Annex A
Legal Authorities and Public Benefit
A. THE PUBLIC
BENEFIT—EXCEPTIONS
FOR THE
RELIEF OF
POVERTY
1. The case of Re Scarisbrick[4]
is the principal authority establishing that charities for the
relief of poverty, are excepted from the general principle that
there must not be a personal family connection or tie within the
definition for the pool from which the beneficiaries may be drawn.
2. The court concluded that the exception
was established by a series of long standing authorities which
must accept as valid, not withstanding the general principle that
applied to the other heads of charity that a personal connection
or tie would affect public benefit.
3. This was confirmed in Dingle v
Turner[5]
, concerning a gift to pay pensions to poor employees of a family
company, where Lord Cross reviewed and confirmed the poor relations
cases as well as cases on poor employees. The "poor relations"
and "poor employees" exceptions are well established
and have been confirmed and applied by the court and by the Commission.
B. PUBLIC BENEFIT—PERSONAL
CONNECTIONS AND
TIES
4. The court considered whether a sufficient
section of the public was present in several cases, including
Re Compton[6],
Oppenheim v Tobacco Securities Trust Co Ltd[7]
and Dingle v Turner.
5. The case of Re Compton is generally
relied upon as authority that where the connection between the
beneficiaries is a personal relationship or quality then they
will not be the public nor a sufficient section of the public
for charitable purposes. The trust, to provide scholarships to
educate the relatives of three named people was held not charitable.
It is said that if the quality is impersonal, the group or class
may be a section of the public and the body may be a charity.
However, if the quality is a personal one, the trust will be private
and not charitable.
6. In the Oppenheim case, a trust to educate
children of employees and former employees of a tobacco company,
the court considered that the words "sufficient section of
the public" indicate that:
— the possible beneficiaries must not
be numerically negligible; and
— the quality which distinguishes the
beneficiaries from other members of the community must be a quality
which does not depend on their relationship to a particular individual
or group of individuals.
7. Despite the education for a particular
family not being charitable (Re Compton), trusts which
give preference for the education of founder's kin have been held
as charitable (See Re Spencer's case[8])
and Re Christ's Hospital[9]).
8. In addition, it is possible for preference
to be given to relations or other groups of people if the beneficiaries
are not confined to that group. See Re Koettgen's Will Trusts[10],
Caffoor v Commissioner of Income Tax[11]
IRC v Educational Grants Association[12]
and Re Martin[13].
C. CHARGING AND
EDUCATIONAL INSTITUTIONS
9. The authority for the impact on public
benefit of charging for services relies principally on the case
of Re Resch[14].
This confirmed[15]
the principle that charges could be raised by a charity for the
services it provides, even if the charges produce a profit. It
also sets out some general guidance on how public benefit may
be assessed in any particular case.
10. At least in the case of medical facilities,
the provision of facilities or services, which were available
only to the rich would not be charitable. The test is one of public
benefit. Direct benefit is clearly relevant, although indirect
benefit may be taken into account. But it is not the case that
fees which are set at a level which have the effect of excluding
the less well off will automatically negate public benefit. Public
benefit may still arise by the provision of access to charitable
services to the less well off in other ways and by indirect public
benefit, for example, the relief to public services.
11. The cases on independent schools are:
— Attorney General v The
Earl of Lonsdale[16];
— Brighton College v Marriott[17];
and
— Malvern Wells v Ministry
of Local Government and Planning[18].
12. These cases make clear that an educational
institution is charitable, even if its facilities and services
are confined to the relatively well off. In Re Resch, the
court did not draw on the educational cases. Even Counsel for
the parties arguing that the hospital was not charitable because
it excluded the less well off, stated that "the educational
cases stand on their own. To apply the logic of those educational
cases to other cases would open the door too far." It would
appear from this that these cases are treated as separate lines
of authority as regards educational institutions and did not apply
to the fourth head purpose being considered in Re Resch.
4 [1951] Ch 622. Back
5
1972 AC 601. Back
6
1945 Ch 123. Back
7
1951 AC 297. Back
8
1928 34 OWN 29. Back
9
1889 15 App Cas 172. Back
10
[1954] Ch 252. Back
11
[1961] AC 584. Back
12
[1967] Ch 123. Back
13
the Times, 17 November 1977. Back
14
Re Resch's Wills Trusts [Le Cras and the Perpetual Trustee
Company Limited and Others] [1969] 1 AC 51. Back
15
See Scottish Burial Reform and Cremation Society Limited v
Glasgow Corporation [1968]. See also Incorporated Council
of Law Reporting for England and Wales [1972] Ch 73, CA and Joseph
Rowntree Memorial Trust Housing Association Ltd v Attorney
General [1983] 1 Ch 159. Back
16
[1827] 1 Sim 105. Back
17
[1926] AC 192. Back
18
[1951] Ch 728. Back
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