HMAG v Charity Commission & ors FTC/84/2011

WTLR Issue: July/August 2012 #121

HER MAJESTY'S ATTORNEY GENERAL

1. THE CHARITY COMMISSION FOR ENGLAND AND WALES

2. THE TRUSTEES OF THE PROFESSIONAL FOOTBALLERS'

ASSOCIATION BENEVOLENT FUND

3. THE CHARTERED ACCOUNTANTS' BENEVOLENT ASSOCIATION (A COMPANY)

4. THE TRUSTEES OF THE BRITISH AIRWAYS WELFARE AND BENEVOLENT FUND

5. THE TRUSTEES OF THE NATIONAL WESTMINSTER STAFF FOUNDATION (AKA RBS CARE HOMES FOUNDATION)

6. THE TRUSTEES OF THE ROYAL BANK OF SCOTLAND GROUP BENEVOLENT FUND

7. THE TRUSTEES OF THE STOCK EXCHANGE BENEVOLENT FUND

8. THE TRUSTEES OF THE HENRY SMITH CHARITY

9. THE TRUSTEES OF THE BT BENEVOLENT FUND

10. THE CHARTERED INSTITUTE OF PUBLIC RELATIONS BENEVOLENT FUND (A COMPANY)

11. THE TRUSTEES OF THE GRAND STEWARD'S LODGE 250TH ANNIVERSARY BENEVOLENT FUND

Analysis

A Notice of Reference dated 27 January 2011 was made by Her Majesty’s Attorney General following concerns expressed by the Charity Commission that the Charities Act 2006 (2006 Act) had cast doubt on the continued charitable status of certain charitable trusts. The trusts affected were trusts for the relief of poverty where the class of potential beneficiaries were defined by a family relationship, employment or former employment status or membership of an unincorporated association. There were 11 parties and 19 interveners. Other than the Charity Commission, each of the parties was a charity of the type affected by the reference. The tribunal was asked to determine whether such trusts were capable of being charitable trusts, whether the 2006 Act had reversed certain decisions and whether the nature and extent of the public benefit requirement for a trust for the prevention of poverty was the same as that required for a trust for the relief of poverty.

The Charity Commission was neutral on the reference but put an alternative argument to the tribunal in order to assist in its determination. It suggested that:

(a) charities for the relief of poverty had been held to be exempt from the Compton test, ie the rule that a trust would not be charitable where potential beneficiaries were defined by their relationship to ‘a named propositus’;
(b) some cases suggested that the reason for this was that there was no public benefit requirement for trusts for the relief of poverty and others suggested that the public benefit test operated differently in trusts for the relief of poverty;
(c) the 2006 Act imposed an express requirement of public benefit for charitable trusts; and
(d) if relief of poverty trusts did not need to satisfy a public benefit test prior to the 2006 Act, then such trusts were no longer charitable.

Held

(1) The cases show two related aspects of public benefit. Firstly, the nature of the purpose itself must be such as to benefit the community. The purpose should be of its nature, and without regard to the section of the community to be benefited, beneficial to the community (paras [31]-[32]). Secondly, those who may benefit from the purpose must be sufficiently numerous and identified in such a manner as to constitute a section of the public (para [33]). The relief of poverty will ordinarily be for the public benefit in the first sense (para [35]).
(2) The abolition of the presumption of public benefit in the 2006 Act has had no impact on whether a trust for the relief of poverty is charitable or not. There is no presumption that a trust for the relief of poverty is for the public benefit. The court or tribunal will form its own view by way of decision and not by presumption (para [39]).
(3) There is no doubt that a public benefit in the first sense is necessary for a purpose to qualify as a charitable purpose (para [61]). Both prior to and after the 2006 Act, there was, and is, a requirement that a purpose is also one capable of being for the benefit of the community (para [62]).
(4) It is not necessary for every trust for the relief of poverty to be for the public benefit in the second sense. Public benefit should not be assessed in the abstract but instead it should be asked what that requirement is in relation to the particular institution under consideration. In order that a trust for the relief of poverty with a narrow class of beneficiaries should be charitable, the public benefit requirement as applied to such a trust requires only that public benefit in the first sense be established. The 2006 Act had not changed the position (para [64]).
(5) Where a trust is for the prevention (as opposed to the relief) of poverty, deciding on its charitable status prior to the 2006 Act would have entailed a close examination of its purposes to see whether those purposes were ones which corresponded with the relief of poverty in a way that made it illogical to draw any distinction between its purposes and the relief of poverty (para [76]). Just as it is not necessary to demonstrate public benefit in the second sense in the case of relief of poverty, it is not necessary to demonstrate it in the case of prevention of poverty (para [79]).
(6) The concept of public benefit is not fixed. As society changes, so does the perception of public benefit. Incremental development can continue (para [77]).

JUDGMENT Warren HJ, Alison McKenna J: The Proceedings [1] These proceedings concern a Notice of Reference (the reference) made by Her Majesty’s Attorney General on 27 January 2011, by which he sought the tribunal’s determination of a number of issues relating to charities for the relief of poverty, in which the potential beneficiaries are connected …

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Counsel Details

William Henderson (Serle Court, 6 New Square, Lincoln’s Inn, London WC2A 3QS, tel 020 7242 6105, e-mail clerks@serlecourt.co.uk), instructed by the Treasury Solicitor for HM Attorney General (The Treasury Solicitor’s Department, One Kemble Street, London WC2B 4TS , tel 0207 210 3000, e-mail thetreasurysolicitor@tsol.gsi.gov.uk).

Kenneth Dibble (Charity Commission First Contact, PO Box 1227, Liverpool L69 3UG, tel 0845 300 0218), chief legal adviser of, and for, the Charity Commission for England and Wales.

Robert Pearce QC (Radcliffe Chambers, 11 New Square, Lincoln’s Inn, London WC2A 3QB, tel 020 7831 0081, e-mail rpearce@radcliffechambers.com), instructed by Brabners Chaffe Street LLP (Horton House Exchange Flags, Liverpool L2 3YL, tel 0151 600 3000, e-mail law@brabnerscs.com) for the trustees of the Professional Footballers Association Benevolent Fund.

Andrew Westwood (Maitland Chambers, 7 Stone Buildings, Lincoln’s Inn, London WC2A 3SZ, tel 020 7406 1200, e-mail awestwood@maitlandchambers.com), instructed by Bates Wells and Braithwaite LLP (2-6 Cannon Street, London EC4M 6YH, tel 020 7551 7777, e-mail mail@bwbllp.com) for The Chartered Accountants’ Benevolent Association and the trustees of the British Airways Welfare and Benevolent Fund.

Matthew Smith (Maitland Chambers, 7 Stone Buildings, Lincoln’s Inn, London WC2A 3SZ, tel 020 7406 1200 e-mail msmith@maitlandchambers.com), instructed by Lester Aldridge LLP (Russell House, Oxford Road, Bournemouth BH8 8EX, tel 01202 786161, e-mail online.enquiry@la-law.com) for the trustees of the National Westminster Staff Foundation (otherwise RBS Care Homes Foundation) and the trustees of the Royal Bank of Scotland Group Benevolent Fund.

Amanda Tipples QC (Maitland Chambers, 7 Stone Buildings, Lincoln’s Inn, London WC2A 3SZ, tel 020 7406 1200, e-mail atipples@maitlandchambers.com), instructed by Russell-Cooke Solicitors (8 Bedford Row, London WC1R 4BX, tel 020 8789 9111, e-mail helpdesk@russell-cooke.co.uk) for the trustees of the Stock Exchange Benevolent Fund, the trustees of the BT Benevolent Fund, the Chartered Institute of Public Relations Benevolent Fund and the Association of Charitable Organisations (intervening).

Christopher McCall QC (Maitland Chambers, 7 Stone Buildings, Lincoln’s Inn, London WC2A 3SZ, tel 020 7406 1200, e-mail cmccall@maitlandchambers.com), instructed by Portrait Solicitors (1 Chancery Lane, London WC2A 1LF, tel 020 7092 6990, e-mail dominic.flynn@portraitsolicitors.com) for the Trustees of the Henry Smith Charity.

Simon Taube QC (10 Old Square, Lincoln’s Inn, London WC2A 3SU, tel 020 7405 0758, e-mail clerks@tenoldsquare.com), instructed by Farrer & Co (Farrer & Co, 66 Lincoln’s Inn Fields, London WC2A 3LH, tel 020 3375 7000, e-mail enquiries@farrer.co.uk for the trustees of the Grand Steward’s Lodge 250th Anniversary Benevolent Fund.

Francesca Quint (Radcliffe Chambers, 11 New Square, Lincoln’s Inn, London WC2A 3QB, tel 020 7831 0081, e-mail fquint@radcliffechambers.com), instructed by Russell Jones & Walker Solicitors (50-52 Chancery Lane, London WC2A 1HL, tel 020 7657 1555, e-mail enquiries@rjw.co.uk) for The Police Federation of England and Wales (intervening).