England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

		Royal Courts of Justice Strand, London, WC2A 2LL
		13 July 2009

Mr Justice Blackburne :

Introduction

1. The claimants hold as trustees some very valuable freehold property in Lincoln Way, Croxley Green, Rickmansworth, in Hertfordshire. Known as Durrants, the property comprises a large house built in the 1870s, three staff cottages, garages and grounds running to just over 19 acres laid out as playing fields and sports pitches. It was acquired by the claimants' predecessors in late 1936 or early 1937. Since late 1937, following works of adaptation, it has been used as the clubhouse and sports ground for old boys of Merchant Taylors' School. I shall refer to them as "OMTs". In 1947, the various sports clubs which used the facilities at Durrants amalgamated to form the Old Merchant Taylors' Society ("the Society"). The Society is an unincorporated members' club, membership of which is open to OMTs and certain other defined categories of person. It exists to further non-political sporting, social and recreative activities for the benefit of its members and for other objects ancillary thereto. It is represented in these proceedings by Mr Anthony Wright who is the third defendant and chairman of its general committee.
2. The Society has close relations with Merchant Taylors' School which, as now constituted, is a registered charity with its assets and undertaking vested in and run by the first defendant. The School, which is an independent fee-paying day school for boys, currently with over 800 pupils aged from 11 to 18, was from the time of its foundation in 1561 until 1933 situated in the City of London, first at one address and subsequently at another, before moving to its present premises in Northwood, Middlesex.
3. The School in turn has a close connection with the second defendant which is a livery company ("the Company") based in the City of London, having been first incorporated by a Royal Charter granted in 1327. The Company ran the School until 1997. In that year the first defendant, which is a company limited by guarantee, was formed to conduct the business of the School and hold its assets. I shall refer to the first defendant and the School as it existed prior to the first defendant's incorporation simply as "the School". The School's site at Northwood is, however, owned by the Company; the School occupies the site under a short-term lease from the Company which is due to expire in 2014.
4. Durrants has very considerable development value. On 30 January 2004 the claimants, as trustees - I will come later to what the trusts are on which they hold, entered into a contract ("the sale contract") for the sale of Durrants to Barratt Homes Ltd. The sale contract, which was varied by a deed entered into on 23 June 2009, was made conditional upon a number of matters, including the grant of various planning consents (since obtained) and, relevantly to the present application, "the consent approval or order of such one or more of the Attorney-General the Court and the Charity Commission as is [of] sufficient validity to permit and authorise the Trustees [ie the claimants] to give effect to and be bound by the provisions of the Agreement [ie the contract] and the New Heads of Agreement". The "New Heads of Agreement" is a reference to an agreement which, at the time of the contract, was yet to be entered into between (1) the claimants (as such trustees), (2) the School, (3) the Society and (4) the Company and was to supersede an earlier agreement of August 2002.
5. The New Heads of Agreement envisaged by the sale contract were entered into on 25 June 2008. Supplemental Heads of Agreement, expressed to be supplemental to the New Heads of Agreement, were entered into on 23 June 2009. The New Heads of Agreement, as amended and supplemented by the Supplemental Heads of Agreement (I shall refer to them collectively as "the Heads of Agreement"), are expressed to be conditional upon (1) the sale contract becoming unconditional, (2) the court's approval of the actions (a) of the claimants (as such trustees) in entering into the sale contract and the Heads of Agreement and (b) of the School in entering into the Heads of Agreement and (3) compliance by the School with the requirements of the Charities Acts. They embody a compromise of a claim by the Society to share in the beneficial ownership of Durrants. Provided the court's approval as described above is obtained the terms oblige the parties to enter into various further transactions designed to carry the compromise into effect. The sale contract is a key element of the compromise. The sale proceeds arising from it will yield at least £10,105,000 and, depending on certain valuation and other matters, possibly £15 million or so.

On what trusts is Durrants held?

6. Before the court can give its approval to the claimants' wish to enter into the compromise (and thus to the transaction by which the compromise is to be implemented) it is necessary to determine whether there are others, not parties to the compromise, who might be in a position to establish the right to a share in Durrants and thus to its sale proceeds. If there are, then it is very unlikely that the sale contract can be completed. If that happens, the compromise will fall away and, with it, all the benefits which, as will hereafter appear, are intended to flow from it.
7. It is to this antecedent question, whether there are others who are beneficially interested in Durrants, that I now turn. It gives rise to essentially two issues. The first is to determine what the trusts are upon which Durrants is held. The second is to determine whether and to what extent those trusts are valid.
8. As already explained, Durrants came into the ownership of the then trustees in the second-half of the 1930s. The trustees are referred to in the contemporary records as the War Memorial Trustees and the fund of which they were trustees as the War Memorial Fund or simply as the Memorial Fund. (I shall refer to it simply as "the Fund".) The evidence indicates that Durrants was acquired and improved at a cost of £30,110. Of that amount £24,900 came from the sale proceeds of the sports ground that it replaced, namely a property in Teddington which the trustees had previously held. The balance of £5,210 was provided as to £580 out of cash available to the trustees and the remainder by the Old Merchant Taylors' Sports Club. That club was one of the bodies which amalgamated with others in 1947 to form the Society.
9. The claim of the Society, as successor to the OMTs Sports Club, to a beneficial share in Durrants derives from that contribution to its acquisition and also from later expenditure on improving and maintaining Durrants. It is to be satisfied by the compromise embodied in the Heads of Agreement. I need not therefore take up time at this stage to consider whether and to what extent the Society's claim is well founded. Instead, the investigation needs to focus on the acquisition and ownership by the trustees of the Teddington property and, in particular, the trusts on which they held that property and the other assets available to them as such trustees.
10. The evidence establishes that the Fund originated with a resolution passed at a meeting of OMTs, parents and relatives of boys who had been to the School and persons interested in the School, held on 31 October 1917 at the Merchant Taylors' Hall in the City of London. I refer to that resolution as "the October resolution". The meeting was convened "to consider the most fitting method of perpetuating the memory of all Old Merchant Taylors who have fallen in the war". That is a reference to the First World War which, by that date, had still just over one year to run (although quite how long it would last no one could then know) before the Armistice was signed on 11 November 1918. The meeting resolved:

"That a Committee be formed for the purpose of inviting donations to a fund to be applied as a lasting and visible record of those Old Merchant Taylors who have fallen in the war, as follows:

(a) The creation of a fund the income or capital of which shall be employed in (1) paying for the education at the School of any son of an Old Merchant Taylor who has fallen in the war or who has been thereby disabled, whether directly or indirectly, or in (2) assisting any relative of such Old Merchant Taylor as may be dependent upon him; in every case the decision as to the eligibility of the candidates and the extent and method of assistance to be in the sole discretion of the Committee.

(b) The erection of a permanent memorial on the School premises.

(c) On the attainment of these objects the fund or so much thereof as shall remain in the hands of the Committee shall be applied by them to such purposes for the benefit of the School as the Committee shall determine."

One report of the meeting has the figures "(1)" and "(2)" inserted in object (a) of the resolution as shown above. They conveniently break down paragraph (a) into two limbs which I shall later refer to as the "first limb" and the "second limb". Another version does not. Both versions record that it was also resolved to form a General Committee - it is the Committee referred to in the resolution - "to carry out the resolution passed, with power to add to their numbers, and elect such sub-committees as they consider necessary". The report then sets out 23 names by way of membership of the General Committee, including the then Master of the Company, a future Lord Chancellor (then Sir George Cave), a judge of the King's Bench Division (Sir Montague Shearman), a retired Lord Justice of Appeal and former judge of the Chancery Division (Lord Wrenbury), and a future judge of the Chancery Division and later Lord Justice of Appeal (AC Clauson KC, later Lord Clauson).

11. The intention was to keep the Fund open for donations for five years. It was hoped to raise £25,000. In the event, although there were very many subscribers to the Fund, rather less than £25,000 was raised. In the end, as the records indicate, roughly £10,000 was subscribed to the Fund. Most of the monies raised were applied in purchasing in early 1922 two parcels of land extending to twelve acres or so and forming part of the Udney Park Estate at Teddington in Middlesex (the one parcel by a conveyance dated 9 February 1922, the other by a conveyance dated 13 March 1922). The parcels were conveyed to five persons as trustees. That land, the Teddington property, was later contracted to be sold. The contract was entered into on 23 September 1935. Completion took place, as I understand it, in either late 1936 or early 1937 following an order dated 14 December 1936 of Luxmoore J conferring the necessary power on the trustees to carry the contract into effect. It was the £24,900 proceeds of that sale that were applied towards the acquisition of Durrants.
12. The records indicate that the Teddington property was purchased at a cost of £3,257 and that a further £4,359 was spent on adapting and fencing the land for use as playing fields.
13. Independently of the purchase of the Teddington property, steps were taken to invite subscriptions to a separate fund, named the Pavilion Fund, to erect a pavilion at the Teddington property. It is recorded in the "Taylorian", the School magazine, in April 1922 that the new ground had been purchased and that:

"the War Memorial Committee has made a grant to meet the purchase money of the land and the levelling and fencing, but the cost of erecting a pavilion and other incidental expenses will have to be provided by voluntary subscription … sums amounting to £1600 have already been promised. It is hoped that the remainder of the sum required will be guaranteed before the end of April, when the work must be put in hand with a view to the opening of the ground in October."

14. In the event, the necessary monies appear to have been raised to enable the pavilion to be erected, for it is reported in a school publication of 1923 that on 25 November 1922 the new ground was declared open (and a memorial tablet in the new pavilion unveiled) by the then Lord Chancellor, Viscount Cave.
15. A report in the Taylorian of July 1923 gave an account of what monies had been raised by the Fund and how those monies had been applied. It reported that:

"When the fund was first established in January 1918, the Committee were advised that it would be well, until some definite scheme was formulated, to distinguish carefully between Capital and Income, and the accounts had hitherto been prepared upon that basis.

Now that the disposition of the Fund has been finally determined, viz:-

(a) Provision of Fees etc at MTS for sons of OMTs killed in the War,

(b) Mural records at the School, the Mission Church, and Teddington,

(c) A completely equipped Sports Ground at Teddington,

the necessity for this distinction has ceased…

Appeals have been made for two distinct objects - (1) the Fund itself; (2) the Pavilion at Teddington; but as these two naturally merge into one another, the total receipts and payments in connection with both appeals have been combined …"

Details were then set out. The gist of it was that the pavilion cost £5,058 (a part of which had come from a £2,000 loan from the Rugby Football Union) and that the balance of the Fund (ie the War Memorial Fund) would be "devoted" to the Pavilion Fund except for certain housing bonds "the interest on which, together with the rent of £100 per annum with which it is proposed to charge the Sports Club …will, in the opinion of the Committee, be sufficient to meet all grants for School Fees that the Committee are likely to be called upon to pay."

16. I have dealt in some detail with the acquisition of the Teddington property and the later erection on it of the pavilion in order to deal with the possibility that subscribers to the pavilion's construction by means of the Pavilion Fund might have some claim to a share of the Teddington property and thus to a beneficial share in Durrants. Counsel before me were at one in dismissing that possibility. It is appropriate nevertheless that I should mention the point, if only briefly.
17. In my judgment, counsel were right to say that the subscribers to the Pavilion Fund could have no claim. There are two reasons for this. First, no part of the Pavilion Fund was applied in the purchase of the Teddington property itself: it had already been acquired before the Pavilion Fund was established. Second, although the pavilion, paid for out of the Pavilion Fund, was constructed on the Teddington property, and doubtless enhanced its value, it is, in the circumstances, quite impossible to impute any intention on the part of the subscribers to that fund and the trustees that, by financing the cost of the new pavilion those subscribers should acquire an interest in the Teddington property itself. Nor is there any evidential basis for establishing by estoppel some kind of proprietary interest in the Teddington property in consequence of the donations to the Pavilion Fund. The obvious reality is that subscribers to that fund were making out and out gifts (most of them, according to the evidence, were in relatively small amounts) to enable the pavilion to be constructed. The money was duly so applied. The pavilion was to be for the benefit of the clubs that would have the use of the sports facilities at the Teddington property. All of this, as it seems to me, is entirely antithetical to the notion that the subscribers should thereby have acquired an interest in the property benefited by the new pavilion.
18. There is one further document to which I should refer. It is a declaration of trust dated 1 September 1925 and made by four of the five persons to whom the Teddington property had been conveyed by the two conveyances of early 1922. Those four are referred to in the document as "the Trustees". The fifth person had died in the intervening period.
19. After reciting the two conveyances and the housing bonds vested in the trustees and that the purchase money for the Teddington property and those bonds "was provided out of the funds of the Committee of subscribers to the Merchant Taylors' School War Memorial for the purpose of establishing and maintaining a memorial to former pupils of the said School who fell in the Great War" the trustees declared that the Teddington property and the bonds and all property and investments representing the same should be held upon trust until 31 December 1932:

"to pay or apply at the Trustees' discretion the net annual income therefrom in the first place in or towards defraying the school fees at Merchant Taylors School of dependents of former pupils of the said school who fell in the Great War and in the next place in for or towards such purpose or purposes in connection with Merchant Taylors School as to the Trustees may seem proper or desirable."

20. By clause 2 it was provided that from and after 31 December 1932:

"The trust property and the proceeds thereof shall be held upon trust to apply the same for the use and enjoyment of such persons and in such manner for the benefit of former pupils of Merchant Taylors School as to the Trustees shall seem fit."

Clause 3 then provided that "so long as there are at least three trustees it shall not be necessary to fill up any vacancy in the Trustees".

21. A question arose as to whether that declaration sets out the trusts on which the trustees thereafter held the Teddington property and whether therefore, following its sale and the application of its proceeds towards the acquisition of Durrants, it sets out the trusts on which Durrants, or at least a share in that property proportionate to the contribution made by the sale proceeds towards its acquisition, is now held.
22. It appears that in 1974 Mr Richard Scott (later Lord Scott of Foscote) advised in conference that the trusts contained in the declaration were (according to the conference note) "not charitable", that they were "not legally valid" and that the trust funds "must accordingly be regarded as held upon a resulting trust for the original donors", ie the subscribers to the Fund. It is not clear precisely what information Mr Scott had when giving that advice. It is, at the least, questionable whether, viewing the declaration in isolation, the advice he gave was correct. But I do not need to go further into that question because it is not evident how, to the extent that the trusts declared by it departed from the trusts which were to apply to donations towards the Fund set out in the October resolution, it was open to the makers of that declaration to depart from those trusts. The October resolution does not empower the General Committee, much less the trustees holding the Fund or the assets or investments derived from it, to alter the objects for which the monies had been raised. Counsel before me were therefore agreed, rightly in my judgment, that the declaration of trust was ineffectual to vary the trusts upon which the Teddington property (and the housing bonds) were thenceforward held.
23. There is one further matter which I should mention relevant to the identification of the applicable trusts. This concerns the registration of the Fund under the War Charities Act 1916. The record of registration states that the charity was established on 31 October 1917 (so that it plainly refers to the charity to be established by the October resolution) but goes on to state that the objects of the charity were "(1) to raise a fund to provide a Memorial to Old Merchant Taylors who have fallen in the war; (2) to educate sons and dependents of above: and (3) to use balance for what purpose Committee consider is in the interest of the school". The registration was applied for on 18 June 1918 and the registration itself effected on 31 January 1919. A handwritten endorsement dated 1 October 1925 states that "this charity ceased to operate as a war charity". To some extent the objects of the charity, as set out in that registration document, depart from the wording contained in the October resolution: in some respects it is narrower, in others it is wider. In my view, the registration is of no relevance. The statement of the objects can be no more than a précis of the terms of the October resolution. There is no evidence that any donations were made on the faith of the terms set out in the registration. Counsel before me were agreed that it was of no relevance.
24. It follows therefore that the trusts affecting the Teddington property and therefore Durrants are, subject only to the Society's claim, those set out in the October resolution and no others.

The validity of the trusts of the October resolution

25. The question whether those trusts are valid turns on the extent to which object (a) of the resolution is valid and, in particular, whether subscribers to the Fund can establish that, by reason of a failure to any extent of those trusts, there is a resulting trust in their favour.
26. In order to give them the opportunity of representation to argue the point, or be bound by the court's decision if they should decline that opportunity, the Chief Master, by order dated 16 January 2009, directed that notice of the claim be given to a number of different persons as executors by representation of some of the subscribers to the Fund (considerable research having been necessary to identify such persons) and to the Treasury Solicitor as representing the interests of the Crown. Notice to the Treasury Solicitor was on the footing that, if there were otherwise a resulting trust in their favour, the subscribers might be taken to have intended to have parted with their money out and out and therefore that the Crown should be entitled to it as bona vacantia (see Re West Sussex Constabulary's Widows, Children Benevolent (1930) Fund Trusts [1971] Ch 1.) The Chief Master also directed that the claimants should place advertisements in the London Gazette and the Times, in a form which he approved, giving details of the claim and inviting participation in the proceedings. This was on the basis that such advertisements should constitute notice in accordance with CPR 19.8A with the result that any person claming an interest in Durrants who failed to file an acknowledgement of service should be bound by the judgment made as if that person had been made a party to the claim. Since the advertisements were placed but no acknowledgements of service were filed the effect has been that the subscribers to the Fund, and the Crown, are bound by the court's decision on whether they have any interest.
27. Rather than allow any arguments that could be advanced on behalf of subscribers to go by default, Mr Philip Jones QC who appeared with Mr Dakis Hagen on behalf of the claimants, advanced such arguments as it might be thought that the subscribers would have advanced in support of a resulting trust in their favour had they been represented before the court. I am greatly indebted to Mr Jones for having done so. The Crown, although (like the subscribers) not represented before me, can only get any claim off the ground if the subscribers are able to establish that the objects of the October resolution cannot (and did not) to any extent take effect. There was no need for any separate arguments to be advanced on its behalf.
28. It was accepted by Mr Jones that objects (b) and (c) of the October resolution gave rise to valid charitable gifts. The only questions therefore were whether object (a) was to any extent invalid and, if it was, whether that fact impacted on the validity of object (c). For it is in reliance on the provisions of object (c) that the claimants wish, subject to the court's approval, to apply the sale proceeds of Durrants in accordance with the terms of the compromise.
29. In considering the validity of object (a) the first question is whether the aims set out in it proceed from motives of general benevolence towards the classes of persons mentioned in it - the sons of OMTs killed or disabled in the First World War and the dependants of such persons - in which case its validity is to be decided as a matter of charity law, or whether it proceeds from motives of personal bounty towards the persons so identified, with payment of their education at the School or the provision of assistance serving as the means by which the bounty is to be bestowed on those selected for benefit from among the class, in which case the validity of the gift is to be determined as a matter of private trust law. See Attorney-General v Comber (1824) 2 Sim & St 93; In re Scarisbrick's Will Trusts [1961] Ch 622; and Dingle v Turner [1972] AC 601 at 623C.
30. I am in no doubt that it is the former. Object (a) was one of the purposes of the appeal for funds which, it was intended, should remain open for several years and which was addressed to OMTs, parents and relatives of boys who had attended the School and others interested in the School. In other words it was a continuing appeal addressed to a wide group of people linked only by their connection to the School. The appeal was set up in response to a wish to establish a lasting and visible record of OMTs who had fallen in the War. The objects set out in (b) and (c) were aimed at the attainment of purposes rather that at bestowing personal bounty on particular persons.
31. It was conceded by Mr William Henderson, appearing for the Attorney-General, and by Mr Jonathan Adkin, appearing for the School (and, as such, interested in arguing for the validity of the trusts of the October resolution), that the first limb of object (a), namely the part concerned to provide for the education at the School of any son of an OMT killed or disabled in the war, could only take effect as a valid charitable trust if it constituted a gift for the relief of poverty. For, in that event, the need for the potential beneficiaries to be a sufficient section of the public, which the first limb lacks, was not necessary: see Dingle v Turner. They submitted that, properly understood, object (a) was a gift for the relief of poverty. By contrast, Mr Jones submitted that the subscribers to the Fund would contend that the first limb was not for the relief of poverty but for educational purposes.
32. The meaning of poverty for the purpose of a valid charitable gift for the relief of poverty was one of the matters that arose for decision in In re Coulthurst deceased, Coutts & Co v Coulthurst [1951] Ch 661. In that case the testator by his will directed that the income of a trust fund should be applied by a bank as trustee of the fund "to or for the benefit of such …of the …widows and orphaned children of deceased officers and deceased ex-officers" of the bank "as the bank shall in its absolute discretion consider by reason of his, her or their financial circumstances to be most deserving of such assistance…". The evidence before the court indicated that the bank had no more than 439 employees who qualified as officers within the terms of the testamentary gift. The class therefore was relatively small. But, as was by then accepted (see Gibson v South American Stores (Gath & Chaves) Ltd [1950] Ch 177), the fact that the class of beneficiaries is by reference to employment in a particular business (and quite likely therefore to be small in number) does not disqualify the gift, if it is for the relief of poverty, from operating as a valid charitable trust. Affirming the decision of Vaisey J, the Court of Appeal held that the testator had created a valid charitable trust for the relief of poverty. In the course of his judgment, which Jenkins and Hodson LJJ agreed, Lord Evershed MR stated (1) (at page 665) that whether a trust was for the relief of poverty did not turn on finding the word "poverty" expressed in it but on a consideration of the gift as a whole ("…having regard to the whole context as well as to the precise language.. is it right to infer… that the relief of poverty was meant?") and (2) (at page 666) that poverty does not mean destitution but, being a word of wide and somewhat indefinite import, "may not unfairly be paraphrased …as meaning persons who have to 'go short' in the ordinary acceptation of that term, due regard being had to their status in life, and so forth".
33. Is then object (a) to be interpreted as a gift for the relief of poverty? In considering that question, the following points are to be noted about object (a). First, the payment to be made is described, in the words which follow the semi-colon, as "assistance". Second, it is not every son or dependent relative of an OMT killed or disabled in the war that is to receive the assistance; whether any eligible person is to receive any and what assistance is a matter for the Committee. Third, the eligibility of candidates for assistance in the case of relatives of OMTs killed or disabled in the war is their dependency on the OMT. When coupled with the reference to the Committee's discretion to determine the extent and means of the assistance, this suggests that financial need is the criterion ie that it is to those who would otherwise "go short" that the assistance is to be directed. It was therefore accepted by Mr Jones, rightly, that the second limb of object (a) - the provision of financial assistance to dependent relatives of the OMTs killed or disabled in the war - is charitable in nature as being for the relief of poverty. Fourth, it is difficult to see why, if that is so in the case of dependent relatives, the criterion of financial need, because otherwise they would "go short", is any less the criterion where eligibility depends on being the son of an OMT killed or disabled in the war.
34. Bearing all of these factors in mind, both those concerned with the meaning of poverty and those arising from a consideration of the wording of object (a), I accept the submission that, properly understood, the trusts of both limbs of object (a) are for the relief of poverty and, as such, were valid in law. In particular I accept that the first limb is not to be construed as a trust for the advancement of education.
35. That conclusion makes unnecessary consideration of the alternative arguments which counsel addressed to me. I shall nevertheless mention them briefly. The first was that if the trusts of the first limb of object (a) are not for the relief of poverty and, lacking the necessary element of public benefit, cannot therefore be charitable, they are nevertheless saved from invalidity by section 1(1) of the Charitable Trusts (Validation) Act 1954 in that (on the assumption of such invalidity) object (a) constitutes an imperfect trust provision within the meaning of section 1(1) of that Act. In this regard I respectfully agree with and adopt the approach adopted by Hart J to the construction of section 1(1) set out in Ulrich v Treasury Solicitor [2005] EWHC 67 (Ch); [2006] 1WLR 33 at [29] to which counsel drew my attention. Applying the approach set out in that authority, section 1 applies to validate the trusts applicable to the disposition effected by object (a) insofar as it might be argued that either limb would permit an application which was not exclusively charitable. This is because it would be open to the Committee (by whom decisions concerning the application of the Fund are made) to give effect to object (a) in an exclusively charitable manner without thereby affording anyone a legitimate complaint that the application was to any extent impermissible.
36. Yet a further approach to object (a) is to say that even if to any extent it did give rise to an invalid trust which, however, section 1 of the 1954 Act was not able to save, it would not be open to any subscriber to complain that monies were applied in the manner envisaged by that object since that was the very application which, by giving monies on the terms of the October resolution, the subscribers had mandated. The argument then continues that, such monies having been so applied and there being no intention that any further monies should be so applied because that object has long since been fully fulfilled, it is academic to consider whether, if an attempt had been made to establish a trust for the purpose of carrying out object (a), that trust would have been valid as a matter of charity law. There seems to me to be force in that argument.
37. The final argument was that, in any event, the application of the Fund in accordance with the compromise is justified by object (c) which, it is common ground, either is exclusively charitable or, by force of section 1 of the 1954 Act, can legitimately be applied for exclusively charitable purposes. The only contrary argument is to contend, as Mr Jones submitted that subscribers arguing for a resulting trust in their favour might seek to do, that the invalidity of object (a) (assuming that it is to any extent invalid) "infected" and therefore rendered invalid, object (c) which, it is to be noted, is only expressed to apply "on the attainment" of, inter alia, object (a). This argument relies on establishing that the trusts declared by object (c) are dependent upon and cannot take effect before the exhaustion or termination of the trusts declared by objects (a) and that the trusts declared by object (a) are void for remoteness.
38. Whether an interest fails by reason of the failure of a prior interest on which it is dependent and which is void for remoteness (the rule was abolished by section 6 of the Perpetuities and Accumulations Act 1964 in respect of instruments taking effect after the commencement of that Act) is a difficult area of law: see In re Hubbard's Will Trusts [1962] Ch 275 in which the matter (described at page 284 as a "rule of invalidity by contagion with another and invalid limitation") is discussed. I need only say that the plain intention behind the October resolution was that object (c) should take immediate effect subject only to the attainment of objects (a) and (b) or the setting aside of sufficient monies to satisfy those objects. It is not realistic to suppose that any application of the Fund to meet object (c) was to be delayed to the date when the prior objects had been wholly attained. Nor did those concerned with the application of the Fund so understand the October resolution: they took steps long prior to the date when funds were no longer applied for the attainment of object (a) to acquire the Teddington property and then to alter it for use as playing fields. In my view, therefore, there is nothing in this further argument to support any claim by subscribers to an interest in Durrants or its sale proceeds.
39. It follows therefore that there is nothing to prevent an application of the sale proceeds of Durrants for a purpose permitted by the terms of object (c). This is a conclusion which I am happy to reach. This is not only because it does not result in a possible windfall for the original subscribers or, failing them, the Crown when, so far as they have been notified of these proceedings, no one now representing them has been willing to advance a claim but also because it would have yielded a result which would, I think, have surprised the several eminent Chancery practitioners, not to mention a future Lord Chancellor, who subscribed to the fund on the terms of the October resolution and who became members of the Committee charged with the application of the funds thereby raised.
40. The only other point I need mention is that the decision whether and how to apply the Fund is, by the terms of the October resolution, that of the Committee, not that of the trustees who hold the fund. It appears, however, that at a general meeting of subscribers to the fund held on 26 June 1923 a resolution was passed that further management of the Fund be handed over to the very persons to whom the Teddington property had been conveyed. It is a fair inference that the propose of so doing was to merge the Committee and the trustees so that thereafter those who were appointed to be trustees of the Teddington property and of any other assets of the Fund, should also discharge the functions of the Committee. Whether this was a legitimate step to take does not matter. The disposition of the sale proceeds now sought to be made is one for which the court's approval is sought. If that approval is forthcoming it does not seem to me to matter whether the persons seeking it might not strictly have been the persons on whom, in accordance with the terms of the October resolution, the power to determine the disposition of the Fund had been conferred.

The compromise

41. I return then to the compromise and whether the court should give its consent to it. I first explain in more detail what the compromise involves before explaining for whose benefit the court's approval is sought and whether it is appropriate for the court to give that approval.
42. The sale contract provides for the residential redevelopment of Durrants in two parts, referred to as "phase 1" and "phase 2". Payment of the purchase price for Durrants is as follows: the price of phase 1 is to be the greater of £10,105,000 and the open market value of that phase, to be assessed when the sale contract becomes unconditional, together with possible overage. The price of phase 2 is 95% of the open market value of that phase as at the date of its development, together with possible overage, but subject to possible deduction if the phase 1 open market value is below the minimum phase 1 payment price of £10,105,000. The sale contract further provides for payment of the development costs of a new sports ground at the School (at its premises in Northwood) and certain associated legal and professional costs as they are incurred, up to a maximum of £8.4 million. The need for such replacement facilities is a condition of planning consent in relation to the development of Durrants and, without such up-front funding, the fulfilment of that condition, I am told, will probably not be possible.
43. The Heads of Agreement commit the parties to enter into (1) a 128 year lease to be executed by the Company in favour of the School of the land on which the School is situated, (2) a development agreement between the Society, the School, the claimants and the Company which, in broad terms, provides for the building of the new sports facilities for the use of the School and the Society and (3) a 125 year licence to be granted by the School to the Society relating to use of the new sports facilities (in substance, permitting the Society to use the new facilities at weekends and bank holidays during the relevant sports season and to have the use of one floor of the new clubhouse). The proposed 128 year lease provides for the payment of a rent by the School to the Company with periodic reviews and contemplates the grant of the 125 year licence by the School to the Society relating to the proposed new sports facilities at the School. The development agreement provides that, out of the sale proceeds of the sale contract, after paying the various legal and professional fees and the costs of constructing the new facilities (for which the agreement makes detailed provision and which are expected to cost around £8.4 million), the next £2.5 million is to be paid to the School and any remaining balance thereafter is to be divided equally between the School and the Society, subject to any necessary reserve for the payment of tax.
44. Following queries by HM Attorney-General, the Company and the School agreed to amend the proposed 128 year lease by the Company to the School. This has led in turn to consequential amendments to the 125 year licence. The broad purpose of those amendments is to compensate (and thereby protect) the interests of charity in the event of an early termination of the lease in stated events, and with it a loss of the right to use the new sports facilities. To cater for these amendments a draft amendment to the Heads of Agreement has also been agreed to which the proposed 128 lease and 125 year licence (as revised) and a compensation agreement are annexed.
45. Ordinarily these days, where a question arises whether or not a charity should act in particular way, for example by compromising a claim or entering into some transaction, the Charity Commission will be able to advise or guide the charity in question pursuant to the power given to the Commission by section 29 of the 1993 Act. A charity trustee who acts in accordance with any such advice or guidance is treated, as regards his responsibility for so acting, as having acted in accordance with his trust. If the involvement of the Attorney-General on behalf of charity generally is needed, she is available, through her advisers, to give her view and, if appropriate, give her approval. This would extend to whether and if so on what terms to compromise a dispute over the entitlement to some item of property. The court need not become involved.
46. In the instant case, however, because of the doubt whether the claims to Durrants' beneficial ownership (and thus to its proceeds of sale) lay exclusively between charity (represented for the purpose by the Attorney-General) and the Society or whether, in addition, there were others who might be in a position to establish an entitlement, the claimants launched the present application with a view to obtaining the court's determination of the question and assuming that there were no others who have any interest, obtaining the court's approval of the compromise. That is the issue which I have now determined. The way is now clear therefore for the sale contract to be completed and the compromise to the carried into effect.
47. The advice given on 18 June 2009 by Montagu Evans, who are chartered surveyors, is that, even after the passage of over five years since the sale contract was entered into:

"…if the Trustees [ie the claimants] wish to move to realise the value of the Durrants asset on the basis that optimises value (that is as a residential development site), then the terms of the proposed transaction [ie the sale contract] remain the best reasonably obtainable in the open market at the relevant time."

They then add:

"Given the complexity of realising the value of this asset it is, in our opinion, unlikely that any replacement purchaser would be identified on better terms in the short term.

The alternative to this would be to mothball the proposed sale and revisit it in due course in improved market conditions. That judgment is the matter for the trustees but were this approach to be adopted, there is a risk that the residential allocation of the Durrants site may be lost."

(I should add that, four days later, a variation to the sale contract was negotiated involving an increase in the up-front payment from £6.5 million to £8.4 million but extending the time for the phase 2 payment, which Montague Evans felt able to recommend.)

48. Given that advice it is plain that, provided the division of the sale proceeds is one which adequately reflects the interests of charity, and Mr Henderson accepts that it does, the decision of the claimants to enter into the compromise and, to that end, enter into the various transactions designed to give effect to it is one which, in the exercise of the court's jurisdiction in trust matters, the court is invited to approve. It was thought convenient to invite the court to consider and, if appropriate, give the claimants the comfort that they seek before committing themselves to so major a transaction because the question whether there are any and if so what outside interests (beyond those of charity and of the Society) was one which the court needed to determine in any event. The Attorney-General and, more particularly, the Charity Commission have been content that the approval that the claimants seek before committing themselves to these transactions should be dealt with in this way. By order dated 23 February 2009, the Charity Commission authorised the claimants to bring these proceedings with a view to obtaining the court's approval.
49. The School, as I have mentioned, is a registered charity. It too seeks the approval of the court before entering into the compromise. Like the claimants, it has the authority of the Charity Commission to apply to the court and to do so in the present proceedings rather than by commencing fresh proceedings for that purpose. Its position is straightforward. Through Mr Adkin, the School submits that it is in its best interest to enter into the compromise since, if it does so, it stands to gain substantial tangible benefits, namely the new sports facilities, the likelihood (on present valuations) of a further £2.5 million from the sale proceeds, together with half of any further balance and a long lease of its premises from the Company (a security of tenure that it has not previously enjoyed). It also stands to obtain benefits which, as Mr Adkin put it, are intangible but no less real, namely the likely enhancement of its relations with OMTs in general, and the Society in particular, as a result of the Society having a presence at the School. Further, since the interests of charity in Durrants and its sale proceeds are essentially those of the School the compromise avoids the risk that if the matter were fought out the Society might establish a larger share of the beneficial interest in Durrants (and thus to its sale proceeds) than it will receive under the compromise. Even if the share of charity were to be at least as great as that provided by the compromise, if not greater, the risk is avoided that, in the process, relations between the School and OMTs, as represented by the Society, might be soured. The compromise also avoids the strong likelihood that, in the absence of the compromise, the sale contract would be lost.
50. For all of these reasons, which were endorsed by Mr Henderson, and which apply with as much force to the decisions that the claimants invite the court to bless, it was submitted that, viewed from the standpoint of the School, the compromise was one which the court should approve.
51. I am fully persuaded that the interests of charity will be greatly benefited by the compromise and therefore that, both on the application of the claimants and on the application of the School, it is one to which the court should give its consent. In particular, I see no reason to question the broad division of the expected sale proceeds between charity and the Society.
52. Having earlier in the course of the hearing stated that, for reasons which I would later set out in writing (as I have now done), there were no persons beneficially interested in Durrants beyond those of charity and the Society, I indicated at the conclusion of counsel's submissions inviting the court's blessing of the compromise that I approved the decision of the claimants to enter into the sale contract (as recently varied) and the Heads of Agreement, and the decision of the School to enter into the Heads of Agreement. These matters are already reflected in the order which I then approved.