Inland Revenue Commissioners v City of Glasgow Police Athletic Association
[1953] 1 All ER 747(Judgment by: Lord Morton of Henryton)
Inland Revenue Commissioners
v City of Glasgow Police Athletic Association
Judges:
Lord Normand
Lord Oaksey
Lord Morton of HenrytonLord Reid
Lord Cohen
Judgment date: 9 March 1953
Judgment by:
Lord Morton of Henryton
My Lords, the only question arising for decision on this appeal is whether the respondent association is a "body of persons ... established for charitable purposes only" within the meaning of the Finance Act, 1921, s 30(3). If the association is such a body, it is not disputed that the profit of £1,214 resulting from its annual amateur sports meeting, held during the year ending 30 September 1950, is exempted from income tax by the Finance Act, 1921, s 30(1)(c), as amended by the Finance Act, 1927, s 24.
The facts as to the establishment of the association are set out in the Case Stated as follows:
"Prior to 1938 there were various clubs connected with the City of Glasgow Police. In February, 1938, these clubs were merged in the association, which was established at that date with the purpose of co-ordinating the various athletic and sporting activities of the members of the police force."
Starting from this point, I have carefully considered the constitution and general rules of the association, and the facts as to its activities which are set out in the Case Stated, and I am quite unable to hold that this body of persons is established for charitable purposes only.
Rule 2 provides that: "The objects of the association shall be to encourage and promote all forms of athletic sports and general pastimes". It was accepted by the Special Commissioners, and it is not disputed by the respondent association, that these objects, stated in such general terms, are not objects which the law regards as charitable. It is rightly said, however, that the constitution and rules must be read as a whole and construed in the light of such evidence of surrounding circumstances as may be admissible. So reading them and so construing them I arrive at the conclusion that the purpose for which the association is established is to provide for its members and their friends facilities for taking part in athletic sports and general pastimes, both outdoor and indoor. I cannot detect in this purpose any element of charity. The members pay their subscriptions and get certain benefits in return; they make a profit by running the annual amateur sports meeting already mentioned and that profit is applied to carrying out the purpose which I have just stated. So far, the association would not appear to be any more a charity than is any other athletic or social association or club established for the like purpose. The association does not, in my view, fit into any of the four "principal divisions" mentioned by Lord Macnaghten in Pemsel's case ( [1891] AC 583 ), and the purpose just stated is far indeed from the "spirit and intendment" of the preamble to the statute 43 Eliz c 4.
Counsel for the respondent association rely strongly on the facts found in para V of the Special Case and especially on sub-para (f) which is as follows:
"The existence and activities of the respondent association: (i) played an important part in the maintenance of physical fitness, health, morale and esprit de corps within the force, (ii) attracted recruits to the force, (iii) helped to maintain the strength and efficiency of the force by conducing to a contented force, keeping members happy in their work and inducing them to continue in the force, rather than leave it, (iv) conduced to the public order by promoting good relations between the force and the general public, (v) increased the efficiency of the force, generally, and thereby directly benefited the public."
They contend that the achievement of the results just stated is the purpose for which the association is established, and that this is a charitable purpose. I do not doubt, my Lords, that a gift made for the sole purpose of increasing the efficiency of the police force would be a charitable gift, but the task before your Lordships is first to determine the purpose or purposes for which the association is established and then to determine whether the sole purpose is, or all the purposes are, charitable. In my view, the purpose for which the association is established, within the meaning of the Finance Act, 1921, s 30(3), is the non-charitable purpose which I have already stated and the achievement of the results set out in para V is simply a consequence which will follow if the purpose for which the association is established is carried out successfully and efficiently.
Even if I were satisfied that there exists some other purpose for which the association was or is established, for instance, the purpose of maintaining the strength and efficiency of the police force, I should find it impossible to say that the sole purpose of the association is a purpose which is nowhere even mentioned in the constitution and general rules, and that the purpose which emerges so clearly in the rules and on which the income of the association appears to have been expended ever since it came into existence is either non-existent or merely incidental. Observations have been made by my noble and learned friend on the Woolsack as to the course which this case took in the First Division of the Court of Session. I agree with these observations and do not desire to add to them. I agree also with my noble and learned friend's comments on the cases of Re Good, Re Gray and Re Hobourn Aero Components Ltd's Air Raid Distress Fund . I would allow the appeal.