Inland Revenue Commissioners v City of Glasgow Police Athletic Association
[1953] 1 All ER 747(Judgment by: Lord Cohen)
Inland Revenue Commissioners
v City of Glasgow Police Athletic Association
Judges:
Lord Normand
Lord Oaksey
Lord Morton of Henryton
Lord Reid
Lord Cohen
Judgment date: 9 March 1953
Judgment by:
Lord Cohen
My Lords, the question at issue in these proceedings is whether the respondent association is a "body of persons ... established for charitable purposes only" and is therefore entitled to exemption under the Finance Act, 1921, s 30, as amended by the Finance Act, 1927, s 24. The Special Commissioners answered this question in favour of the association but stated a Case at the instance of the appellants, the question for the decision of the court being framed as follows:
"The question of law for the opinion of the court is whether the City of Glasgow Police Athletic Association is, within the meaning and for the purposes of s. 30 of the Finance Act, 1921 (as amended by s. 24 of the Finance Act, 1927), a charity, namely a body of persons established for charitable purposes only."
The First Division of the Court of Session answered this question in the affirmative. They arrived at their conclusion by treating the question as one of fact, on the ground that your Lordships' House had held in Pemsel's case ( [1891] AC 583 ) that the question whether a body of persons was a charity for the purposes of the Income Tax Acts fell to be determined according to English law and that English law in a Scottish court was a question of fact. Counsel for the association did not attempt to support that line of reasoning and I have nothing to add to what has been said by my noble and learned friend on the Woolsack on this aspect of the question. I turn, therefore, to the question stated by the Special Commissioners.
They based their conclusion in favour of the respondent association in substance on the decisions in the Chancery Division in Re Good and Re Gray . In both those cases the question at issue was the validity of a gift contained in the will of a testator, the gift in the former case being of a library and plate for an officers' mess and in the latter of a fund for the promotion of sport in a regiment. The ratio decidendi of the two cases is conveniently stated by Farwell J in Re Good in the passage cited by the Special Commissioners, which reads as follows ([1905] 2 Ch 66):
"I have come to the conclusion that this is a good charitable gift on the first ground-namely, that it is a direct public benefit to increase the efficiency of the army, in which the public is interested, not only financially, but also for the safety and protection of the country."
The commissioners then observed that the increase of the efficiency of police forces appeared to them analogous to the increase of the efficiency of the army, and on this ground decided in favour of the association. They omitted, however, to notice that they were not concerned with the question whether a gift for the promotion of efficiency in the police force was a valid charitable gift but with the different question whether the respondent association was formed for charitable purposes only.
This question has to be determined on the construction of the constitution and rules of the association and of the findings of fact contained in the Stated Case, but before I turn to them it will be convenient to refer briefly to some of the authorities to which your Lordships' attention was directed in the course of the argument. From them certain principles appear to be settled:-(i) If the main purpose of the body of persons is charitable and the only elements in its constitution and operations which are non-charitable are merely incidental to that main purpose, that body of persons is a charity notwithstanding the presence of those elements: Royal College of Surgeons of England v National Provincial Bank Ltd . (ii) If, however, a non-charitable object is itself one of the purposes of the body of persons and is not merely incidental to the charitable purpose, the body of persons is not a body of persons formed for charitable purposes only within the meaning of the Income Tax Acts: Oxford Group v Inland Revenue Comrs . (iii) If a substantial part of the objects of the body of persons is to benefit its own members, the body of persons is not established for charitable purposes only: Inland Revenue Comrs v Yorkshire Agricultural Society . The distinction between this class of case and that contemplated in the first principle I have stated is aptly pointed out by Atkin LJ in the case last cited, when he says ( [1928] 1 KB 631 ):
"There can be no doubt that a society formed for the purpose merely of benefiting its own members, though it may be to the public advantage that its members should be benefited by being educated or having their aesthetic tastes improved or whatever the object may be, would not be for a charitable purpose, and if it were a substantial part of the object that it should benefit its members I should think that it would not be established for a charitable purpose only. But, on the other hand, if the benefit given to its members is only given to them with a view of giving encouragement and carrying out the main purpose which is a charitable purpose, then I think the mere fact that the members are benefited in the course of promoting the charitable purpose would not prevent the society being established for charitable purposes only."
With these principles in mind I turn to the constitution and rules of the respondent association. Rule 2 declares the objects of the association to be "to encourage and promote all forms of athletic sports and general pastimes". It was common ground between the parties that if this object had to be considered in vacuo it would not be a good charitable purpose, but counsel for the association argued, and I think, rightly, that, read in its context, it must be limited to the promotion of sports and pastimes among the Glasgow police; not, however, as I read the document, all the Glasgow police, but only such of them and such ex-members of the Glasgow police as become and remain members of the association. So limited, said counsel for the appellants, the association is merely a private club and the observations of Lord Greene MR in Re Hobourn Aero Components Ltd's Air Raid Distress Fund were in point. In that case Lord Greene, after citing a passage from Tudor On Charities, 5th ed, p 18, said ( [1946] 1 All ER 508 ), the particular association of persons with which the court was there concerned could properly be described as a mutual benefit society, which could not be charitable unless poverty was an essential qualification for participation in the benefits. There is no element of poverty to be found in the present case. Therefore, said counsel for the appellants, the respondent association is stamped with the character of a private trust.
Counsel for the association did not dispute the correctness of that decision, but argued that in the present case the purpose of the association was to maintain the strength and the efficiency of the Glasgow police force and the benefits to the membership of the association were merely incidental to that purpose.
Counsel relied on the findings of the commissioners as expressed in para V of the Case Stated as establishing the correctness of this contention. He relied also on the following rules: r 3 giving the superior officers of the force strong representation on the executive committee and the divisional committees; r 10 providing for deduction of serving members' subscriptions from their pay, and, above all, r 23 giving the chief constable a power of veto on all resolutions and decisions passed at meetings of the association.)
He referred also to the finding that the sports meetings of the association received specially favourable treatment in that no charge was made for the services of the police in connection therewith. It is, I think, a fair inference from these matters and from other evidence that was before the commissioners that the association was regarded by the authorities as an essential part of the police organisation and as playing an important part in the maintenance of health, morale, and esprit de corps in the police force: but the achievement of this end was more the result of the operations of the association than an achievement of its purpose, and I am unable to draw from the evidence the conclusion that the benefits to the members were given with a view only to giving encouragement to the maintenance of the strength and efficiency of the Glasgow police force. These benefits were and could be given to the members and to no one else. Reading the Case Stated and the documents annexed thereto I am forced to the conclusion that the conferment of those benefits was a substantial part of the objects of the association. In my opinion, therefore, the association cannot be said to have been established for a charitable purpose only. I agree that the appeal should be allowed.