Between: Royal College of Surgeons of England - Appellant
And: National Provincial Bank Ltd and Ors - Respondents

Judges: Lord Normand
Lord Morton of Henryton
Lord 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

Decision by:
Lord Cohen

My Lords, I agree with your Lordships that the event on the occurrence of which the testatrix directed that the gift over in favour of the Royal College of Surgeons (hereinafter sometimes referred to as "the college") should take effect has taken place, and I cannot usefully add anything to the reasons given by your Lordships for affirming the decision of the Court of Appeal on that point.

The gift over may obviously take effect beyond the time allowed by the rule against perpetuities. It can only be valid, therefore, if it can be brought within the exception in favour of charities which was laid down by Lord Cottenham L.C. in Christ's Hospital v. Grainger ^[F69] in the following terms:

"It was then argued that it"

(a gift over in favour of the Corporation of London for the benefit of Christ's Hospital)

"was void, as contrary to the rules against perpetuities. These rules are to prevent, in the cases to which they apply, property from being inalienable beyond certain periods. Is this effect produced, and are these rules invaded by the transfer, in a certain event, of property from one charity to another? 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? The property is neither more nor less alienable on that account."

Mr. Pascoe Hayward said that the college is not a charity which comes within the exception recognized in Christ's Hospital v. Grainger ^[F70] for two reasons:

(1)

That exception only applies to cases where property is given over to trustees upon charitable trusts and not to cases of a gift over direct to a charitable corporation incorporated by royal charter.

(2)

In any event the Royal College of Surgeons is not a charitable corporation, since one of its main objects is in effect the object of a professional protection society and this is not charitable.

The first point was taken in the court below but only in order that it should be reserved for this House. We have not the assistance of the Court of Appeal on it. It derives support from the judgment of Ronan L.J. in the Irish case of Miley v. Attorney-General for Ireland, ^[F71] and is based on the passage in

Lord Cottenham's judgment in which he gave as the reason for his decision that the property did not become more or less alienable by reason of a gift over from one charity to another. This, said Mr. Pascoe Hayward, cannot apply to a gift over from a charity created by declaration of trust to a corporation incorporated by royal charter, since such a corporation has all the powers of an individual. (See Baroness Wenlock v. River Dee Co. ^[F72] If it disregards some expressed limitation in its charter, it is not acting ultra vires. It cannot be restrained by injunction if it disregards the limitation; it only runs the risk that on an application by the Attorney-General by writ of scire facias, its charter may be rescinded. A gift over to a chartered corporation cannot therefore be said to fulfil the condition that the property should be neither more nor less alienable.

In my opinion, this argument is not well founded. In the first place, the exception has always been regarded by textbook writers in the 100 years that have elapsed since the case was decided as applying to all charities whether their charitable character was derived from a document creating a trust or from the terms of a charter. Secondly, although there is no direct decision on the point, the decision in In re Tyler ^[F73] proceeded on the basis that a gift over from the trustees of charity A to charity B, a charitable corporation incorporated by royal charter is valid. In In re Lopes ^[F74] it was admitted by counsel ^[F75] that such a gift over was valid. Thirdly, even if the decision in Christ's Hospital v. Grainger ^[F76] is, as suggested in Gray on Perpetuities, 4th ed., pp. 572-578, illogical, we should make matters worse if we were to accept Mr. Pascoe Hayward's argument on this point. The policy behind the decision in Christ's Hospital v. Grainger ^[F76] was, in my opinion, the leaning of the court in favour of charity. I can see no reason why that leaning should prevail in favour of charitable trusts declared by a will or trust instrument and yet be disregarded when the gift over takes the form of a direct gift to a charitable corporation.

Before parting with this branch of the case I would add that the statement by Mr. Pascoe Hayward that a corporation incorporated by a royal charter cannot be restrained by injunction from disregarding a restriction imposed by its charter is too wide. It has been held that such an injunction will be granted at the instance of a member since a member should be allowed to prevent his rights being defeated by an application by the Attorney-General to rescind the charter. See Jenkin v. Pharmaceutical Society of Great Britain. ^[F77] Moreover, in some cases, at any rate, charitable corporations are by reason of their charitable objects necessarily trustees of their corporate property and are, therefore, like other trustees subject to the jurisdiction of the Court of Chancery. See Halsbury's Laws of England, 2nd ed., Vol. IV, p. 336, para. 566.

The second point, to my mind, presents much greater difficulty. Mr. Pascoe Hayward suggested that we could not decide against him unless we were prepared to overrule the decision of the Court of Appeal in In re Royal College of Surgeons of England. ^[78] That was a step which the Court of Appeal in the present case did not consider themselves at liberty to take, and there are undoubtedly dicta in the judgment of the court which lend support to their view. I agree, however, with Danckwerts J. that the question which we have to decide was not really before the Court of Appeal in the 1899 case.

That was a decision upon section 11 of the Customs and Inland Revenue Act, 1885, which granted exemption from corporation duty inter alia on "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." In the 1899 case the college did not rely on the words "for any charitable purpose," nor on the word "education." An issue, and the only relevant issue, argued and decided was whether or not the income or profits derived from the property of the college was legally appropriated and applied for the promotion of science. The Court of Appeal decided this question against the college. Sir Robert Romer L.J., who delivered the judgment of the court, relied very largely on those provisions of the charter which dealt with the examining functions of the college. These were undoubtedly important functions and could hardly be said to be purely ancillary to its other objects. It may well be that they cannot be said to be purposes connected with the promotion of science: but we are concerned with the wider question of charitable objects in general, one of which is education. In my opinion, the examining functions of the college are so much connected with education that I do not think they deprive the college of any charitable character which it might otherwise possess.

I have not overlooked that in the 1899 case Romer L.J. said: ^[F79]

"It was finally determined by the House of Lords in the case of Inland Revenue Commissioners v. Forrest ^[F80] that if the main purpose or object of an institution be the promotion of science, though there may be some subsidiary purposes or objects, then this property, having to be applied and being applied for the purposes of the institution, is legally appropriated and applied for the promotion of science within the meaning of those words as used in the Act, and is accordingly exempt from duty. 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."

I can well understand that the Court of Appeal felt a difficulty, in view of those observations, in deciding the present case against the respondent, but the observations should be read in the light of the point to which the Court of Appeal was then directing its attention. I think, therefore, that, even if we now decide in favour of the college, it does not necessarily follow that the decision in the 1899 case was wrong on the question then decided in the light of the evidence then before the court.

Our attention was also directed to cases in which the character of the bodies in Scotland and Ireland corresponding to the Royal College of Surgeons in England arose for consideration. In the Scotch case (Sulley v. Royal College of Surgeons, Edinburgh ^[F81] the question was whether the defendants could claim exemption from income tax under Schedule A in respect of a building on the ground that it was

"property of any literary or scientific institution, used solely for the purposes of such institution, and in which no payment is made or demanded for any instruction there afforded, by lectures or otherwise."

It was held that the defendants were not a scientific institution and therefore not entitled to exemption. The court came to the conclusion, on the evidence in that case, that the defendants' primary and proximate objects were professional, that its methods squared with the requirements of the profession and that if it furthered research it did so only incidentally and indirectly (see per the Lord President. ^[F82] Both the facts in that case and the question for decision differed so much from the case before us that I do not get any assistance from it in deciding the present case.

In the Irish case (Miley v. Attorney-General for Ireland ^[F83] the question for decision was similar to that before us. The court held that the Royal College of Surgeons in Ireland had been 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, and that the latter was not a charitable object. The only evidence before the court were the charter and the by-laws of the college, and it appears from the judgment of O'Brien L.C. ^[F84] and of Molony L.J. ^[F85] that the charter itself contained elaborate provisions for disciplining the members of the Irish college and others connected with the profession, and that the oath required of licentiates was of a more professional character than that required of the governors and examiners of the college. The Chancellor said: ^[F86]

"I am satisfied from a consideration of these and other clauses to be found in the charters that by the incorporation of this body with such great powers there was to be effected the second great object I have mentioned - that of keeping the profession of surgeons honourable in its conduct, and of ensuring its discipline, so that anything in the nature of unprofessional conduct could be punished by the corporate body. It was further pointed out in the course of the argument that until comparatively recent times the system of apprenticeship prevailed, under which a youth was apprenticed to a member of the body in the same manner as to a land agent or stockbroker. This apprenticeship might be either indoor or external; it was open to the body to regulate the fees and emoluments of the member to whom an apprentice was bound, and it might also insist that no one should be admitted as a licentiate unless he had been previously apprenticed to a member of the body. It would also be open and legitimate to the body to expend money on providing the necessary machinery for the detection or prevention of anything which might be regarded as casting a slur on the honour and character of the profession."

Molony L.J. referred also to the by-laws which contained strong indications - particularly in defining the duties of the general purposes committee - of a professional objective. He said: ^[F87]

"It is clear, therefore, that one of the objects of the college is to become acquainted with all intended legislation, and to take all proper steps to safeguard the interests of the profession, and in furtherance of this object, if need be, to send deputations to London or elsewhere on the business of the college, and to pay the expense of such deputations out of the corporate funds. This object is, no doubt, very useful, but in no sense can it be regarded as charitable."

The differences between the charters and by-laws of the Irish college and those of the Royal College of Surgeons in England are, however, such that I cannot regard the decision of the Court of Appeal in Ireland as a decision of the question we have to consider.

Mr. Pascoe Hayward said that it was clear from the charters of the college and its by-laws that it had objects which were not exclusively charitable and that, as it had non-charitable objects which were not to be accomplished only in the course of and in pursuit of the main charitable objects, the appeal must necessarily fail.

Mr. Cross, on the other hand, contended that the main objects of the college were clearly charitable, and that if in so far as it had other objects such other objects were purely ancillary to the main objects. He relied on the last two recitals in the charter of 1800 and the last recitals in the charters of 1822 and 1843 respectively as declaring the objects of the college in terms which he argued were clearly charitable. He also referred to the paragraphs in Lord Webb-Johnson's affidavit which deal with the current activities of the college. I doubt whether this latter evidence is admissible. We are concerned not with what the college is in fact doing now but with what it is authorized to do, and I do not think we are entitled to construe its charters of 1800, 1822 and 1843 by evidence of its actions in 1948.

In support of his argument, Mr. Cross referred us to two decisions in relation to the Institution of Civil Engineers. In the first (Inland Revenue Commissioners v. Forrest ^[F88] the question was as to the right of the institution to exemption from duty under section 11 of the Customs and Inland Revenue Act, 1885. The House held that the institution was entitled to exemption as being formed not for the professional ends of individuals but for the promotion of science within section 11. In the second (Institution of Civil Engineers v. Inland Revenue Commissioners ^[F89] the question was whether the institution was established for charitable purposes only within section 37 (1) (b) of the Income Tax Act, 1918. The Court of Appeal decided in favour of the institution.

The charter of the institution contained a recital, similar to the last recitals in the 1800 charter of the college, to the effect that it was in the national interest to establish an institution for "the general advancement of mechanical science, and more particularly for promoting the acquisition of that species of knowledge which constitutes the profession of a civil engineer, being the art of directing the great sources of power in nature for the use and convenience of man." The charter of the institution differed from the 1800 charter of the college in that it expressly declared that the institution was incorporated for the purpose specified in the recital. This seems to me a material difference as it clearly defines the main purpose of the institution. I cannot, therefore, agree with Mr. Cross, that the decision of the Court of Appeal as to the status of the college in 1899 was, or that any decision we might give in favour of the respondents in the present case would necessarily be, inconsistent with the decisions of the House of Lords and the Court of Appeal on the status of the Institution of Civil Engineers. I do, however, find assistance from certain passages in the judgments of the Court of Appeal. Thus Lord Hanworth M.R. says: ^[F90]

"As Rowlatt J. has said, there may be a charitable institution for the relief of sickness, and incidental advantages can be gained by a subscriber to the funds without the institution losing its character; but if there is an object, e.g., the promotion of the profession in addition to the promotion of science that is collateral and not merely incidental, the result is that the institution cannot be described as established for charitable purposes only. I confess that I have a difficulty in attaching the same weight as was given to it by the Commissioners and the learned judge to the fact that members of the institution can attach letters as suffixes to their names. The requirement of the institution whereby its members have to possess an adequate qualification does not appear to me to connote an advantage, amounting to a collateral purpose in the sense above. That its members should bring a certain knowledge and capacity for learning to the institution seems only to confirm its purpose of the general advancement of mechanical science and knowledge."

Then, again, ^[F91] he refers to an observation of Lord Macnaghten when he points out that where a society is incorporated, and its purpose defined by charter or statute, it is not right to confuse the purpose of the society with the objects of individuals in joining it.

With these principles in mind I return to the charters and by-laws of the college and would refer first to the last two recitals in the charter of 1800, which read as follows:

"And whereas, it is of great consequence to the commonwealth 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."

Had these been the only recitals and had the charter gone on to provide, as did the charter of the Institution of Civil Engineers, that the college was incorporated for the purposes specified in the recitals, I should, I think, have agreed with your Lordships that the only main object of the college was charitable and that any professional object which might be deduced from the reference to the practice of the art of surgery was merely ancillary to the main object. This view would have been reinforced by the concluding recitals in the charters of 1822 and 1843.

Unfortunately, the words of incorporation do not contain any direct reference to the material recitals and these are preceded by an historical account of the predecessors in title of the college, all of which appear to have been in the nature of trade guilds under the jurisdiction of the Corporation of London and conferring on their members franchises as freemen of the City of London. None of these predecessors could, I think, have claimed that their non-charitable activities were merely ancillary to a main object which was charitable. The last of such predecessors is, however, stated in the recitals to have been dissolved, and although under the operative part of the charter its privileges and properties are confirmed to the college, it is expressly provided that the Corporation of London is to have no jurisdiction over the college nor are the members of the college to be freemen of the City of London.

It is, therefore, argued that the college is not in any sense a trade guild. On the other hand, it is to be observed that the master, governors and court of assistants are given power to make by-laws for the regulation, government and advantage of the college, and that the master, governors and assistants are obliged to take an oath to maintain the honour and the welfare of the college. The master, governors and court of assistants are further empowered to transact or ordain all such other matters and things as the master, governors and court of assistants of the late dissolved company or corporation might theretofore lawfully do, transact or ordain.

Mr. Cross argued that this last power was purely administrative and was confined to doing such things as were requisite for the achievement of the charitable objects referred to in the last two recitals in the charter. In considering the validity of this argument it is, I think, permissible to look at the by-laws which in fact the college adopted. They are set out in the calendar. Section XV reads as follows:

"The council will, at all times, protect and defend every fellow, fellow in dental surgery, member, and licentiate in dental surgery of the college in the exercise and enjoyment of the rights and privileges acquired by him as a diplomate of the college."

Section XVI gives power to remove from fellowship or membership a fellow or member who is adjudged guilty of professional misconduct or is convicted of a criminal offence or has his name removed from the medical register of the General Medical Council under section XXIX of the Medical Act, 1858. Section XVI at any rate cannot have existed in its present form in 1800, or, indeed, at any date before the passing of the Medical Act, 1858, but it was not suggested that some disciplinary powers were not at all times contained in the by-laws or that some provision had not always been made enabling the council to defend its fellows and members.

Mr. Cross sought to explain these provisions on the grounds indicated in paragraphs 22 and 23 of Lord Webb-Johnson's affidavit, where he says:

"22.

Apart from examinations the college seeks and has sought in the interests of the public to do all it can to secure that surgical practitioners shall not only be technically competent but also shall hold to high standards of professional honour. As a corollary the college feels and has felt itself bound to take and retain powers to defend and protect in their professional capacity its fellows, members and licentiates but this not in their interest but in the interest of the public so that surgeons feeling that they enjoy the support of the college may fearlessly and without anxiety render their best professional services to their patients.

23.

As for disciplinary measures the council preserve their powers under the charters and by-laws but in practice the discipline of registered medical practitioners is now for the most part maintained by the General Medical Council established by the Medical Act of 1858."

In the light of this evidence I am unable to reach a conclusion that the disciplinary and "defence" activities of the college are purely ancillary to its plainly charitable objects as set out in the recitals and illustrated in its 1948 Report. It was the descendant of a body which plainly could not be regarded as a purely charitable corporation. If it had not had disciplinary powers over its members, there was, until the Medical Act, 1858, so far as the evidence goes, no other body which could exercise those powers over its members. Having regard to section XV of the by-laws and to paragraph 22 of Lord Webb-Johnson's affidavit, it is difficult to accept the view that the power to defend and protect in their professional capacity its fellows, members and licentiates was taken in 1800 solely in the interests of the public and without any intention to promote the interests of the college. On the whole, therefore, though with some reluctance, having regard to the excellent work in research and education that the college is now doing, I have come to the conclusion that the college cannot properly be held to have established that its objects in so far as they are non-charitable are merely ancillary to a main charitable object. I would, therefore, dismiss the appeal.

Appeal allowed.

Solicitors: Wilde, Sapte & Co.; Peake & Co.; Withers & Co.