Commissioners of Inland Revenue v McMullen
| Jurisdiction | UK Non-devolved |
| Judge | Lord Hailsham of St. Marylebone (Lord Chancellor),Lord Diplock,Lord Salmon,Lord Russell of Killowen,Lord Keith of Kinkel |
| Judgment Date | 06 March 1980 |
| Judgment citation (vLex) | [1980] UKHL J0306-1 |
| Date | 06 March 1980 |
| Court | House of Lords |
[1980] UKHL J0306-1
Lord Hailsham of St. Marylebone (Lord Chancellor)
Lord Diplock
Lord Salmon
Lord Russell of Killowen
Lord Keith of Kinkel
House of Lords
My Lords,
By a deed dated the 30th October 1972 between The Football Association Ltd. described as "the donor" and three persons named as the Original Trustees the donor purported to set up a Trust to be known as The Football Association Youth Trust. The sole question for decision in the appeal before the House is whether the deed was effective in setting up a valid charitable trust. The Charity Commissioners decided that it was so effective, overriding the objections of the present Respondents. Walton J. decided that it was not, and in his conclusion was supported by a majority (Stamp L.J. and Orr L.J.) of the Court of Appeal, who, however, in reaching this conclusion, did so for reasons not merely different from but, in some respects, diametrically opposed to, the reasons which found favour with Walton J. Bridge L.J., dissenting from the majority, supported the view of the Charity Commissioners. There is thus ample room for a legitimate difference of opinion. Happily, in your Lordships' House, opinion appears to be substantially unanimous that the appeal should be allowed.
Four questions arose for decision below. In the first place neither the parties nor the judgments below were in agreement as to the proper construction of the trust deed itself. Clearly this is a preliminary debate which must be settled before the remaining questions are even capable of decision. In the second place the Appellants contend and the Respondents dispute, that, on the correct construction of the deed, the trust is charitable as being for the advancement of education. Thirdly, the Appellants contend and the Respondents dispute that if they are wrong on the second question the trust is charitable at least because it falls within the fourth class of Lord Macnaghten's categories as enumerated in Income Tax Special Purposes Commissioners v. Pemsel [1891] A.C. 531 as a trust beneficial to the community within the spirit and intendment of the preamble to the Statute 43 Eliz. 1 c.4. Fourthly the Appellants contend and the Respondents dispute that, even if not otherwise charitable, the trust is a valid charitable trust as falling within section 1 of the Recreational Charities Act 1958, that is as a trust to provide or to assist in the provision of facilities for recreation or other leisure time occupation provided in the interests of social welfare.
In the events which happened, their Lordships have been greatly assisted by helpful arguments from counsel for the Appellants and the Respondents and by a valuable contribution from counsel instructed on behalf of the Attorney General as guardian of charities. Since we have reached the view that the trust is a valid educational charity their Lordships have not sought to hear argument nor, therefore, to reach a conclusion on any but the first two disputed questions in the dispute. Speaking for myself, however, I do not wish my absence of decision on the third or fourth points to be interpreted as an indorsement of the majority judgments in the Court of Appeal nor as necessarily dissenting from the contrary views contained in the minority judgment of Bridge L.J. For me at least the answers to the third and fourth questions are still left entirely undecided.
I now turn to the question of construction, for which it is necessary that I reproduce the material portions of the deed:
The first recital to the deed reads as follows:
"WHEREAS:—
(1) The First Donor is desirous of establishing a charitable trust which would have as the main objects the furtherance of education of Schools and Universities in any part of the United Kingdom encouraging and facilitating the playing of association football or other games and sports at such Schools and Universities and thus assisting to ensure that due attention is given to the physical education and character development of pupils at such Schools and Universities as aforesaid as well as the development and occupation of their minds and the organisation or provision or assistance in the organisation or provision of facilities for physical recreation for young people in the interests of social welfare in any part of the United Kingdom."
Some reliance was placed on this recital in argument, but, since I do not find the remainder of the deed ambiguous I need only say that for the purposes of what follows I have drawn no assistance from it.
The interpretation clause of the deed (clause 1), so far as material, reads as follows:
1. ( a) [Defines "the Trust"]
( b) [Defines "the Trustees"]
( c) "Schools" has the same meaning as in the Education Act 1944
( d) "Universities" means universities, training colleges for teachers, or other institutions of further education (including professional and technical education approved by the trustees).
( e) [Defines "the Trust Fund"]
The clause of the deed which is effectively for construction is clause 3, which I now reproduce in extenso. It reads:—
"3. THE objects of the Trust are:—
( a) 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 and thereby to assist in ensuring that due attention is given to the physical education and development of such pupils as well as to the development and occupation of their minds and with a view to furthering this object
(i) to provide or assist in the provision of Association Football or games or sports equipment of every kind for the use of such pupils as aforesaid
(ii) to provide or assist in the provision of courses lectures demonstrations and coaching for pupils of Schools and Universities in any part of the United Kingdom and for teachers who organise or supervise playing and coaching of Association Football or other games or sports at such Schools and Universities as aforesaid
(iii) to promote provide or assist in the promotion and provision of training colleges for the purpose of training teachers in the coaching of Association Football or other games or sports at such Schools and Universities as aforesaid
(iv) to lay out manage equip and maintain or assist in the laying out management equipment and maintenance of playing fields or appropriate indoor facilities or accommodation (whether vested in the Trustees or not) to be used for the teaching and playing of Association Football or other sports or games by such pupils as aforesaid
( b) to organise or provide or assist in the organisation or provision of facilities for physical recreation in the interests of social welfare in any part of the United Kingdom (with the object of improving the conditions of life for the boys and girls for whom the same are provided) for boys and girls who are under the age of twenty-one years and who by reason of their youth or social and economic circumstances have need of such facilities".
I pause here only to say that no question arises as to clause 3( b) above which clearly corresponds to the language of the Recreational Charities Act 1958. Controversy therefore revolves solely around 3(a), since it is obvious that, if this cannot be shown to be solely for charitable purposes, the whole trust ceases to be a charitable trust. Walton J., adopting for this purpose the construction propounded for the Respondents, construed the words between "thereby" and "object" where they occur in clause 3( a) of the deed as if they "only express the draftsman's erroneous view of the effect of the earlier part of clause 3( a), and cannot control the operation of that part." ( [1978] 1 W.L.R. at p.673). Stamp L.J. appears, though not quite unequivocally, to differ. After reciting Walton J's. view, he said ( [1979] 1 W.L.R. at p. 134):
"In my view, however, the proper approach to the construction of paragraph ( a) is to construe 'physical education and development', which I find an elusive phrase, as connoting something which the playing of association football will assist in ensuring".
And on the following page:
"But in relation to association football the settlor has made it clear that, for the purposes of the trust, facilities which do enable and encourage pupils to play that game are to be regarded as 'thereby' assisting in ensuring that due attention is given to their physical education and development".
Orr L.J. claimed (p.138) to prefer the view of Stamp L.J. by saying that the proper approach to the words in question is to construe "physical education and development" as "denoting something which the playing of association football will assist in ensuring, with the result that the trust has the single object of physical education and development of the pupils".
In his dissenting judgment Bridge L.J. at p.140 took a view fundamentally differing from any of the above. Since I agree with it entirely, I quote the entire passage:
"… For convenience of reference I set out the words of the clause which define the object divided into two parts: The first part is:
…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 …
The second part is:
and thereby to assist in ensuring that due attention is given to the physical education and development of such pupils as well as to the development and occupation of their minds …
The ensuing words 'and with a view to furthering this object' must refer back to both the first and second parts...
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...7 T.L.R. 657 (H.L.) ..........................................................61, 62, 67 Inland Revenue Commissioners v. McMullen (1980), [1981] A.C. 1, [1980] 1 All E.R. 884, [1980] 2 W.L.R. 416, 124 Sol. J. 206, 54 T.C. 413, [1980] T.R. 85, 130 N.L.J. 260 (H.L.) ................................