The Incorporated Council of Law Reporting for England and Wales v. Attorney-General and another
[1971] 3 All ER 1029(Judgment by: Russell LJ)
The Incorporated Council of Law Reporting for England and Wales
v Attorney-General and another
Judges:
Russell LJSachs LJ
Buckley LJ
Judgment date: 14 October 1971
Judgment by:
Russell LJ
The question raised in this appeal is whether a company limited by guarantee incorporated on 28 July 1870 under the Companies Acts entitled The Incorporated Council of Law Reporting for England and Wales (hereinafter called 'the Association') is a corporate institution which is established for purposes which are exclusively charitable according to the law of England and Wales and is subject to the control of the High Court in the exercise of the court's jurisdiction with respect to charities. If it is such, then it is a charity within the Charities Act 1960 (see ss 45(1) and 46); and it is entitled to be entered as such on the register of charities to be maintained by the Charity Commissioners under s 4 of the Act. The Association applied to be so registered: the Commissioners of Inland Revenue objected on the ground that the Association was not a charity; the Charity Commissioners upheld the objection and declined to register the Association; the Association appealed to the High Court by the appropriate procedure, joining as parties to the appeal the Commissioners of Inland Revenue and the Attorney General. Foster J ( [1971] 1 All ER 436 , [1971] Ch 626) allowed the appeal on the ground that the Association was a charity within the fourth of the categories in Income Tax Special Purpose Comrs v Pemsel , this contention of the association being supported by the Attorney General; but he did not accept the additional or alternative contention of the Association that it was an educational charity, a contention which was not supported by the Attorney General. From this decision that the Association was a charity entitled to registration as such the Commissioners of Inland Revenue appeal, and the Association seeks to support the decision on the additional or alternative ground of education.
In order to see for what purposes the Association was established and whether those purposes are exclusively charitable, attention must be focused on its memorandum and articles of association, bearing in mind, of course, that purposes merely ancillary to a main charitable purpose, which if taken by themselves would not be charitable, will not vitiate the claim of an institution to be established for purposes that are exclusively charitable. Hereunder the objects clause in the memorandum must plainly play the leading role. That is in the following terms:
'The Objects for which the Association is established are: 1. The preparation and publication, in a convenient form, at a moderate price, and under gratuitous professional control, of Reports of Judicial Decisions of the Superior and Appellate Courts in England. 2. The issue, periodically or occasionally, of any subsidiary or other publications relating to legal subjects which it may be considered expedient to combine with the publication of such Reports, including the Statutes of the Realm, or any part thereof, if deemed expedient. 3. The continuation (in furtherance of the above objects) of the Series of Reports called "The Law Reports" (now in course of publication by the present Council of Law Reporting) under their present or any other name, and either in their present form and according to the present system or subject to any alterations of form or system that may be considered conducive to the promotion of the above objects; and the issue periodically or occasionally of any legal Digests or other publications connected with "The Law Reports", or subsidiary thereto, or which may be considered likely to increase the utility thereof; and the acquiring by purchase or otherwise, on such terms or conditions as shall be considered expedient, the copyright of any (rival or) other publications of Law Reports which may now or shall hereafter exist or be in course of publication, and the making any agreement or arrangement for the purpose of procuring the discontinuance of such Reports, or the publishing thereof, or the discontinuance of preparing Reports for any such publication by any other persons. The taking over and assuming all the assets and liabilities of the existing Council of Law Reporting. 4. The doing all such other lawful things as are incidental or conducive to the attainment of the above objects.'
Clause 4 of the memorandum is in the following terms:
'The income and property of the Association, whencesoever derived, shall be applied solely towards the promotion of the objects of the Association as set forth in this Memorandum of Association, and no portion thereof shall be paid or transferred, directly or indirectly, by way of dividend, bonus, or otherwise howsoever by way of profit, to the persons who at any time are or have been Members of the Association, or to any of them, or to any person claiming through any of them: Provided, that nothing herein shall prevent the payment, in good faith, of remuneration to any Editors, Reporters, Secretaries, officers or servants of the Association, or to any Member of the Association, or other person in return for any services actually rendered to the Association.'
The signatories to the memorandum were five of Her Majesty's counsel and two solicitors. By the articles of association membership of the Association was limited to 20 in number. Eligibility for membership of the Association was confined to (a) 'nominated persons' (up to two nominated by each of the four Inns of Court and the Law Society), (b) up to two more members nominated or selected by or with the approval of the Council of Management of the Association ('the council')-called 'elected members', (c) the Law Officers and President of the Law Society-called 'ex officio members', and (d) (since 1951) any other persons up to five in number nominated by the council-called 'co-opted members'. Provision was made for retirement by rotation and resignation of membership of the Association. Article 34 provided that membership of the Association should ipso facto confer and be a requirement of membership of the council. By art 39 the management of the affairs of the Association is vested in the council which (art 37) may appoint an executive committee of the council to which supervision of the day-to-day management of the Association's affairs are delegated. I do not think that any other reference to the articles is needed.
There are some matters which require no proof. The making of the law of this country is partly by statutory enactment (including therein subordinate legislation) and partly by judicial exposition in the decision of cases brought before the courts. It cannot be doubted that dissemination by publication of accurate copies of statutory enactments is beneficial to the community as a whole; and this is not the less so because at least in many instances the ordinary member of the public either does not attempt to, or cannot by study, arrive at a true conclusion of their import, or because the true understanding is largely limited to persons engaged professionally or as public servants in the field of any particular enactment, or otherwise interested in that field. The fact that to perhaps the majority of those who acquire and study a copy of (for example) a Finance Act it constitutes what might be described as a tool of their trades or professions or avocations in no way lessens the benefit to the community that results if accurate versions of that Finance Act are published and not kept like a cat in a bag to be let out haphazard. The same is to be said of the other source of our law, judicial decisions and the reasons therefor, especially in the light of our system of precedent. It is in my view just as beneficial to the community that reliable reports of judicial decisions of importance in the applicability of the law to varying but probably recurrent circumstances, or demonstrating development in the law, should be published; and all the more so if the publication be supervised by those who by training are best qualified to present the essence of a decision correctly and to distinguish the ephemeral from the significant. To state that the publication also supplies many professional men with the tools of their trade does not seem to me in any way to detract from the benefit that accrues to the community from the fact that the law does not remain locked in the bosom of the judiciary.
Now the first contention of the Crown is shortly stated. When the stated objects of the Association are considered they amount to no more (it is said) than to carry on the trade of publishers and sellers of law reports; there is (it is said) no difference between the objects of the Association and the objects of the publishers of the All England Law Reports with the one exception that the Association is to make no profit from its trade that is not to be applied in the production and publication of law reports, ie the Association is in that sense non-profit making. This short contention does not in my judgment supply the answer to the case. The fact that the Association carries on a trade or business is admittedly not inconsistent with a charitable character in its objects. The difference between the two cases is in my view a vital distinction. The element of unselfishness is well recognised as an aspect of charity, and an important one. Suppose on the one hand a company which publishes the Bible for the profit of its directors and shareholders: plainly the company would not be established for charitable purposes. But suppose an association or company which is non-profit making, whose members or directors are forbidden to benefit from its activities, and whose object is to publish the Bible: equally plainly it would seem to me that the main object of the association or company would be charitable-the advancement or promotion of religion.
It was next contended by the Crown that a main purpose, even if not the only main purpose, of the Association is to advance the interests of the legal profession by supplying it with the tools of its trade. Reference hereunder was made to the fact that the Association and its unincorporated predecessor were brought into being by members of the legal profession; to the fact that it is to be supposed that the main body of 'consumers' would be such members; to the fact that Scrutton J in Smith v Incorporated Council of Law Reporting for England and Wales ( [1914] 3 KB 674 at 681) (very much by the way) remarked that the Association 'publish the Law Reports for the benefit of the profession'; and to the fact that Lord Simonds's Law Reporting Committee appointed by the Lord Chancellor in 1939 contained this reference in its report to the aims of the Association:
'No other purpose was to be served than to produce the best possible reports at the lowest possible price for the benefit of the profession and of the public at large.'
To this may be added the comment of Professor Goodhart (a member of that committee) that the committee recommended continuance of the Law Reports in their established form 'as they performed an essential function for the legal profession'. I am not persuaded of the validity of this contention. It seems to me that if the publication of reliable reports of decisions of the courts is for the benefit of the community and of general public utility in the charitable sense, it is an inevitable and indeed necessary step in the achievement of that benefit that the members of the legal profession are supplied with the tools of their trade. I do not see how the benefit to the public, assuming it to be a charitable object, could otherwise be achieved. So it would be if there were a non-profit making association under gratutous professional supervision for the production at moderate expense of pure medical drugs or efficient surgical instruments. But the only main object or purpose in such case would be, it seems to me, the relief of the sick. We were in this connection referred to a number of cases, some on one side of the line and some on the other, where the question was whether a main object was the promotion of the interests of a professional body or organisation. I do not find these helpful. Here the Association consists of members who as such can derive no conceivable benefit from their gratuitous supervision of the activities of the Association. Nor to my mind is the contention now under consideration fortified, as was I think at least at one stage in argument suggested, by the fact that cl 3 of the memorandum of association does not open with the words 'The Objects for which the Association is established are to advance and promote the proper development of law by the following means:'.
Accordingly I reject the contention that the Association is not established for purposes which are exclusively charitable insofar as that contention is based on the submission that a main purpose or object is to supply members of the legal profession with the tools of their trade.
I come now to the question whether, if the main purpose of the Association is (as I think it is) to further the sound development and administration of the law in this country, and if (as I think it is) that is a purpose beneficial to the community or of general public utility, that purpose is charitable according to the law of England and Wales. On this point the law is rooted in the Statute of Elizabeth [b] , a statute whose object was the oversight and reform of abuses in the administration of property devoted by donors to purposes which were regarded as worthy of such protection as being charitable. The preamble to the statute listed certain examples of purposes worthy of such protection. These were from an early stage regarded merely as examples, and have through the centuries been regarded as examples or guideposts for the courts in the differing circumstances of a developing civilisation and economy. Sometimes recourse has been had by the courts to the instances given in the preamble in order to see whether in a given case sufficient analogy may be found with something specifically stated in the preamble, or sufficient analogy with some decided case in which already a previous sufficient analogy has been found. Of this approach perhaps the most obvious example is the provision of crematoria by analogy with the provision of burial grounds by analogy with the upkeep of churchyards by analogy with the repair of churches. On other occasions a decision in favour or against a purpose being charitable has been based in terms on a more general question whether the purpose is or is not within 'the spirit and intendment' of the Elizabethan statute and in particular its preamble. Again (and at an early stage in development) whether the purpose is within 'the equity' or within 'the mischief' of the statute. Again whether the purpose is charitable 'in the same sense' as purposes within the purview of the statute. I have much sympathy with those who say that these phrases do little of themselves to elucidate any particular problem. 'Tell me', they say, 'what you define when you speak of spirit, intendment, equity, mischief, the same sense, and I will tell you whether a purpose is charitable according to law. But you never define. All you do is sometimes to say that a purpose is none of these things. I can understand it when you say that the preservation of sea walls is for the safety of lives and property, and therefore by analogy the voluntary provision of lifeboats and fire brigades are charitable. I can even follow you as far as crematoria. But these other generalities teach me nothing.' I say I have much sympathy for such an approach; but it seems to me to be unduly and improperly restrictive. The Statute of Elizabeth was a statute to reform abuses; in such circumstances and in that age the courts of this country were not inclined to be restricted in their implementation of Parliament's desire for reform to particular examples given by the statute, and they deliberately kept open their ability to intervene when they thought necessary in cases not specifically mentioned, by applying as the test whether any particular case of abuse of funds or property was within the 'mischief' or the 'equity' of the statute.
For myself I believe that this rather vague and undefined approach is the correct one, with analogy its handmaid, and that when considering Lord Macnaghten's fourth category in Pemsel's case ([1891] AC at 583, [1891-94] All ER Rep at 55) of 'other purposes beneficial to the community' (or as phrased by Sir Samuel Romilly [c] 'objects of general public utility') the courts, in consistently saying that not all such are necessarily charitable in law, are in substance accepting that if a purpose is shown to be so beneficial or of such utility it is prima facie charitable in law, but have left open a line of retreat based on the equity of the statute in case they are faced with a purpose (eg a political purpose) which could not have been within the contemplation of the statute even if the then legislators had been endowed with the gift of foresight into the circumstances of later centuries.
In a case such as the present, in which in my view the object cannot be thought otherwise than beneficial to the community and of general public utility, I believe the proper question to ask is whether there are any grounds for holding it to be outside the equity of the statute; and I think the answer to that is here in the negative. I have already touched on its essential importance to our rule of law. If I look at the somewhat random examples in the preamble to the statute I find in the repair of bridges, havens, causeways, sea banks and highways examples of matters which if not looked after by private enterprise must be a proper function and responsibility of government, which would afford strong ground for a statutory expression by Parliament of anxiety to prevent misappropriation of funds voluntarily dedicated to such matters. It cannot I think be doubted that if there were not a competent and reliable set of reports of judicial decisions, it would be a proper function and responsibility of government to secure their provision for the due administration of the law. It was argued that the specific topics in the preamble that I have mentioned are all concerned with concrete matters, and that so also is the judicially accepted opinion that the provision of a court house is a charitable purpose. But whether the search be for analogy or for the equity of the statute this seems to me to be too narrow or refined an approach. I cannot accept that the provision, in order to facilitate the proper administration of the law, of the walls and other physical facilities of a court house is a charitable purpose, but that the dissemination by accurate and selective reporting of knowledge of a most important part of the law to be there administered is not.
In my judgment accordingly the purpose for which the Association is established is exclusively charitable in the sense of Lord Macnaghten's fourth category. I would not hold that the purpose is purely the advancement of education; but in determining that the purpose is within the equity of the statute I by no means ignore the function of the purpose in furthering knowledge in legal science.
I would dismiss the appeal.