Analysis
The Attorney General applied for a cy-près scheme to be made pursuant to the Charities Act 2011, ss62 and 67 with respect to a charitable trust known as the National Fund. The defendant as trustee of the National Fund (the trustee) invited the court to direct an alternative scheme.
The National Fund had been established in 1928 for the purpose of the discharge of the National Debt. By the date of the hearing the National Fund held £600m, and the National Debt, as at the end of October 2021, was £2,277.6bn.
In its judgment of 20 November 2020 (HM Attorney General v Zedra Fiduciary Services (UK) Ltd [2020]), the court had found that:
- (i) the National Fund was a valid charitable trust, the principal purpose of which was (either alone or with other funds available for the same purpose) benefiting the nation by the discharge of the National Debt, and the subsidiary purpose was benefiting the nation by the application of part of the National Fund in the earlier reduction of the National Debt if the trustees determined that national exigencies so required; and
- (ii) the court had jurisdiction to direct a cy-près scheme, on the grounds that the original purposes of the charitable trust cannot be carried out and have ceased to provide a suitable and effective method of using the trust property, within the meaning of the Charities Act 2011, s62(1)(a)(ii), and there had been a subsequent (and not initial) failure of those purposes.
The Attorney General applied for a scheme to be made, such that the assets of the National Fund would be applied immediately in the reduction of the National Debt. The trustee proposed an alternative scheme, under which the assets of the National Fund would be applied to form the corpus of a new corporate national charity with broad charitable objects.
Held:
The court directed the Attorney General’s scheme. By Charities Act 2011, s67(3)(a) the court was required to have regard to the ‘spirit of the gift’ which was to be identified from the terms of the trust deed and relevant evidence of the surrounding circumstances. The spirit in which the gift, by which the National Fund was constituted, was given was to benefit the nation, and all of its citizens, by attempting to free it from debt and by encouraging others to join in that effort. By Charities Act 2011, ss67(2) and 67(3) the court was also to have regard to ‘the desirability of securing that the property is applied for charitable purposes which are close to the original purposes’. These provisions were to be interpreted on the footing that they presupposed that it was desirable for the property to be applied for charitable purposes which were close to the original purposes and did not invite the court to consider whether or not this was desirable. The court was also to have regard to the ‘need’ for the relevant charity to have purposes which were suitable and effective in the light of current social and economic circumstances. There was some merit in the trustee’s argument that, in view of the minimal impact on the current National Debt if the assets of the National Fund were now applied to reduce it, it would be more suitable and effective to use that money for other charitable purposes, in the manner the trustee proposed. Taking all three matters to which the court was to have regard into consideration, the court considered that, on balance, the Attorney General’s scheme was to be preferred.
JUDGMENT MR JUSTICE ZACAROLI: Introduction [1] The ‘National Fund’ was established by a deed of trust dated 9 January 1928 (the ‘Deed’) by Baring Brothers & Co Limited (‘Barings’), acting on behalf of a donor whose identity remained anonymous for 92 years, Mr Gaspard Farrer (‘Mr Farrer’). The Deed provided for an amount of cash …Continue reading "HM Attorney General v Zedra Fiduciary Services (UK) Ltd [2022] WTLR 557"