Attorney General v Ross and others

[1985] 3 All ER 334

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(Judgment by: Scott J)

Between: Attorney General
And: Ross and others

Court:

Judge:
Scott J

Subject References:
Charity
Education
Educational purposes
Students' union
Union founded to provide and develop scientific, artistic, cultural, athletic, political, religious and social activities among students
Constitution also providing for affiliation with National Union of Students
Whether union formed for furthering educational purposes of polytechnic
Whether funds of union held on trusts exclusively charitable at law

Case References:
London Hospital Medical College v IRC - [1976] 2 All ER 113 applied.
IRC v City of Glasgow Police Athletic Association - [1953] 1 All ER 747; [1953] AC 380; [1953] 2 WLR 625, HL
IRC v Yorkshire Agricultural Society - [1928] 1 KB 611; [1927] All ER Rep 536, CA
London Hospital Medical College v IRC - [1976] 2 All ER 113; [1976] 1 WLR 613
Oxford Group v IRC - [1949] 2 All ER 537, CA
Royal College of Surgeons of England v National Provincial Bank Ltd - [1952] 1 All ER 984; [1952] AC 631, HL
A-G v Brazen Nose College Oxford - (1834) 2 Cl & Fin 295; 6 ER 1166
Baldry v Feintuck - [1972] 2 All ER 81; [1972] 1 WLR 552
Geologists Association v IRC - (1928) 14 TC 271, CA
Hood, Re, Public Trustee v Hood - [1931] 1 Ch 240; [1930] All ER Rep 215, CA
IRC v McMullen - [1980] 1 All ER 884; [1981] AC 1, HL
McGovern v A-G - [1981] 3 All ER 493; [1982] Ch 321
National Anti-Vivisection Society v IRC - [1947] 2 All ER 217; [1948] AC 31, HL
Royal College of Nursing v St Marylebone Corp - [1959] 3 All ER 663; [1959] 1 WLR 1077, CA
Schuler (L) AG v Wickman Machine Tool Sales Ltd - [1973] 2 All ER 39; [1974] AC 235, HL
Shore v Wilson - 8 ER 450, HL

Hearing date: 23, 24, 25 July 1985
Judgment date: 31 July 1985

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Judgment by:
Scott J

I have before me a preliminary issue in an action in which Her Majesty's Attorney General is the plaintiff and three officers of the students' union of the North London Polytechnic are the defendants. The defendants are Mr Peter Ross, Mr Philip Brett and Mr Peter Redman. They are respectively the president, treasurer and vice-president of the students' union.

The preliminary issue was directed by an order made by Peter Gibson J on 4 February 1985 and is expressed in these terms: 'Whether the funds of the Union are held upon trust exclusively charitable at law and if so upon what trust.'

I should, I think, refer to the background to the action and to the relevance in that action of the answer to the question posed by the preliminary issue.

By December 1984 the strike of the National Union of Mineworkers had been in progress for several months. Strong views were held and were expressed by various sections of the community as to the rights and wrongs of that industrial dispute. It became known that the students' union of the North London Polytechnic were proposing, out of the funds of that union, to make a payment of £5,000 to the striking miners. Whether that payment was to be for the general purpose of the strike or was to be confined to the relief of the hardship being suffered by the wives and families of the striking miners I do not know and it does not for present purposes matter. At or about the same time it became known that the students' union were proposing, also out of the funds of the students' union, to make a payment of £5,000 for the relief of those suffering from the famine in Ethiopia.

The Attorney General took the view that the purposes for which these payments were proposed to be made fell outside the scope of any of the objects expressed in the constitution of the students' union and that the payments if made would be ultra vires. He accordingly commenced this action for, inter alia, an injunction restraining the union from making these proposed payments.

An interlocutory injunction to that effect was sought by the Attorney General and was granted. In addition, on 27 December 1984, an interlocutory order was made appointing a receiver and manager of the funds of the union.

There are two relevant questions in the action. The first is whether the payments made, or proposed to be made, by the defendants out of the funds of the union are ultra vires. The second is whether the Attorney General has any locus standi to interfere. This latter question depends on whether those funds are held on charitable trusts. If they are held on charitable trusts, the Attorney General has an undoubted locus standi to maintain this action. If the funds are not held on charitable trusts then, even if it is right that the proposed payments would be ultra vires, the Attorney General lacks the locus standi to interfere. Whoever else might be able to control an ultra vires application of those funds it would not be he.

Accordingly the preliminary issue has been directed to be tried. The issue before me is whether or not the funds of the union are held on charitable trusts. The question whether the payments made, or proposed to be made, to the striking miners or to aid famine relief in Ethiopia are ultra vires is not before me.

Counsel for the defendants commenced his submissions by informing me that the defendants would feel a sense of grievance at being subjected to what he described as 'the restraints of charity'. He submitted that it could not have been intended when the union was founded that it should be subjected to these restraints of charity. This approach is, in my judgment, misconceived. The union, and the defendants as officers of the union, are subject to the restraints of its constitution. If the payments in question are outside the scope of its prescribed objects, they ought not to be made whether or not the union is a charity. If the payments are within the scope of the union's objects, then the union is entitled to make them whether or not the union is a charity. The answer to the question whether the union is or is not a charity will not, as I see it, add to or detract from the propriety of the payments which have given rise to this action. It will simply settle whether the Attorney General has the right to complain of the impropriety of the payments, if impropriety there be.

The question posed by the preliminary issue concerns the trusts on which or purposes for which the funds of the union are held. These funds derive almost entirely from the Inner London Education Authority (ILEA). The position, if I have correctly understood it, is that each year ILEA makes a payment to the polytechnic of, inter alia, a sum earmarked for the general purposes of the students' union and quantified by reference to the number of students at the polytechnic. The polytechnic passes the payments on to the union. The affidavit of Neil Fletcher, chairman of the further and higher education sub-committee of ILEA, contains this paragraph:

'Each individual Students' Union is funded by I.L.E.A.'s annual subvention which is allocated to the governing body within the global sums allotted for the academic year. Although the articles of government may give the Governors the power to set the level of the subvention, the governing body acts only as a conduit for the subvention which is at all times quite separate from other College funds. The Union has for practical purposes no other source of funds than the I.L.E.A. annual subvention.'

In the year 1984-85 the payment from ILEA to the North London Polytechnic Students' Union was some £204,000.

The polytechnic came into existence on 1 May 1971 by the amalgamation of the Northern Polytechnic and the North-Western Polytechnic. It is a corporate registered charity. It has currently some 5,000 full-time students and 3,400 part-time students.

The constitution of the polytechnic is embodied in its memorandum and articles of association which require, inter alia, that there should be a students' union. Article 27 is headed 'Staff and Students'. Sub-articles 2 and 3 are in these terms:

'(2)

Provisions as to the participation of and consultation with students and the admission, conduct, suspension, exclusion and expulsion of students and disciplinary procedures and appeals relating thereto and as to the Students' Union shall pursuant to the powers of the Court as set out in Articles 21 and 22 be contained in byelaws or regulations made by or under the authority of the Court.

(3)

There shall be a Students' Union of the Polytechnic. The constitution of the Students' Union including any proposed amendments thereto shall be subject to the approval of the Court. The Students' Union shall conduct and manage its own affairs and finances in accordance with the constitution.'

The 'Court' there referred to is the court of governors provided for by art 6, and in which is vested the management and control of the affairs of the polytechnic. Sub-article 2(xii) of art 6 provides that the court shall include-

'two Governors who shall be full time students of the Polytechnic appointed by the Students' Union, of whom one shall be the President for the time being of the Students' Union.'

The powers bestowed on the court of governors by the articles include power to set up an academic board charged with making recommendations concerning the academic organisation and structure of the polytechnic. The members of the academic board include a number of ex-officio members among whom is the president of the students' union.

Under this constitution, which has changed in no material respect since 1971, the students' union is thus an integral part of the polytechnic.

The constitution of the students' union was originally approved by the court of governors on 29 November 1971. Subsequently there have been certain amendments from time to time approved by the court of governors, but none which are material for present purposes.

The objects of the students' union are set out in cl 3 of its constitution. I should read the whole clause, which is in these terms:

'Objects. The objects of the Union shall be:

(a)

To provide an official organisation representing its members.

(b)

To provide and develop scientific, artistic, cultural, athletic, political, religious and social activities among its members, and to promote their general welfare without distinction of race, sex, language, religion or political belief, and to advance the interest of the Polytechnic as a whole in all appropriate ways.

(c)

To promote, encourage and develop among its members the formation, organisation and operation of clubs and societies, for such purposes as are mentioned in paragraph 3b above. Such clubs and societies, when formed, may become affiliated to the Union at the discretion of the Executive or Ordinary General Meeting.

(d)

To be affiliated to the National Union of Students, at the discretion of the Annual General Meeting, and to such other organisations as may be determined by the Ordinary General Meeting from time to time.

(e)

To represent its members in their relations with all other external bodies.

(f)

To represent its members and to provide a channel of communication between its members and the Court of Governors, and the teaching and administrative staff of the Polytechnic.

(g)

At the discretion of the Executive or Ordinary General Meeting, to enter into agreements with other Students' Unions for the purpose of developing such common aims and activities as are hereinbefore provided, and to permit reciprocal arrangements for the provision of general facilities to be made available to the members of such Students' Unions.

(h)

To organise such subordinate bodies as may be necessary from time to time for the adequate execution of its objects within the provisions of this Constitution.

(i)

To promote and maintain the co-operation of its members with other students regionally, nationally and internationally.

(j)

To act as a central body co-ordinating the activities of the Precincts.'

'The Precints' is a reference to the organisations set up in the respective groups of buildings which, by amalgamation, had become the North London Polytechnic.

Clause 4 of the constitution deals with membership of the union and provides for all full-time students to be ordinary members. Associate membership is granted to part-time students and members of the teaching staff, and, at the discretion of the union officers, may be granted to former students. Associate members are not entitled to propose, second or vote on any motion at any general meeting of the union. No subscriptions are paid by members of the union. The constitution does provide a procedure for the introduction of subscriptions payable by members, but requires the consent of the court of governors to the introduction of subscriptions.

Clause 5 of the constitution provides that:

'All personal property whatsoever of the Union, except money representing the Reserve Fund, shall be vested in the President, Treasurer and Secretary for the time being upon trust for the purpose of the Union ....'

Clause 14 of the constitution deals with meetings and provides:

'The General Meeting shall be the supreme authority of the Union within the terms of this constitution and the Rules made thereunder.'

Clause 16(i) of the constitution provides as follows:

'No alteration shall be made to the provisions of this constitution or its appendices, except by resolution of a two-thirds majority of the members of the Union present at a General Meeting.'

The provisions of cl 16(i) appear inconsistent with the provisions of art 27(iii) of the polytechnic's articles of association which require the approval of the court of governors to any amendment to the union's constitution. I do not think, however, that much, if anything, turns for present purposes on this inconsistency.

Under cl 5 of the union's constitution its funds are held 'upon trust for the purpose of the Union'. The critical question is whether that purpose is a charitable purpose.

Counsel for the Attorney General has relied heavily on the role and function of the union as part of the polytechnic. The polytechnic is an educational charity. The formation of the students' union, with a constitution approved by the court of governors of the polytechnic, was undertaken by the polytechnic, submitted counsel, in the furtherance of its own charitable educational purposes. Education, he submitted, is a developing concept not limited to classroom teaching. It involves developing the minds and interests of the students so as to equip them to play a full part in a complex society. The students' union and its objects must, he said, be viewed in that context. This emphasis by counsel on the part played by the students' union in furthering the educational purposes of the polytechnic was prompted, I think, in part by a wish to bring the case within the principles expressed by Brightman J in London Hospital Medical College v IRC [1976] 2 All ER 113, [1976] 1 WLR 613 , a case in which the London Hospital students' union was held charitable, and in part by an uneasiness as to the consequences for his case of the many political activities that this students' union undertakes.

Paragraph (b) of the objects clause of the students union's constitution includes as one of the objects of the union '... to provide and develop ... political ... activities among its members ... ' Paragraph (d) expresses it to be an object of the union 'To be affiliated to the National Union of Students ... ' The students' union has in fact been affiliated to the National Union of Students (NUS) since 1972 and has duly paid its affiliation fees in consequence of the affiliation. The level of those fees has risen from £1,675 in 1971-72 to £15,138 in 1983-84. Since at least 1970 the NUS, an association whose objects are not charitable, has fulfilled the national political role of representing, co-ordinating and expressing student opinion on matters not only affecting students as such but also of national and international significance. In many areas the NUS mounts campaigns to change both the law and government policy. In the course of such activities the NUS expends funds derived in part from affiliation fees.

Pursuant to clause 3 of its constitution the students' union is affiliated and pays affiliation fees to a number of other non-charitable organisations, both of a political nature and otherwise. In addition, the students' union itself has, since its inception, represented, co-ordinated and expressed the opinion of students of the North London Polytechnic. In the course of these activities the students' union has expended part of its funds. This activity is consistent with para (a) of the objects clause which empowers the union to 'provide an official organisation representing its members,'

Counsel for the defendants has submitted that the various sub-paragraphs of the union's objects clause should be read disjunctively, and that the objects declared by some, at least, of those sub-paragraphs cannot be regarded as charitable. He referred in particular to para (d), to the activities of the National Union of Students, and to those sub-paragraphs which envisaged the union representing the students in, he said, a trade union sense.

There is thus a very fundamental difference of approach advocated by counsel for the Attorney General and counsel for the defendants. Counsel for the Attorney General would have the union and its objects regarded as an integral part of the polytechnic and as deriving a charitable flavour from the undeniably charitable nature of the polytechnic. Counsel for the defendants does not dispute that some of the union's objects are plainly charitable, but he stresses the independence of the union from the polytechnic which gave it birth and presents the union as a body with the important independent objects of furthering the interests of its members in a trade union sense and of engaging in political activities as its members may think fit.

As a guide to the right approach to the question whether or not the union is charitable I would start with the London Hospital case [1976] 2 All ER 113 at 119, [1976] 1 WLR 613 at 620. Brightman J said:

'The London Hospital Medical College is a school of learning existing for the benefit of the community. It is therefore charitable. A club which provides athletic and social activities for its members is not, per se, charitable. Therefore, the union, standing alone, is not charitable under the general law. But if the union exists solely to further, and does further, the educational purposes of the college, then in my judgment it is clearly charitable.'

Having thus made clear the approach he proposed to adopt, Brightman J found as a fact, on the evidence before him, that the students' union existed solely to further the educational purposes of the medical college. He did not accept the argument put forward by counsel for the Inland Revenue Commissioners that the union was merely 'a self-regarding' organisation for the benefit of its members. He cited and applied this passage from the judgment of Atkin LJ in IRC v Yorkshire Agricultural Society [1928] 1 KB 611 at 631, [1927] All ER Rep 536 at 543:

'... 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 the members are benefited in the course of promoting the charitable purpose would not prevent the Society being established for charitable purposes only.'

Brightman J then continued ([1976] 2 All ER 113 at 121, [1976] 1 WLR 613 at 622):

'Applying the last-mentioned test, I take the view that the benefit given to the members of the union by that organisation is only given to them with a view to giving encouragement to and carrying out the main purpose of the college, which is a charitable purpose. These benefits, to a very large extent, stem from the college both in cash and kind, and the union is not, in my opinion, "self-regarding" merely because it is, to the extent of its members' subscriptions and certain other payments, self-supporting.'

Brightman J rephrased the critical question in this way ([1976] 2 All ER 113 at 122, [1976] 1 WLR 613 at 623):

'I must ask myself: what is the object for which the union is established? Is the predominant object of the union the furtherance of the purposes of the college as a school of learning, or is its object, or one of its objects, the private and personal benefit of those students who are members of the union.'

He answered that question by saying this ([1976] 2 All ER 113 at 122, [1976] 1 WLR 613 at 623-624):

'I do not think, looking at the origins of the union and its constitution, that it has any raison d'être except to further the educational purposes of the college. The union does not, of course, itself teach medicine, but what it does do, and what it is intended to do, and was established to do, is to assist the teaching of medicine by providing those physical and cultural and social outlets which are needed, or are at any rate highly desirable, if the art of teaching is to be efficiently performed at the college. I think that most people would say that the facilities of the union are a practical necessity in these days if the college is to function efficiently.'

The approach adopted by Brightman J in the London Hospital case, which I would respectfully accept as the right approach for me to adopt in the present case, is, in my view, inconsistent with counsel for the defendants' emphasis on a disjunctive approach to the various sub-paragraphs in cl 3 of the union's constitution. If the right question is whether the union was established for the predominant purpose of furthering the educational purposes of the polytechnic an answer cannot be found by concentrating on any one individual sub-paragraph of cl 3. For the purpose of answering that question the union's constitution must, in my judgment, be read as a whole and considered in the context of its relevant factual background. That background necessarily includes the polytechnic and the polytechnic's own educational purposes. The polytechnic is required by its constitution to have a students' union for its students. It was plainly supposed, and in my view rightly supposed, by the authors of the polytechnic's constitution that a students' union was desirable in order to facilitate the discharge by the polytechnic of its function as an institution of higher education. It is clear from the union's constitution that it was intended to have a variety of functions. It was intended to be the body which would represent the students in dealings with the polytechnic itself. It was intended to be the body which would represent the students in dealings with other student bodies. It was intended to arrange social and recreational, religious and political activities for the students, either directly or through affiliated clubs or societies. It was intended generally to promote the general welfare of the students. All these functions must have been intended by the authors of the union's constitution to be carried out by the union.

Counsel for the Attorney General has submitted that the primary object of the union's constitution is that expressed in the last two lines of sub-para 3(b), namely 'to advance the interest of the Polytechnic as a whole in all appropriate ways', and that the other expressed objects of the union should be regarded merely as the means by which that prime object may be achieved. I regard this approach as a little too narrow. It is true that a number of the 'objects' declared by the respective sub-paragraphs of cl 3 appear subordinate in character, but I do not regard the object identified by counsel as the only main object of the union. Reading cl 3 as a whole, it seems to me that four objects of a general character are expressed with the remaining so-called objects assuming a subordinate and ancillary character and, perhaps, rightly to be categorised as 'means' whereby the four main objects may be pursued.

The four main objects of the union are, in my view, those expressed in paras (a) and (b) of cl 3, that is to say:

(i)

'To provide an official organisation representing its members';

(ii)

To provide and develop scientific, artistic, cultural, athletic, political, religious and social activities among its members';

(iii)

'to promote their general welfare without distinction of race, sex, language, religion or political belief';

(iv)

'to advance the interest of the Polytechnic as a whole in all appropriate ways.'

These four objects, individually and collectively, are intended, in my view, to serve the interests of the students in their capacity as students of the polytechnic. They are not, in my view, intended to provide personal benefit or advantage to the students otherwise than in that capacity.

In expressing my opinion as to the intention behind those primary objects of the union I am not overlooking the fact that membership of the union is not restricted to students but extends also to staff of the polytechnic and past students. The extension of membership privileges to staff and past students is, however, in my view, supplemental to the main purpose of the constitution of the union, namely to provide for the students of the polytechnic.

Counsel for the Attorney General, as I have remarked, invited me to regard the advancement of the interests of the polytechnic as the overriding object of the union. Counsel for the defendants, on the other hand, invited me to regard the representational role of the union as its dominant function. I regard this relative 'weighing' of these four main objects as unnecessary. It is a process for which I can find no justification on a fair reading of the constitution. They are, as objects, in my view, of comparable weight and importance. Nevertheless, all four objects, and indeed the whole constitution of the union, were, in my view, intended to serve the interests of the polytechnic in this sense, namely that the polytechnic, under its constitution and for the furtherance of its own educational purposes, required to have a students' union and thought it right that its students' union should be formed with this particular constitution.

In view of the educational purposes of the polytechnic, in view of the terms of art 27 of the polytechnic's constitution, in view of the constitutional relationship between the polytechnic and the union and between the polytechnic and the union's officers, I find it easy to conclude that the union was established by the polytechnic in the furtherance of the polytechnic's educational purposes.

Further, in view of the need of students for representation in many areas, within and outside the institution of which they are members, in view of their need of suitable facilities to cater for their interest and activities outside the lecture room, in view of the need for their general welfare as students to be the concern of, and catered for by, the institution of which they are members, in view of the hindrance to the successful functioning of any institution of higher learning if any of the needs to which I have referred are not met, I find it easy to conclude that this union, with the particular constitution given to it by the polytechnic which enables all those needs to be met, does further the educational purposes of the polytechnic.

These conclusions, in my judgment, prima facie invest the union with charitable status. It is well settled that an organisation may properly be regarded as established for charitable purposes only notwithstanding that some of its activities do not in themselves promote charitable purposes. Lord Reid in IRC v City of Glasgow Police Athletic Association [1953] 1 All ER 747 at 754, [1953] AC 380 at 402:

'It is not enough that one of the purposes of a body of persons is charitable. The Act requires that it must be established for charitable purposes only. This does not mean that the sole effect of the activities of the body must be to promote charitable purposes, but it does mean that that must be its predominant object and that any benefits to its individual members of a non-charitable character which result from its activities must be of a subsidiary or incidental character.'

Lord Cohen in the same case said ([1953] 1 All ER 747 at 757-758, [1953] AC 380 at 405):

'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. ([1952] 1 All ER 984, [1952] AC 631).

(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 Act: Oxford Group v. Inland Revenue Comrs. ([1949] 2 All ER 537).

(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 ([1928] 1 KB 611).'

Brightman J in the London Hospital case [1976] 2 All ER 113 at 122, [1976] 1 WLR 613 at 623, after citing the passage that I have read from Lord Reid's judgment, commented: 'In the end it seems, to me the question is to some extent a matter of degree.'

In the present case counsel for the defendants has concentrated on the affiliation of the union to the NUS. This affiliation is expressly authorised under para (d) of cl 3 but is, I think, properly to be regarded as a means of pursuing the representational object expressed in para (a). Be that as it may, the union pays, it seems, affiliation fees in excess of £15,000 per annum at the current level to the NUS. The NUS expends its funds on purposes which are plainly not charitable. It is not, and could not be, suggested that the NUS is charitable. How, argues counsel, can the union then be charitable? It is empowered to spend, and does spend, substantial sums out of its funds on a non-charitable purpose. But, as Brightman J observed, the question is one of degree. There is no reason in principle why, for the purpose of achieving its own charitable purposes, a charitable body should not ally itself with and contribute to the funds of a non-charitable organisation. I am sure that a number of charities do so as a matter of course.

There is, in my view, no reason in principle why a students' union being a charity should not affiliate itself to the NUS, a non-charity, and pay the subscriptions or fees consequent on the affiliation. It is an express object of this union, and consistent with an overall charitable purpose, that it should represent its members on national student organisations. The NUS is the leading national student organisation. I do not, therefore, accept counsel's argument that affiliation to the NUS and the payment of affiliation fees is inconsistent with the union having a charitable status.

A point was made by counsel for the defendants concerning the reference in sub-cl (b) to political activities. The carrying on of political activities or the pursuit of political objectives cannot, in the ordinary way, be a charitable purpose. But I can see nothing the matter with an educational charity, in the furtherance of its educational purposes, encouraging students to develop their political awareness or to acquire knowledge of, and to debate, and to form views on, political issues. If the form of the encouragement includes provision of facilities for a students' Labour club, or Conservative club, or any other political club, I can see nothing in that which is necessarily inconsistent with the furtherance of educational purposes. Here, too, the question is, perhaps, one of degree. But the proposition that an educational charity, be it a school, polytechnic or university, cannot consistently with its charitable status promote and encourage the development of political ideas among its students has only to be stated to be seen to be untenable. The reference to political activities in para (b) is, in my judgment, no obstacle to the union's charitable status.

Finally, counsel for the defendants prayed in aid the activities of the union. He submitted that the activities of the union since it was founded in 1971 could be prayed in aid in order to resolve the question whether the union was or was not charitable. He submitted that on the facts of this case I should conclude that the union existed primarily in order to express the political views and aspirations of its student members and, further, that the main object of the union was to reflect and give effect to the political views of its student members. I am unable to accept these submissions.

The question whether under its constitution the union is or is not charitable must, in my view, be answered by reference to the content of its constitution, construed and assessed in the context of the factual background to its formation. This background may serve to elucidate the purposes for which the union was formed. But if the union was of a charitable nature when formed in 1971 it cannot have been deprived of that nature by the activities carried on subsequently in its name.

I must not be taken to be expressing the opinion that the activities of an organisation subsequent to its formation can never be relevant to the question whether the organisation was formed for charitable purposes only. The skill of Chancery draftsmen is well able to produce a constitution of charitable flavour intended to allow the pursuit of aims of a non-charitable or dubiously charitable flavour. In a case where the real purpose for which an organisation was formed is in doubt, it may be legitimate to take into account the nature of the activities which the organisation has since its formation carried on. It is, as I have remarked, settled by, among other cases, IRC v City of Glasgow Police Athletic Association that, if the main purpose of an organisation is charitable, power to carry on incidental, supplementary non-charitable activities is not fatal to charitable status. The activities of an organisation after its formation may serve to indicate that the power to carry on non-charitable activities was in truth not incidental or supplementary at all but was the main purpose for which the organisation was formed. In such a case the organisation could not be regarded as charitable.

Accordingly, I would accept that the activities of an organisation after its formation may form part of the background to its formation relevant to the question whether the main purpose for which it was formed was or was not charitable. But if the activities of an organisation subsequent to its formation are to be relevant to the question whether or not it was formed for a charitable purpose, two requirements at least must, in my view, be satisfied: First, the activities must be capable of being justified under some power in the constitution of the organisation. In short, the activities must be intra vires. The carrying on by an organisation of ultra vires activities cannot possibly, in my judgment, be relevant to the question whether or not it was formed for a charitable purpose. In this respect, I must respectfully say that some of the arguments of counsel for the defendants put, in my opinion, the cart before the horse. He tended to argue, as I understood it, that the powers of the union, the construction of the various sub-paragraphs of the constitution, depended on whether or not it was right to conclude that the union was formed for a charitable purpose. He argued, in effect but not in terms, that firstly a decision ought to be made as to whether the union was formed for charitable purposes and only secondly was it relevant to consider the scope of its objects.

I cannot accept this approach. In my view, the first essential is to consider and construe the scope of the objects and powers of the union under its constitution. If the objects of an organisation and the means by which those objects may be achieved are exclusively charitable, that, without more ado, answers the question whether the organisation was formed for a charitable purpose. Activities of a non-charitable nature would necessarily be ultra vires such an organisation. But if the constitution, while expressing some charitable objects, also permits non-charitable activities to be carried on, then, in my opinion, it is necessary to ask whether the main purpose of the organisation is charitable and whether the non-charitable powers can be regarded as merely ancillary or supplemental. This, as Brightman J said, is a matter of degree. And extrinsic evidence as to the real or main purpose for which the organisation was formed would, in my view, be admissible. The extent to which the organisation has carried on intra vires but non-charitable activities is capable, in my opinion, of being admissible extrinsic evidence.

The second requirement, in my opinion, is that the activities are of a nature and take place at a time which gives them probative value on the question whether the main purpose for which the organisation was formed was charitable or non-charitable. If an organisation is formed with an exclusively charitable purpose but with a constitution that permits ancillary non-charitable activities it is, on authority, charitable. If subsequently the managers of the organisation transform the ancillary non-charitable purpose into the main purpose of the organisation, the conclusion does not, in my view, follow that the organisation loses its charitable status. The right conclusion, in my opinion, would be that the managers are in breach of their fiduciary duties of management.

The facts relied on by counsel for the defendants in support of his submission that the activities of the union disqualify it from charitable status fail, in my judgment, to satisfy either of the requirements I have mentioned. He referred me to some details given in the affidavit of the first defendant of grants and donations made by the union between 1976 and 1982. These details show the expenditure by the union of funds on a variety of political or quasi-political causes. But these payments appear prima facie to fall outside any of the objects or powers given to the union under cl 3 of its constitution. In answer to a question from me as to which paragraph of cl 3 was relied on as justifying these payments, counsel for the defendants did not put forward any paragraph for that purpose. He was, in my view, right not to do so. But the position reached is an unattractive one. The apparently ultra vires use of the union's funds for political purposes from, it seems, at least 1976 to date is being put forward to justify the submission that the union exists for political purposes and cannot, accordingly, be a charity. I reject this approach. There is no evidence before me of union activities falling within the scope of its objects or powers expressed in cl 3 that justifies the conclusion that it exists, or was formed, for the purpose of expressing or giving effect to the political views of its members.

There is an additional reason why, in my view, counsel for the defendants' submissions cannot be accepted. The union's funds come from ILEA. The funds are provided by ILEA in pursuance of its statutory function as an educational authority. They are funds intended to further the educational purposes for which ILEA is responsible. They are paid to the polytechnic, an educational charity for transmission to the union, an integral part of the polytechnic. The funds are, in my view, stamped throughout with the flavour of educational purpose. The basis of funding of the union supports, and, in my opinion, strongly supports, the conclusion that the predominant purpose for which the union was founded was charitable.

In my judgment, accordingly, the union was formed and exists for the charitable purpose of furthering the educational function of the polytechnic. The non-charitable activities which the union is, under its constitution, authorised to carry on and has carried on are, in my judgment, as a matter of degree no more than ancillary means by which that charitable purpose may be pursued. It follows that I would answer the preliminary issue by declaring that the general funds of the union are held on trusts exclusively charitable at law, namely the furtherance of the charitable purposes of the polytechnic in accordance with the terms of the constitution of the union.

Declaration accordingly.