15. Charitable trusts and cy-pres

Why charitable trusts are special

A private trust must be for persons who can enforce it. A charitable trust is for purposes, and the Attorney-General enforces it for the public. Charitable trusts can last forever, and they enjoy tax advantages in many countries.

What is charitable

The starting point is the preamble to the Statute of Charitable Uses 1601. It is a pre-1880 statute, and courts here use its spirit. In Income Tax Special Purposes Commissioners v Pemsel, Lord Macnaghten grouped charitable purposes under four heads:

The relief of poverty.

The advancement of education.

The advancement of religion.

Other purposes beneficial to the community that fall within the spirit of the preamble.

In England the Charities Act 2006, now the Charities Act 2011, sets out a longer list of thirteen purposes. That statute does not apply in Sierra Leone unless adopted, so Sierra Leone courts work from the four heads and the cases.

Public benefit

A charitable trust must benefit the public or a sufficient section of it. In Oppenheim v Tobacco Securities Trust a trust to educate the children of employees of a group of companies was not charitable, though there were over 110,000 employees. A link to a common employer is a personal nexus. Trusts for the relief of poverty are an exception, and can be for poor relatives or poor employees.

Cy-pres

When a charitable purpose fails, the property may be applied cy-pres, meaning as near as possible to the original purpose, under a scheme. Once property is given to charity it is treated as dedicated to charity generally.

Initial failure: the charity or purpose fails before the gift takes effect, for example a charity named in a will closes before the testator dies. The property goes cy-pres only if the testator had a general charitable intention. Otherwise it goes on resulting trust to the estate. In Re Spencer's Will Trusts the old people's home named in the will had closed before the testatrix died.

Subsequent failure: the gift took effect, and the purpose fails later. The property is already dedicated to charity, so it goes cy-pres without any need for general charitable intention. In Re Slevin a legacy to an orphanage that closed after the testator's death but before payment went cy-pres.

Surplus: if the purpose is achieved and money is left, the surplus is usually applied cy-pres. In Re King a gift to install a church window left a surplus, which went cy-pres.

Amalgamated and unincorporated charities

A charity that has been amalgamated into another body has not failed. In Re Faraker a legacy to a widows' charity founded in 1756 went to the body into which it had been merged. In Re Finger's Will Trusts a gift to an unincorporated charity was read as a gift for its purposes, which continued. A gift to an incorporated charity that had been dissolved failed, but went cy-pres because there was a general charitable intention.

When the purpose has become impossible

Before the English Charities Act 1960, cy-pres applied only where the purpose had become impossible or impracticable. Courts read those words widely. In Re Lysaght the Royal College of Surgeons refused a scholarship trust that excluded Jews and Roman Catholics. Because the trustee would not accept it on those terms, the purpose was impossible, and the court removed the restrictions. The Charities Act 1960 widened the grounds in England.

Non-charitable appeals

If a public appeal is not for a charitable purpose, the surplus cannot go cy-pres. In Re Gillingham Bus Disaster Fund money collected after an accident, partly for non-charitable purposes, was held on resulting trust for the donors, even though many could not be found.