Re Trusts of Hobourn Aero Components Ltd's Air-Raid Distress Fund, Ryan and Others v. Forrest and Others
[1946] ALL ER 501(Decision by: Morton LJ)
Re Trusts of Hobourn Aero Components Ltd's Air-Raid Distress Fund
Between: Ryan and Others
And: Forrest and Others
Judges:
Lord Greene MR
Morton LJSomervell LJ
Subject References:
trusts
Charities
Charitable purposes
Fund raised by employees of a company to provide grants for contributors in respect of air-raid distress
No means test applied in considering claims
Claims by non-contributors not considered
Gift not for general public purposes nor within "poor relations" cases
Fund not subject to valid charitable trusts
Case References:
Re Compton, Powell v Compton - [1945] 1 All ER 198; [1945] Ch 123; 114 LJCh 99; 172 LT 158
Income Tax Special Purposes Comrs v Pemsel - [1891] AC 531; 8 Digest 241, 1; 61 LJQB 265; 65 LT 621
Re Clark's Trust - (1875), 1 ChD 497; 8 Digest 262, 241; 45 LJCh 194
Spiller v Maude - (1881), 32 ChD 158, n; 8 Digest 262, 245
Pease v Pattinson - (1886), 32 ChD 154; 8 Digest 262, 244; 55 LJCh 617; 54 LT 209
Shaw v Halifax Corpn - [1915] 2 KB 170; 8 Digest 243, 21; 84 LJKB 761; 112 LT 921
Re Forster, Gellatly v Palmer - [1938] 3 All ER 767; [1939] Ch 22; Digest Supp; 108 LJCh 18; 159 LT 613
Hall v Derby Sanitary Authority - (1885), 16 QBD 163; 8 Digest 243, 26; 55 LJMC 21; 54 LT 175
Re Hillier, Dauncey v Finch and A-G - [1944] 1 All ER 480
Re Drummond, Ashworth v Drummond - [1914] 2 Ch 90; 8 Digest 244, 28; 83 LTCh 817; 111 LT 156
Re Grove-Grday, Plowden v Lawrence - [1929] 1 Ch 557; Digest Supp; 98 LJCh 261; 140 LT 659 (varied on appeal); sub nom A-G v Plowden [1931] WN 89
Re Christchurch Inclosure Act - (1888), 38 ChD 520; 8 Digest 289, 658; 57 LJCh 564; 58 LT 827
Goodman v Saltash Corpn - (1882), 7 App Cas 633; 8 Digest 327, 1099; 52 LJQB 193; 48 LT 239
Judgment date: 13 March 1946
Decision by:
Morton LJ
I am of the same opinion and I have comparatively little to add. In Re Compton, a recent decision of this court, Lord Greene MR said ( [1945] 1 All ER 198 , at p 200):
'The fundamental requirement of a charitable gift is, in my opinion, correctly stated in the following passage in TUDOR ON CHARITIES, 5th Edn., at p. 11: "In the first place it may be laid down as a universal rule that the law recognises no purpose as charitable unless it is of a public character. That is to say, a purpose must, in order to be charitable, be directed to the benefit of the community or a section of the community.'
In the present case I think there are three reasons why it is impossible to decide that the fund in question is held upon a charitable trust. In the first place, the only objects of the trust, as I see the matter, are employees of a particular company. It seems to me that, on the true construction of this circular, ex-employees are not included, although I am not suggesting that if ex-employees serving with the Forces had been included, that would in any way have altered the position.
In the course of the argument of the Attorney General and Mr Upjohn, Re Drummond was criticised, notwithstanding the approval of it indicated by this court in Re Compton. It was said that any expressions of approval were not necessary for the decision of Re Compton and that this court is not bound by them. I desire to say quite plainly that I entirely approve of the decision in Re Drummond. In considering the numerous cases as to trusts alleged to be directed to the benefit of the community, or of a section of the community, I have often felt inclined to echo the observations of Russell LJ in Re Grove-Grady. He observed ([1929] 1 Ch 557, at p 582):
'I cannot help feeling that in some instances matters have been stretched in favour of charities almost to bursting point: and that a decision benevolent to one doubtful charity has too often been the basis of a subsequent decision still more benevolent in favour of another.'
It must have been very doubtful, until this court removed the doubt in Re Christchurch Inclosure Act, whether a right of cutting turf, vested in the occupiers for the time being of a few cottages, was of a sufficient public character to come within the legal definition of a charity. In that case, Lindley LJ said (38 ChD 520, at p 530):
'Had it not been for the decision of the House of Lords in Goodman v. Mayor of Saltash we should have felt great difficulty in holding this trust to be a charitable trust. For, although the occupiers of these cottages may have been, and perhaps were, poor, people, the trust is not for the poor occupiers, but for all the then and future occupiers, whether poor or not. Moreover, the trust is not for the inhabitants of a parish or district, but only for some of such persons. The trust is for a comparatively small and tolerably well-defined class of persons. The class consists of all the then and future occupiers of the cottages; and there may be several occupiers of one cottage. The class, however, though limited, is as to its members uncertain, and is liable to fluctuation, and the trust for the class is perpetual. This being the case, we are unable to distinguish this case from the trust which both LORD SELBORNE and LORD CAIRNS held to be a charitable trust, and therefore valid, in Goodman v. Mayor of Saltash.'
Charities are rightly privileged as regards freedom from income tax and freedom from the restrictions imposed by the rule against perpetuities, and it is important that those privileges should really be restricted to purposes which benefit the public or some section of the public. I think Re Drummond imposed a very healthy check upon the extension of the legal definition of "charity," and I suspect that if the decision had been the other way it would have been followed by a case in which it would have been argued that, if the provision of holidays for the employees of a large company was a charitable object, so also was the provision of holidays for employees of a partnership firm employing say, 100 persons. Next there would have followed an argument that the same would apply in the case of a partnership firm employing eight persons. In the present case, as I have said, the trust is for the employees of a particular company and such a trust is not, in my view, a trust for the benefit of the community, or of a section of the community: see per Lord Greene MR ( [1945] 1 All ER 198 , at pp 201, 202) in Re Compton.
In the second place, I think that those eligible to receive benefits were not even all the employees of the particular company. They were those who chose to join in the scheme and to allow 2d a week to be deducted from their wages, and no one else. That is not expressly stated in the circular to which my Lord has referred, but I think it is clear from the whole tenor of the circular that those who were allowing the deduction from their wages were not intending to provide benefits for those who refused to allow any such deduction. As regards the payments which were made to ex-employees serving in the Forces, I only desire to say this. I respectfully agree that one cannot infer the consent of all those interested, but I think that these payments must have been known to a very large proportion of those interested, and it is a significant fact that there was never any protest, so far as we know, against the making of payments to ex-employees serving with the Forces. The only protest arose when those payments were stopped, and the protest came from those at home, who displayed, I think, a very generous spirit in so protesting. It seems to me that this arrangement, initiated by the circular of November 1940, was a perfectly businesslike arrangement whereby payments were made into a fund which was to be applied for the benefit of persons making those payments. It is true that, under the circular, no one was given a contractual right to any particular sum, but a wide discretion was given to the trustees as to what payments should be made in respect of air-raid distress. As my Lord has pointed out, that does not alter the fact that this was a businesslike arrangement on the part of the subscribers for their own benefit.
The third point is that there is no element of poverty in the present case. That, of course, does not prevent a trust from coming within the fourth head of Lord MacNaghten's classification in Pemsel's case, but the relevance of it in the present case is this: where poverty is essential in the qualification for benefits under a particular fund, there have been cases where trusts which would appear to be of a private nature have been held to be charitable. An example of this is Spiller v Maude. The reason, as was suggested by Lord Greene MR in Re Compton, may be that the relief of poverty is regarded as being in itself beneficial to the community. that element being absent in the present case, the appellant cannot rely upon these cases. Mr Upjohn has argued that in the present times the provision of relief for air-raid distress should be elevated to the same position as trusts for the relief of poverty. No doubt the provision of relief for air-raid distress is a most excellent object, and I should not myself doubt that a fund for the relief of air-raid distress in Coventry was a fund held upon charitable trusts. But I do not feel inclined to extend the somewhat anomalous line of cases where poverty has been held to take a trust out of the category of a private trust and into the category of a trust which is charitable in the legal sense.
I agree with decision of Cohen J on this branch of the case.