Oppenheim v Tobacco Securities Trust Company Ltd

JurisdictionEngland & Wales
CourtHouse of Lords
JudgeLord Simonds,Lord Normand,Lord Oaksey,Lord Morton of Henryton,Lord MacDermott
Judgment Date13 December 1950
Judgment citation (vLex)[1950] UKHL J1213-1
Date13 December 1950

[1950] UKHL J1213-1

House of Lords

Lord Simonds

Lord Normand

Lord Oaksey

Lord Morton of Henryton

Lord MacDermott

Oppenheim
and
Tobacco Securities Trust Company Limited and Others

Upon Report from the Appellate Committee, to whom was referred the Cause Oppenheim against Tobacco Securities Trust Company Limited and others, that the Committee had heard Counsel, as well on Thursday the 2d, as on Friday the 3d and Monday the 6th, days of November last, upon the Petition and Appeal of Duncan Morris Oppenheim, of Rusham House, Whitehall Lane, Egham. in the County of Surrey, praying, That the matter of the Order set forth in the Schedule thereto, namely, an Order of His Majesty's Court of Appeal of the 4th of July 1949, might be reviewed before His Majesty the King, in His Court of Parliament, and that the said Order might be reversed, varied or altered, or that the Petitioner might have such other relief in the premises as to His Majesty the King, in His Court of Parliament, might seem meet; as also upon the printed Case of Barclays Bank (Dominion, Colonial and Overseas) lodged in answer to the said Appeal (in which said Case it was stated that His Majesty's Attorney-General, called as a Respondent in the said Appeal, was concerned only for the protection of the charitable interests arising under the Settlement, and did not lodge a separate Case in answer thereto); and Counsel having been heard on behalf of His Majesty's Attorney-General and due consideration had this day of what was offered on either side in this Cause:

It is Ordered and Adjudged, by the Lords Spiritual and Temporal in the Court of Parliament of His Majesty the King assembled, that the said Order of His Majesty's Court of Appeal, of the 4th day of July 1949, complained of in the said Appeal, be, and the same is hereby. Affirmed, and that the said Petition and Appeal be, and the same is hereby, dismissed this House: And it is further Ordered, That the Appellant do pay, or cause to be paid, to the said Respondents the Costs incurred by them in respect of the said Appeal, the amount thereof to be certified by the Clerk of the Parliaments.

Lord Simonds

My Lords,

1

Once more your Lordships have to consider the difficult subject of charitable trusts, and this time a question is asked to which no wholly satisfactory answer can be given.

2

On the 24th March, 1930, John Phillips and Elizabeth Miller Phillips, his wife, executed a settlement whereof the Respondent, Tobacco Securities Trust Company Limited, were and are the trustees and thereby assigned to them certain investments in the British American Tobacco Company Limited (which I will call "the Company") and its subsidiary and allied companies and certain real estate in Trinidad (together with certain heritable property in Scotland as to which no question arises in this appeal) to be held upon certain trusts during the lives of the grantors and the survivor of them and thereafter upon trust to apply the income of the trust premises "in providing for or assisting in providing for the education of children of employees or former employees of British-American Tobacco Company Limited � or any of its subsidiary or allied companies in such manner and according to such schemes or rules or regulations as the Acting Trustees shall in their absolute discretion from time to time think fit and also at the discretion from time to time of the Acting Trustees to apply all or any part of the corpus of the said trust for the like purposes". The expression "Acting Trustees" meant the grantors during their lives and the directors for the time being of the Company or in the event of a reconstruction or amalgamation of the Company such other persons as were therein mentioned, in which event a variation was made also in the beneficiaries under the trust.

3

Elizabeth Miller Phillips died on the 8th October, 1940, leaving John Phillips, her universal legatee and devisee. He died on the 26th June, 1947, and his will was duly proved by the Respondent Barclays Bank (Dominion, Colonial and Overseas). The probate value of the trust premises was over £125,000, including £2,000 which represented the proceeds of the property in Scotland. It appears that in Trinidad the English common law and doctrines of equity have been in force since 1848.

4

In these circumstances the question arose whether the trust that I have set out is a valid trust. It is clear that it creates a perpetuity: it is therefore invalid unless it can be supported as a charitable trust. The Appellant as one of the directors of the Company and accordingly an "Acting Trustee" contends in favour of its validity: the contrary is contended by the Respondent Bank, since in the event of invalidity there is a resulting trust of the trust premises to the estates of the grantors.

5

No evidence was given of any connection of the grantors with the Company except that John Phillips was clearly a large stockholder. It appears that the number of employees of the Company and its subsidiary and allied companies was large. It exceeded 110,000.

6

This question coming before Roxburgh J. in the Chancery Division, it was conceded and he held that, having regard to the decisions of the Court of Appeal in In re Compton [1945], 1 Ch. 123 and In re Hobourn Aero Components Limited's Air Raid Distress Fund [1946], Ch. 194, he was bound to declare the trust void except as to the property in Scotland and on the 10th February, 1949, he made an order accordingly. Upon appeal to the Court of Appeal the same view was taken and the appeal was dismissed. In neither Court was more than a formal decision given. Your Lordships must look to the cases that I have cited for the reasoning which led to it.

7

Before I turn to these authorities I will make some preliminary observations. It is a clearly established principle of the law of charity that a trust is not charitable unless it is directed to the public benefit. This is sometimes stated in the proposition that it must benefit the community or a section of the community. Negatively it is said that a trust is not charitable if it confers only private benefits. In the recent case of Gilmour v. Coats [1949], A.C., 426, this principle was reasserted. It is easy to state and has been stated in a variety of ways, the earliest statement that I find being in Jones v. Williams (1767), Ambler 651, in which Lord Chancellor Hardwicke is briefly reported as follows:

"Definition of charity: a gift to a general public use, which extends to the poor as well as to the rich.�"

8

With a single exception, to which I shall refer, this applies to all charities. We are apt now to classify them by reference to Lord Macnaghten's division in Pemsel's case and, as I have elsewhere pointed out, it was at one time suggested that the element of public benefit was not essential except for charities falling within the fourth class, "other purposes beneficial to the community". This is certainly wrong except in the anomalous case of trusts for the relief of poverty with which I must specifically deal. In the case of trusts for educational purposes the condition of public benefit must be satisfied. The difficulty lies in determining what is sufficient to satisfy the test, and there is little to help your Lordships to solve it.

9

If I may begin at the bottom of the scale, a trust established by a father for the education of his son is not a charity. The public element, as I will call it, is not supplied by the fact that from that son's education all may benefit. At the other end of the scale the establishment of a college or university is beyond doubt a charity. "Schools of learning and free schools and scholars of universities" are the very words of the preamble to the Statute of Elizabeth. So also the endowment of a college, university or school by the creation of scholarships or bursaries is a charity and none the less because competition may be limited to a particular class of persons. It is upon this ground, as Lord Greene M.R. pointed out in In re Compton, that the so-called Founder's Kin cases can be rested. The difficulty arises where the trust is not for the benefit of any institution either then existing or by the terms of the trust to be brought into existence, but for the benefit of a class of persons at large. Then the question is whether that class of persons can be regarded as such a "section of the community" as to satisfy the test of public benefit. These words "section of the community" have no special sanctity, but they conveniently indicate first, that the possible (I emphasise the word "possible") beneficiaries must not be numerically negligible, and secondly, that the quality which distinguishes them from other members of the community, so that they form by themselves a section of it, must be a quality which does not depend on their relationship to a particular individual. It is for this reason that a trust for the education of members of a family or, as in In re Compton, of a number of families cannot be regarded as charitable. A group of persons may be numerous but, if the nexus between them is their personal relationship to a single propositus or to several propositi, they are neither the community nor a section of the community for charitable purposes.

10

I come then to the present case where the class of beneficiaries is numerous but the difficulty arises in regard to their common and distinguishing quality. That quality is being children of employees of one or other of a group of companies. I can make no distinction between children of employees and the employees themselves. In both cases the common quality is found in employment by particular employers. The latter of the two cases to which I first referred, the Hobourn case, is a direct authority for saying that such a common quality does not constitute its possessors a section of the public for charitable purposes. In the...

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