Royal College of Surgeons of England v National Provincial Bank Ltd and Ors
[1952] A.C. 631(Judgment by: Lord Morton of Henryton)
Between: Royal College of Surgeons of England - Appellant
And: National Provincial Bank Ltd and Ors - Respondents
Judges:
Lord Normand
Lord Morton of HenrytonLord Reid
Lord Tucker
Lord Cohen
Subject References:
CHARITY
Royal College of Surgeons
Incorporation by Royal Charter
Objects
Charitable institution
Will
Construction Gift to hospital for department of medical school
Defeasance to operate if hospital nationalized
Nationalization of hospital but not of medical school
Legislative References:
National Health Service Act, 1946 (9 & 10 Geo. 6, c. 81) - ss. 6, 7, 8 (2), 11 (8), 151
Judgment date: 3 April 1952
Judgment by:
Lord Morton of Henryton
My Lords, the appellant, the Royal College of Surgeons of England (hereafter referred to as "the college") claims that on July 5, 1948, it became absolutely entitled to the "endowment fund" created by the will of the testatrix, Lady Bland-Sutton. This claim is resisted by the second respondent, hereafter referred to as "the medical school."
The testatrix made her will on January 13, 1943, and died on February 10, 1943. The only relevant clauses of her will are clauses 2, 10 and 11. By clause 2 the testatrix appointed National Provincial Bank Ld. (the first respondent to this appeal) to be the executor and trustee of her will. By clause 10 the testatrix gave all the residue of her real and personal estate to the bank upon the usual trusts for sale and conversion and directed the bank to hold the net proceeds of such sale and conversion and the investments for the time being representing the same (which she called "the endowment fund") "upon the following charitable trusts for so long as the law shall permit." By subclause (1) of clause 10 the testatrix directed the bank to pay the annual sum therein mentioned to the college for the purpose of maintaining a Bland-Sutton Research Scholarship in the Bernard Baron Laboratories at the college upon the terms and conditions therein mentioned. By sub-clause (2) she directed the bank "to pay the residue of the income of the endowment fund in each year to the treasurer or other proper officer of the Mlddlesex Hospital for the maintenance and benefit of the Bland-Sutton Institute of Pathology now carried on in connexion with the said hospital."
Clause 11 of the will is as follows:
"Provided always that should the said Bland-Sutton Institute of Pathology cease to be carried on as a pathological research institution or should its name be changed or should the Middlesex Hospital become nationalized or by any means pass into public ownership or should the bank at any time become unable lawfully to apply the income of the endowment fund for the purposes aforesaid then and in any of the said events the bank shall thereupon pay and transfer the endowment fund (both as to the capital and the income thereof) to the said Royal College of Surgeons absolutely for the general purposes of the said college and the receipt of the treasurer or other proper officer thereof shall be a full and sufficient discharge to the bank therefor."
It will at once be apparent that one or other of the events specified in clause 11 of the will might happen at any time in the future, however remote. Accordingly the gift over to the college is void as offending the rule against perpetuities unless the college can establish that it is a charity and comes within the exception to that rule which was established by the well-known case of Christ's Hospital v. Grainger. [F29] Down to July 5, 1948, the "appointed day" under the National Health Service Act, 1946, no difficulty arose as to the effect of the will, but doubts then arose as to the effect of the provisions of that Act on the trusts declared by the will, and the bank took out an originating summons to have the matters of doubt determined.
The case came first before Danckwerts J. He held that the college was a charity and that, for this reason, the gift over to the college was not rendered invalid by the rule against perpetuities. He held, however, that no one of the events mentioned in clause 11 of the will had so far occurred.
The Court of Appeal differed from Danckwerts J. on each of these points. All the members of that court were of opinion that the Middlesex Hospital had been nationalized, within the meaning of clause 11 of the will. They then considered the question whether the gift over to the college was valid, notwithstanding the rule against perpetuities, on the ground that the college is a charity. The Master of the Rolls expressed himself as follows: [F30]
"Sympathizing, as I am strongly inclined to do, with Danckwerts J.'s opinion of the nature of the purposes of the college, I am unable to escape the conclusion that, in conformity with the principles recently expounded in Young v. Bristol Aeroplane Co. Ld., [F31] the court is bound by the decision of the Court of Appeal in In re Royal College of Surgeons of England [F32] to conclude that the college fail to qualify as a charity."
Jenkins L.J. said: [F33]
"Having regard to the decision of this court in In re Royal College of Surgeons of England [F34] as to the nature of the college's objects, I do not think it was open to Danckwerts J., or is now open to this court, to deal with the matter in that way."
And Hodson L.J. was of opinion [F35] that "the court ought to consider itself bound in the circumstances of this case by the opinion expressed by the court in In re Royal College of Surgeons of England. [F36] It will be convenient to refer to the case by which the members of the Court of Appeal considered themselves bound as "the 1899 case."
The result was that the Court of Appeal held the gift over to be void for remoteness, as that court felt bound to hold that the college was not a charity. It was conceded that on this footing the gift of income contained in clause 10 (2) of the will would continue on foot as a gift of income for charitable purposes for an indefinite period, in accordance with the principle laid down in Hancock v. Watson. [F37] The college now appeals, and submits that the Middlesex Hospital was nationalized on July 5, 1948, within the meaning of clause 11 of the will; that the college is a charity; and that the gift over in favour of the college is therefore valid and effective.
My Lords, I propose first to consider whether the Middlesex Hospital has become nationalized, within the meaning of clause 11 of the will. It is not now suggested that any one of the other events mentioned in that clause has occurred. The relevant facts in regard to the Middlesex Hospital, the medical school and the Bland-Sutton Institute of Pathology referred to in the testatrix's will have been so admirably summarized by Jenkins L.J. that I shall take the liberty of quoting the portion of his judgment which deals with these matters:
"The Middlesex Hospital was incorporated by Act of Parliament in 1836, but had then already been in existence for more than 90 years. Teaching in the wards of the hospital had begun in 1745, but the medical school associated with it was not founded until 1835. Down to 1896 the school, though associated with, did not form part of, the hospital. In that year it became part of the hospital under a scheme of amalgamation which was adopted by the weekly Board of Governors of the hospital on July 28, 1896. Under this scheme the hospital took over the property and liabilities of the school, and the school became, and thereafter down to July 5, 1948 (being the appointed day under the National Health Service Act, 1946), remained a department of the hospital, though in practice it enjoyed a considerable degree of autonomy in the management of its affairs (through a council constituted for the purpose under the scheme), and its accounts were kept separate from those of the hospital.
In 1900 on the reconstitution of the University of London the school became a school of the university. This did not affect the legal position of the school as a department of the hospital, but involved recognition of the school by the university us one where London University medical students might take their training, and the university became the examining body of the school to which it also made grants. The Bland-Sutton Institute of Pathology referred to in the testatrix's will was opened in 1914 as part of the school in a building for which a sum of money had been provided by Sir John Bland-Sutton in 1913. The school has always been housed on the same site as the hospital, and the buildings devoted to the purposes of the school (including the Institute building) are physically connected and one might say intermixed with those of the hospital us distinct from the school."
The learned Lord Justice went on to set out the relevant provisions of the National Health Service Act, 1946, in order to show what was the effect of that Act on the hospital and the medical school. I am relieved from the necessity of embarking on this task because it is now common ground that the hospital, divested of the assets and liabilities of the school, was "nationalized" on July 5, 1948, while the medical school, which was an important department of the hospital down to July 5, 1948, has not been nationalized.
In these circumstances, has the event happened which the testatrix expressed in the words "should the Middlesex Hospital become nationalized"? I would answer this question in the affirmative, and I can state my reasons very shortly, as I am in agreement with the reasoning and the conclusion of the Court of Appeal. I think the test to be applied is: has the institution to which the testatrix referred as "the Middlesex Hospital" ceased to exist? If it is still in existence, there is no doubt that it has been nationalized.
The argument of counsel for the second respondent involves the proposition that if any part of the property of the hospital, as it existed prior to the appointed day, were exempted from the process of nationalization, the institution which became nationalized on the appointed day would not be "the Middlesex Hospital" within the meaning of clause 11 of the will. In my view, this contention gives a very artificial meaning to clause 11 and I cannot accept it. Moreover, I agree with the Court of Appeal that there are indications in the will which support the view taken by that court. Each member of the court relied on these indications, and the matter is dealt with most fully by Jenkins L.J., who said: [F38]
"Apart from the natural meaning of the testatrix's reference to 'the Middlesex Hospital' there are indications in clauses 10 (2) and 11, which seem to me on the whole to support the conclusion to which I have come. She refers, in clause 10 (2), to 'the Bland-Sutton Institute of Pathology now carried on in connexion with' the Middlesex Hospital. That form of words seems to me to suggest that she regarded the institute as connected with but distinct from the hospital itself; and I think the word 'now' in the phrase 'now carried on' also holds a suggestion that the institution referred to as 'the Middlesex Hospital' had existed and might continue to exist as such without the Bland-Sutton Institute - and inferentially without the school of which the institute formed part.
Further, clause 11 contains no reference to the nationalization of the institute. The relevant event contemplated is the nationalization of the hospital. If the testatrix's concept of nationalization of the hospital had been such as Danckwerts J. has held it to be, it would surely have been more natural for her to refer to nationalization of the institute itself. As it is, the language she has used seems to contemplate the possibility of the hospital becoming nationalized in the sense in which she uses that expression without nationalization of the institute 'carried on in connexion' with it, or inferentially of the school of which the institute formed part."
The result is that the gift over in clause 11 of the will has taken effect in favour of the college, unless that gift over is rendered invalid by the rule against perpetuities. Mr. Cross for the college contends that his client is a charity, in the legal sense of the word, and that the rule against perpetuities has no application to a gift over from one charity to another. In support of the latter proposition he relies on the case of Christ's Hospital v. Grainger. [F39] Mr. Pascoe Hayward for the medical school contends first that the college is not a charity, and secondly that, even if the college is a charity, the rule in Christ's Hospital v. Grainger [F39] does not apply to a case where the charity designated to take under the gift over is a body incorporated by royal charter.
My Lords, it will, I think, be convenient to deal with this latter submission before coming to the only question which was argued at any length in your Lordships' House, viz., is the college a charity? The submission is a novel one, for the industry of counsel could not discover any case in which it had been put forward in the 103 years which have elapsed since the decision in Christ's Hospital v. Grainger. [F39] In that case the Corporation of London, as governors of Christ's Hospital, claimed certain property which had been left by the testator, John Hendricke, in 1624, to the Corporation of Reading, for certain charitable purposes in that town, with a direction that if the donees should for a year neglect, omit, or fail to perform the directions of his will, such gift should be utterly void, and should forthwith be paid and transferred to the Corporation of London for the benefit of Christ's Hospital. The strict execution of the directions of the will having been found inconvenient, an information was filed by the Attorney-General in the Court of Exchequer against the Corporations of London and Reading, which led to a decree in 1639, varying the purposes and application of the charity, but still confined to Reading, and providing, as in the will, that if the Corporation of Reading should neglect to perform the directions of the decree, or should misemploy the trust property, and such neglect and misemployment should continue for a year, the legacy should be void and of no effect as to Reading, and that the property should be forthwith paid and transferred to the Corporation of London, for the benefit of Christ's Hospital.
It was clearly established that the directions of the decree, as well as those of the will, had been neglected for the period of far more than one year. It was argued that the gift over was void, as contrary to the rule against perpetuities, but Lord Cottenham L.C. rejected this argument, saying: [F40]
"If the Corporation of Reading might hold the property for certain charities in Reading, why may not the Corporation of London hold it for the charity of Christ's Hospital in London?"
Certain portions of the reasoning of the Lord Chancellor in that case may be open to criticism, but his decision has always been treated as good law.
In In re Tyler [F41] the testator had made a bequest in the following terms:
"I give to the trustees for the time being of the London Missionary Society the sum of £42,000 Russian 5 per Cent. Stock, with a rentcharge to my brother, Charles Tyler, Esq., of £1,000 a year for life. Also I commit to their keeping of the keys of my family vault at Highgate Cemetery, to the (sic) care and charge, my brothers to be buried in the vault if they wish, and to use the same, if they wish, for any member of the family, the same to be kept in good repair and name legible, and to rebuild when it shall require: failing to comply with this request, the money left to go to the Blue Coat School, Newgate Street, London."
Stirling J. said: [F42]
"The rule against perpetuities has no application to a transfer in a certain event from one charity to another, as is expressly laid down by Lord Cottenham in the case of Christ's Hospital v. Grainger"; [F43]
and held that the condition and gift over were good. An appeal from his decision was dismissed, and Lindley L.J. said: [F44]
"What is this gift when you come to look at it? It is a gift of £42,000 Russian 5 per Cent. Stock to the London Missionary Society. What for? It is for their charitable purposes. It is a gift to them for the purposes for which they exist. Then there is a gift over to another charity in a given event - that is to say, the non-repair of the testator's vault. It seems to me to fall precisely within the principle on which Christ's Hospital v. Grainger [F45] was decided. A gift to a charity for charitable purposes, with a gift over on an event which may be beyond the ordinary limit of perpetuities to another charity - I cannot see that there is anything illegal in this."
Fry L.J. said: [F46]
"Inasmuch as both the donees of this fund, the first donee and the second, are charitable bodies, and are created for the purposes of charity, the rule of law against perpetuities has nothing whatever to do with the donees";
while Lopes L.J. concurred.
My Lords, there is not the slightest indication in In re Tyler, [F47] or in any other case cited by counsel, that any distinction is to be drawn between a charity incorporated by royal charter and any other charity, and textbook writers, down to the most modern editions, repeat the rule in general terms. See, for example, Tudor on Charities, 5th ed., p. 81: "A gift over from one charity to another is never void for remoteness"; Gray on the Rule against Perpetuities, 4th ed., p. 572; Theobald on Wills, 10th ed., pp. 280-1; Jarman on Wills, 8th ed., p. 226; Halsbury's Laws of England, 2nd ed., Vol. XXV, p. 119, para. 215. It cannot be doubted that many estates must have been distributed, within the last hundred years, on the footing that the rule as to a gift over from one charity to another is a general rule, as stated in In re Tyler [F47] and in the textbooks. In these circumstances, I apprehend that your Lordships would be most reluctant to introduce into the rule the new qualification suggested by counsel.
Further, I am of opinion that there is no logical ground for this qualification. The reason why a gift to charity is not subject to the rule against perpetuities is stated by Lord Macnaghten in Commissioners for Special Purposes of the Income Tax v. Pemsel [F48] follows:
"The Court of Chancery has always regarded with peculiar favour those trusts of a public nature which, according to the doctrine of the court derived from the piety of early times, are considered to be charitable. Charitable uses or trusts form a distinct head of equity. Their distinctive position is made the more conspicuous by the circumstance that owing to their nature they are not obnoxious to the rule against perpetuities, while a gift in perpetuity not being a charity is void."
My Lords, if the reason for upholding a gift to a charity for an indefinite period is that a charity in its nature is not obnoxious to the rule against perpetuities, I fail to see why the same reason should not apply to a gift over from any one charity to any other charity.
For these reasons I reject the novel submission by Mr. Pascoe Hayward which I have already set out.
My Lords, I now come to the last, and, in my view, the most important of the questions which arise on this appeal, viz., the question whether or not the college is a charity in the sense in which that word is used in English law. It is, in my view, regrettable that, in order to find out what is or is not a charity according to English law, it is still necessary to refer to the preamble to a statute passed in the reign of Queen Elizabeth I. That statute (43 Eliz. 1, c. 4), was not passed for the purpose of giving a definition of "charity," but was directed to providing for the reformation of abuses in the application of property devoted to charitable uses; and the whole of the Act, except the preamble, was repealed by the Mortmain and Charitable Uses Act, 1888; yet, in order to find a comprehensive definition of "charity," it is still necessary first to turn to that Act and then to consider a series of decisions in your Lordships' House and elsewhere, including the case of Commissioners for Special Purposes of the Income Tax v. Pemsel. [F49] I take this opportunity of saying that I hope the legislature will soon embark on the task of giving a comprehensive statutory definition of "charity." In the present case, however, I do not think that a prolonged study of the Statute of Elizabeth I, or of the subsequent cases on the meaning of the word "charity," is necessary, and I turn at once to the charter granted by King George III on March 22, 1800, by which the college was established, in order to discover what were the objects with which the college was established.
The charter first recites certain letters patent of King Edward IV, an Act of the reign of King Henry VIII, and certain letters patent of King Charles I, and then continues:
"And whereas, by an Act of Parliament, made and passed in the 18th year of the reign of our late Royal Grandfather, King George II, intituled 'An Act for making the surgeons of London, and the barbers of London, two separate and distinct corporations,' It was enacted, that the said union and incorporation of the barbers and surgeons of London, made and effected by the aforesaid Act of the 32nd year of King Henry VIII, should, from and after June 24, 1745, be dissolved and declared void and of no effect; and that such of the members of the said united company who were freemen of the said company, and admitted and approved surgeons, within the rules of the said company, and their successors, should from thenceforth be made, and they were thereby made and constituted, a separate and distinct body corporate and commonalty perpetual, which at all times thereafter were to be called by the name of master, governors and commonalty of the art and science of surgeons of London, and by the same name might implead and he impleaded before all manner of justices, in all courts, and in all manner of actions and suits, and take to them and their successors, lands, tenements, rents, or hereditaments, not exceeding the yearly value of £200 in the whole."
Now follow recitals which seem to me to be of the greatest importance:
"And whereas, we are informed that the said corporation of master, governors and commonalty of the art and science of surgeons of London, hath become and now is dissolved: And whereas it is of great consequence to the commonweal of this kingdom, that the art and science of surgery should be duly promoted: And whereas, it appears to us, that the establishment of a college of surgeons will be expedient for the due promotion and encouragement of the study and practice of the said art and science."
Then begins the operative part of the charter:
"Now we ... by these presents ... do will, ordain, constitute, and declare, give and grant; unto the aforesaid James Earle and unto all the members of the said late company or corporation of master, governors and commonalty of the art and science of surgeons of London; having been admitted and approved surgeons, within the rules of the said company; and also unto all such persons, who upon, or since, the dissolution of the said corporation, shall have obtained letters testimonial, under a seal purporting to be the seal of the late dissolved corporation, authorizing them to practise the art and science of surgery; and they, from henceforth forever hereafter, shall be and remain by virtue of these presents, one body corporate and politic; by the name of the Royal College of Surgeons in London and by the same name shall and may have perpetual succession, and a common seal."
Then follow powers for the college to acquire and use a hall or council house and other lands for the purposes of the college without incurring any of the penalties in any Statutes of Mortmain.
The charter then goes on to sever the college from the City of London in the following terms:
"And it is our further will and pleasure, that nothing in these presents shall be construed to give the Corporation of the City of London any power or jurisdiction over the said college hereby established and incorporated; and that no person, by virtue of these our letters patent, constituted or ordained, or hereafter to be admitted a member of the said college, shall be thereby entitled to any franchise belonging to the freemen of the City of London."
It is then provided that the college
"shall and may exercise and enjoy all and singular other the gifts, grants, liberties, privileges and immunities, possessions, real and personal ... by any Act or Acts of Parliament, or by any letters patent ... given, granted, and confirmed unto, or otherwise lawfully acquired by, and belonging to the said late master, governors, and commonalty of the art and science of surgeons; or any of them, and not hereby altered, taken away, changed, or abridged, made void, or annulled."
It is later provided that the college may elect 21 persons to be the court of assistants, 10 of whom are to be examiners of surgeons for the college; and of these 10 persons, one is to be principal master, and two others are to be governors. Power is given to the master and governors, together with 10 or more of the members of the court of assistants, to hold courts and assemblies and
"to make, ordain, confirm, annul, or revoke, from time to time such by-laws, ordinances, rules, and constitutions, as to them shall seem requisite and convenient, for the regulation, government, and advantage of the said college: so as such by-laws, ordinances, rules, and constitutions be not contrary to law: and in all such cases as shall be necessary, be examined, approved of, and allowed, as by the laws and statutes of this realm is provided and required: and also to transact and ordain all such other matters and things as the master, governors, and court of assistants of the late dissolved company or corporation, of the master, governors, and commonalty of the art and science of surgeons of London, might heretofore lawfully do, transact or ordain."
Then follows an appointment of the first master, governors, examiners, and court of assistants, and provision is made for the election of successors in these offices from time to time. The conditions of membership are stated as follows:
"And it is our further will and pleasure, that after the day of the date of these presents, no person except those who before the day of the date of these presents were members of the late corporation of surgeons, established by the said Act, made and passed in the 18th year of the reign of our royal grandfather, King George II; and also excepting such persons as shall have received such letters testimonial as aforesaid, under a seal purporting to be the seal of the late dissolved company or corporation of surgeons, shall be capable of becoming a member of the said college hereby established, unless he shall have obtained letters testimonial of his qualification to practise the art and science of surgery, under the common seal of the college hereby established; but every person who shall hereafter obtain such letters testimonial, under the common seal of the college aforesaid, shall thereby, by virtue of such letters testimonial, become and be constituted a member of the said college, subject to all the regulations, provisions, and by-laws of the said college."
The charter goes on to require the examiners of the college to examine candidates for the post of surgeon or assistant surgeon in the army or surgeon or surgeon's mate in the navy, and also to examine all surgeons' instruments to be used in the King's service, and proceeds:
"And further, we will that no court or courts for the examination of any person or persons touching their skill in surgery, shall ever be held but in the presence of the master or one of the governors, and five of the members, at least of the court of examiners of the said college, hereby established and incorporated as aforesaid."
The rest of the charter need not be quoted for the present purpose.
Your Lordships have heard much argument on the question where, in this charter, the object or objects of the college is or are set out. It is submitted on behalf of the medical school that the usual place in which to find the objects stated is in the operative part of a charter, and not in the recitals; that the last recital merely states the reason of His Majesty for establishing the college and does not state what are to be the objects of the college when established; and that the recital which immediately precedes it is merely the statement of a platitude. My Lords, it may well be that one would expect to find the object or objects stated in the operative part of a royal charter, but I can find no statement of the objects in the operative part of the document now under consideration, although I do find various provisions as to the means by which these objects are to be achieved, and various powers conferred for better enabling the college to achieve these objects. This being so, I have no doubt that the object of this newly created body, the college, is stated in the last recital and is "the due promotion and encouragement of the study and practice of the art and science of surgery." As I read the words "study" and "practice," they embody two ideas, research in the laboratory and that practical experience which can only be gained by using surgical implements upon human or other bodies. The object of the college is to promote the art and science of surgery by encouraging each of these activities.
My Lords, if this be the true construction of the original charter, can it be doubted that the college is a charity? The object just stated may be regarded as being directed to the relief of human suffering or to the advancement of education or science or to all of these ends. Each of these is a charitable end and it cannot be doubted that in the present case there is no lack of that element of public benefit which is essential if an institution is to be regarded as a charity. I cannot find in this recital any statement that one of the objects of the new college is to be the promotion of the interests of individuals who are carrying on their profession as surgeons, nor can I find any reference to the promotion of the interests of such individuals in any other part of this charter. I state this at once, in view of the observations of the Court of Appeal in the 1899 case, to which I must refer later.
So far I have considered only the charter of 1800 by which the college was established, but the later charters, in so far as they are relevant, support my view that the object of the college is to be found in the last recital of the charter of 1800. In the charter of 1822 the last recital is: "And whereas it appears to us to be expedient, in order more effectively to promote and encourage the study and practice of the said art and science of surgery, that further powers and privileges be granted to the said royal college," and the same words "in order more effectively to promote and encourage the study and practice of the said art and science of surgery" appear in the last recital to the charter of 1843. I refrain from any detailed reference to the other charters or to the by-laws, as I cannot find, either in the charter of 1800, or in any subsequent charter, or in the by-laws, any statement of the objects of the college, as distinct from the methods by which these objects are to be pursued.
My Lords, for these reasons, had the matter been wholly free from authority, I should have felt no doubt that the college was a charity. I must shortly consider the decision of the Court of Appeal in the 1899 case, by which the Court of Appeal has found itself bound, but it will be convenient to turn first to two cases which dealt with the position of the Institution of Civil Engineers. The first is Inland Revenue Commissioners v. Forrest, [F50] a decision of this House. The question which arose in that case was whether the Institution of Civil Engineers was liable to the duty imposed by section 11 of the Customs and Inland Revenue Act, 1885, or came within the exemption granted by subsection (3) of that section. Subsection (3) exempts from the duty in question "property which, or the income or profits whereof, shall be legally appropriated and applied for any purpose connected with any religious persuasion, or for any charitable purpose, or for the promotion of education, literature, science, or the fine arts." It was contended on behalf of the institution that its property was legally appropriated and applied for the promotion of science, and your Lordships' House accepted this contention. It was argued by counsel for the Commissioners of Inland Revenue that the main and primary object of the institution was to promote the interests of the profession of engineers and not to increase scientific knowledge. This argument was rejected by Lords Watson and Macnaghten, Lord Halsbury L.C. dissenting. Lord Watson said: [F51]
"I do not doubt that membership is accompanied with a certain amount of prestige which may prove to be of service to the member in his professional career; but I believe that the same result would attend membership of any society which effectively promoted a branch of science intimately connected with the profession or business in which the member was engaged. That there is a science of civil engineering, and that its development is of the utmost consequence to our national interest, are to my mind propositions not admitting of dispute."
Lord Macnaghten said: [F52]
"The question at issue may be stated shortly. Is the property of the Institution of Civil Engineers legally appropriated and applied for the promotion of the science of civil engineering, or is it legally appropriated and applied for the benefit of civil engineers in order to enable them to practise their profession to greater advantage? It cannot, I think, be doubted that the institution has raised the standard of the profession, and that, to a civil engineer, it is of advantage, and probably of pecuniary advantage, to be a member. But is that result the purpose of the society, or is it an incidental, though an important and perhaps a necessary consequence of the way in which the institution does its work in the pursuit of science?"
My Lords, I think that the words of Lords Watson and Macnaghten may aptly be applied to the present case, with the substitution of "the college," "the science of surgery" and "surgeons" for "the Institution of Civil Engineers," "the science of civil engineering" and "civil engineers."
The matter was carried a stage further, as regards the Institution of Civil Engineers, by the decision of the Court of Appeal in Institution of Civil Engineers v. Inland Revenue Commissioners. [F53] In that case the question was whether the institution was "a body of persons ... established for charitable purposes only" and was, therefore, exempt from income tax under section 37 (1) (b) of the Income Tax Act, 1918. Rowlatt J. held that the institution was not established for charitable purposes only. On the charter of the institution and its by-laws he found that, although one of the objects of the institution was undoubtedly to enlarge the knowledge of mankind in regard to mechanical science, the institution had also as an object the organization of the profession of civil engineers by giving to those who passed the necessary examination and became members of the institution the exclusive right to affix to their names certain designations. The members became known to the public as persons belonging to the institution, and as members they were required to observe certain rules for the protection of clients. That was collateral to the acquisition or spread of knowledge of mechanical science and was an object which could on no view be called charitable. His decision was reversed by the Court of Appeal, and Lord Hanworth, after referring to the charter and by-laws, said: [F54]
"The question of law that arises upon these matters of fact is this: do these other activities represent a collateral or independent purpose, or are they subsidiary and incidental to the main object for which the institution was started and incorporated?"
He held that the latter was the true view, and Lawrence L.J., in agreeing, said, [F55] after referring to Forrest's case: [F56]
"It follows, in my judgment, that the institution is established for a charitable purpose only, notwithstanding that it is of advantage to a civil engineer in his profession to be a member of the institution, this result not being a purpose for which the institution was established but being incidental to and consequent upon the way in which the institution carries out the charitable purpose for which alone it was established."
I have referred in detail to this decision of the Court of Appeal, because in Forrest's case, [F56] as Lord Macnaghten pointed out, it was not necessary for this House to consider whether the promotion of science was the only purpose for which the property sought to be charged was legally appropriated and applied.
I now come to In re Royal College of Surgeons of England, [F57] and it will be convenient to refer to the report in the Tax Cases, as the history of the case is there fully set out. In that case the Court of Appeal had to consider whether the college was liable to the duty imposed by section 11 of the Customs and Inland Revenue Act, 1885 (the same section which had to be considered by your Lordships' House in Forrest's case, [F58] or came within the exemption contained in subsection (3) of that section. Before the Commissioners the college had relied upon the words "for the promotion of education, literature, or science" which appear in subsection (3). When the case came before a Divisional Court of the Queen's Bench Division, it would appear that counsel relied only upon the words "legally appropriated and applied for the promotion of science," and this was the only argument put forward when the case came before the Court of Appeal. It is difficult to understand why counsel did not rely upon the words "for any charitable purpose" and why they ceased to rely on the words "for the promotion of education," as both of these purposes come within the exemption conferred by subsection (3). However, both the argument in the Court of Appeal, and the judgment of the court, which was delivered by Romer L.J., concentrated on the words "legally appropriated and applied for the promotion of science."
Romer L.J. said: [F59]
"It is contended by the appellants that the property is exempt from duty under subsection (3) of section 11 of the Act, as being property which, or the income or profits whereof, is or are legally appropriated and applied for the promotion of science. In order to see whether this contention is correct or not it is important to ascertain what is the main purpose and object of the college."
After referring to Forrest's case, [F60] he continued:
"Now the case before us differs essentially from the case of the Institution of Civil Engineers before the House of Lords. That institution had only one main object and purpose. The college has two main objects, each of great importance, in fact, it would be difficult to say which of the two main functions imposed on and discharged by the college is the more important. Neither can be considered as merely subsidiary to the other. The one may be shortly described as the promotion of the science of surgery. The other is the promotion and encouragement of the practice of surgery, including the promotion of the interests of those practising, or about to practise, surgery as a profession, and also including the examination of students and others to qualify for practice or honours in surgery or kindred subjects."
My Lords, I need quote no more of the judgment, for these words reveal at once the difference between the view which I hold of the construction of the charters, and the view taken by the Court of Appeal in the 1899 case. If I understand the judgment aright, that court thought that "the promotion of the interests of those practising, or about to practise, surgery as a profession" was one of the main objects of the college. I do not so read the charters. I think that the promotion of the interests of practising surgeons is "an incidental, though an important and perhaps a necessary, consequence" of the work of the college in carrying out its main object, the promotion and encouragement of the study and practice of the art and science of surgery.
The distinction between an institution whose main object is the promotion and advancement of a science and an institution whose main object is the protection and advantage of those practising a particular profession is well illustrated by a comparison of the judgments in the two cases, already cited, relating to the Institution of Civil Engineers, with the judgments in the cases of Society of Writers to Her Majesty's Signet [F61] and Sulley v. Royal College of Surgeons, Edinburgh. [F62]
Counsel for the medical school relied upon the case of Miley v. Attorney-General for Ireland. [F63] In that case the Court of Appeal in Ireland held that the College of Surgeons in Ireland was incorporated with two main objects, the promotion of the science of surgery and the promotion of the interests of those practising the profession of surgery, the latter not being a charitable object. It was accordingly held that a legacy to that college was not a charitable bequest. The language of the charters of the Irish college appears to differ in some respects from the language of the charters now under consideration, and the decision may be justified on that account; but I think that Barton J. in the court of first instance, and two at least of the members of the Court of Appeal, attached importance to the views on construction which had been expressed by the English Court of Appeal in the 1899 case, and I have already expressed my disagreement with these views.
The arguments on this point before your Lordships' House ranged over a wide field, and many portions of the charters and by-laws were relied on as showing that the protection of the interests of the profession was one of the main objects of the college. I have anxiously considered all these arguments, but I have decided not to increase the length of this speech by discussing them in detail. Suffice it to say that, in my view, each and all of the powers conferred upon the college and the regulations made by the charters and by-laws were powers and regulations conferred and made for the purpose only of enabling the college the better to achieve its charitable objects, and any benefit to the profession resulting from the exercise of these powers or the carrying out of these regulations was incidental to the carrying out of the main purpose for which the college was incorporated, as stated in the last recital of the charter of 1800. I have already stated the construction which I place on that recital.
I would add that, in my opinion, your Lordships could not decide against the college in this case without drawing too fine a distinction between the relevant documents in the case of the Institution of Civil Engineers and the relevant documents in the present case. It is true that in the first charter of that institution, dated June 3, 1828, it appears that the institution was the direct successor of a society formed for "the general advancement of mechanical science and more particularly for promoting the acquisition of the species of knowledge which constitutes the profession of a civil engineer," and the institution is stated to be formed "for the purposes aforesaid." But if I am right in thinking that the last recital to the college's charter of 1800 states the object of the college, and that object is charitable, there is no distinction, so far, between the college and the institution; and a general comparison of the charters and by-laws of these two bodies respectively leads me to think that it would be very difficult to draw a distinction between them in favour of the Institution of Civil Engineers.
I have not referred to the evidence filed in this case, because it is said that the manner in which the college has in fact carried out its functions is irrelevant for the present purpose. I am content to assume that this is so, and I have not relied on that evidence in any way in reaching my conclusion; but it is satisfactory to learn, from the affidavit of Lord Webb-Johnson, how well-founded have been the happy expectations expressed in the charter of 1800.
I would allow the appeal and declare that the proviso contained in clause 11 of the will of the testatrix is valid and has come into operation, and that on July 5, 1948, the endowment fund referred to in clause 10 of the said will became transferable to the college for the general purposes of the college.
In the special circumstances of this case I would leave undisturbed the order of the Court of Appeal as to costs and would direct that the costs of the appeal to this House be taxed as between solicitor and client and paid out of the corpus of the said endowment fund.