Freely Available British and Irish Public Legal Information
[Home] [Databases] [World Law] [Multidatabase Search] [Help] [Feedback]
United Kingdom House of Lords Decisions
You are here: BAILII >> Databases >> United Kingdom House of Lords Decisions >> Dingle v Turner [1972] UKHL 2 (16 February 1972)
URL: http://www.bailii.org/uk/cases/UKHL/1972/2.html
Cite as: [1972] AC 601, [1972] UKHL 2
[New search] [Buy ICLR report: [1972] AC 601] [Help]
Die Mercurii, 16° Februarii 1972
Parliamentary
Archives,
HL/PO/JU/4/3/1222
HOUSE OP LORDS
DINGLE
v.
TURNER and Others
Viscount Dilhorne
Lord
MacDermott
Lord Hodson
Lord Simon of Glaisdale
Lord Cross of
Chelsea
Viscount Dilhorne
MY LORDS,
I agree that the costs of all the parties should be paid out of the fund.
Lord MacDermott
MY LORDS,
I do not find it necessary to
state my reasons for this conclusion in detail.
In the first
place, the views which I expressed at some length in relation to
an
educational trust in Oppenheim v. Tobacco Securities
Trust Coy. Ltd. and
others, [1951] AC 297, seem to me to
apply to this appeal and to mean
that it fails. It would, of
course, be otherwise if the case just cited pur-
ported to rule
the point now in issue. But that is not so, for it clearly left
that
point undecided and open for further consideration.
I agree with the order as to
costs proposed by my noble and learned
friend.
Lord Hodson
MY LORDS,
2
Lord Simon of Glaisdale
my lords,
I have had the advantage of reading the opinion of my
noble and learned
friend, Lord Cross of Chelsea, with which I
agree.
I too would dismiss this appeal, and make the same recommendation as to
costs.
Lord Cross of Chelsea
MY LORDS,
By his will dated 10th January, 1950, Frank Hanscomb
Dingle (whom I
will call the Testator) after appointing Lloyds
Bank Ltd., his wife Annie
Dingle and his solicitor Henry Elliot
Turner to be his executors and trustees
made the following—among
other—dispositions. By clause 5 he gave to
his trustees his
ordinary and preference shares in E. Dingle and Company
Ltd. upon
trust to pay the income arising therefrom to his wife for her
life
and after her death to hold the same in trust for such person
or persons as
she should by will or codicil appoint but without
any trust in default of
appointment. By clause 8 (a) he
directed his trustees to pay the income of
his residuary estate
after payment thereout of his debts funeral and testa-
mentary
expenses to his wife for her life. By clause 8(b), (c), (d), (e)
and
(f) he directed his trustees to raise various sums
out of his residuary estate
after the death of his wife. Clause
8(e) was in the following terms:
" (e) To invest the sum of Ten thousand
pounds in any of the invest-
" ments for the time being
authorised by law for the investment of trust
" funds in the
names of three persons (hereinafter referred to as ' the
" '
Pension Fund Trustees') to be nominated for the purpose by the
"
persons who at the time at which my Executors assent to this
bequest
" are directors of E. Dingle & Company Limited
and the Pension Fund
" Trustees shall hold the said sum and
the investments for the time being
" representing the same
(hereinafter referred to as ' the Pensions Fund ')
" UPON
TRUST to apply the income thereof in paying pensions to poor
"
employees of E. Dingle & Company Limited or of any other
company
" to which upon any reconstruction or amalgamation
the goodwill and
" assets of E. Dingle & Company Limited
may be transferred who are
" of the age of sixty years at
least or who being of the age of forty five
" years at least
are incapacitated from earning their living by reason of
"
some physical or mental infirmity PROVIDED ALWAYS that if at
"
any time the Pension Fund Trustees shall for any reason be unable
to
" apply the income of the Pensions Fund in paying such
pensions to such
" employees as aforesaid the Pension Fund
Trustees shall hold the pen-
" sions Fund and the income
thereof UPON TRUST for the aged poor
" in the Parish of St.
Andrew Plymouth."
Finally by clause 8(g) the Testator directed his
trustees to hold the ultimate
residue of his estate on the trusts
set out in clause 8(e).
The Testator died on 10th January, 1950. His widow died
on the 8th
October, 1966, having previously released her
testamentary power of appoint-
ment over her husband's shares in
E. Dingle and Co. Ltd. which accordingly
fell into the residuary
estate. When these proceedings started in October,
1970, the value
of the fund held on the trusts declared by clause 8(e)
was
about £320,000 producing a gross income of about £17.800
per annum.
E. Dingle and Company Ltd., was incorporated as a
private company on
20th January, 1935. Its capital was owned by
the Testator and one John
Russell Baker and it carried on the
business of a departmental store. At the
time of the Testator's
death the Company employed over 600 persons and
there was a
substantial number of ex-employees. On 23rd October. 1950,
the
Company became a public company. Since the Testator's death
its
business has expanded and when these proceedings started it had 705
full
time and 189 part-time employees and was paying pensions to
89 ex-
employees.
3
4
one under which the capital was
immediately distributable among the objects.
in which case the
gift was not a charity. The Court of Appeal rejected this
ground
of distinction. They held that in this field the distinction between
a
public or charitable trust and a private trust depended on
whether as a
matter of construction the gift was for the relief of
poverty amongst a
particular description of poor people or was
merely a gift to particular poor
persons, the relief of poverty
among them being the motive of the gift. The
fact that the gift
took the form of a perpetual trust would no doubt indicate
that
the intention of the donor could not have been to confer private
benefits.
on particular people whose possible necessities he had
in mind ; but the
fact that the capital of the gift was to be
distributed at once did not
necessarily show that the gift was a
private trust. The Appellant in the
instant case, while of course
submitting that the judges who decided the old
cases were wrong in
not appreciating that no gift for the relief of poverty
among
persons tracing descent from a common ancestor could ever have
a
sufficiently " public " quality to constitute a
charity, did not dispute the
correctness of the analysis of those
cases made by the Court of Appeal in
Re Scarisbrick.
Later in the 19th century came
the Friendly Society cases—Spiller v.
Maude
decided in 1881 but reported in a note in 32 Ch.D. at pages
158-160;
Pease v. Pattison 32 ChD 154 and Re
Buck [1896] 2 Ch 727. In all these
cases the Court had to
consider whether funds held on trust for the relief of
poverty
among members of a voluntary association were held on
charitable
trusts—such funds being derived in each case in
part from subscriptions made
by the members and in part from
donations or bequests by well-wishers. In
each case the Court held
that the funds were held on a charitable trust but
it does not
appear to have been argued in any of them that the fact that
the
benefits were confined to persons who were linked by the
common tie of
membership of an association prevented the trusts
from being charitable. The
arguments against " charity "
were either that the association in question was
really no more
than a private mutual insurance society or that at all events
on a
winding up so much of the funds as were derived from donations
or
bequests should be returned to the donors or the estates of the
testators and
not applied " cy pres ".
In Re Drummond [1914] 2 Ch 90 the testator bequeathed some shares in
a company of which
he had been a director to trustees upon trust to pay the
income to
the directors of the company " for the purposes of contribution
to
" the holiday expenses of the workpeople employed in the
spinning depart-
" ment of the said company in such manner as
a majority of the directors
" should in their absolute
discretion think fit". There were some 500
employees in the
department. It was first submitted that this was a trust
for the
relief of poverty. Eve J. rejected that submission but. in doing
so,
he did not suggest that if he could have held that the
workpeople in question
were " poor persons " within the
meaning of the Statute of Elizabeth the
gift would nevertheless
have failed on the ground that it was confined to
5
employees of a particular
company. Next it was submitted that the gift fell
under the last
of the four heads of charity set out by Lord Macnaghten in
Pemsel's
case. It was a trust to secure a holiday for a substantial
number
of the inhabitants of Ilkley who though not poor might in
many cases not
otherwise be able to get a holiday. Such a trust—it
was said—promoted
the general well being of the community;
and the beneficiaries could well be
considered as constituting a "
section of the community " for the purpose of
the law of
charity. Eve J.—with some regret—rejected that
contention
saying: "This is not a trust for general public
purposes; it is a trust for
" private individuals, a
fluctuating body of private individuals it is true, but
"
still private individuals ". So Eve J., while not disagreeing
with the decision
in Re Gosling, plainly thought that the
words of Byrne J. which I have
quoted though true of poverty cases
were not of general application in the
law of charity.
6
insurance fund. In that connection he pointed out that
the decisions in the
Friendly Society cases to which I have
already referred could only be
justified—if at all—because
" poverty " was a necessary qualification for the
receipt
of benefits. But both Lord Greene and Morton L.J. were also
clearly
of opinion that even if this fund had been provided by the
employers or an
outside donor it would not have been held on
charitable trusts since, as Eve J.
had held in Re Drummond and
they had held in Re Compton, the employees
of a company
were not a section of the public for the purpose of the law
of
charity.
The facts in Gibson v. South American Stores
(supra)—the case followed
by Megarry J. in this
case—were that a company had vested in trustees a
fund
derived solely from its profits to be applied at the discretion of
the
directors in granting gratuities, pensions or allowances to
persons "who
" are or shall be necessitous and deserving
and who for the time being are
" or have been in the
Company's employ .... and the wives, widows,
" husbands,
widowers, children, parents and other dependants of any person
"
who for the time being is or would if living have been himself or
herself
" a member of the class of beneficiaries ". The
Court of Appeal held that
this trust was a valid charitable trust
but it did so without expressing a view
of its own on the question
of principle involved, because the case of Re
Laidlaw which
was unearthed in the course of the hearing showed that the
Court
of Appeal had already accepted the decision in Re Gosling as
correct.
In Oppenheim v. Tobacco
Securities Trust Coy. Ltd. and Others [1951]
A.C. 297 this
House had to consider the principle laid down by the Court
of
Appeal in Re Compton. There the trustees of a fund worth over
£125,000
were directed to apply its income and also if they
thought fit all or any part
of the capital " in providing for
or assisting in providing for the education
" of children of
employees or former employees of British American Tobacco
"
Coy. Ltd or any of its subsidiary or allied Companies ".
over 110,000 such employees. The
majority of your Lordships—namely
Lord Simonds (in whose
judgment Lord Oaksey concurred). Lord Normand
and Lord Morton of
Henryton—in holding that the trust was not a valid
charitable
trust gave unqualified approval to the Compton principle.
They
held, that is to say, that although the " poverty "
cases might afford an
anomalous exception to the rule, it was
otherwise a general rule applicable
to all charitable trusts that
no class of beneficiaries can constitute a " section
"
of the public " for the purpose of the law of charity if the
distinguishing
quality which links them together is relationship
to a particular individual
either through common descent or common
employment. My noble and
learned friend. Lord MacDermott, on the
other hand, in his dissenting speech,
while not challenging the
correctness of the decisions in Re Compton or in
the
Hobourn Aero case said that he could not regard the principle
stated by
Lord Greene as a criterion of general applicability and
conclusiveness. " I
" see much difficulty " he said
" in dividing the qualities or attributes, which
" may
serve to bind human beings into classes, into two mutually
exclusive
" groups, the one involving individual status and
purely personal, the other
" disregarding such status and
quite impersonal. As a task this seems to
" me no less
baffling and elusive than the problem to which it is directed.
"
namely, the determination of what is and what is not a section of
the
" public for the purposes of this branch of the law."
He thought that the
question whether any given trust was a public
or a private trust was a
question of degree to be decided in the
light of the facts of the particular case
and that viewed in that
light the trust in the Oppenheim case was a valid
charitable
trust.
In
Re Cox [1955] AC 627 a Canadian testator directed his
trustees to hold
the balance of his residuary estate upon trust to
pay its income in perpetuity
for charitable purposes only, the
persons to benefit directly in pursuance of
such charitable
purposes being such as were or had been employees of a
certain
company and/or the dependants of such employees. This
disposition
raised, of course, a question of construction—namely
whether "charitable
" purposes" was simply a
compendious mode of referring to any purposes
a trust to promote
which would be charitable providing that the beneficiaries
7
were the public or a section of
the public or whether the words meant such
purposes only as having
regard to the class of beneficiaries named could be
the subject of
a valid charitable trust. It was only on the latter construction
that
the question whether Gibson v. South American Stores (supra)
was
rightly decided would arise and in fact both the Courts below
and the Privy
Council held that the former construction was the
right one. It is, however,
to be observed that the Court of Appeal
in Ontario unanimously held that
even if the second construction
was right the trust would still fail for want
of any possible
purposes since the " poor relations " cases formed a
class
apart and the " poor employees " cases could not
stand with the decision in
the Oppenheim case. The Privy
Council expressly refrained from expressing
any opinion on this
point.
Finally, we were referred to the
Privy Council case of Davies v. Perpetual
Trustee
Company Ltd. and Others [1959] AC 439. There a testator
who
died on 21st January, 1897, after giving successive life
interests in certain
property in Sydney to several life tenants,
the last of whom died in 1957, gave
the property " to the
Presbyterians the descendants of those settled in the
"
Colony hailing from or born in the North of Ireland to be held in
trust
" for the purpose of establishing a college for the
education and tuition of their
" youth in the standards of
the Westminster Divines as taught in the Holy
" Scriptures".
On an originating summons issued in 1918 by the then sole
trustee
for the determination of certain questions it was held (inter
alia) by
the trial judge and on appeal by the Supreme Court of
New South Wales that
this devise created a valid charitable trust;
but after the death of the last
life tenant special leave was
given to a representative of the next of kin to
appeal to the
Privy Council which held the trust to be invalid. The Board
held
as a matter of construction that a child would only be eligible to
be
educated at the college if (i) he was descended from a
Presbyterian living
on 21st January, 1897; (ii) that Presbyterian
was himself descended from a
Presbyterian who had settled in the
Colony and (iii) that settler either hailed
from or was born in
Northern Ireland. After quoting passages from the
judgments of
Lord Simonds and Lord Normand in the Oppenheim case
the
Board held that this class of beneficiaries the nexus between whom
was
simply their personal relationship to several propositi was
not a section of
the public but merely a fluctuating class of
private individuals and that
though the purposes of the
trust-—being for the advancement of religion and
education—were
prima facie charitable the trust did not possess the
necessary
public quality and was invalid.
Even
on that assumption—as it seems to me—the appeal must
fail. The
status of some of the " poor relations "
trusts as valid charitable trusts was
recognised more than 200
years ago and a few of those then recognised are
still being
administered as charities to-day. In Re Compton Lord
Greene
said that it was " quite impossible " for the
Court of Appeal to overrule
such old decisions and in the
Oppenheim case Lord Simonds in speaking of
them remarked on
the unwisdom of " casting doubt on decisions of
"
respectable antiquity in order to introduce a greater harmony with
the law
" of charity as a whole ". Indeed counsel for
the Appellant hardly ventured
8
to suggest that we should overrule the "poor
relations" cases. His
submission was that which was accepted
by the Court of Appeal in Ontario
in Re Cox—namely
that while the " poor relations " cases might have to
be
left as long standing anomalies there was no good reason for
sparing the
" poor employees " cases which only date
from Re Gosling decided in 1900
and which have been under
suspecion ever since the decision in Re Compton
in 1945.
But the " poor members " and the " poor employees "
decisions
were a natural development of the " poor relations
" decisions and to draw
a distinction between different sorts
of "poverty" trusts would be quite
illogical and could
certainly not be said to be introducing " greater harmony "
into
the law of charity. Moreover, though not as old as the " poor
relations "
trusts " poor employees " trusts have
been recognised as charities for many
years ; there are now a
large number of such trusts in existence ; and assum-
ing, as one
must, that they are properly administered in the sense that
benefits
under them are only given to people who can fairly be
said to be, according
to current standards, " poor persons "
to treat such trusts as charities is not
open to any practical
objection. So as it seems to me it must be accepted
that wherever
else it may hold sway the " Compton rule " has no
application
in the field of trusts for the relief of poverty and
that there the dividing line
between a charitable trust and a
private trust lies where the Court of Appeal
drew it in Re
Scarisbrick.
The
Oppenheim case was a case of an educational trust and though
the
majority evidently agreed with the view expressed by the Court
of Appeal
in the Hobourn Aero case that the Compton rule
was of universal application
outside the field of poverty it would
no doubt be open to this House without
overruling Oppenheim to
hold that the scope of the rule was more limited.
If ever I should
be called upon to pronounce on this question—which does
not
arise in this appeal—I would as at present advised be inclined
to draw
a distinction between the practical merits of the Compton
rule and the
reasoning by which Lord Greene sought to justify
it. That reasoning-
based on the distinction between personal
and impersonal relationships—
has never seemed to me very
satisfactory and I have always—if I may say
so—felt
the force of the criticism to which my noble and learned friend
Lord
MacDermott subjected it in his dissenting speech in the
Oppenheim case.
For my part I would prefer to approach the
problem on far broader lines
The phrase a " section of the
public " is in truth a vague phrase which may
mean different
things to different people. In the law of charity judges
have
sought to elucidate its meaning by contrasting it with
another phrase " a
" fluctuating body of private
individuals ". But I get little help from the
supposed
contrast for as I see it one and the same aggregate of persons
may
well be describable both as a section of the public and as a
fluctuating
body of private individuals. The ratepayers in
the Royal Borough of
Kensington and Chelsea, for example,
certainly constitute a section of the
public; but would it be a
misuse of language to describe them as a
" fluctuating body
of private individuals "? After all, every part of the
public
is composed of individuals and being susceptible of increase
or
decrease is fluctuating. So at the end of the day one is left
where one
started with the bare contrast between " public "
and " private ". No doubt
some classes are more
naturally describable as sections of the public than as
private
classes while other classes are more naturally describable as
private
classes than as sections of the public. The blind, for
example, can naturally
be described as a section of the public;
but what they have in common—
their blindness—does not
join them together in such a way that they could
be called a
private class. On the other hand, the descendants of Mr.
Gladstone
might more reasonably be described as a " private class"
than as
a section of the public, and in the field of common
employment the same
might well be said of the employees in some
fairly small firm. But if one
turns to large companies employing
many thousands of men and women
most of whom are quite unknown to
one another and to the directors the
answer is by no means so
clear. One might say that in such a case the
distinction between
a section of the public and a private class is not
applicable at
all or even that the employees in such concerns as I.C.I, or
G.E.C.
as just as much " sections of the public " as the residents
in some
9
geographical
area. In truth the question whether or not the potential
bene-
ficiaries of a trust can fairly be said to constitute a
section of the public is
a question of degree and cannot be by
itself decisive of the question whether
the trust is a charity.
Much must depend on the purpose of the trust. It
may well be that,
on the one hand, a trust to promote some purpose, prima
facie
charitable, will constitute a charity even though the class of
potential
beneficiaries might fairly be called a private class and
that, on the other hand,
a trust to promote another purpose, also
prima facie charitable, will not
constitute a charity even
though the class of potential beneficiaries might
seem to some
people fairly describable as a section of the public. In answer-
ing
the question whether any given trust is a charitable trust the
Courts—as
I see it—cannot avoid having regard to the
fiscal privileges accorded to
charities. As counsel for the
Attorney-General remarked in the course of
the argument the law of
charity is bedevilled by the fact that charitable
trusts enjoy two
quite different sorts of privilege. On the one hand, they
enjoy
immunity from the rules against perpetuity and uncertainty and
though
individual potential beneficiaries cannot sue to enforce
them the public interest
arising under them is protected by the
Attorney-General. If this was all
there would be no reason for the
Courts not to look favourably on the claim
of any " purpose "
trust to be considered as a charity if it seemed calculated
to
confer some real benefit on those intended to benefit by it whoever
they
might be and if it would fail if not held to be a charity.
But that is not all.
Charities automatically enjoy fiscal
privileges which with the increased burden
of taxation have become
more and more important and in deciding that such
and such a trust
is a charitable trust the Court is endowing it with a
substantial
annual subsidy at the expense of the taxpayer. Indeed, claims
of
trusts to rank as charities are just as often challenged by the
Revenue as by
those who would take the fund if the trust was
invalid. It is, of course,
unfortunate that the recognition of any
trust as a valid charitable trust
should automatically attract
fiscal privileges, for the question whether a trust
to further
some purpose is so little likely to benefit the public that it
ought
to be declared invalid and the question whether it is likely
to confer such
great benefits on the public that it should enjoy
fiscal immunity are really
two quite different questions. The
logical solution would be to separate
them and to say—as the
Radcliffe Commission proposed—that only some
charities
should enjoy fiscal privileges. But as things are, validity and
fiscal
immunity march hand in hand and the decisions in the
Compton and
Oppenheim cases were pretty obviously
influenced by the consideration that
if such trusts as were there
in question were held valid they would enjoy
an undeserved fiscal
immunity. To establish a trust for the education of
the children
of employees in a company in which you are interested is no
doubt
a meritorious act; but however numerous the employees may be
the
purpose which you are seeking to achieve is not a public
purpose. It is a
company purpose and there is no reason why your
fellow taxpayers should
contribute to a scheme which by providing
" fringe benefits" for your
employees will benefit the
company by making their conditions of employ-
ment more
attractive. The temptation to enlist the assistance of the law
of
charity in private endeavours of this sort is considerable—witness
the
recent case of the Metal Box scholarships—1.R.C. v.
Educational Grants
Association Ltd. [1967] Ch. 993—and
the Courts must do what they can to
discourage such attempts. In
the field of poverty the danger is not so great
as in the field of
education—for while people are keenly alive to the need
to
give their children a good education and to the expense of doing so,
they
are generally optimistic enough not to entertain serious
fears of falling on
evil days much before they fall on them.
Consequently the existence of
company " Benevolent funds ",
the income of which is free of tax does not
constitute a very
attractive " fringe benefit ". This is a practical
justification
—though not. of course, the historical
explanation—for the special treatment
accorded to poverty
trusts in charity law. For the same sort of reason a trust
to
promote some religion among the employees of a company might
perhaps
safely be held to be charitable provided that it was clear
that the benefits were
to be purely spiritual. On the other hand,
many " purpose " trusts falling
under Lord Macnaghten's
fourth head if confined to a class of employees
10
would clearly be open to the
same sort of objection as educational trusts.
As I see it, it is
on these broad lines rather than for the reasons actually
given by
Lord Greene that the Compton rule can best be justified.
(322695) Dd 197075 100 2/72 St.St.