Dingle v Turner and Ors
[1972] 1 All ER 878(Judgment by: Lord Cross of Chelsea)
Between: Dingle
And: Turner and Ors
Judges:
Viscount Dilhorne
Lord Macdermott
Lord Hodson
Lord Simon of Glaisdale
Lord Cross of Chelsea
Subject References:
CHARITY
Relief of poverty
Poor employees
Trust to provide pensions to poor employees of a company
Whether valid charitable trust
Charity
Public benefit
Requirement of public benefit
Section of the public
Determination whether potential beneficiaries constitute a section of the public
Relevance
Case References:
A-G v Northumberland (Duke) - (1877) 7 Ch D 745; 47 LJCh 569; varied (1878) 38 LT 245; 8 Digest (Repl) 410, 1020
A-G v Price - (1810) 17 Ves 371; [1803-13] All ER Rep 467; 34 ER 143; 8 Digest (Repl) 316, 19
Buck, Re, Bruty v Mackey - [1896] 2 Ch 727; [1895-99] All ER Rep 366; 65 LJCh 881; 75 LT 312; 60 JP 775; 8 Digest (Repl) 356, 348
Compton, Re, Powell v Compton - [1945] 1 All ER 198; [1945] Ch 123; 114 LJCh 99; 172 LT 158; 8 Digest (Repl) 330, 123
Cox (decd), Re, Baker v National Trust Co Ltd, Public Trustee for Ontario (Province) v National Trust Co Ltd - [1955] 2 All ER 550; [1955] AC 627; [1955] 3 WLR 42; affg [1951] OR 205; Digest (Cont Vol A) 91, 3a
Davies v Perpetual Trustee Co (Ltd) - [1959] 2 All ER 128; [1959] AC 439; [1959] 2 WLR 673; Digest (Cont Vol A) 88, 6a
Drummond, Re, Ashworth v Drummond - [1914] 2 Ch 90; [1914-15] All ER Rep 223; 83 LJCh 817; 111 LT 156; 8 Digest (Repl) 320, 52
Gibson v South American Stores (Gath & Chaves) Ltd - [1949] 2 All ER 985; [1950] Ch 177; 8 Digest (Repl) 320, 51
Gosling, Re, Gosling v Smith - (1900) 48 WR 300; 16 TLR 152; 8 Digest (Repl) 320, 49
Hobourn Aero Components Ltd's Air Raid Distress Fund, Re, Ryan v Forrest - [1946] 1 All ER 501; [1946] Ch 194; 115 LJCh 158; 174 LT 428; 8 Digest (Repl) 321, 56
Income Tax Special Purposes Comrs v Pemsel - [1891] AC 531; [1891-94] All ER Rep 28; 61 LJQB 265; 65 LT 621; 55 JP 805; 3 Tax Cas 53; 8 Digest (Repl) 312
Inland Revenue Comrs v Educational Grants Association Ltd - [1967] 2 All ER 893; [1967] Ch 993; [1967] 3 WLR 41; 44 Tax Cas 111; Digest (Cont Vol C) 529, 1400a
Laidlaw, Re, Sir Robert Laidlaw's Will Trusts - (11 January 1935) unreported
Oppenheim v Tobacco Securities Trust Co Ltd - [1951] 1 All ER 31; [1951] AC 297; 8 Digest (Repl) 321, 55
Pease v Pattinson - (1886) 32 Ch D 154; [1886-90] All ER Rep 507; 55 LJCh 617; 54 LT 209; 8 Digest (Repl) 355, 356
Scarisbrick, Re, Cockshott v Public Trustee - [1951] 1 All ER 822; [1951] Ch 622; rvsg [1950] 1 All ER 143; [1950] Ch 226; 8 Digest (Repl) 316, 18
Spiller v Maude - (1881) 32 Ch D 158n; 8 Digest (Repl) 463, 1641
Young's Will Trusts, Re, Westminster Bank Ltd v Sterling - [1955] 3 All ER 689; [1955] 1 WLR 1269; Digest (Cont Vol A) 89, 31a
Judgment date: 16 February 1972
Judgment by:
Lord Cross of Chelsea
My Lords, by his will dated 10 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 cl 5 he gave to his trustees his ordinary and preference shares in E Dingle & Co Ltd on 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 cl 8(a) he directed his trustees to pay the income of his residuary estate after payment thereout of his debts, funeral and testamentary expenses to his wife for her life. By cl 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 investments 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 the 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 pensions Fund and the income thereof UPON TRUST for the aged poor in the Parish of St Andrew, Plymouth.'
Finally by cl 8(g) the testator directed his trustees to hold the ultimate residue of his estate on the trusts set out in cl 8(e).
The testator died on 10 January 1950. His widow died on 8 October 1966, having previously released her testamentary power of appointment over her husband's shares in E Dingle & Co Ltd, which accordingly fell into the residuary estate. When these proceedings started in July 1970, the value of the fund held on the trusts declared by cl 8(e) was about £320,000 producing a gross income of about £17,800 per annum.
E Dingle and Co Ltd was incorporated as a private company on 20 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 23 October 1950 the company became a public company. Since the testator's death its business has expended and when these proceedings started it had 705 full-time and 189 part-time employees and was paying pensions to 89 ex-employees.
The trustees took out an originating summons in the Chancery Division on 30 July 1970 asking the court to determine whether the trusts declared by cl 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-employees, (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 cl 8 (e) for the aged poor in the Parish of St Andrew Plymouth is dependent 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 2 April 1971 Megarry J held, inter alia, following the decision of the Court of Appeal in Gibson v South American Stores (Gath & Chaves) Ltd, that the trust declared by cl 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 s 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 17 May 1971 the House gave her leave to appeal.
Your Lordships, therefore, are now called on 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] 1 All ER at 38, [1951] AC at 313) Lord Morton of Henryton 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 although 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 today 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, Cockshott v Public Trustee. 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 trusts 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 determine on what basis the distinction was drawn. Roxburgh J-founding himself on some words attributed to Sir William Grant MR in A-G v Price-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 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, Pease v Pattinson and Re Buck, Bruty v Mackey. 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-près'.
The first of the 'poor employees' cases was Re Gosling, Gosling v Smith. 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 A-G v The Duke Northumberland, which was one of the 'poor relations' cases. His judgment continued as follows ((1900) 48 WR at 301):
'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, Ashworth v Drummond, the testator bequeathed some shares in a company of which he had been a director to trustees on 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 department 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 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 Income Tax Special Purposes Comrs v Pemsel ([1891] AC 531 at 583, [1891-94] All ER Rep 28 at 55, 56). It was a trust to secure a holiday for a substantial number of the inhabitants of Ilkley who, although 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 purposes of the law of charity. Eve J-with some regret-rejected that contention saying ([1914] 2 Ch at 97, [1914-15] All ER Rep at 227):
'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 ((1900) 48 WR at 301) which I have quoted, although true of poverty cases, were not of general application in the law of charity.
Next comes Re Laidlaw, Sir Robert Laidlaw's Will Trusts, a decision of the Court of Appeal given in 1935 but not then reported and only brought to light in 1949. [F1] There the testator had bequeathed a legacy of £2,000 on certain trusts for the relief of poor members or former members of the staff of Whiteway Laidlaw & 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, Powell v Compton, 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 Finaly and Morton LJJ concurred Lord Greene MR began by stating that no trust could be charitable unless it is directed to be 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 MR said that even if his view that the necessity of founding a claim on 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, although 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 Re Hobourn Aero Components Ltd's Air Raid Distress Fund, Ryan v Forrest, the Court of Appeal, consisting of Lord Greene MR and Morton and Somervall LJJ, 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. [F2] In rejecting that submission Lord Greene MR relied largely on the fact that the fund was a mutual 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 MR and Morton LJ 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 (Gath & Chaves) Ltd-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 parsons-
'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 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 Co Ltd 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 Co., Ltd.... . or any of its subsidiary or allied companies ... '
There were 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 MR as a criterion of general applicability and conclusiveness. He said ([1951] 1 All ER at 41, [1951] AC at 317):
'... I see much difficulty 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 (decd), Baker v National Trust Co Ltd, Public Trustee for Ontario (Province) v National Trust Co Ltd, a Canadian testator directed his trustees to hold the balance of his residuary estate on 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 dependents 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 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 on the latter construction that the question whether Gibson v South American Stores 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's Will Trusts, Westminster Bank Ltd v Sterling, 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 Co (Ltd). There a testator who died on 21 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 21 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 I 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 today. In Re Compton ([1945] 1 All ER at 206, [1945] Ch at 139) Lord Greene MR said that it was 'quite impossible' for the Court of Appeal to overrule such old decisions and in the Oppenheim case ([1945] 1 All ER at 35, [1951] AC at 309) 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 into the law of charity as a whole.'
Indeed counsel for the appellant hardly ventured 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 (decd)-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 suspicion 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, although 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 assuming, 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 although 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 on 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 MR 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 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 then 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 ICI or GEC are just as much 'sections of the public' as the residents in some geographical area. In truth the question whether or not the potential beneficiaries 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 answering 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 although 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 favourable 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 employment 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-Inland Revenue Comrs v Educational Grants Association Ltd-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-although 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 [F3] if confined to a class of employees 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 MR 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 costs of all parties to the appeal be paid out of it.
Appeal dismissed.
Solicitors: Hatchett Jones & Co agents for Wolferstan, Snell & Turner, Plymouth (for the appellant); Vizards agents for Shelly & Johns, Plymouth (for the second to tenth respondents); Treasury Solicitor.