Re Cottam's Will Trusts 3 All ER 704
(Judgment by: Danckwerts J)
Midland Bank Executor and Trustee Co Ltd and Another v.
Huddersfield Corporation and Others
Benefit to community
Gift to local authority to provide flats for married couples or bachelors over sixty-five years of age and living in the district
Flats to be let at economic rents
Re Robinson -  2 All ER 1148;  Ch 198; 8 Digest (Repl) 317, 34
Re Monk -  2 Ch 197; 96 LJCh 296; 137 LT 4; 8 Digest 322, 62
Judgment date: 17 November 1955
By his will the testator gave the trust fund comprising his residuary estate to the Huddersfield Corporation to "apply the same (through such committee as the corporation shall in its absolute discretion think fit) for the provision of a flat or flats to be occupied by married couples or bachelors living within the boundaries of the ... county borough of Huddersfield and being in every case over the age of sixty-five years". The testator further directed: "(i) that the said flat or flats shall be let at economic rents bearing in mind the cost of providing the said flat or flats either by building or purchasing and adapting existing buildings and maintenance and repair of the said flat or flats; and (ii) that the corporation shall formulate such rules and regulations as it shall in its absolute discretion think fit for the letting of the said flat or flats along the lines of but not necessarily strictly complying with the rules and regulations now in existence relating to the corporation Cottage Homes for Old People and the Roebuck Memorial Homes Huddersfield ... " The two institutions referred to in the will were admittedly charities, but, in both cases, the homes were provided free of rent and rates, and gas, electricity and coke were also provided to the residents free. In each case the rules provided that an applicant should have a minimum weekly income of 10s, and that the maximum weekly income of a single applicant should be 41s 6d, and that of a married couple should be 62s. The rules also contained certain restrictions on the liberty of the inhabitants of the homes. On the question whether the gift to the corporation was a valid charitable gift,
Held - The trust, being for the benefit of the aged, was prima facie charitable; and as, having regard particularly to the testator's reference to the rules and regulations, his object was to provide homes for aged persons of small means, the direction that the flats should be let "at economic rents" did not displace the charitable purpose and accordingly the gift was a valid charitable gift.
Re Robinson ( 2 All ER 1148) and Re Monk ( 2 Ch 197) applied.
As to gifts for the relief of the aged and poor, see 4 Halsbury's Laws (3rd Edn) 213-218, paras 492-495; and for cases on the subject, see 8 Digest (Repl) 316-319, 13-43.
The plaintiffs, Midland Bank Executor and Trustee Co Ltd and Charles Smith, as executors and trustees of the will of the testator, Ernest Peter Cottam deceased, applied to the court by originating summons to determine whether the gift by the testator of the trust fund (as defined in the will) to the Huddersfield Corporation for the provision of a flat or flats on the terms specified in the will was a valid charitable gift. The "trust fund", as defined in the will, comprised the testator's residuary estate, namely, the investments and all parts of the estate for the time being unsold.
B G Burnett-Hall for the plaintiffs, the trustees of the will.
E J T G Bagshawe for the first defendants, Huddersfield Corporation.
K Backhouse for the second defendant, the testator's sister, interested on an intestacy.
B J H Clauson for the Attorney General.
22 November 1955. The following judgment was delivered.
DANCKWERTS J . The will in this case was made on 14 April 1949, and the testator died on 14 February 1951. The particular trust which I have to consider was to take effect on the death of the testator's brother, Rodger Cottam, and he died on 23 May 1952. The trust is in cl 7 of the will and is in the following terms:
"After the death of the said Rodger Cottam my trustees shall transfer the trust fund unto the council for the time being of the county borough of Huddersfield (hereinafter called 'the corporation') who shall apply the same (through such committee as the corporation shall in its absolute discretion think fit) for the provision of a flat or flats to be occupied by married couples or bachelors living within the boundaries of the said county borough and being in every case over the age of sixty-five years and I declare (i) that the said flat or flats shall be let at economic rents bearing in mind the cost of providing the said flat or flats either by building or purchasing and adapting existing buildings and maintenance and repair of the said flat or flats; and (ii) that the corporation shall formulate such rules and regulations as it shall in its absolute discretion think fit for the letting of the said flat or flats along the lines of but not necessarily strictly complying with the rules and regulations now in existence relating to the corporation Cottage Homes for Old People and the Roebuck Memorial Homes Huddersfield aforesaid."
It is plain that the class of persons selected for benefit by this trust by the testator is a class which falls within the definition of charity. It is for aged persons, and, therefore, prima facie, it is a charitable trust. Among other cases, Re Robinson ( 2 All ER 1148) may be referred to as an authority for that. It is contended, however, on behalf of the next of kin that the provision in the will that the flats "shall be let at economic rents" prevents there being any bounty in the gift, and, therefore, it is not really an effective charitable gift; the persons who are to receive the benefit of the trust are to pay a certain sum, and there is nothing in the nature of a gift to them to be found. The fact that persons have to pay something or re-pay something under a trust of a charitable nature does not necessarily render that trust one which is not a charitable trust: see, for example, Re Monk ( 2 Ch 197), where the testator directed that part of his residuary estate was to be held as a loans fund for poor people. In that case, the recipients of the loan had to re-pay the principal sum loaned to them, although they were not to be charged interest. It was plain that the trust in that case was regarded by the Court of Appeal as a good charitable trust.
In the present case it is submitted by the corporation that the economic rent which the testator had in mind is not a full economic rent, not a full commercial rent, if I may paraphrase it in that way, because, although the rent is fixed so as to have regard to the cost of providing the flat or flats-I suppose that means taking into consideration interest on capital and maintenance and repairs-there is no provision for inclusion of sums for the replacement of the capital value of the properties as they eventually wear out. There is also the consideration that the corporation are to make rules and regulations on the lines of the Cottage Homes for Old People and the Roebuck Memorial Homes, Huddersfield. The set of rules relating to each of those two charities, which are admittedly charities, provides that the minimum income of applicants is to be 10s a week in the case of a single person, married couples and two single persons, and the maximum incomes are to be 41s 6d a week in the case of a single person, 62s a week for married couples, and 68s a week for two single persons. On the other hand, in the case of those two charities, the homes are to be provided free of rent and rates, and gas, electricity and coke are provided free. The rules, however, contain various restrictions on the liberty of the inhabitants of the homes which would not necessarily appeal to people with sufficient money to pick and choose their accommodation without regard to financial difficulties.
It seems to me plain that the testator had in mind a class of persons of small means. The minimum income referred to in the regulations shows that the persons to be benefited in the case of the two existing charities are persons who, in present social conditions, where artisans are able to make £20 a week, are persons in the very low scale of income groups or income-receiving groups. Accordingly, it seems to me that the intention of the testator was that homes of a cheap character should be provided so that the economic rent, even though they pay the economic rent as required by the testator, is such as might properly be paid by people falling within the class for which these other homes deal perhaps more adequately, because in the case of existing charities there are no rents payable at all. It is a case which is not without difficulty, but, on the whole, I think that the provisions of the will are not such as to prevent the prima facie charitable intention of the testator being sustained. Therefore, I come to the conclusion that this is a valid charitable trust.
Solicitors: Biddle, Thorne, Welsford & Barnes agents for Cartwright & Fieldhouse, Huddersfield (for the plaintiffs); Sharpe, Pritchard & Co agents for the Town clerk, Huddersfield (for the first defendants); Francis Miller & Steele agents for J Nightingale & Co Manchester (for the second defendant); Treasury Solicitor.