#17117 - Charitable Trusts - Irish Trusts

• Per Gavan Duffy J. in Re Howley’s Estate [1940] IR 109.

“Charity is in law an artificial conception, which during some 300 years, under the guidance of pedantic technicians, seems to have strayed rather far from the realm of plain common sense”.

• Irish Law on Charitable trusts has gone through some significant changes in recent times which stemmed on foot of the enactment of the Charities Act 2009 which its main provisions came into play in 2014.

• This Act was the first attempt by the legislature to define what a charitable trust was and put it on statutory footing. These trusts are enforced by the Attorney General and the Charities Regulatory Authority.

• Charitable trusts are afforded many advantages under the Act:

1. They can exist in perpetuity.

2. Various tax advantages.

3. Objects of the trust need not be certain; Moggride v. Thackwell.

• Merrins v. AG; is a case which illustrates something which occasionally happens where property is just left to the charity and no trust was created, in these cases the government applies it to charity under the signed manual procedure.

• Advantages given the charitable trusts are overly complicated as the courts will now take into account financial implications when dealing whether to accept a new purpose as a charity.

• The 2009 Act was quite the development in Ireland in this area of law however, it is not without elements which are too technical and artificial, especially revolving around the definition of charity, and as of today we see need to look to the developments outside of the Charities Act 2009.

• The modern definition still refers back to the English Charitable Uses Act 1601 to which we applied in the Preamble of the Charitable Uses Act 1634.

• The classification of Charitable Trust is found in s.3(1) of the Act and mirrors the 4 principles established by Lord Mac Naughten in the case of Commissioners for Special Purposes of Income Tax v. Pemsel, which are as follows;

1. Trusts for the relief of poverty.

2. Trusts for the advancement of education.

3. Trusts for the advancement of religion.

4. Trusts for other purposes beneficial to the community.

• S.3(2) of the Act further states that whilst falling into one of these 4 categories the trust will also need to be for the public benefit, which does not vary between the different categories.

• On foot of this, it is of the utmost importance to discuss the public benefit provisions provided in the Act.

  • S.3(3) allows for great flexibility in interpreting the meaning of public benefit, a gift will be regarded for the public benefit if it is intended to benefit individuals of the public.

  • S.3(11) benefit to the public, it is necessary for the court to be satisfied that they are charitable in the required technical sense of the law. This section also lays out a non-exhaustive list of things which may be classified as a benefit to the community to act as guidance for the court.

  • S.3(7) provides factors which should be taken into account when deciding whether a gift can be classed as a public benefit. So here account of a limitation imposed by the donor on the class of persons who may be of benefit from the gift and if this is justified and reasonable.

  • S.3(7)(b) will also account for “any charge payable for a service provided in furtherance of the purpose of which the gift is given and whether it is likely to limit the number of persons or classes of person who will benefit from the gift”.

  • S.3(8) provides for a limitation referring to s.3(7), which will not be justified reasonably if the intended beneficiaries to the gift have a personal connection to the donor

    • Lord Greene MR in Re Compton “Personal Nexus Test” “[a] gift under which the beneficiaries are defined by reference to a purely personal relationship to a named propositus, cannot on principle be a valid charitable gift”.

Trusts for Mixed & Non-Charitable Purposes:

• Chicester Dioceasan Fund v. Simpson- gift was for such charitable purposes as the trustees may see fit. Trust may be invalid if it might include non-charitable purposes.

• S.49(1) of the Charities Act 1961: In Ireland this section of the Act provides that, is food charitable are non-charitable objects are included comma the non-charitable objects are to be excluded. You just read the child to be purposes so the trust would fail on foot of the non-charitable element.

• Interesting Irish case of Daly v. Murphy: Here there was a gift to the executor for around 650,000 euros and the executor could apply it for the purposes he sees fit.

  • S.49(1) of the Act was applicable here and all non-charitable purposes were excluded, thus in term saving the gift.

  • Here the judge looked to extrinsic evidence of the testator’s intentions and the intentions were found to concern both non-charitable and charitable purposes.

• Thus, there is a need for some charitable flavor to be evident in cases to save any potential gifts.

• S.49(2) affirms this point where only the charitable purpose in the gift will be upheld the separate non-charitable purpose will not be upheld.

4 TYPES OF CHARITABLE TRUSTS:

1. Trusts for the prevention or relief of poverty or economic hardship.

• Poverty has been held to be a relative term so that so called “genteel” poverty could be covered and notes in Re Coulthurst where it was stated that “Poverty does not mean destitution”.

• Contrast this view with the case of Re Sander’s Will Trust: where a gift to provide housing for the working classes were held not to be charitable, because these people has jobs and weren’t poor.

• Re Gwyon: unusual case, whereby a Rev left a substantial fund to set up a foundation to provide clothes to the boys of Farnham & district. This case didn’t exclude boys who were not poor and in fact it excluded those who were in receipt of other charitable relief, and on foot of this the trust failed.

• This category has been expanded upon in s3(1) of the Charities Act 2009 in Ireland.

• The preamble of the Irish Statute uses the phrase “poor, succcourless, distressed or impotent persons”, the English statute provides for “aged, impotent or poor”. As result, it is clear those whom are disabled may also be classed in this category due to the use of the term “impotent”

• In addition, S.3(1) of the Act also states that trusts for “economic hardship” are also classed as charitable trusts.

• In English law; there is an exception in the law to the requirement of public benefit in trusts where “poor relations” are concerned and these will be classed as valid trusts, despite the connection of a personal nature. As seen in Re Scarisbrick and Dingle v. Turner, which concerned the employee exception in England, however, these cases are no longer part of Irish law, if they ever were as noted by Keane [11.22]

• Keane notes how this category of poverty is an anomalous exception to the requirement of public benefit… and now in Ireland s.3 of the Charities Act 2009 is supposed to have fixed this problem in Ireland.

• Hanbury & Martin have noted that prior to s.3 of the 2009 Act, the public benefit requirement was seen to have been “reduced… almost to vanishing point”

• Biehler at pg 376, has noted that we are yet to have a challenge under this Act in Ireland in this area and it would be interesting to see if poverty would be interpreted with in a broad or narrow sense. Further, noting that the “poor relations” and “poor employees” would not qualify under this new Act. However, again this has not been tried in law under the section, and the courts could so well follow the English approach still, however, the express wording of s.3 of the 2009 Act would say otherwise with its clear expression that these will not be included to benefit the public.

2. Trusts for the Advancement of Education.

• In Ireland pre-state education this category would’ve been quite important.

• Royal Choral Society v. IRC: promotion of choral singing in London. Here it was rejected that education meant a teacher teaching a class.

  • On foot of this, result it is clear to see that the courts took quite a broad view towards what could constitute education for the purpose of a charitable trust.

• Re Hopkins Will Trusts: a case whereby the trust was for the investigation as to whom actually wrote the plays of Shakespeare was deemed to be charitable.

  • This approach was favoured in the case of Re Worth Library.

• Contrast this with the case of Re Shaw; where a trust was created to research the merit of a proposed new phonetic alphabet. It was found not to be charitable to create new knowledge unless this is associated with research or teaching, yet this idea was contrary to the overall consensus and ended up being settled on appeal.

• Magee v. AG; where activities in a local community hall was deemed to be educational in nature because they ran self-help classes, again affordance of the Re Hopkins approach.

  • Especially, in the case of Magee, it would prove to be a general overlap with s. 3(11)(k) a provision which came into effect in the 2009 Act 7 years post the Magee decision which accounts for “the advancement of the arts, culture, heritage or sciences”.

• IRC v. McMullan; House of Lords, upheld a trust to provide facilities for the playing of football and other games at schools and universities.

  • Held that a trust is more likely to be found where the crux of the trust concerns young people. As even outside the matter of education recreational trusts have been treated quite unfairly unless they concern youths, and as said in class notes this position is not changed by the 2009 Act.

• Subjectivity: So here different purposes might look different to different...