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You are here: BAILII >> Databases >> United Kingdom House of Lords Decisions >> Williams Trustees v Inland Revenue Commissioners [1947] UKHL 1 (21 March 1947)
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Cite as: [1947] UKHL 1, [1947] AC 447, [1947] 1 All ER 513
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Die Veneris, 21° Martii, 1947.
Parliamentary
Archives,
HL/PO/JU/4/3/987
Viscount
Simon
Lord
Wright
Lord
Porter
Lord
Simonds
Lord
Normand
TRUSTEES OF SIR HOWELL JONES WILLIAMS' TRUST
v.
COMMISSIONERS OF INLAND REVENUE
Viscount Simon
MY LORDS,
Lord Wright
MY LORDS,
Lord Simonds
MY LORDS,
[2]
Lord Simonds
MY LORDS,
Section 37 (1) of the Income Tax
Act, 1918, is as follows:
" 37.—(1) Exemption shall be
granted—
" (a) from tax under
Schedule A in respect of the rents
" and profits of any
lands, tenements, hereditaments,
" or heritages belonging to
any hospital, public school
"or almshouse, or vested in
trustees for charitable
" purposes, so far as the same are
applied to
" charitable purposes only."
. I will now state the relevant provisions of the Trust Deed.
Clauses 2 and 3 I can pass over.
Clauses 4 and 5 cannot fairly be
summarised and I state them
in extenso.
" 4. The Trustees shall
hold the Settled Properties and the
" Endowment Fund for the
purpose of establishing and main-
" taming an Institute and
meeting place in London to be
" known as ' The London Welsh
Association ' (hereinafter
" called ' the Institute') for the
benefit of Welsh people resident
" in or near or visiting
London with a view to creating a centre
" in London for
promoting the moral social spiritual and
[3] 2
" educational welfare of
Welsh people and fostering the study
" of the Welsh language
and of Welsh history literature music
" and art ".
"5. Without prejudice to
the generality of the foregoing
" provisions the Trustees may
use or permit such part of the
" Settled Properties as is
required to be used as the Institute
" for all or any of the
following purposes: —
" (a) For providing a
meeting place for Welsh people in
" London and their friends
where they can obtain facilities
" for social intercourse
study reading rest recreation and
" refreshment.
" (b) For meetings concerts
lectures and other forms of
" instruction discussion or
entertainment especially in
" relation to subjects connected
with the Welsh language
" and Welsh history literature music
and art.
" (c) For any educational
purposes connected with the
" Welsh language or Welsh
subjects or likely to be of value
" or interest to Welsh
people.
" (d) For establishing and
maintaining a library of
" periodical historical and other
literature in the Welsh
" language or relating to Wales or
which is likely to be of
" use to Welsh people.
" (e) As a hostel for the
accommodation of Welsh people
"in London.
" (f) For any of the
purposes of the Association or of
" any similar association
which may be formed for the
" benefit of Welsh people in
London and which purposes
" may be within the general scope
of the Trusts declared
" in Clause 4 hereof.
" (g) Generally for such
other purposes being charitable
" and for the benefit of
Welsh people as the Trustees may
" from time to time think
fit provided always that the
" Trustees shall not permit any
alcoholic liquor to be sold
" or consumed on any part of the
Settled Properties for
" the time being occupied or used for
the purposes of the
" Institute ".
Clause 9 will be found to be
important and I set out the
substantive part of it.
" 9. The Trustees shall
apply the income arising from the
" Endowment Fund and any
rents and profits arising from
" the Settled Properties and
any other profits income or contri-
" butions which may be
received by the Trustees in carrying
" on the Institute and
otherwise for the maintenance repair
" and insurance of the
Settled Properties and in payment of
" the rates and other
outgoings and towards the cost of main-
" taining equipping
and using the Settled Properties for the
" purposes of the
Institute and generally for carrying into
" effect all or any
of the trusts of this Deed.
3 [4]
I do not think it necessary to
refer to any other provisions of the
Deed.
In the next paragraph of the
Case the claim is stated. I think
it worth while to set it out
" The Trustees were not on
this claim contending that this
" Association was established
for charitable purposes only.
" The claim before us was that
not the Association but the
" Trustees were so established;
that in applying the rents of
" 29, 30 and 31 Doughty Street
to the purposes of the before-
" mentioned Association (which
they claimed was an application
" of income of the Trust
under clause 9 of the Trust Deed) they
" had applied the same
to charitable purposes only and that
" consequently they were
entitled to exemption from Income
" Tax, Schedule A, in
respect of the rents of the said
" properties ".
[5] 4
and he and his co-trustees knew
that any donation which they
made would be paid into the
Headquarters Account, from which
the activities of the Institute
were financed. This was one of
two accounts, the other being the
General Account. On the Head-
quarters account there was a debit
balance. On the General
account there was a credit balance; into
this account the sub-
scriptions of members of the Association
were paid, and also
donations from another distinct trust, and out
of it was paid
printing, postage and secretarial expenses,
Corporation duty, etc.
The Association did not keep separate
accounts as to the expendi-
ture of the donations. The objects
(said Mr. Lewis) to which the
donations were intended to be
devoted were numbers I, 4, 5, part
of 7, and 8 and 11 of the
activities of the Association, as set out in
its booklet which was
annexed to the Case. These activities are
there described as
follows: —
" 1. Public lectures and
debates, a Music Club, and literary
" and educational
classes.
" ....
" 4. The maintenance of
Headquarters premises at 11 Meck-
" lenburgh Square, W.C.1,
comprising Lounge and Writing
" Room, Library (where current
Welsh and English periodicals
" and newspapers may be found),
Billiard Room, Tea and
" Games Rooms, etc.,
available for the use of Headquarters
" Members of the
Association, and of all Donors and
" Subscribers.
" The Headquarters Premises
and in particular the London
" Welsh Hall are increasingly
becoming the meeting place of
" the committees and functions
of the various London Welsh
" societies and other
organisations.
" 5. Badminton and Table Tennis Clubs are maintained in
" connection with the Headquarters Premises.
" ....
" 7. Dances,
whist and bridge drives, and annually a dinner
" and a
garden party.
" 8. A weekly Social and
Dance is held for headquarters
" members in the London
Welsh Hall, on Saturday evenings.
" The charge made for
admission is only 6d. (ordinary
" members, and visitors on
the introduction of a member, may
" obtain admission at 2s.):
a dance band is provided, and
" the popularity of these
weekly functions among the younger
" members of the London
Welsh community is undoubted.
" ....
" ii. The Headquarters
office of the Association serves in
" many ways as a Central
Information Bureau for London
" Welsh people and visitors to
the metropolis ".
Mr. Lewis said that in making
these donations the trustees
regarded themselves as contributing
to dances, whist and bridge
drives held at the Institute, and as
part of the activities taking
place there, and not to any such
activities held elsewhere. A
prominent part of the activities of
the Institute consisted of lectures,
debates, music club and
literary and educational classes. Classes
were held in the Welsh
language, history, and literature. The
Trustees did not contribute
towards the Theatre Guild referred to
in No. 2 of the list of the
activities.
I must assume that the
Commissioners accepted as facts the
statements which they set out
without comment in this Case.
The
Commissioners then state (as should always be done with
clearness
and particularity) the rival contentions of the trustees
and the
Crown. I have referred earlier in this opinion to the
claim made
by the trustees. Of the Crown it is only said that the
contention
of the trustees was resisted on its behalf.
5 [6]
The decision of the Commissioners was as follows: —
"Under the terms of the
trust deed the purposes of the
" Institute, to which the
rents of the properties in question
" held by the trustees
have been applied, are wide and inclusive.
" While certain of
its features conform to the idea of a charity,
" we have come
to the conclusion that these features are
" not so
dominating, nor is the general character of the
" Institute
such, as effectively to distinguish it from an ordinary
"
social club. We are unable to say that it is established for
"
charitable purposes only, and the application accordingly
"fails"
.
I have thought it necessary to
state the facts at this length because
it has been a matter of
some controversy what the Commissioners
really decided. The issues
being two-fold, (a) whether the trust
property was vested
in the trustees for charitable purposes, and
(b) whether
the rents were applied for charitable purposes only,
it is at
least arguable that the Commissioners, notwithstanding
that the
facts stated in the Case related mainly to the second issue,
yet
decided only the first issue. It is not clear what view was
taken
upon this point by Macnaghten J., before whom came the
appeal from
the Commissioners. He found it sufficient to say
that he saw no
ground for questioning their conclusion, adding
that, if their
decision was open to criticism at all, it was that it
might have
been expressed in even stronger terms.
When the matter came before the
Court of Appeal, the con-
fusion was made apparent, and there was
some difference of
opinion between the members of that Court,
Scott L.J. thinking it
possible to read into the decision of the
Commissioners a plain find-
ing of fact that the income in
question was not applied to charitable
purposes only, while
Morton, L.J. (if I read his judgment correctly)
was prepared to
assume that there was no finding of fact fatal
to the appellants'
case.
In these circumstances, while I
cannot entertain any doubt that
upon the facts stated in the case
it was not open to the Commis-
sioners to come to any other
conclusion on the second issue than
that the rents in question
were not applied for charitable purposes
only, I think it right
also to examine the question whether,
irrespective of the
application of the rents in any year, the trust
property itself is
vested in the appellants for charitable purposes.
That this
expression means "for charitable purposes only" is
conceded
by the appellants.
My Lords, the claim of the
appellants that the property is vested
in them for charitable
purposes is based on these contentions: (a)
that the
dominant purpose of the trust is the fostering of Welsh
culture,
which is a purpose beneficial to the community composed
of the
people of the United Kingdom, (b) that the purpose afore-
said
is beneficial to the community composed of the people of
the
Principality of Wales and the County of Monmouth, which is
an
integral part of the United Kingdom and in itself constitutes
a
political body settled in a particular territorial area; and (c)
because
the maintenance of the Institute (the expressed method
ot
effectuating the purpose aforesaid) is itself a purpose
beneficial to
a section of the British community which is
determined by reference
to impersonal qualifications (namely
persons with Welsh con-
nections who are resident in or near or
visiting London) and is
not a selection of private individuals
chosen on account of personal
qualifications.
I have taken this statement of
the appellant's contentions from
the formal reasons in their
written case, because in them so clearly
appears the fallacious
argument upon which, in this and other
cases which it has been my
fortune to hear, an attempt has been
made to establish the
charitable character of a trust.
[7] 6
My Lords, there are, I think,
two propositions which must ever
be borne in mind in any case in
which the question is whether
a trust is charitable. The first is
that it is still the general law that a
trust is not charitable
and entitled to the privileges which charity
confers, unless it is
within the spirit and intendment of the pre-
amble to the Statute
of Elizabeth, (43 Eliz. c. 4), which is expressly
preserved by S.
13(2) of the Mortmain and Charitable Uses Act,
1888. The second is
that the classification of charity in its legal
sense into four
principal divisions by Lord Macnaghten in
Pemsel's case
(1891 AC 531) must always be read subject to the
qualification
appearing in the judgment of Lindley L.J. in
re Macduft (1896 2 Ch 451 at p. 466) "Now Sir Samuel Romilly did
" not
mean, and I am certain Lord Macnaghten did not mean,
" to say
that every object of public general utility must necessarily
"
be a charity. Some may be and some may not be ".
This
observation has been expanded by Lord Cave in this House
in
these words: " Lord Macnaghten did not mean that all trusts
for
"purposes beneficial to the community are charitable, but
that
" there were certain beneficial trusts which fell within
that category:
" and accordingly to argue that because a
trust is for a purpose
" beneficial to the community it is
therefore a charitable trust is to
" turn round his sentence
and to give it a different meaning. So
" here it is not
enough to say that the trust in question is for public
"
purposes beneficial to the community or for the public welfare:
"
you must also show it to be a charitable trust". see A.G.
v.
National Provincial Bank (1924 A.C. 262 at p. 265).
But it is just because the
purpose of the trust deed in this case
is said to be beneficial to
the community or a section of the com-
munity, and for no other
reason, that its charitable character is
asserted. It is not
alleged that the trust is (a) for the benefit of
the
community and (6) beneficial in a way which the law regards
as
charitable. Therefore, as it seems to me, in its mere statement
the
claim is imperfect and must fail.
My Lords, the cases in which the
question of charity has come
before the Courts are legion, and no
one who is versed in them will
pretend that all the decisions,
even of the highest authority, are easy
to reconcile, but I will
venture to refer to one or two of them to
make good the importance
of my two general propositions. In
Houston v. Burns (1918
A.C. 337) the question was as to the validity
of a gift " for
such public, benevolent, or charitable purposes in
"
connection with the parish of Lesmahagow or the neighbour-
"
hood " as might be thought proper. This was a Scotch case,
but
upon the point now under consideration there is no
difference
between English and Scotch law. It was argued that the
limitation
of the purpose to a particular locality was sufficient
to validate
the gift, that is to say, though purposes beneficial
to the community
might fail, yet purposes beneficial to a
localised section of the
community were charitable. That argument
was rejected by this
House. If the purposes are not charitable per
se, the localisation
of them will not make them charitable. It
is noticeable that Lord
Finlay at p. 341 expressly overrules a
decision or dictum of Lord
Romilly to the contrary effect in Dolan
v. Macdermot (L.R. 5
Eq. 60).
Next I will refer to a case in
the Privy Council which is the more
valuable because Lord
Macnaghten himself delivered the judgment
of the Board. In that
case the question was of the validity of
a residuary gift "
to the Roman Catholic Archbishop of Brisbane
" and his
successors to be used and expended wholly or in part
" as
such Archbishop may judge most conducive to the good of
"
religion in the diocese ". What could have been easier than
to
say that such a trust was beneficial to the community, and
more-
over to a section of the community sufficiently defined by
a
reference to the diocese; and was therefore charitable? Yet the
7 [8]
only argument was that the
benefit to the community was of a
character which fell within the
preamble to the Statute of Elizabeth,
i.e. for religious purposes,
and therefore was charitable. And it
is to be observed that this
contention was rejected on the narrow
ground that the terms of the
bequest were not identical with
religious purposes. " The
language of the bequest", said Lord
Macnaghten, " would
(to quote Lord Langdale's words) be ' open
" ' to such
latitude of construction as to raise no trust which a
" '
Court of Equity could carry into execution ' ". (Dunne
v.
Byrne, 1912 AC 407, at p. 411.)
One more decision out of many to
the same effect may be cited.
In Farley v. Westminster
Bank (1939 AC 430) a testatrix had
bequeathed the residue of
her estate in part to the respective vicars
and church-wardens of
two named churches " for parish work "
Could it be
doubted that the purpose of the gift was beneficial
to the
community ? It could fairly be described in the very words
in
which the appellants here assert the charitable nature of
their
trust. Yet the gift failed. It was, in the words of Lord Russell
of
Killowen, " for the assistance and furtherance of those
various
" activities connected with the parish church, which
are to be
" found in every parish". It would be unduly
cynical to say
that that is not a purpose beneficial to the
community. Yet it
failed. And it failed because it did not fall
within the spirit and
intendment of the preamble to the Statute of
Elizabeth.
My Lords, I must mention another
aspect of this case, which
was discussed in the Court of Appeal
and in the argument at
your Lordships' bar. It is not expressly
stated in the preamble
to the Statute, but it was established in
the Court of Chancery,
and, so far as I am aware, the principle
has been consistently
maintained, that a trust in order to be
charitable must be of a
public character. It must not be merely
for the benefit of par-
ticular private individuals: if it is, it
will not be in law a charity,
though the benefit taken by those
individuals is of the very
character stated in the preamble.
The rule is thus stated by Lord
Wrenbury in Verge v.
Somerville (1924 AC 496 at 499): " To
"
ascertain whether a gift constitutes a valid charitable trust so
"
as to escape being void on the ground of perpetuity, a first
"
enquiry must be whether it is public—whether it is for the
benefit
" of the community or of an appreciably important
class of the com-
" munity. 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". It is, I think, obvious that this
rule,
necessary as it is, must often be difficult of application,
and so the
Courts have found. Fortunately, perhaps, though Lord
Wrenbury
put it first, the question does not arise at all, if the
purpose of
the gift, whether for the benefit of a class of
inhabitants or of a
fluctuating body of private individuals, is
not itself charitable. I
may however refer to a recent case
in this House which in
some aspects resembles the present case.
In Keren v. Commis-
sioners of Inland Revenue (1932 AC 650) a company had been
formed which had as its main object
(to put it shortly) the purchase
of land in Palestine, Syria or
other parts of Turkey in Asia and
the peninsula of Sinai for the
purpose of settling Jews on such lands.
In its memorandum it took
numerous other powers which were
to be exercised only in such a
way as should, in the opinion of
the company, be conducive to the
attainment of the primary
object. No part of the income of the
company was distributable
among its members. It was
urged that the company was
established for charitable
purposes for numerous reasons,
with only one of
which I will trouble your Lordships,
viz. that it was
established for the benefit of the community or of
a section of
the community, viz. Jews, whether the association
was for the
benefit of Jews all over the world or of the Jews
[9] 8
repatriated in the Promised
Land. Lord Tomlin, dealing with
the argument that I have just
mentioned upon the footing that,
if benefit to " a community"
could be established, the purpose
might be charitable, proceeded
to examine the problem in that
aspect and sought to identify the
community. He failed to do so,
finding it neither in the community
of all Jews throughout the world
nor in that of the Jews in the
region prescribed for settlement
It is perhaps unnecessary to
pursue the matter. Each case must
be judged on its own facts, and
the dividing line is not easily drawn.
But the difficulty of
finding the community in the present case,
when the definition of
" Welsh people " in the first deed is remem-
bered,
would not, I think, be less than that of finding the community
of
Jews in Keren's case.
9 [10]
is some ground for it. But I
would suggest that it is possible to
justify as charitable a gift
to " my country England " upon the
ground that, where no
purpose is defined, a charitable purpose is
implicit in the
context; it is at least not excluded by the express
prescription
of " public " purposes. Where the gift is localised but
the
nature of the benefit is defined, no reconciliation is
possible
except upon the assumption that the particular purpose
was in each
case regarded as falling within the spirit and
intendment of the
preamble to the Statute of Elizabeth, though I
find it difficult to
ascribe this quality to the benefit taken by
the freemen of Saltash.
If this affords no solution of the
problem, I can only invite your
Lordships to maintain the
principles which have consistently been
asserted in this House
over the last 50 years in this difficult and
intricate branch of
the law.
I would dismiss this appeal.
[11]
Lord Normand
(57936) Wt. 8047—45 25 4/47 DL. G. 338