raid Distress Fund was also a case on Lord Macnaghten's fourth class. It decided that funds collected by the employees of a company for their own benefit were not a fund applicable for the benefit of the public or any section of the public because the purpose of the subscription was to benefit the subscribers themselves, but Morton LJ discussed ([1946] 1 All ER 510, 511) the requirement that a purpose, to be charitable, must be directed to the benefit of the community or a section of the community with special relation to trusts for the benefit of employees of a particular company. With all that he said I respectfully agree. I, therefore, consider that to admit the present trust to the category of charity would be an innovation contrary alike to principle and to the trend of authority and on these grounds I would dismiss the appeal.