High Court of Ireland Decisions

Judgment Title: National Tourism Development Authority -v- Coughlan & Ors

Neutral Citation: [2009] IEHC 53


High Court Record Number: 2007 7760 P

Date of Delivery: 17 February 2009

Court: High Court

“To provide amenities and facilities at the tourist resort of Killarney and to develop tourist traffic at or to the same resort.”

“We are reviewing our involvement in companies, property, etc. As you know, we have a controlling interest in your Company’s shares. What would you and [the board of Killarney Golf and Fishing Club Limited] think about us getting rid of those shares?
Your views would be particularly relevant because we acquired the shares from you.
To avoid any misunderstanding I should say that this is not an offer to sell the shares. However, informal consultation with you will help us to arrive at a decision about them. The share transfer took place many years ago, and it would also be helpful if you would say whether, from your point of view, there were any understandings or agreements regarding the future of the shares.”

“The Directors always understood that when Bord Fáilte held the majority of the ordinary shares, that the Golf Club property in Killarney would be protected permanently from any possibility of exploitation arising from private ownership. I personally unreservedly agreed with these sentiments and transferred my shares to Bord Fáilte for a purely nominal sum. I enclose photo copy of share transfer form herewith. Bord Fáilte representatives at the time in 1968 initiated this transfer of shares for the very reason expressed above . . . .
After [lengthy] discussion, the Directors agreed that I convey the following points to you. In view of the unexpected suggestion that Bord Fáilte might dispose of their ordinary shares in Killarney Golf Club Ltd., the Directors think that it would be essential that these ordinary shares be held in perpetuity by a type of trust possibly formed by the local ordinary shareholders.
Therefore, in order to avoid any possible complication that could arise in the future, it is imperative that Bord Fáilte acquire the ordinary shares held by [another shareholder]. Then a transfer of the … shares to the trust referred to above could be negotiated.”

“Because we cannot own shares, they are held, as you know, by Niall Miller. Shares in Killarney Golf Club Limited are difficult to transfer because they must be offered to other shareholders. The shares held by Niall Miller cannot be held by others here. There are two examples of other shares in Killarney Golf Club Limited going to non nationals on the death of original shareholders. It is essential that our shares go from Niall Miller into the hands of a group of trustees that would hold them beneficially on our behalf and subject to a trust document.
We got the shares when we acquired land in Killarney to preserve it from undesirable development. It adjoined the golf course and we agreed with them to develop a second eighteen holes on it. Consequently, the trustees must undertake not to allow anything to happen to the golf course lands that would interfere with the property being used as a golf course. Specifically, the land must not be sold without the express prior approval of Bord Fáilte. It must be operated as a golf course and for no other use without our express approval.
Being a company limited by shares, Killarney Golf Club Limited can distribute dividends and, on dissolution, any surplus accrues to the shareholders. We do not want the shareholders to be able to wind up the company; distribute dividends or in any way liquidate the assets without our express prior approval. Particularly, we would not like our trustees to be able to sell their own privately held shares. That requirement may be difficult to accommodate.
We would like the trustees to be appointed for so long as they continue to be directors of Killarney Golf Club Limited. Their role as trustees should not be capable of being willed or devised in any way. Any vacancy should revert to Bord Fáilte for the appointment of another trustee.
Should the trust prove impossible to implement, or for any other reason be wound up, then the shares should revert to Bord Fáilte.
The directors of Killarney Golf Club Limited in their draft document indicated that they wished to purchase our shares from us for a nominal value. An essential point of difference between us that we will not sell our shares. Instead, we are prepared to vest them in directors acting as our trustees.”

“WHEREAS in pursuance of its powers and functions as Tourist Authority, the Bord has contributed, or intends to contribute, grants to the Company of the sum of £46,494 or thereabouts towards the development of the Company’s new 18 hole golf course and WHEREAS the Company have agreed to take from the Bord a Lease of certain of the Bord’s lands at Killarney when registration of the Bord’s title has been completed and WHEREAS the company have agreed with the Bord to enter into a Deed of Covenant and Charge with the Bord with the intent of maintaining the tourism and golfing amenities of the said new 18 hole golf course… the Company doth hereby covenant and agree with the Bord . . . to take out a lease from the Bord of the lands and premises…”

“(1) The Trustees shall hold the said shares UPON TRUST to use their best endeavours to promote the present amenities of the Company for its members and visiting golfers in the spirit and manner as now exists and shall in so far as it is within their power ensure that the premises, buildings and courses of the club are maintained to their present high standards and improved whenever and wheresoever necessary.
(2) To pay and apply any dividends on the said shares or any proceeds whatsoever therefrom and howsoever received for the improvement of the Killarney Golf and Fishing Club being the Club operated by the company or in the event of same no longer being used for the purposes of a golf and/or fishing club to hold such dividends or proceeds UPON TRUST for such tourism objects as the Bord shall direct.

(4) Not to charge, encumber, alienate or otherwise dispose of the shares or any of them in any manner without the consent in writing of the Bord.
(5) Subject to condition 4 hereof, not to sell or otherwise dispose of the shares or any of them for any purpose which would cause the assets of the Company to be used for purposes other than those now within the powers of the Company and in particular, not to use the shares or the powers of voting derived therefrom for any commercial or profit making purposes other than those now authorised by the Memorandum and Articles of Association of the company…

“…extrinsic evidence may be admitted, not strictly speaking as evidence of the intention of the testator, but rather of circumstances existing at the date of his death which he might have had in mind and which accordingly, might assist the court in the construction of the language used in the will. James L.J. in Boyes v. Cook [1880] 14 Ch. 53 said at p. 56:-
‘You may place yourself, so to speak, in (the testator's) armchair and consider the circumstances by which he was surrounded when he made his will to assist you in arriving at his intention.’
Such evidence was admitted, not as direct evidence of the testator's intention, but rather as circumstantial evidence which assisted the court in inferring what the testator's intention was. Under this rule - sometimes referred to as "the armchair principle" - evidence could be adduced as to the testator's knowledge of and relations with the different persons or institutions who claimed to be the object of a gift under his will.”

“I regret having to give this decision, for the evidence which I have excluded, if I were allowed to take it into account, would convince me to a moral certainty that the testatrix intended to benefit the Dublin Seamen’s Institute… This is by no means the first – and, equally, certainly, will not be the last – case in which a judge has been forced by the rules of law to give a decision on the construction of a will which he believed to be contrary to the intentions of the testator.”

“At the end of the day the rule as to construction and the context in which it is to be achieved is most succinctly expressed in the judgment of Keane J. (as he then was) in Kramer v. Arnold [1997] 3 I.R. 43 at p. 55 when he said:-
‘In this case, as in any case where the parties are in disagreement as to what a particular provision of a contract means, the task of the court is to decide what the intention of the parties was, having regard to the language used in the contract itself and the surrounding circumstances.’”

“It is then the duty of the court by the exercise of its judicial knowledge and experience in the relevant matter, innate common sense and desire to make sense of the settlers or parties’ expressed intentions, however obscure and ambiguous the language that may have been used, to give a reasonable meaning to that language if it can do so without doing complete violence to it.”

“Reliance has been invoked by [Counsel for the body applying for charitable status] on the principle of construction that, where there is an ambiguity, a benignant construction should be adopted in favour of charity . . . [But] the principle only applies where a provision or a gift will be held void and fail unless held charitable…”

“There is one other principle of general application to which I should refer. The court leans in favour of charities and, consequently, will prefer a construction which gives effect to the testator’s desire to benefit a stated object rather than one which leads to a failure of the bequest.”

“The general rule is that a gift on trust must have a cestui que trust and must be for the benefit of individuals, unless charitable. It must have a definite object, and there must be someone in whose favour the court can enforce it. In general, in order to be valid, a non-charitable trust must have an ascertainable beneficiary in whose favour performance of the trust may be decreed: Maurice v. Bishop of Durham (1804) 9 Ves 399, 404; Leahy v. Attorney General of New South Wales [1959] AC 457, 478; Re Denley’s Trust Deed [1969] 1 Ch. 373. Consequently, trusts for purposes or objects are invalid, for a purpose or object cannot sue, but trusts for charitable purposes are valid because they are enforceable by the Attorney General. . .
Consequently, gifts to unincorporated associations are subject to (a) the rule against remoteness of vesting, which requires that the interests of the beneficiaries must vest within the perpetuity period; (b) the rule that, for there to be a valid trust, there must be a beneficiary or cestui que trust in whose favour performance of the trust may be decreed (“the beneficiary principle”); and (c) the general principle of trust law that the objects of the trust must be sufficiently certain.”

“No doubt the popular meaning of the words ‘charity’ and ‘charitable’ does not coincide with their legal meaning; and no doubt it is easy enough to collect from the books a few decisions which seem to push the doctrine of the Court to the extreme, and to present a contrast between the two meanings in an aspect almost ludicrous. But still it is difficult to fix the point of divergence, and no one as yet has succeeded in defining the popular meaning of the word ‘charity’. The learned counsel for the Crown did not attempt the task. Even the paraphrase of the Master of the Rolls is not quite satisfactory. It would extend to every gift which the donor, with or without reason, might happen to think beneficial for the recipient; and to which he might be moved by the consideration that it was beyond the means of the object of his bounty to procure it for himself. That seems to me much too wide. If I might say so without offence, under conceivable circumstances, it might cover a trip to the Continent, or a box at the Opera. . . . How far then, it may be asked, does the popular meaning of the word ‘charity’ correspond with its legal meaning? ‘Charity’ in its legal sense comprises four principle divisions: trusts for the relief of poverty; trusts for the advancement of education; trusts for the advancement of religion; and trusts for other purposes beneficial to the community, not falling under any of the preceding heads.”

“(a) assist, financially (including by way of loan) or otherwise, in the provision, extension, or improvement of accommodation for tourists;
(b) build, establish, equip, or operate hotels, guest houses, holiday hostels, holiday homes, youth hostels, and holiday camps or assist, financially (including by way of loan) or otherwise, in the building, establishing, equipping, or operating thereof;
(c) provide or assist, financially (including by way of loan) or otherwise, in providing services, sports, amusements, or other facilities which appear to the Board to be calculated to improve tourist traffic;
(d) improve and maintain amenities and conditions which appear to the Board to be likely to affect tourist traffic;
(e) engage in any kind of publicity in connection with tourist traffic;
(f) establish or assist in establishing any form of agency in connection with tourist traffic;
(g) provide or assist in providing schemes for the training of persons to do work which is wholly or mainly connected with tourist traffic;
(h) prepare and publish guide-books, itineraries, time-tables, and other publications for the benefit or assistance of tourists.”

“To ascertain whether a gift constitutes a valid charitable trust so as to escape being void on the ground of perpetuity, a first inquiry must be whether it is public - whether it is for the benefit of the community or of an appreciably important class of the community. The inhabitants of a parish or town, or any particular class of such inhabitants, may, for instance, be the objects of such a gift, but private individuals, or a fluctuating body of private individuals, cannot. If this test is satisfied, is it necessary to find, further, that the class is confined to poor persons, to the exclusion of persons not poor? Is poverty a necessary element? In argument it was scarcely pressed that it is necessary, and after the decision in Goodman v. Mayor of Saltash 7 App. Cas. 633, it was not possible to maintain the general proposition that it is. A trust or condition in favour of the free inhabitants of ancient tenements in the borough of Saltash, in accordance with a usage whereunder they had the privilege of dredging for oysters, was there held to be a valid charitable trust, and, obviously, some of the inhabitants might not have been poor. The poor are not the only people who like oysters or the profits to be derived from their sale.”

“It is a prize for a mere game . . . Now, I should say that every healthy sport is good for the nation – cricket, football, fencing, yachting, or any other healthy exercise and recreation; but if it had been the idea of lawyers that a gift for the encouragement of such exercises is therefore charitable, we should have heard of it before now.”

“It is most difficult to draw a line separating charitable gifts from gifts not charitable; and the only safe course is to say that a particular class of gifts do not come within the definition of a charitable gift. I am of opinion that a gift, the object of which is the encouragement of a mere sport or game primarily calculated to amuse individuals apart from the community at large, cannot upon the authorities be held to be charitable, though such sport or game is to some extent beneficial to the public. If we were to hold the gift before us to be charitable we should open a very wide door, for it would then be difficult to say that gifts for promoting bicycling, cricket, football, lawn-tennis, or any outdoor game, were not charitable, for they promote the health and bodily well being of the community.”

“In those circumstances, it seems to me that the intention of the Act in including in the objects the promotion of industry, commerce and art, is the benefit of the public, that is, the community, and is not the furtherance of the interests of individuals engaging in trade or industry or commerce by the trustees. It appears to me that the promotion of industry or commerce in general in such circumstances is a public purpose of a charitable nature within the fourth class in the enumeration of charitable purposes contained in Pemsel’s case [1891] AC 531, 583.”

“Once it is accepted that assistance to business and industry can provide a public benefit of the kind which the law recognises as charitable, a proposition which does not seem to be in dispute in the present case, I do not see how the fact that individual businesses may benefit can be a disqualifying factor. On the contrary, if business in general is assisted, it seems inevitable that some firms at least will become profitable, or more profitable, as a result of that assistance. There would be no point in the exercise if this were not the case. It would be an odd result if an institution established to benefit business could only quality as a charity if the recipients of its benefits made losses or did no more than break even.
Presumably, some farmers in Yorkshire were able to make, or increase, profits as a consequence of the work of the Yorkshire Agricultural Society, but there was no suggestion that this militated against classification of the Society as a charity. Indeed it was common ground that the promotion of agriculture generally would be charitable…; the issue in the case was whether the fact that members of the Society received benefits would lead to a different result. In the present case it was not put that members of TECC, the Tasmanian Government and the University, receive any benefit.
It seems to me self-evident that benefits to Tasmania’s economy resulting in long term economic advantage to Tasmania will be a benefit to the Tasmanian public, and indeed to the wider national public. In a capitalist economy like Australia’s, a prosperous and productive private sector generates profits and creates employment which in turn raises incomes which individuals can either spend, creating demand, or save, creating capital for further investment. Either way, people can make a better life for themselves and their families. In a prosperous economy, more money can be raised by taxes to improve education, health and other essential public services.”