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Section 67 of the 2011 Act, so far as material, provides: “(1) The power of the court or the [Charity] Commission to make schemes for the application of property cy-près must be exercised in accordance with this section. (2) Where any property given for charitable purposes is applicable cy-près, the court or the Commission may make a scheme providing for the property to be applied— (a) for such charitable purposes, and (b) (if the scheme provides for the property to be transferred to another charity) by or on trust for such other charity, as it considers appropriate, having regard to the matters set out in subsection (3). (3) The matters are— (a) the spirit of the original gift, (b) the desirability of securing that the property is applied for charitable purposes which are close to the original purposes, and (c) the need for the relevant charity to have purposes which are suitable and effective in the light of current social and economic circumstances.”
By a deed of trust executed in 1928, an anonymous donor settled a trust, the “National Fund”, pursuant to which funds were to be held on charitable trusts for the purpose of discharging the national debt in due course. Having taken the view that the initial charitable purpose was no longer achievable, the Attorney General, acting pursuant to her functions and duties in relation to charities, brought a claim in the High Court by which she contended that the deed had created a valid charitable trust and that the National Fund could and should now be applied to the reduction of the national debt. The trustee, while supporting the Attorney General’s contention that the trust was a valid charitable trust, disputed that the court could (alternatively should at this stage) order that the National Fund be applied to the reduction of the national debt. By two judgments, the judge concluded, first, that although the trust funds were held on charitable trusts, the original charitable trusts were no longer capable of achievement, with the consequence that the funds held on those trusts should be applied cy-près, and, second, in considering the two rival cy-près schemes proposed by the parties, that the scheme proposed by the Attorney General was the most appropriate application of the fund, having regard to the statutory criteria in section 67 of the Charities Act 2011. The trustee appealed.
On the appeal—
Held, appeal dismissed, Where a court was required to exercise its power to make a scheme for the application of property cy-près, section 67 of the Charities Act 2011 required the court to determine the charitable purposes it considered appropriate, having regard to the three matters set out in section 67(3). There was no necessary hierarchy between the matters set out in section 67(3), nor were they to be considered in watertight isolation, since each of the factors cast light on the others and formed part of the evaluative judgment to be made by the court. The question for the court was “what were appropriate alternative purposes for the funds held on these particular charitable trusts”, it being no part of the court’s task to question the wisdom of the original gift provided that it was a gift for charitable purposes. In particular, in considering: (i) the spirit of the gift within section 67(3)(a), regard was to be had to the spirit of the original gift as a whole, it being impermissible to pick out only some elements of the spirit of the gift to the exclusion of considering any remaining elements, and the fact that a particular aim or purpose was not of itself a charitable purpose would not necessarily mean that it could not form a component of the spirit of the gift; (ii) the closeness of purpose under section 67(3)(b), although in most cases it would be desirable to apply the funds to a purpose that was close to the original purpose, that would not necessarily always be so, since a cy-près trigger might arise where the original purpose had become useless (or even harmful to the community), in which case it would make little sense for the court to search for an alternative purpose close to that original purpose; and (iii) purposes which were suitable and effective under section 67(3)(c), the focus had to be on what was suitable for this charity in relation to the these funds held on these charitable trusts, which questions could not be divorced from the spirit of the gift or its original purposes. In the present case, having regard to those factors, although some parts of the judge’s reasoning were doubtful, on analysis the evaluative conclusion reached by the judge had been one properly open to him. Accordingly, there was no proper basis on which to interfere with that decision (paras 22, 29, 45, 57,58, 71, 85, 90-96, 101-106, 107, 108).
Robert Pearce KC and Daniel Burton (instructed by Macfarlanes LLP) for the trustee.
William Henderson (instructed by Treasury Solicitor) for the Attorney General.