Williams (H. J.) Trustees v Commissioners of Inland Revenue

JurisdictionEngland & Wales
CourtHouse of Lords
JudgeViscount Simon,Lord Wright,Lord Simonds,Lord Normand
Judgment Date21 Mar 1947
Judgment citation (vLex)[1947] UKHL J0321-2

[1947] UKHL J0321-2

House of Lords

Viscount Simon

Lord Wright

Lord Porter

Lord Simonds

Lord Normand

Trustees of Sir Howell Jones Williams' Trust
and
Commissioners of Inland Revenue
Viscount Simon

My Lords,

1

I have had the great advantage of reading in print and of studying the exhaustive Opinion prepared in this case by my noble and learned friend Lord Simonds. I agree with it, and need say no more except that I move that the appeal be dismissed, with costs.

Lord Wright

My Lords,

2

I also have had the advantage of studying the Opinion about to be delivered by my noble and learned friend Lord Simonds. I agree with it, and have nothing to add.

Lord Simonds

My Lords,

3

My noble and learned friend Lord Porter has asked me to say that he concurs in the Opinion which I am about to deliver.

Lord Simonds

My Lords,

4

The question raised in this appeal is whether under a trust deed dated the 12th October, 1937, and made between Howell J. Williams Ltd. as trustees of the one part and Sir Howell Jones Williams, therein called the settlor, of the other part, certain properties were vested in the trustees for charitable purposes within the meaning of Section 37 (1) ( a) of the Income Tax Act, 1918, and whether the rents of those properties were in the years 1940-41 and 1941-42 applied by them to charitable purposes only.

5

Section 37 (1) of the Income Tax Act, 1918 , is as follows:

"37.—(1) Exemption shall be granted—

( a) from tax under Schedule A in respect of the rents and profits of any lands, tenements, hereditaments, or heritages belonging to any hospital, public school or almshouse, or vested in trustees for charitable purposes, so far as the same are applied to charitable purposes only."

6

I will now state the relevant provisions of the Trust Deed.

7

It begins by reciting that it is supplemental to a transfer of the 16th January, 1930, whereby certain freehold property specified in the Schedule (together with other property) was transferred to the trustees. This property consisted of certain premises in the Gray's Inn Road in the Parish of St. Pancras and No. 11 Mecklenburgh Square and Nos. 29, 30 and 31 Doughty Street in the same parish.

8

It further recites that the property had been purchased by the trustees out of moneys provided by the settlor, and that the Young Wales Association (London) Ltd. (thereinafter called "the Association") had been incorporated on the 21st March, 1925, with ( inter alia) the following objects, namely: (i) to promote Welsh interests in London and to provide means of social intercourse between persons of Welsh nationality birth domicile education or sympathies; (ii) to consider and discuss all questions affecting Welsh interests; (iii) to foster the study of the Welsh language and to procure the delivery of lectures on subjects connected with Welsh history literature music and art; (iv) to form and maintain a library of periodical historical and other literature in the Welsh language or relating to Wales, and, finally, that the property had for some time past been and was then occupied used and enjoyed by the Association with the consent of the settlor for the purposes of the Association.

9

I come to the operative part of the Deed. Clause 1 contains an important definition. "The expression 'Welsh people' shall mean and include persons of Welsh nationality by birth or descent or born or educated or at any time domiciled in the Principality of Wales or the County of Monmouth".

10

Clauses 2 and 3 I can pass over

11

Clauses 4 and 5 cannot fairly be summarised and I state them in extenso.

"4. The Trustees shall hold the Settled Properties and the Endowment Fund for the purpose of establishing and maintaining an Institute and meeting place in London to be known as 'The London Welsh Association' (hereinafter called 'the Institute') for the benefit of Welsh people resident in or near or visiting London with a view to creating a centre in London for promoting the moral social spiritual and educational welfare of Welsh people and fostering the study of the Welsh language and of Welsh history literature music and art".

5. Without prejudice to the generality of the foregoing provisions the Trustees may use or permit such part of the Settled Properties as is required to be used as the Institute for all or any of the following purposes:—

(A) For providing a meeting place for Welsh people in London and their friends where they can obtain facilities for social intercourse study reading rest recreation and refreshment.

(B) For meetings concerts lectures and other forms of instruction discussion or entertainment especially in relation to subjects connected with the Welsh language and Welsh history literature music and art.

(c) For any educational purposes connected with the Welsh language or Welsh subjects or likely to be of value or interest to Welsh people.

(D) For establishing and maintaining a library of periodical historical and other literature in the Welsh language or relating to Wales or which is likely to be of use to Welsh people.

(E) As a hostel for the accommodation of Welsh people in London.

(F) For any of the purposes of the Association or of any similar association which may be formed for the benefit of Welsh people in London and which purposes may be within the general scope of the Trusts declared in Clause 4 hereof.

(G) Generally for such other purposes being charitable and for the benefit of Welsh people as the Trustees may from time to time think fit Provided always that the Trustees shall not permit any alcoholic liquor to be sold or consumed on any part of the Settled Properties for the time being occupied or used for the purposes of the Institute".

12

Clause 9 will be found to be important and I set out the substantive part of it.

"9. The Trustees shall apply the income arising from the Endowment Fund and any rents and profits arising from the Settled Properties and any other profits income or contributions which may be received by the Trustees in carrying on the Institute and otherwise for the maintenance repair and insurance of the Settled Properties and in payment of the rates and other outgoings and towards the cost of maintaining equipping and using the Settled Properties for the purposes of the Institute and generally for carrying into effect all or any of the trusts of this Deed."

13

Clause 10 provided that the Institute should not be used for meetings of any political party or for the purposes of any such party and that no part of the property capital or income for the time being subject to the trusts thereof should at any time be used or applied for any such purposes or for any other purposes not being charitable, with a proviso that that prohibition should not prevent any application of money or property for purposes necessarily incidental to carrying out the charitable trusts of the Deed.

14

Clause 13 authorised the Trustees to delegate their power to carry on the Institute by appointing Managers and Clause 14 to exercise that power by appointing the Association to act as Managers of the Institute.

15

I do not think it necessary to refer to any other provisions of the Deed.

16

On the day following its execution Howell J. Williams Ld. resigned the trusteeship of the Deed and in their place seven individuals (including the Settlor) were appointed trustees. The survivors of them are the present appellants.

17

The relevant facts as found by the Commissioners for the special purposes of the Income Tax Acts are these. I take them from the Case stated, which will at the same time conveniently show the nature of the claim which is the subject of appeal to this House.

18

Paragraph 4 of the Case states that the trust property had always been maintained as two blocks, that the first block (thereinafter referred to as "the Institute Block") consisted of property in Gray's Inn Road and Mecklenburgh Square which was adapted for use as an Institute in accordance with the trusts of the Deed, that the second block consisting of 29, 30 and 31 Doughty Street was let out to tenants, that the first block only—and not, as incorrectly indicated in the recitals to the deed, the whole of the trust property—was until May, 1941 occupied by the Young Wales Association (London) Ld., which later changed its name to London Welsh Association Ld., and was thereinafter referred to as the Association.

19

In the next paragraph of the Case the claim is stated. I think it worth while to set it out.

"The Trustees were not on this claim contending that this Association was established for charitable purposes only. The claim before us was that not the Association but the Trustees were so established; that in applying the rents of 29, 30 and 31 Doughty Street to the purposes of the before-mentioned Association (which they claimed was an application of income of the Trust under clause 9 of the Trust Deed) they had applied the same to charitable purposes only and that consequently they were entitled to exemption from Income Tax, Schedule A, in respect of the rents of the said properties".

20

From paragraph 7 of the Case it appears that the Trustees in exercise of their powers under the deed allowed the Association to occupy the Institute block and to act as managers of the Institute, and that the Association so acted until May, 1941, and that before that date they made two donations to the Association for the purposes of the Institute, but that after that date the Association had been unable to continue in occupation of the premises, which had been let to the Welsh Services Club, and similarly after that date no further donations had been made.

21

In paragraph 11 of the Case there is a summary of the evidence given before the Commissioners by a Mr. V. J. Lewis, one of the Trustees of the Deed, and at one time Secretary of the Association. Since the question raised in this appeal appears in one...

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