CHARITABLE TRUSTS

WEEK 13 LAW 501 TUTORIAL

1. In March 2020, Bisping settled RM 2 million and his mansion in PJ for the education of all
science students in district of Georgetown, Penang. However, the science students to benefit
must also be those who are suffering from some form of disability. The trustees are required
to rebuild an abandoned research facility for the students and construct a separate building for
their recreation needs.
Last week, the abandoned facility site was destroyed by fire and the trustees diverted the
funds for the benefit of science students in UITM Penang.
Advise Bisping.

In order for a charitable trust to be valid, need not strictly comply with the essential
requirements, the trust need not have human beneficiaries, and as far as the object is
concerned, they may still be valid even if the terms appear to be vague. Before the passing
of the Charities Act 2006, the court relied on the preamble of Statute of Elizabeth I
(Charitable Uses Act 1601) which provides the catalogue of purposes which at that time
were regarded as charitable. Even though the above Act was repealed and replaced by
Mortmain and Charitable Uses Act 1888, the courts via common law still incorporated
charitable status to purposes analogous to the preamble of the Elizabeth Statute. The
objectives or charitable purposes mentioned in the preamble above was summarized or
classified in the case of Commissioner of Income Tax v Pemsel [1891] AC 531 (Pemsel’s case)
into four categories which are trusts for relief of poverty, trusts for advancement of
education, trusts for the advancement of religion, and trust for other purposes beneficial to
the community.

In the present situation, the trustees are required to rebuild an abandoned research facility
for the students which falls under trusts for advancement of education and construct a
separate building for their recreation needs which falls under trust for other purposes
beneficial to the community.

Cases for the trusts for advancement of education :

Re Shaw - Shaw had left money to be applied towards research to create a new alphabet – it
was hope that research would lead to the creation of a new common language in line with
Shaw’s humanist philosophy so that his works can be understood to all nations regardless of
their mother tongue , so that peace might be founded via this common language. H : not a
charitable purpose as it involves propaganda.

Inland Revenue Commissioners v McMullen - the trust was created ‘to organise or provide
or assist in the organisation and provision of facilities which will enable and encourage
pupils of schools and universities in any part of the United Kingdom to play association
football or other games or sports’, It was held that the trustees’ appeal succeeded. The case
was decided against the revenue. The trust was one for the advancement of education and
the judge reluctant to confine the meaning of education to formal instruction in the
classroom’

Cases for trusts for other purposes beneficial to the community :

Incorporated Council for Law v AG - a trust provides for services voluntarily and removes the
need for statutory or governmental action to provide such services then it is charitable.

Re South Place Ethical Society (1980) - stated that just because a purpose is beneficial to the
community does not necessarily mean it is charitable. It must be considered in each case
whether a trust provides a sufficient public benefit.

Doctrine of cy-pres : Where charitable trust is impossible ab initio, the doctrine cannot be
applied unless the testator or settlor has shown a general charitable intention. In Biscoe v
Jackson, the settlor wanted to create a soup kitchen and a cottage hospital in Shoreditch,
but the intended land could not be acquired. Thus, the doctrine could not be applied as the
settlor had not shown a general charitable intention. Besides that, in Re Rymer, it was
provided that before the testator’s death, the seminary had been closed, the building was
sold, the student had been transferred to another seminary near Birmingham. It was held
that the gift failed, as the testator had a specific but not a general charitable intent.
Therefore, it fell into residue. Thus, the cy-pres cannot be applied in this case.

Application :
In the present situation, Bisping settled RM 2 million and his mansion in PJ for the education
of all science students in the district of Georgetown, Penang. However, the science students
to benefit must also be those who are suffering from some form of disability. Thus, based on
the cases above, education does not always mean classroom activities, as in the case of
Inland Revenue Commissioners v McMullen.

Besides that, the question states that the trustees are required to rebuild an abandoned
research facility for the students and construct a separate building for their recreation
needs. By applying the case of Re South Place Ethical Society, the trust did not have
sufficient public benefit. Thus, just because a purpose is beneficial to the community, the
trust was drawn narrowly hence it is not charitable.

Besides that, only disabled science students may benefit from all the science students in
Georgetown, whereby the number of non-disabled science students may be greater than
those who are disabled. The trust is, therefore, not true. This is because only one small
group of individuals will benefit from it which is the disabled science students.

In the present situation, the abandoned facility site was destroyed by fire and the trustees
diverted the funds for the benefit of science students in UITM Penang. Thus, based on the
doctrine of cy-pres and Re Rymer, it cannot be reverted as the testator had a specific but
not a general intent. Thus, the trust is not valid where it was too narrowly drawn.

In conclusion, the charitable trust which intended by Bisping could be deemed as void ab
initio.

SIR CAKAP : SATISFACTORY FOR STRATERS - BUT LEADING CASE = IRC V BADDELEY =
MISSING. LAW IS NOT LUMPED TOGETHER - WHICH IS GOOD. NANTI DENGAR AUDIO....
SIR JOHN : SOALAN HARI INI - ADVISE BISPING. ON WHAT ??? THE VALIDITY OF THE TRUST -
SO WHAT IS THE PROBLEM - THIS IS A PURPOSE TRUST!!!! U ASSUME THIS IS ADVISING ON
THE VALIDITY OF PUBLIC TRUST - ITS WIDER THAN THAT

When you face a question like today the main issue in advising the settlor is the validity of
the entire trust, is this a valid trust? so it is not just on charities just because this week we're
doing charities. it is also to reflect back on any other issues that may invalidate this trust and
the most important element which may invalidate this trust is not the three certainties, BUT
THE INFRINGEMENT OF THE BENEFICIARY PRINCIPLE.

BECAUSE THIS IS A PURPOSE TRUST, THE ENTIRE TRUST MONEY DOESN’T GO TO A HUMAN
BENEFICIARY, IT GOES FOR THE EDUCATION OF THE SCIENE STUDENT, IT DOESN’T GO TO
THE SCIENCE STUDENT, AS SUCH THIS IS A PURPOSE TRUST AB INITIO .because this is a
purpose trust it infringes the beneficiary principle, there are no human beneficiaries which
can go to court and enforce the trust, Leahy V Attorney General Of New South Wales and
even if the order of the court is to be made, he cannot be made in favor of a non-human
beneficiary, it must be made in favor of a human. Case? again Maurice v Bishop the
exception being that the infringement of a beneficiary principle can still lead to a valid
settlement is PUBLIC TRUST AND TRUST OF IMPERFECT OBLIGATIONS. Under public trust,
which we will discuss shortly, you will find that the courts have often allowed the four
categories under the foreheads of pencil to be valid Charitable Trusts even though they are
purpose, Truss under TIO which we discussed last week the Re Denley, Re Hooper type of
trust and even some animal trust can be validated. now so the bottom line is, THIS SHOULD
BE YOUR FIRST PARAGRAPH

DR JOHN : IS THIS A TIO?? APPLY THE PRINCIPLES OF HOOPER / DENLEY WE HAVE STUDIES
LAST WEEK HERE - I WILL NOT REPEAT THE SAME - BUT U HAVE TO DISCUSS TIO IF THERE IS
A PURPOSE TRUST

DR JOHN : IS THIS A VALID PUBLIC TRUST - IF SO THE TRUST IS VALID - IF NOT IT CAN STILL
BE A VALID TRUST AS TIO.

when you have a question ON PURPOSE TRUST, YOU HAVE TO DISCUSS BOTH TIO AND
CHARITIES, you cannot have one without the other just because it is an invalid TIO or invalid
charities, DOESN'T MEAN IT CANNOT FALL UNDER THE OTHER CATEGORY AS A VALID TIO OR
VALID CHARITIES, unless BOTH CATEGORIES ARE INVALID THEN THE SETTLEMENT BECOMES
INVALID. But, when you advise Bisping(org dalam q tuto) YOU HAVE TO ADVISE ON A
POSSIBILITY THAT IF THE TIO IS VALID THE CHARITIES IS NOT, THEN, THE SETTLEMENT IS
STILL VALID AND VICE VERSA.

DR JOHN : PUBLIC TRUST - HERE EDUCATION HEAD?? - RESEARCH.....

COMPTON TEST

Under the third state of the pencil test namely under the case of Re COMPTON THERE MUST
BE UNDER EDUCATION, A USEFUL STUDY SUBJECT. THERE MUST BE INHERENT CHARITABLE
BENEFIT, and, in our case, research facility could fall under that category. Why? cause as the
case of Re Hopkins indicated, research is education in value and in re Hopkins it was English
literature research, so, research education may not be confined to teaching in classroom
only, it could also involve research. However, the research must be disseminated to the
public. It must be transmitted with the public, not just confined to the institution of
research. The leading cases McGovern vs EG. In McGovern v EG 1982 case, the court made
it clear the trust for research will qualify as charitable, IF THE SUBJECT MATTER OF THE
RESEARCH IS A USEFUL SUBJECT OF STUDY. Here, science is a useful subject of study. you
have science courses in every other University. Secondly, according to the same case the so-
called research and the knowledge acquired must be given to the public so that there is a
sufficient public benefit and how large is this public? AGAIN, it has to be a certain proportion
of public. It cannot just be confined to a few individual members of the public

CLASS WITHIN CLASS DISCRIMINATION? IRC V BADDELEY

But if you look at a case of IRC v Baddeley, you will find that a class within a class
discrimination strictly disallowed as far as the public trust is concerned. Now, the reason
why the courts did not accept class within a class discrimination is because it goes against
the criteria of sufficient public benefit. Here, in IRC V Baddeley the charitable services are
confined only for certain Methodists in two parts of east London instead of the whole east
London, just to (Pasadena West Ham and Leighton). So, the court say geographical
discrimination exists here. It is a class within a class, why not open to all the Methodist in
east London? why only confined to two district? SO THE COURTS IN CHARITABLE TRUST DO
NOT ACCEPT CLASS WITHIN CLASS DISCRIMINATION. Here, the discrimination is not
geographical but in terms of health wise. It is only for the disabled science student why
don't you open up to all the science students why must there be only for the disabled? So
this may legate the validity of the public trust.

RECRETION- IRC V BADDELEY, WILLIANS V IRC

Well other than political trust, the court just don't like recreation trust, if they smell
recreation, he will track it down. in WILLIAM V IRC, the trust was to benefit the Welsh
people in London. Here, the trust was struck down because it was to provide for their
recreation and social needs, the court say this is nothing to do with charities we do not
accept social behavior or social benefits as far as charitable trust is concerned. Again, when
you come to the case of IRC V BADDELEY, the trust here was not just for religious services
but it was also for the social and physical training. Now, the court say look there is a social
recreation element inside. We don't want it, we cannot accept this for charities. So, these
cases illustrate if there is any element of charities which is associated to social physical
training, the court say NO this can never be charitable in character. Applying this to the
question, you will find that besides the research facility, the trust funds are allocated to
construct a separate building for the recreation needs. This could easily negate the
possibility of a valid charitable trust. However, there is a problem here now the trust fund is
not just for the recreation needs, it's also for research facility so is this a valid charitable
trust? half of it/a portion of it, is for recreation but portion of it’s for education. How do we
deal with trust that mixes both together?
HOUSTON V BURNS

Now if you look at a case of HOUSTON V BURNS, the property in this case was held for
charitable or other purpose. The court said, this is not a valid charitable trust for a very
simple reason. BECAUSE THE OTHER PURPOSES IS NOT CHARITABLE. This case seems to
suggest that when you have a mix trust charities, plus non charitable trust, THE COURT SAY
THIS IS NOT A VALID CHARITABLE TRUST THE COURT CANNOT ALLOW YOU TO MIX IT UP
TOGETHER.

GUILD V IRC

Again, in the case of GUILD V IRC, the trust is phrased in some other way as here charity or
some other purpose in connection with the charity. The court said that this mixture is
unhealthy, and court will not allow this to be a valid charitable trust. UNLESS THE OTHER
PURPOSE IS CONNECTED WITH CHARITY IS VERY VERY STRONGLY CHARITABLE IN NATURE IE
IT CAN ALSO QUALIFY AS A VALID CHARITABLE TRUST ITSELF BUT THE OTHER PURPOSE
MUST BE VERY VERY STRONGLY CONNECTED NOT JUST CONNECTED IN A SIMPLE MANNER
IT MUST BE CHARITABLE BY ITSELF IT MUST BE ABLE TO STAND BY ITSELF

RE BEST

In Re Best, again, the term crops up, charity and other purposes. So, the court again adhere
to the same principle. This type of charitable trust cannot stand. Because there is a mixture
THAT A MIXTURE THE OTHER PURPOSES AGAIN HAS MOVED AWAY FROM THE UNDERLYING
CHARITABLE PURPOSE. SO, YOU CANNOT HAVE A MIXTURE AT THE END OF THE DAY. In
conclusion, because the trust here is for research and is for recreation, according to the
three cases of Houston, Guild and Re Best, IT IS UNLIKELY TO STAND. The recreation here
has got nothing to do with charities by virtue of IRC v Baddley and the Williams case.

CYPRES – NO PUBLIC TRUST = NO CYPRES – RE SLEVIN

Very simple equation as far as Cypres is concerned, IF THE TRUST IS NOT CHARITABLE YOU
CANNOT APPLY CEPRES. CEPRES DOCTRINE IS ONLY CONFINED TO CHARITABLE TRUSTS.
Example the case of Re Slevin, the testator left money to an orphanage which existed at the
date of the declaration of the trust, but the orphanage was not in existence anymore when
the trust came into effect. The court said this so-called charitable trust, the money, they
cannot be distributed. CANNOT BE DISTRIBUTED. It is because the orphanage is NO LONGER
IN EXISTENCE. Because orphanage was no longer in existence, the court will distribute the
money under the doctrine of Cypres to some other orphanage. In this case, the orphanage,
was a charitable trust that’s why the distribution under Cypres could be made. On the other
hand, in the case of CHICHESTER DIOCESAN FUND V SIMPSON, the court made it clear that
the testator left property here for charitable or other Benevolent purposes. Because of this
mixture, the trust failed badly, it is not a valid charitable trust, the doctrine of Cepres cannot
apply.
CHICHESTER DIOCESAN FUND V SIMPSON
' CHRITABLE OR BENEVOLENT PURPOSE' = NO VALID PUBLIC TRUST = NO CYPRES

IN CONCLUSION THE SETTLEMANT MAY BE VALID AS A PURPOSE TRUST IE TIO BUT NOT
PUBLIC TRUST.