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Cite as: [1972] UKHL 2, [1972] AC 601

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JISCBAILII_CASE_TRUSTS

    Die Mercurii, 16° Februarii 1972

    Parliamentary Archives,
    HL/PO/JU/4/3/1222


    HOUSE OP LORDS

    DINGLE

    v.
    TURNER and Others

    Viscount Dilhorne
    Lord MacDermott
    Lord Hodson
    Lord Simon of Glaisdale
    Lord Cross of Chelsea


    Viscount Dilhorne

    MY LORDS,

    I have had the advantage of reading the opinions of my noble and
    learned friends. Lord Cross of Chelsea and Lord MacDermott. I agree with
    Lord Cross that this appeal should be dismissed and with the reasons he
    gives for that conclusion.

    With Lord MacDermott. I too do not wish to extend my concurrence to
    what my noble and learned friend Lord Cross has said with regard to the
    fiscal privileges of a legal charity. Those privileges may be altered from time
    to time by Parliament and I doubt whether their existence should be a
    determining factor in deciding whether a gift or trust is charitable.

    I agree that the costs of all the parties should be paid out of the fund.

    Lord MacDermott

    MY LORDS,

    The conclusion I have reached on the facts of this case is that the gift
    in question constitutes a public trust for the relief of poverty which is charit-
    able in law. I would therefore dismiss the appeal.

    I do not find it necessary to state my reasons for this conclusion in detail.
    In the first place, the views which I expressed at some length in relation to an
    educational trust in Oppenheim v. Tobacco Securities Trust Coy. Ltd. and
    others,
    [1951] AC 297, seem to me to apply to this appeal and to mean
    that it fails. It would, of course, be otherwise if the case just cited pur-
    ported to rule the point now in issue. But that is not so, for it clearly left
    that point undecided and open for further consideration.

    And, secondly, I have had the advantage of reading the opinion prepared
    by my noble and learned friend, Lord Cross of Chelsea, and find myself
    in agreement with his conclusion for the reasons he has given. In particular,
    I welcome his commentary on the difficulties of the phrase " a section of the
    " public ". But I would prefer not to extend my concurrence to what my
    noble and learned friend goes on to say respecting the fiscal privileges
    of a legal charity. This subject may be material on the question as to
    whether what is alleged to be a charity is sufficiently altruistic in nature to
    qualify as such, but beyond that, and without wishing to express any final
    view on the matter, I doubt if these consequential privileges have much
    relevance to the primary question whether a given trust or purpose should
    be held charitable in law.

    I agree with the order as to costs proposed by my noble and learned
    friend.


    Lord Hodson

    MY LORDS,

    I agree with my noble and learned friend, Lord Cross of Chelsea, that this
    appeal should be dismissed and with his reasons for that conclusion. With
    this reservation : that I share the doubts expressed by my noble and learned
    friends, Lord MacDermott and Viscount Dilhorne, as to the relevance of
    fiscal considerations in deciding whether a gift or trust is charitable.


    2

    Lord Simon of Glaisdale

    my lords,

    I have had the advantage of reading the opinion of my noble and learned
    friend, Lord Cross of Chelsea, with which I agree.

    I too would dismiss this appeal, and make the same recommendation as to

    costs.

    Lord Cross of Chelsea

    MY LORDS,

    By his will dated 10th January, 1950, Frank Hanscomb Dingle (whom I
    will call the Testator) after appointing Lloyds Bank Ltd., his wife Annie
    Dingle and his solicitor Henry Elliot Turner to be his executors and trustees
    made the following—among other—dispositions. By clause 5 he gave to
    his trustees his ordinary and preference shares in E. Dingle and Company
    Ltd. upon trust to pay the income arising therefrom to his wife for her life
    and after her death to hold the same in trust for such person or persons as
    she should by will or codicil appoint but without any trust in default of
    appointment. By clause 8 (a) he directed his trustees to pay the income of
    his residuary estate after payment thereout of his debts funeral and testa-
    mentary expenses to his wife for her life. By clause 8(b), (c), (d), (e) and
    (f) he directed his trustees to raise various sums out of his residuary estate
    after the death of his wife. Clause 8(e) was in the following terms:

    " (e) To invest the sum of Ten thousand pounds in any of the invest-
    " ments for the time being authorised by law for the investment of trust
    " funds in the names of three persons (hereinafter referred to as ' the
    " ' Pension Fund Trustees') to be nominated for the purpose by the
    " persons who at the time at which my Executors assent to this bequest
    " are directors of E. Dingle & Company Limited and the Pension Fund
    " Trustees shall hold the said sum and the investments for the time being
    " representing the same (hereinafter referred to as ' the Pensions Fund ')
    " UPON TRUST to apply the income thereof in paying pensions to poor
    " employees of E. Dingle & Company Limited or of any other company
    " to which upon any reconstruction or amalgamation the goodwill and
    " assets of E. Dingle & Company Limited may be transferred who are
    " of the age of sixty years at least or who being of the age of forty five
    " years at least are incapacitated from earning their living by reason of
    " some physical or mental infirmity PROVIDED ALWAYS that if at
    " any time the Pension Fund Trustees shall for any reason be unable to
    " apply the income of the Pensions Fund in paying such pensions to such
    " employees as aforesaid the Pension Fund Trustees shall hold the pen-
    " sions Fund and the income thereof UPON TRUST for the aged poor
    " in the Parish of St. Andrew Plymouth."

    Finally by clause 8(g) the Testator directed his trustees to hold the ultimate
    residue of his estate on the trusts set out in clause 8(e).

    The Testator died on 10th January, 1950. His widow died on the 8th
    October, 1966, having previously released her testamentary power of appoint-
    ment over her husband's shares in E. Dingle and Co. Ltd. which accordingly
    fell into the residuary estate. When these proceedings started in October,
    1970, the value of the fund held on the trusts declared by clause 8(e) was
    about £320,000 producing a gross income of about £17.800 per annum.

    E. Dingle and Company Ltd., was incorporated as a private company on
    20th January, 1935. Its capital was owned by the Testator and one John
    Russell Baker and it carried on the business of a departmental store. At the
    time of the Testator's death the Company employed over 600 persons and
    there was a substantial number of ex-employees. On 23rd October. 1950,
    the Company became a public company. Since the Testator's death
    its business has expanded and when these proceedings started it had 705 full
    time and 189 part-time employees and was paying pensions to 89 ex-
    employees.

    3

    The Trustees took out an Originating Summons in the Chancery Division
    on the 30th July, 1970, asking the Court to determine whether the trusts
    declared by clause 8(e) were valid and if so to determine various subsidiary
    questions of construction—as, for example, whether part-time employees or
    employees of subsidiary companies were eligible to receive benefits under
    the trust. To this Summons they made defendants (1) representatives of the
    various classes of employees or ex-exployees, (2) those who would be interested
    on an intestacy if the trusts failed and (3) Her Majesty's Attorney-General. It
    has been common ground throughout that the trust at the end of clause 8(e)
    for the aged poor in the Parish of St. Andrew Plymouth is dependant
    on the preceding trust for poor employees of the Company so that although
    it will catch any surplus income which the Trustees do not apply for the
    benefit of poor employees it can have no application if the preceding trust
    is itself void.

    By his judgment given on 2nd April, 1971, Megarry J. held (inter alia),
    following the decision of the Court of Appeal in Gibson v. South American
    Stores (Gath & Chaves) Ltd.
    [1950] Ch. 177, that the trust declared by
    clause 8(e) was a valid charitable trust but, on the application of the Appellant
    Betty Mary Dingle, one of the persons interested under an intestacy, he
    granted a certificate under section 12 of the Administration of Justice Act,
    1969, enabling her to apply to this House directly for leave to appeal against
    that part of his judgment and on 17th May, 1971, the House gave her leave
    to appeal.

    Your Lordships, therefore, are now called upon to give to the old " poor
    " relations" cases and the more modern " poor employees" cases that
    careful consideration which, in his speech in the Oppenheim case ([1951]
    A.C. 297 at 313), Lord Morton of Henry ton said that they might one day
    require.

    The contentions of the Appellant and the Respondents may be stated
    broadly as follows. The Appellant says that in the Oppenheim case this
    House decided that in principle a trust ought not to be regarded as charitable
    if the benefits under it are confined either to the descendants of a named
    individual or individuals or the employees of a given individual or company
    and that though the " poor relations " cases may have to be left standing as
    an anomalous exception to the general rule because their validity has been
    recognised for so long the exception ought not to be extended to " poor
    " employees " trusts which had not been recognised for long before their status
    as charitable trusts began to be called in question. The Respondents, on
    the other hand, say, first, that the rule laid down in the Oppenheim case
    with regard to educational trusts ought not to be regarded as a rule applicable
    in principle to all kinds of charitable trust, and, secondly, that in any case it
    is impossible to draw any logical distinction between " poor relations " trusts
    and " poor employees " trusts, and, that as the former cannot be held
    invalid to-day after having been recognised as valid for so long, the latter
    must be regarded as valid also.

    By a curious coincidence within a few months of the decision of this
    House in the Oppenheim case the cases on gifts to " poor relations " had
    to be considered by the Court of Appeal in Re Scarisbrick [1951] Ch. 622.
    Most of the cases on this subject were decided in the 18th or early 19th
    centuries and are very inadequately reported, but two things at least were
    clear. First, that it never occurred to the judges who decided them that in
    the field of " poverty " a trust could not be a charitable trust if the class of
    beneficiaries was defined by reference to descent from a common ancestor.
    Secondly, that the Courts did not treat a gift or trust as necessarily charitable
    because the objects of it had to be poor in order to qualify, for in some of
    the cases the trust was treated as a private trust and not a charity. The
    problem in Re Scarisbrick was to determined on what basis the distinction
    was drawn. Roxburgh J.,—founding himself on some words attributed to
    Sir William Grant M.R. in Attorney-General v. Price (1810) 17 Ves. 371-
    had held that the distinction lay in whether the gift took the form of a trust
    under which capital was retained and the income only applied for the benefit
    of the objects, in which case the gift was charitable, or whether the gift was

    4

    one under which the capital was immediately distributable among the objects.
    in which case the gift was not a charity. The Court of Appeal rejected this
    ground of distinction. They held that in this field the distinction between a
    public or charitable trust and a private trust depended on whether as a
    matter of construction the gift was for the relief of poverty amongst a
    particular description of poor people or was merely a gift to particular poor
    persons, the relief of poverty among them being the motive of the gift. The
    fact that the gift took the form of a perpetual trust would no doubt indicate
    that the intention of the donor could not have been to confer private benefits.
    on particular people whose possible necessities he had in mind ; but the
    fact that the capital of the gift was to be distributed at once did not
    necessarily show that the gift was a private trust. The Appellant in the
    instant case, while of course submitting that the judges who decided the old
    cases were wrong in not appreciating that no gift for the relief of poverty
    among persons tracing descent from a common ancestor could ever have a
    sufficiently " public " quality to constitute a charity, did not dispute the
    correctness of the analysis of those cases made by the Court of Appeal in
    Re Scarisbrick.

    Later in the 19th century came the Friendly Society cases—Spiller v.
    Maude decided in 1881 but reported in a note in 32 Ch.D. at pages 158-160;
    Pease v. Pattison
    32 ChD 154 and Re Buck [1896] 2 Ch 727. In all these
    cases the Court had to consider whether funds held on trust for the relief of
    poverty among members of a voluntary association were held on charitable
    trusts—such funds being derived in each case in part from subscriptions made
    by the members and in part from donations or bequests by well-wishers. In
    each case the Court held that the funds were held on a charitable trust but
    it does not appear to have been argued in any of them that the fact that the
    benefits were confined to persons who were linked by the common tie of
    membership of an association prevented the trusts from being charitable. The
    arguments against " charity " were either that the association in question was
    really no more than a private mutual insurance society or that at all events
    on a winding up so much of the funds as were derived from donations or
    bequests should be returned to the donors or the estates of the testators and
    not applied " cy pres ".

    The first of the " poor employees " cases was Re Gosling (1900) 48 W.R.
    300. There the testator sought to establish a fund for " pensioning off " the
    old and worn out clerks of a banking firm of which he had been a member.
    It was argued by those interested in contending that the gift was not charitable,
    that there was no public element in it, and that a distinction should be drawn
    between the relief of poverty among employees of a firm and the relief
    of poverty among inhabitants of a geographical area. In rejecting that
    argument Byrne J. said (inter alia) that it was inconsistent with Attorney-
    General
    v. The Duke of Northumberland 7 Ch. D. 745. which was one of
    the " poor relations " cases. His judgment continued as follows: " The fact
    " that the section of the public is limited to persons born or residing in a
    " particular parish, district, or county, or belonging to or connected with any
    " special sect, denomination, guild, institution, firm, name, or family, does
    " not of itself render that which would be otherwise charitable void for lack
    " of a sufficient or satisfactory description or take it out of the category
    " of charitable gifts. I therefore hold it to be a good charitable gift". It is
    to be observed that he does not confine what he says there to trusts for the
    relief of poverty as opposed to other forms of charitable trust.

    In Re Drummond [1914] 2 Ch 90 the testator bequeathed some shares in
    a company of which he had been a director to trustees upon trust to pay the
    income to the directors of the company " for the purposes of contribution to
    " the holiday expenses of the workpeople employed in the spinning depart-
    " ment of the said company in such manner as a majority of the directors
    " should in their absolute discretion think fit". There were some 500
    employees in the department. It was first submitted that this was a trust
    for the relief of poverty. Eve J. rejected that submission but. in doing so,
    he did not suggest that if he could have held that the workpeople in question
    were " poor persons " within the meaning of the Statute of Elizabeth the
    gift would nevertheless have failed on the ground that it was confined to

    5

    employees of a particular company. Next it was submitted that the gift fell
    under the last of the four heads of charity set out by Lord Macnaghten in
    Pemsel's case. It was a trust to secure a holiday for a substantial number
    of the inhabitants of Ilkley who though not poor might in many cases not
    otherwise be able to get a holiday. Such a trust—it was said—promoted
    the general well being of the community; and the beneficiaries could well be
    considered as constituting a " section of the community " for the purpose of
    the law of charity. Eve J.—with some regret—rejected that contention
    saying: "This is not a trust for general public purposes; it is a trust for
    " private individuals, a fluctuating body of private individuals it is true, but
    " still private individuals ". So Eve J., while not disagreeing with the decision
    in Re Gosling, plainly thought that the words of Byrne J. which I have
    quoted though true of poverty cases were not of general application in the
    law of charity.

    Next comes Re Laidlaw a decision of the Court of Appeal given in 1935
    but not then reported and only brought to light in 1949. There the testator
    had bequeathed a legacy of £2,000 upon certain trusts for the relief of poor
    members or former members of the staff of Whiteway Laidlaw and Co. Ltd.
    The judge of first instance having held that the gift failed as not being
    charitable the Court of Appeal reversed his decision and declared that it was a
    valid charitable legacy. Unfortunately neither the reasons given by the judge
    for holding that the gift failed nor those given by the Court of Appeal for
    holding that it was charitable have been recorded ; but the decision of the
    Court of Appeal was plainly in line with Re Gosling.

    In Re Compton [1945] Ch. 123 the Court of Appeal had to decide whether
    a trust for the education of the descendants of three named persons was a
    charitable trust. In a reserved judgment in which Finlay and Morton L.JJ.
    concurred Lord Greene MR. began by stating that no trust could be
    charitable unless it is directed to the benefit of the community or a section
    of the community as opposed to the benefit of private individuals or a
    fluctuating class of private individuals. He went on to say that in his
    opinion no trust under the terms of which a claimant in order to establish his
    title as a potential beneficiary has to show that he is related to some individual
    or that he is or was employed by some person or company can ever be a
    charitable trust since in such cases a personal relationship to individuals or
    an individual which is in its essence non-public enters into the qualification.
    In this connection he expressly approved the decision of Eve J. in Re
    Drummond
    that in the law of charity a class of employees—unlike the
    inhabitants of a geographical area—must be regarded as a fluctuating class
    of private individuals and not a section of the public. Next Lord Greene
    said that even if his view that the necessity of founding a claim upon the
    fact of kinship to an individual precluded the possibility of regarding a gift
    as charitable was too widely stated yet the sort of educational trust which
    this testator had created must be regarded as a private family trust and not
    as one for the benefit of a section of the community on any fair view of
    what that phrase might mean. Finally he said of the " poor relations " cases
    that the decisions were given at a time when the public character of charitable
    gifts had not yet been clearly laid down, that if the validity of such gifts
    had first come before the Courts in modern days they would very likely have
    been held to be invalid and that though as they had been accepted as valid
    for so long it was not possible now to overrule them, they should be regarded
    as anomalous and not be extended by analogy to cover such a trust as that
    with which the Court was concerned.

    Next year in the Hobourn Aero Components Ltd. case [1946] Ch. 194
    the Court of Appeal consisting of Greene M.R. and Morton and Somervell
    L.JJ., had to consider the character of a fund built up by agreed deductions
    from the wages of the employees of a company with factories at Coventry,
    Market Harborough and Kettering: the purpose of the fund being at the
    relevant time to relieve employees who had suffered damage and distress
    from air raids. It could not be suggested that the purpose of the trust was
    the relief of poverty but the Attorney-General argued that it was a charitable
    trust falling within Lord Macnaghten's fourth category. In rejecting that
    submission Lord Greene relied largely on the fact that the fund was a mutual

    6

    insurance fund. In that connection he pointed out that the decisions in the
    Friendly Society cases to which I have already referred could only be
    justified—if at all—because " poverty " was a necessary qualification for the
    receipt of benefits. But both Lord Greene and Morton L.J. were also clearly
    of opinion that even if this fund had been provided by the employers or an
    outside donor it would not have been held on charitable trusts since, as Eve J.
    had held in Re Drummond and they had held in Re Compton, the employees
    of a company were not a section of the public for the purpose of the law
    of charity.

    The facts in Gibson v. South American Stores (supra)—the case followed
    by Megarry J. in this case—were that a company had vested in trustees a
    fund derived solely from its profits to be applied at the discretion of the
    directors in granting gratuities, pensions or allowances to persons "who
    " are or shall be necessitous and deserving and who for the time being are
    " or have been in the Company's employ .... and the wives, widows,
    " husbands, widowers, children, parents and other dependants of any person
    " who for the time being is or would if living have been himself or herself
    " a member of the class of beneficiaries ". The Court of Appeal held that
    this trust was a valid charitable trust but it did so without expressing a view
    of its own on the question of principle involved, because the case of Re
    Laidlaw
    which was unearthed in the course of the hearing showed that the
    Court of Appeal had already accepted the decision in Re Gosling as correct.

    In Oppenheim v. Tobacco Securities Trust Coy. Ltd. and Others [1951]
    A.C. 297 this House had to consider the principle laid down by the Court
    of Appeal in Re Compton. There the trustees of a fund worth over £125,000
    were directed to apply its income and also if they thought fit all or any part
    of the capital " in providing for or assisting in providing for the education
    " of children of employees or former employees of British American Tobacco
    " Coy. Ltd or any of its subsidiary or allied Companies ".

    There were

    over 110,000 such employees. The majority of your Lordships—namely
    Lord Simonds (in whose judgment Lord Oaksey concurred). Lord Normand
    and Lord Morton of Henryton—in holding that the trust was not a valid
    charitable trust gave unqualified approval to the Compton principle. They
    held, that is to say, that although the " poverty " cases might afford an
    anomalous exception to the rule, it was otherwise a general rule applicable
    to all charitable trusts that no class of beneficiaries can constitute a " section
    " of the public " for the purpose of the law of charity if the distinguishing
    quality which links them together is relationship to a particular individual
    either through common descent or common employment. My noble and
    learned friend. Lord MacDermott, on the other hand, in his dissenting speech,
    while not challenging the correctness of the decisions in Re Compton or in
    the Hobourn Aero case said that he could not regard the principle stated by
    Lord Greene as a criterion of general applicability and conclusiveness. " I
    " see much difficulty " he said " in dividing the qualities or attributes, which
    " may serve to bind human beings into classes, into two mutually exclusive
    " groups, the one involving individual status and purely personal, the other
    " disregarding such status and quite impersonal. As a task this seems to
    " me no less baffling and elusive than the problem to which it is directed.
    " namely, the determination of what is and what is not a section of the
    " public for the purposes of this branch of the law." He thought that the
    question whether any given trust was a public or a private trust was a
    question of degree to be decided in the light of the facts of the particular case
    and that viewed in that light the trust in the Oppenheim case was a valid
    charitable trust.

    In Re Cox [1955] AC 627 a Canadian testator directed his trustees to hold
    the balance of his residuary estate upon trust to pay its income in perpetuity
    for charitable purposes only, the persons to benefit directly in pursuance of
    such charitable purposes being such as were or had been employees of a
    certain company and/or the dependants of such employees. This disposition
    raised, of course, a question of construction—namely whether "charitable
    " purposes" was simply a compendious mode of referring to any purposes
    a trust to promote which would be charitable providing that the beneficiaries


    7

    were the public or a section of the public or whether the words meant such
    purposes only as having regard to the class of beneficiaries named could be
    the subject of a valid charitable trust. It was only on the latter construction
    that the question whether Gibson v. South American Stores (supra) was
    rightly decided would arise and in fact both the Courts below and the Privy
    Council held that the former construction was the right one. It is, however,
    to be observed that the Court of Appeal in Ontario unanimously held that
    even if the second construction was right the trust would still fail for want
    of any possible purposes since the " poor relations " cases formed a class
    apart and the " poor employees " cases could not stand with the decision in
    the Oppenheim case. The Privy Council expressly refrained from expressing
    any opinion on this point.

    In Re Young [1955] 3 All.E.R. 689 Danckwerts J. held that a gift by a
    testator of his residuary estate to the trustees of the benevolent fund of the
    Savage Club to be used by them as they should think fit for the assistance
    of any of his fellow members as might fall on evil days created a valid
    charitable trust. In so deciding he referred to Gibson's case and said that
    he could see no distinction in principle between the employees of a limited
    company and the members of a club.

    Finally, we were referred to the Privy Council case of Davies v. Perpetual
    Trustee Company Ltd. and Others
    [1959] AC 439. There a testator who
    died on 21st January, 1897, after giving successive life interests in certain
    property in Sydney to several life tenants, the last of whom died in 1957, gave
    the property " to the Presbyterians the descendants of those settled in the
    " Colony hailing from or born in the North of Ireland to be held in trust
    " for the purpose of establishing a college for the education and tuition of their
    " youth in the standards of the Westminster Divines as taught in the Holy
    " Scriptures". On an originating summons issued in 1918 by the then sole
    trustee for the determination of certain questions it was held (inter alia) by
    the trial judge and on appeal by the Supreme Court of New South Wales that
    this devise created a valid charitable trust; but after the death of the last
    life tenant special leave was given to a representative of the next of kin to
    appeal to the Privy Council which held the trust to be invalid. The Board
    held as a matter of construction that a child would only be eligible to be
    educated at the college if (i) he was descended from a Presbyterian living
    on 21st January, 1897; (ii) that Presbyterian was himself descended from a
    Presbyterian who had settled in the Colony and (iii) that settler either hailed
    from or was born in Northern Ireland. After quoting passages from the
    judgments of Lord Simonds and Lord Normand in the Oppenheim case
    the Board held that this class of beneficiaries the nexus between whom was
    simply their personal relationship to several propositi was not a section of
    the public but merely a fluctuating class of private individuals and that
    though the purposes of the trust-—being for the advancement of religion and
    education—were prima facie charitable the trust did not possess the necessary
    public quality and was invalid.

    After this long—but I hope not unduly long-recital of the decided cases 1
    turn to consider the arguments advanced by the Appellant in support of the
    appeal. For this purpose I will assume that the Appellant is right in saying
    that the Compton rule ought in principle to apply to all charitable trusts and
    that the " poor relations " cases, the " poor members " cases and the " poor
    employees " cases are all anomalous—in the sense that if such cases had
    come before the Courts for the first time after the decision in Re Compton
    the trusts in question would have been held invalid as " private " trusts.

    Even on that assumption—as it seems to me—the appeal must fail. The
    status of some of the " poor relations " trusts as valid charitable trusts was
    recognised more than 200 years ago and a few of those then recognised are
    still being administered as charities to-day. In Re Compton Lord Greene
    said that it was " quite impossible " for the Court of Appeal to overrule
    such old decisions and in the Oppenheim case Lord Simonds in speaking of
    them remarked on the unwisdom of " casting doubt on decisions of
    " respectable antiquity in order to introduce a greater harmony with the law
    " of charity as a whole ". Indeed counsel for the Appellant hardly ventured


    8

    to suggest that we should overrule the "poor relations" cases. His
    submission was that which was accepted by the Court of Appeal in Ontario
    in Re Cox—namely that while the " poor relations " cases might have to be
    left as long standing anomalies there was no good reason for sparing the
    " poor employees " cases which only date from Re Gosling decided in 1900
    and which have been under suspecion ever since the decision in Re Compton
    in 1945. But the " poor members " and the " poor employees " decisions
    were a natural development of the " poor relations " decisions and to draw
    a distinction between different sorts of "poverty" trusts would be quite
    illogical and could certainly not be said to be introducing " greater harmony "
    into the law of charity. Moreover, though not as old as the " poor relations "
    trusts " poor employees " trusts have been recognised as charities for many
    years ; there are now a large number of such trusts in existence ; and assum-
    ing, as one must, that they are properly administered in the sense that benefits
    under them are only given to people who can fairly be said to be, according
    to current standards, " poor persons " to treat such trusts as charities is not
    open to any practical objection. So as it seems to me it must be accepted
    that wherever else it may hold sway the " Compton rule " has no application
    in the field of trusts for the relief of poverty and that there the dividing line
    between a charitable trust and a private trust lies where the Court of Appeal
    drew it in Re Scarisbrick.

    The Oppenheim case was a case of an educational trust and though the
    majority evidently agreed with the view expressed by the Court of Appeal
    in the Hobourn Aero case that the Compton rule was of universal application
    outside the field of poverty it would no doubt be open to this House without
    overruling Oppenheim to hold that the scope of the rule was more limited.
    If ever I should be called upon to pronounce on this question—which does
    not arise in this appeal—I would as at present advised be inclined to draw
    a distinction between the practical merits of the Compton rule and the
    reasoning by which Lord Greene sought to justify it. That reasoning-
    based on the distinction between personal and impersonal relationships—
    has never seemed to me very satisfactory and I have always—if I may say
    so—felt the force of the criticism to which my noble and learned friend Lord
    MacDermott subjected it in his dissenting speech in the Oppenheim case.
    For my part I would prefer to approach the problem on far broader lines
    The phrase a " section of the public " is in truth a vague phrase which may
    mean different things to different people. In the law of charity judges have
    sought to elucidate its meaning by contrasting it with another phrase " a
    " fluctuating body of private individuals ". But I get little help from the
    supposed contrast for as I see it one and the same aggregate of persons may
    well be describable both as a section of the public and as a fluctuating
    body of private individuals. The ratepayers in the Royal Borough of
    Kensington and Chelsea, for example, certainly constitute a section of the
    public; but would it be a misuse of language to describe them as a
    " fluctuating body of private individuals "? After all, every part of the
    public is composed of individuals and being susceptible of increase or
    decrease is fluctuating. So at the end of the day one is left where one
    started with the bare contrast between " public " and " private ". No doubt
    some classes are more naturally describable as sections of the public than as
    private classes while other classes are more naturally describable as private
    classes than as sections of the public. The blind, for example, can naturally
    be described as a section of the public; but what they have in common—
    their blindness—does not join them together in such a way that they could
    be called a private class. On the other hand, the descendants of Mr.
    Gladstone might more reasonably be described as a " private class" than as
    a section of the public, and in the field of common employment the same
    might well be said of the employees in some fairly small firm. But if one
    turns to large companies employing many thousands of men and women
    most of whom are quite unknown to one another and to the directors the
    answer is by no means so clear. One might say that in such a case the
    distinction between a section of the public and a private class is not
    applicable at all or even that the employees in such concerns as I.C.I, or
    G.E.C. as just as much " sections of the public " as the residents in some


    9


    geographical area. In truth the question whether or not the potential bene-
    ficiaries of a trust can fairly be said to constitute a section of the public is
    a question of degree and cannot be by itself decisive of the question whether
    the trust is a charity. Much must depend on the purpose of the trust. It
    may well be that, on the one hand, a trust to promote some purpose, prima
    facie
    charitable, will constitute a charity even though the class of potential
    beneficiaries might fairly be called a private class and that, on the other hand,
    a trust to promote another purpose, also prima facie charitable, will not
    constitute a charity even though the class of potential beneficiaries might
    seem to some people fairly describable as a section of the public. In answer-
    ing the question whether any given trust is a charitable trust the Courts—as
    I see it—cannot avoid having regard to the fiscal privileges accorded to
    charities. As counsel for the Attorney-General remarked in the course of
    the argument the law of charity is bedevilled by the fact that charitable
    trusts enjoy two quite different sorts of privilege. On the one hand, they
    enjoy immunity from the rules against perpetuity and uncertainty and though
    individual potential beneficiaries cannot sue to enforce them the public interest
    arising under them is protected by the Attorney-General. If this was all
    there would be no reason for the Courts not to look favourably on the claim
    of any " purpose " trust to be considered as a charity if it seemed calculated
    to confer some real benefit on those intended to benefit by it whoever they
    might be and if it would fail if not held to be a charity. But that is not all.
    Charities automatically enjoy fiscal privileges which with the increased burden
    of taxation have become more and more important and in deciding that such
    and such a trust is a charitable trust the Court is endowing it with a
    substantial annual subsidy at the expense of the taxpayer. Indeed, claims of
    trusts to rank as charities are just as often challenged by the Revenue as by
    those who would take the fund if the trust was invalid. It is, of course,
    unfortunate that the recognition of any trust as a valid charitable trust
    should automatically attract fiscal privileges, for the question whether a trust
    to further some purpose is so little likely to benefit the public that it ought
    to be declared invalid and the question whether it is likely to confer such
    great benefits on the public that it should enjoy fiscal immunity are really
    two quite different questions. The logical solution would be to separate
    them and to say—as the Radcliffe Commission proposed—that only some
    charities should enjoy fiscal privileges. But as things are, validity and fiscal
    immunity march hand in hand and the decisions in the Compton and
    Oppenheim cases were pretty obviously influenced by the consideration that
    if such trusts as were there in question were held valid they would enjoy
    an undeserved fiscal immunity. To establish a trust for the education of
    the children of employees in a company in which you are interested is no
    doubt a meritorious act; but however numerous the employees may be the
    purpose which you are seeking to achieve is not a public purpose. It is a
    company purpose and there is no reason why your fellow taxpayers should
    contribute to a scheme which by providing " fringe benefits" for your
    employees will benefit the company by making their conditions of employ-
    ment more attractive. The temptation to enlist the assistance of the law
    of charity in private endeavours of this sort is considerable—witness the
    recent case of the Metal Box scholarships—1.R.C. v. Educational Grants
    Association Ltd.
    [1967] Ch. 993—and the Courts must do what they can to
    discourage such attempts. In the field of poverty the danger is not so great
    as in the field of education—for while people are keenly alive to the need
    to give their children a good education and to the expense of doing so, they
    are generally optimistic enough not to entertain serious fears of falling on
    evil days much before they fall on them. Consequently the existence of
    company " Benevolent funds ", the income of which is free of tax does not
    constitute a very attractive " fringe benefit ". This is a practical justification
    —though not. of course, the historical explanation—for the special treatment
    accorded to poverty trusts in charity law. For the same sort of reason a trust
    to promote some religion among the employees of a company might perhaps
    safely be held to be charitable provided that it was clear that the benefits were
    to be purely spiritual. On the other hand, many " purpose " trusts falling
    under Lord Macnaghten's fourth head if confined to a class of employees


    10

    would clearly be open to the same sort of objection as educational trusts.
    As I see it, it is on these broad lines rather than for the reasons actually
    given by Lord Greene that the Compton rule can best be justified.

    My Lords, for the reasons given earlier in this speech I would dismiss this
    appeal; but as the view was expressed in the Oppenheim case that the
    question of the validity of trusts for poor relations and poor employees ought
    some day to be considered by this House and as the fund in dispute in this
    case is substantial, your Lordships may perhaps think it proper to direct
    that the cost of all parties to the appeal be paid out of it.

    (322695) Dd 197075 100 2/72 St.St.


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