Philippe & Ors v Cameron & Ors [2012] EWHC 1040 (Ch)

Case No HC11C03012[2012] EWHC 1040 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Venue Rolls Building, Fetter Lane, London, EC4A 1NLDate 2 May 2012
Before
THE HON MR JUSTICE ARNOLD
Between
IN THE MATTER OF THE ST ANDREW’S (CHEAM) LAWN TENNIS CLUB TRUSTClaimants(1) IAN DUDLEY PHILIPPEClaimant(2) KENNETH BANKS OHLSONClaimant(3) PAUL DAVID TAYLORClaimant(4) MARY GILLIAN CRAIGClaimant(1) ELIZABETH MAY CAMERONDefendants(2) PETER JAMES CAMPBELL SMITHDefendant(3) STEPHANIE CAMPBELL SMITHDefendant(4) JENNIFER ANNE DICKINSONDefendant(5) ROSEMAIRI ISABEL MACDONALD EVISONDefendant(6) JOAN GIDDINGS MBEDefendant(7) MARGARET JANE HOLMESDefendant(8) JENNIFER MARGARET MACDONALDDefendant(9) NIGEL COLIN LOCK MACDONALDDefendant(10) CAMPBELL ALEXANDER MCPHEEDefendant(11) HEATHER ELIZABETH SAINTDefendant(12) AUSTINE STUART YOUNGDefendant(13) ROSANNE ORR YOUNGDefendant(14) DAVID KNILL-JONESDefendant(15) DEREK HUMEDefendant(16) JILL POKEDefendant(17) DAVID TWEDDLEDefendant(18) CAROLINE MARY TWEDDLEDefendant(19) MARY TWEDDLEDefendant
Gilead Cooper QC (instructed by Henmans LLP) for ClaimantsThomas Dumont (instructed by Farrer & Co) for First to Thirteenth DefendantsGabriel Hughes (instructed by Christiane Warncke) for Fourteenth Defendant for The Fifteenth to Nineteenth Defendants did not appear and were not representedHearing Hearing dates: 28-29 March 2012
JudgmentMR JUSTICE ARNOLD :Introduction
[1]This is an unfortunate dispute about the beneficial ownership of land at Sandy Lane, Cheam (“the Land”) which has been occupied by St Andrew’s (Cheam) Lawn Tennis Club (“the Club”) since 1938. As its name suggests, the Club was originally, and to some extent remains, associated with St Andrew’s Cheam (“the Church”). Until fairly recently, it had been thought by all concerned that the Land was held on trust on the terms of a Declaration of Trust dated 11 July 1938 (“the Trust Deed”). The Club now says that the Trust Deed is and always has been invalid, and that the Land is held on a resulting trust for the current members of the Club. The Church (or to be more precise, the trustees of its charitable trust) disputes that the Trust Deed is invalid, and wants the Land to be sold and the money applied for the purposes of the Church. The trustees of the Land are doubtful that either side is correct. The immediate cause of the dispute is the challenge which the complexities of English law with regard to trusts and unincorporated associations pose even for lawyers. More subtly, the dispute arises out of the secularisation of English society since 1938.

The parties

[2]The First to Third Claimants are the present trustees, and the Fourth Claimant a former trustee of, the trusts established by the Trust Deed. I shall refer to the trustees under the Trust Deed at each relevant time as “the Trustees”.[3]The First to Thirteen Defendants are the present trustees of the Church’s charitable trust (as to which, see below).[4]The Fourteenth, Fifteenth and Sixteenth Defendants are, respectively, the present Chairman, Secretary and Treasurer of the Club. The Fourteenth Defendant has been appointed to represent all the present members of the Club.[5]The Seventeenth, Eighteenth and Nineteenth Defendants are the present trustees of the estate of David Tweddle. I shall refer to them as “the Executors”.[6]As counsel for the Trustees accepted, strictly speaking the Treasury Solicitor should have been joined to represent the interests of the Crown. As he submitted, the Treasury Solicitor can be notified of the matter following this judgment and before the order is sealed.

The facts

[7]The claim was brought by the Trustees under CPR Part 8. The Trustees’ stance in these proceedings is neutral: they seek the guidance of the Court. Written evidence has been served by the Trustees, the Club and the Church. Although there are certain conflicts of evidence between the Club’s witness and the Church’s witness, there has been no cross-examination. For the most part, neither witness has first-hand knowledge of the facts, and what matters is the documentary evidence. As will appear, the documentary evidence is fairly extensive, but there are gaps in the record.

The Church

[8]The Church was founded as the St Andrew’s Presbyterian Church of England Cheam in the 1920s. In 1972 the Presbyterian and Congregational Churches merged to the form the United Reformed Church. Since then, the Church has been known as St Andrew’s United Reformed Church Cheam. With the exception of properties held under the trusts declared in Schedule 2 of the United Reformed Church Act 1972 (as amended), all assets and funds are held on behalf of the Church by the St Andrew’s Cheam United Reformed Church Charity, registered charity number 1134905 (“the Charity”). According to the Charity’s current governing document dated September 2009 (no earlier governing document is in evidence), the trustees of the Charity are “those members of the Elders’ Meeting of St Andrew’s Cheam United Reformed Church who are qualified to serve as charity trustees … and [who] are appointed … in accordance with the procedures for the time being laid down by the Church Meeting of St Andrew’s Cheam United Reformed Church”. The Charity has as its sole object “the advancement of the Christian faith for the benefit of the public in accordance with the Scheme of Union of the United Reformed Church”.[9]Counsel for the Club submitted that it was important to distinguish between(1) the congregation of the Church, represented by the Minister or the Elders’ Meeting and(2) the Charity, represented by its trustees. I accept that the two are distinct, and where necessary I will have regard to the distinction, but it is not always necessary to do so.

The Club

[10]From the establishment of the Church, many of its members played tennis together. The St Andrew’s Tennis & Social Club was established in 1930, and tennis was played each week on a number of private courts owned by Church members. That club became popular and soon outgrew the facilities available.[11]The Club was established for the purpose of acquiring and fitting out land for use as a tennis club. Its Inaugural General Meeting was held on 22 April 1937. A Constitution and Rules were adopted, but no copies of these have been found. The Minister of the Church, Rev. E.G. Miles, was elected as President, J.L. Goldspink as Captain, C. Thain as Vice-Captain and E.S. Cotsell as one of two Joint Honorary Secretaries.[12]At a meeting of the Church’s Committee of Management on 10 May 1937 Mr Goldspink referred to the Constitution of the Club “and the intention that it should be kept as part of the Church and the rules of the Club approved by and only altered with the consent of the Committee of Management”. It was agreed that the Rules should be brought up for approval at a later meeting.[13]Between April 1937 and March 1938 an opportunity arose to buy suitable vacant land in Sandy Lane, less than a mile from the Church. A General Meeting was called on 21 March 1938 in the Church Hall. All Church members and adherents were invited to attend. About 60 people attended. The minutes of the meeting record that it was proposed to spend £750 purchasing the Land, £475 on courts, £396 on a pavilion and £79 on landscaping, making a total cost of £1,700. Of that amount, only £650 had been promised. Rev. Miles “stressed the importance of maintaining the Club as part of the Church’s activities and also appealed to the meeting for their support”. It was agreed that the Club would attempt to raise the money by loans in units of £50 on which interest at 4% would be paid. It was estimated that the income of the Club would be sufficient to pay this interest and also to pay off one £50 unit each year.[14]At a meeting of the Committee of the Club on 18 April 1938 Mr Cotsell explained that the rest of the money required for the scheme had not been provided, and that it was for the Committee to decide the future of the Club. Rev. Miles said that he had approached various people with a view to purchasing the Land on behalf of the Club, but without success. Mr Tweddle, who was the Secretary of the Church and a member of the Club’s Committee (albeit, it would appear, a non-playing member), then offered to purchase the Land and rent it to the Club. This was agreed to. Mr Cotsell said that this left only £950 to be raised, and provided that those who had already offered to lend £50 would adhere to their offer, only £250 more was required. It was agreed that this sum would be raised from donations by the members.[15]At a meeting of a Committee of the Club on 2 June 1938 it was agreed that Mr Goldspink, Mr Thain, D. Duncan and H.L. Reid should be appointed as Trustees. The Trustees were all members of the Church, and Mr Duncan was its Freewill Offering Treasurer. It appears that Mr Goldspink, Mr Thain and Mr Duncan were also members of the Club. Arnold Rust advised that it was not necessary for the appointment of the Trustees to form part of the Constitution of the Club. Mr Rust was a solicitor who was the secretary of the Church’s Committee of Management and a member of the Club. It appears that he acted on behalf of both Mr Tweddle and the Club in relation to the acquisition of the Land. He was also one of the lenders.[16]In addition, it was agreed that Barclays Bank Ltd be appointed as the Club’s bankers, and a mandate was completed providing for cheques to be signed by any two of the Trustees or one Trustee and the Treasurer. It was also agreed that the lenders of the £50 units be elected Honorary Members of the Club. It is likely that this meant that they did not have to pay subscriptions.[17]On 4 June 1938 Mr Tweddle was granted a licence to lay out the Land and use it for tennis courts and the erection of a pavilion. It appears that this was so that work could be started in advance of completion of the purchase of the land by Mr Tweddle. Given what transpired later, Mr Tweddle may have completed the purchase on 24 June 1938.[18]It appears from an undated letter circulated prior to the meeting on 8 July 1938 referred to below that the works were financed by loans in multiples of £50 which carried interest at the rate of 4% per annum payable on 30 September each year. The loans were to be repaid at rate of one £50 unit per year drawn by lot. The same people who acted as the Trustees acted as trustees for the Club in connection with these loans.[19]At a meeting of the Committee of the Club on 8 July 1938 the Trustees were authorised and requested on behalf of the Club to take from Mr Tweddle a lease of the Land (“the Lease”) for a term of 10 years from 24 June 1938 at an annual rent of £30 with an option to purchase the freehold for £750 (i.e. the price paid by Mr Tweddle), the Club agreeing to indemnify the Trustees in respect of their liabilities under the Trust Deed. The Lease was duly executed by Mr Tweddle and the Trustees, and the Trust Deed was duly executed by the Trustees, on 11 July 1938.[20]It appears that the Club’s ground was opened on 16 July 1938. The rent due under the Lease was paid by the Club. A letter dated 20 December 1938 records that, to cover the cost of building the courts and the pavilion, the Club borrowed a total of £925. This was £25 less than had originally been estimated.[21]The Charity’s Report and Financial Statements for the year ended 31 December 1938 contains an entry concerning the Club, which states that “membership is open to all in touch with the Church”.[22]The earliest Rules of the Club that have been found date from 1976. These include the following rules: “MANAGEMENT OF THE CLUB 1. The general management of the club shall vest in a committee constituted in accordance with rule 3. … 3.(1) The committee shall consist of the Minister for the time being of St. Andrew’s United Reformed Church, Cheam (in these rules called ‘St. Andrew’s Church’), who shall ex officio be president of the club, and the following elective members -(a) a Chairman(b) a Captain(c) a Vice-Captain(d) a Honorary Secretary(e) a Honorary Treasurer(f) and seven ordinary members and the Elder’s Meeting of St. Andrew’s Church may if they think fit nominate one of their number to be an additional member of the committee. At least seven members of St. Andrew’s Church shall be included in the committee. (2) The elective members for any year shall be elected by secret ballot and shall come into office at the annual general meeting held, in accordance with rule 6, during the preceding year; and any nominated member shall hold office for such period as the Elder’s Meeting of St. Andrew’s Church fix. … SUNDAY PLAY 4. On Sunday, play shall be permitted from one hour after the end of morning public service at St Andrew’s Church, to one hour before the start of the evening service if such is held … MEMBERSHIP 5. … (3) The committee shall not reject any application for membership submitted by a member of St. Andrew’s Church or a member of any youth organisation of that Church. … ANNUAL GENERAL and SPECIAL MEETINGS 6. … (6) An annual general or special meeting shall be held on the premises of St Andrew’s Church CESSATION OF ACTIVITIES 7. If the club should for any reason terminate it’s activities, it’s assets shall, after discharging all debts and liabilities, be transferred as the Elder’s Meeting of St. Andrew’s Church may direct. RULES 8. … (2) These rules may be amended by a resolution passed by a majority of two thirds of the members present at an annual general or special meeting of the club; but such a resolution shall be of no effect until ratified by the Elder’s Meeting of St. Andrew’s Church.” (a) a Chairman (b) a Captain (c) a Vice-Captain (d) a Honorary Secretary (e) a Honorary Treasurer (f) and seven ordinary members and the Elder’s Meeting of St. Andrew’s Church may if they think fit nominate one of their number to be an additional member of the committee. At least seven members of St. Andrew’s Church shall be included in the committee. SUNDAY PLAY MEMBERSHIP ANNUAL GENERAL and SPECIAL MEETINGS CESSATION OF ACTIVITIES

RULES

[23]The current Rules of the Club date from 2004. These include the following rules:
“2. PRESIDENCY The Minister for the time being of St. Andrew’s United Reformed Church, Cheam, (hereafter called ‘St. Andrew’s Church’) shall be President of the Club. 3. MANAGEMENT (a) The Club shall be managed by a Committee consisting of the following honorary Officers and Members, some of whom should be members of St. Andrew’s Church: Chairman ) Captain ) Secretary ) Officers Treasurer ) Match Secretary ) Junior Section Secretary ) and seven Ordinary Members. The Elders’ Meeting of St. Andrew’s Church may, if they think fit, nominate one of their Church members to be an additional member of the Committee. … (c) The Committee shall have the power to: … (v) Borrow money for the purposes of the Club on the security and assets registered in the name of the Trustees of the Club subject to prior consent of members in General Meeting of the Trustees. (vi) Interpret and enforce the rules and deal with all matters not provided for in the Rules. … (h) Meetings of the Committee shall normally be held on the premises of St. Andrew’s Church. … 5. GENERAL … (b) On Sundays, play shall be permitted from one hour after the end of the morning public service at St. Andrew’s Church. … (j) No Rule of the Club shall be amended or repealed and no new Rules shall be made save by a majority of two-thirds of the members present and entitled to vote at a General Meeting. Moreover, such a resolution shall have no effect until ratified by the Elder’s Meeting of St. Andrew’s Church. … 6. ANNUAL AND EXTRAORDINARY GENERAL MEETINGS …. (e) General Meetings shall normally be held in the premises of St. Andrew’s Church. 7. CESSATION OF ACTIVITIES If the Club should for any reason terminate its activities, its assets shall, after discharging all debts and liabilities, be disposed of as decided by members at an Extraordinary General Meeting convened for that purpose. Assets held in the name of the Trustees of the Club and which are not shown in the Club’s accounts shall be disposed of under the terms of the Trust Deed.”
The Minister for the time being of St. Andrew’s United Reformed Church, Cheam, (hereafter called ‘St. Andrew’s Church’) shall be President of the Club. Chairman ) Captain ) Secretary ) Officers Treasurer ) Match Secretary ) Junior Section Secretary ) and seven Ordinary Members. The Elders’ Meeting of St. Andrew’s Church may, if they think fit, nominate one of their Church members to be an additional member of the Committee. … (v) Borrow money for the purposes of the Club on the security and assets registered in the name of the Trustees of the Club subject to prior consent of members in General Meeting of the Trustees. (vi) Interpret and enforce the rules and deal with all matters not provided for in the Rules. If the Club should for any reason terminate its activities, its assets shall, after discharging all debts and liabilities, be disposed of as decided by members at an Extraordinary General Meeting convened for that purpose. Assets held in the name of the Trustees of the Club and which are not shown in the Club’s accounts shall be disposed of under the terms of the Trust Deed.”

The Lease

[24]Under the terms of the Lease Mr Tweddle demised the Land to the Trustees for the term of 10 years from 24 June 1938 at a yearly rent of £30 payable half yearly (clause 1). The Trustees covenanted: i) to maintain and keep the Pavilion proposed to be erected on part of the Land in good condition (clause 2(5)); ii) to use the Land “as a Tennis and/or Sports Ground in connection with St. Andrews Presbyterian Church of England ... and not to permit play thereon on Sundays” (clause 2(6)); and iii) not to assign or underlet or part with the possession of the Land except to the Club without the consent in writing of Mr Tweddle (clause 2(8)).[25]By clause 5 Mr Tweddle granted the Trustees an option to purchase the Land for the sum of £750 exercisable at any time during the 10 year term.[26]Clause 6 declared that “… the Lessees shall hold the said leasehold premises and the freehold reversion if and when acquired under the provisions of the last clause hereunder upon trust to sell the same with the consent in writing of the Chairman and Vice-Chairman of the Committee of Management of St. Andrew’s Presbyterian Church of England Cheam aforesaid … with power at discretion to postpone any sale and to stand possessed of the net proceeds of any such sale after payment of the costs thereof and also of the net rents and profits thereof until sale upon the trusts and with and subject to the powers declared by a Deed Poll of even date herewith executed by the Lessees …”

The Trust Deed

[27]Recital(1) of the Trust Deed recites the effect of the Lease. Recitals(2) and(3) state:
“(2) Money for the erection of a Pavilion and for the fencing off of the said land and laying down of tennis courts thereon has been provided by members and friends of the Congregation connected with the General Assembly of the Presbyterian Church of England worshiping in the Church known as St. Andrew’s Cheam aforesaid (such Congregation being hereinafter called ‘St. Andrew’s Church’) for the use of members and friends of St. Andrew’s Church and in the event of the Trustees being able to exercise the said option of purchase the consideration money it is anticipated would be similarly provided the Trustees receiving the same subject to the powers and provisions hereinafter expressed. (3) The Trustees are desirous of declaring the trusts upon which the said leasehold interest in such land and premises shall be held and the trusts upon which the freehold reversion if purchased is to be held.”
[28]The key operative provisions of the Trust Deed are as follows: “IT IS HEREBY AGREED AND DECLARED that the Trustees shall stand possessed of the said leasehold interest in the said land and premises and of the freehold reversion thereto if and when acquired upon the trusts and with and subject to the powers provisions agreements and declarations hereinafter declared concerning the same that is to say: 1. WITH the consent in writing of the Chairman and Vice-Chairman of the Committee of Management of St. Andrew’s Church to sell the whole or any part of the said land and premises by public auction or private treaty at such price or such prices and subject to such terms and conditions and at such times as the Trustees may determine the Trustees having full power to postpone any such sales for so long as they may think fit. 2. TO let the said land and premises to St. Andrew’s (Cheam) Lawn Tennis Club or such person or persons for such term and at such rent and subject to such conditions as the Trustees may determine and to accept surrenders of any leases and to re-let. … 4. TO permit the same to be used for the purpose of a Tennis and/or other sports ground for games for any person or bodies of persons associated directly or indirectly with St. Andrew’s Church for such time and either with or without any rental being paid therefor and generally on such terms as the Trustees shall from time to time determine. … 7. THE Trustees shall stand possessed of all moneys from time to time received by them as rent or other payment for the use of the said land and premises or otherwise upon trust to apply the same or such parts thereof as them may deem expedient in the payment of any costs charges or other expenses incurred by the Trustees in relation to the trusts hereof … and shall apply any surplus of such money (if any) to such funds or such charitable purposes in connection with St. Andrew’s Church as the Trustees shall think fit… 8. THE Trustees shall stand possessed of the monies to arise from any sale under the trusts aforesaid for any one or more of the objects hereinafter mentioned in such manner at such time and in all respects as the Trustees shall determine namely:(a) In payment of any costs and charges incurred by the Trustees in carrying out the trusts hereof.(b) In repayment of any principal money and interest and charges owing upon any mortgage or charge.(c) In the purchase of a sports ground in substitution for the said land and premises or as a contribution towards any such purpose.(d) In the erection of any building to be used in connection with St. Andrew’s Church.(e) For any other purpose in connection with St. Andrew’s Church which the Committee of Management of such Church and the Trustees shall by a majority at a special meeting called for the purpose determine. … 10. THE statutory power of appointing a new Trustee or new Trustees shall be vested in the Chairman and Vice-Chairman for the time being of the Committee of Management of St. Andrew’s Church …” (a) In payment of any costs and charges incurred by the Trustees in carrying out the trusts hereof. (b) In repayment of any principal money and interest and charges owing upon any mortgage or charge. (c) In the purchase of a sports ground in substitution for the said land and premises or as a contribution towards any such purpose. (d) In the erection of any building to be used in connection with St. Andrew’s Church. (e) For any other purpose in connection with St. Andrew’s Church which the Committee of Management of such Church and the Trustees shall by a majority at a special meeting called for the purpose determine.

The 1948 Agreement

[29]The minutes of a meeting of the Committee of the Club on 12 August 1947 record that a letter had been received from Mr Tweddle reminding the Club that the Lease and the option to purchase it contained were due to expire in June 1948. Mr Tweddle had subsequently made an offer to the Club of what was described in a letter from the Club to Mr Tweddle dated 18 July 1947 as “a new agreement … from 1 Jan 1948, to replace that terminating in June 1948” under which he would sell the Land for £525 paid at the rate of £75 a year for seven years in half yearly instalments. During this period the Club would remain in occupation, but pay no rent. As it was put in the letter to Mr Tweddle, “At the end of which seven years the ground should then be deemed to have been purchased by the Club from you.” The Trustees felt that this offer was one which must be accepted. In addition, holders of the loan notes had agreed to waive repayment of capital during the seven year period. The Committee voted to accept the offer, as did the members of the Club at its Annual General Meeting on 17 November 1947.[30]The Club’s accounts for the year ended 30 September 1947 show loans outstanding of £718, £54 having been repaid during the year. Interest on loans of £29 13s 7d was paid. It appears that there was only one member of the Club in 1947 who not a member of the Church.[31]On 12 January 1948 Mr Tweddle and Mr Goldspink, Mr Thain, A. Gardner and G.E. Wood (“the Purchasers”) entered into an agreement for the sale and purchase of the Land on the terms which had been offered by Mr Tweddle (“the 1948 Agreement”). It is common ground that it is probable that the Purchasers were the current Trustees. The 1948 Agreement contains no reference to the Trust Deed, however. Clause 7 entitled the Purchasers to have possession of the property so long as the half yearly instalments of the purchase money were paid. Clause 8 was in the following terms:
“NO rent shall be paid by the Purchasers or any of them to the Vendor under the terms of the Lease dated the first [sic] day of July One thousand nine hundred and thirty eight made between the Vendor of the one part and David Duncan the said James Lewis Goldspink and Herbert Leigh Reid and the said Caryl Thain of the other part for the period from the Twenty fifth day of December One thousand nine hundred and forty seven to the Twenty fourth day of One thousand nine hundred and forty eight when the term granted by such Lease expires.”
[32]All instalments of the purchase price were paid for out of the Club’s general funds, as is shown by its accounts. The Club’s income was made up largely from subscriptions, supplemented by the profits from fetes and dances and other fund-raising activities. It appears that in 1953, out of 61 members of the Club, 54 were members of the Church and seven were members of the Church’s Fellowship of Youth.[33]Mr Tweddle died on 10 November 1953. The final payments due under the 1948 Agreement were made to his personal representatives. By the end of 1954 the whole of the £525 had been paid, and all other loans forgiven or repaid, and so the Club declared itself free of debt.

The Transfer

[34]On 16 May 1955 Mr Tweddle’s personal representatives executed a transfer of the Land to Mr Goldspink, Mr Thain, W.R. Chalmers and A.R.S. Tweddle (“the Transfer”). It is common ground that it is probable that the transferees were the current Trustees. The Transfer makes no reference to the Trust Deed, however. Nor does it refer to the 1948 Agreement.

Subsequent events

[35]In 1993 the Club decided that it needed to carry out major works to improve the tennis courts on the Land and informed the Trustees of its intentions. The Trustees then took legal advice from solicitors. The advice given was based on the express assumption that the Land had been bought in exercise of the option in the Lease, which was not in fact the case. As a result of the advice given, the Trustees asked the Club for an assurance that this expenditure would not entitle the Club to any rights of tenure or immovability, nor would it give the Club any rights for expenditure reimbursement or other financial recognition against the Trustees. The then Chairman of the Club gave this assurance on behalf of the Club. The Club’s present claim is not based on this expenditure.[36]The Club’s accounts initially showed the Land as an asset of the Club (at cost). The Church was aware of this since, as an organisation associated with the Church, the Club’s accounts were annexed to the Charity’s own annual financial statements from 1944 to 1966. This practice was ended in the Club’s accounts for the year ended 30 September 1994. The reason given in the notes to those accounts was that the Land was owned by the Trustees, having been purchased in their name with funds raised by the Club, and that in consequence it was not an asset of the Club.[37]In February 2000 the Church’s Committee of Management was wound up, and the power to appoint trustees under clause 10 of the Trust Deed was transferred to the Elders’ Meeting of the Church.[38]By 2006, only 20 of the 91 members of the Club were also members of the Church. Of those, only nine were playing members.[39]On 28 May 2006 the Second Defendant wrote on behalf of the Elders of the Church to the Trustees asking the Trustees to consider whether the time had come to sell the Land and make the proceeds available to the Church. The Church wishes to use the money to extend and refurbish its own buildings, so as to enable the Church to improve the parochial services it provides to its members and the local community. Having carefully considered the position, the Trustees concluded in September 2006 that they should request the Church’s consent to sell the Land. The Club then took legal advice, as a result of which it challenged the validity of the Trust Deed.[40]On 20 October 2008 the Charity Commission advised the Trustees pursuant to section 29 of the Charities Act 2006 that the Trust Deed had not created a charitable trust.[41]In May 2010 the Land was valued at about £1.2 million.

Is the Land subject to the trusts in the Trust Deed?

[42]Section 53(1)(b) of the Law of Property Act 1925 provides that:
“a declaration of trust respecting any land or any interest therein must be manifested and proved by some writing signed by some person who is able to declare such trust.”
[43]Counsel for the Club submitted that there was no such document relating to the Land. The option in the Lease was never exercised and the freehold was acquired under the 1948 Agreement. The Lease expired before completion of the 1948 Agreement and continuing occupation of the Land until completion was under the terms of clause 7 of that Agreement. Neither the 1948 Agreement nor the Transfer referred to the Trust Deed. Accordingly, she argued, the Land transferred by the Transfer had not been subjected to the trusts of the Trust Deed.[44]Counsel for the Club described this argument as a “technical point”. In my view the argument is ingenious, but devoid of merit. The 1948 Agreement must be construed having regard to the background knowledge reasonably available to the parties. Having regard to the background set out in paragraphs 8-29 above and in the light of the express reference to the Lease in clause 8, I consider that the 1948 Agreement should be interpreted as a variation of clause 5 of the Lease. Instead of the Trustees having the option to purchase the freehold for £750 before 24 June 1948, it was agreed that they would purchase the freehold for £525 with payment in instalments over seven years. In these circumstances, the references in recital (3) and the declaration of the Trust Deed to “the freehold reversion if purchased” and “the freehold reversion thereto if and when acquired” respectively make it clear that the freehold was to be held subject to the trusts it established. If it were otherwise, the Trustees would have committed a breach of trust in entering into the 1948 Agreement.

Is the Trust Deed valid?

[45]It is trite law that a valid trust must either vest the trust property absolutely in ascertainable persons within the perpetuity period or be for exclusively charitable purposes. It is, regrettably, fairly plain that the Trust Deed is an attempt to achieve the legally impossible: a perpetual trust for a non-charitable purpose, namely to enable the members of the Club to play tennis. I can only suppose that Mr Rust thought that the provisions of clauses 7 and 8 would mean that the Trust Deed created a valid trust, as counsel for the Church sought valiantly to argue.[46]It is common ground that the Trust Deed creates an immediate trust for sale with power to postpone the sale, but that in itself does not affect the position. Clauses 1-7 of the Trust Deed apply to the Land itself. It is common ground that the Trustees have never exercised the power to let in clause 2, but only the power to licence in clause 4. There was some discussion of clauses 4 and 7 in argument. In so far as clause 4 empowers the Trustees to permit the Land to be used for the purposes of tennis (or other games) by persons associated directly or indirectly with the Church rent free, then on the face of it that is a non-charitable purpose. Counsel for the Church argued that it was merely an invalid power, which did not affect the validity of the Trust Deed. If a rack rent were charged, on the other hand, then the income could be applied for charitable purposes under clause 7, although it would be necessary to read “such funds and such charitable purposes in connection with St Andrew’s Church” as meaning such charitable funds and such charitable purposes. It is not necessary to reach a conclusion on these points, however, because the real problem is clause 8, which governs the proceeds of sale.[47]Clause 8(a) and (b) are rather odd as objects, since they are really administrative powers which the Trustees need to have in any event.[48]Clause 8(c) allows the Trustees to buy another sports ground or to contribute towards the purchase of a sports ground. No trust, charitable or otherwise, is attached. The only trust which could be attached by implication is for use by persons associated directly or indirectly with the Church. That would not be charitable: see Inland Revenue Commissioners v Baddeley [1955] AC 572.[49]Clause 8(d) empowers the Trustees to use the money to erect “any building to be used in connection with St Andrew’s Church”. If this stood on its own, it would give rise to a nice question of construction as to whether this could be interpreted as limited to use for the purposes of the Charity of the kind which divided the Court of Appeal in Re Bain [1950] 1 Ch 224. It does not stand on its own, however.[50]Clause 8(e) permits the Trustees to use the proceeds “for any other purposes in connection with St Andrew’s Church”. There is a clear contrast between the wording of this clause and that of clause 7. Given that, given that clause 8(e) must add something to clause 8(d) and given that there are non-charitable purposes which may be connected with a church, it follows in my judgment that these purposes are not limited to charitable purposes. A gift for purposes, some of which are charitable and some of which are not, will fail: see Hunter v Attorney-General [1899] AC 309.[51]The validity of the trusts falls to be tested at the date of the Trust Deed. The fact that nobody realised that there might be a problem until nearly 70 years later does not affect the issue.

Is the Trust Deed validated by the 1954 Act?

[52]The Church contends that, if the Trust Deed would otherwise be void, it is validated by the Charitable Trusts (Validation) Act 1954. The Club disputes this. The 1954 Act provides, so far as relevant, as follows: “Validation and modification of imperfect trust instruments 1.(1) In this Act, ‘imperfect trust provision’ means any provision declaring the objects for which property is to be held or applied, and so describing those objects that, consistently with the terms of the provision, the property could be used exclusively for charitable purposes, but could nevertheless be used for purposes which are not charitable. (2) Subject to the following provisions of this Act, any imperfect trust provision contained in an instrument taking effect before 16 December 1952, shall have, and be deemed to have had, effect in relation to any disposition or covenant to which this Act applies-(a) as respects the period before the commencement of this Act, as if the whole of the declared objects were charitable; and(b) as respects the period after that commencement, as if the provision had required the property to be held or applied for the declared objects in so far only as they authorise use for charitable purposes. … Dispositions and covenants to which the Act applies 2.(1) Subject to the next following subsection, this Act applies to any disposition of property to be held or applied for objects declared by an imperfect trust provision, and to any covenant to make such a disposition, where apart from this Act the disposition or covenant is invalid under the law of England and Wales, but would be valid if the objects were exclusively charitable. (2) This Act does not apply to a disposition if before the sixteenth day of December, nineteen hundred and fifty-two, property comprised in, or representing that comprised in, the disposition in question or another disposition made for the objects declared by the same imperfect trust provision, or income arising from any such property, has been paid or conveyed to, or applied for the benefit of, the persons entitled by reason of the invalidity of the disposition in question or of such other disposition as aforesaid, as the case may be. …” (a) as respects the period before the commencement of this Act, as if the whole of the declared objects were charitable; and (b) as respects the period after that commencement, as if the provision had required the property to be held or applied for the declared objects in so far only as they authorise use for charitable purposes.

Dispositions and covenants to which the Act applies

[53]Counsel for the Club submitted that, since the Land was applied by the Trustees for the benefit of the Club at all times prior to 16 December 1952, the effect of section 2(2) was that the 1954 Act did not apply. Counsel for the Church submitted that, since the Trust Deed had been treated by all concerned as valid and operated in accordance with its terms, section 2(2) did not apply. The issue is one of construction of section 2(2): does “entitled by reason of the invalidity of the disposition in question” describe the class of persons (i.e it means the class of persons whose entitlement arises from the invalidity of the disposition) or does it describe what has happened (i.e. it means the persons who have received benefits because the disposition is invalid)? I was told that there was no authority on this question, and I was not referred to any commentary either. I prefer the latter interpretation. It seems to me that the purpose of section 2(2) is to prevent the 1954 Act being applied where the imperfect trust provision has already been recognised to be invalid, and the invalidity acted upon.[54]The interpretation of the 1954 Act has been the subject of differences in judicial opinion. In Ulrich v Treasury Solicitor [2005] EWHC 67 (Ch), [2006] 1 WLR 33 Hart J reviewed the authorities and concluded as follows:
“29. In my judgment the key to the construction of the two sections is to be found for present purposes in that part of the definition in section 1(1) of ‘imperfect trust provision’ which focuses on the question whether ‘consistently with the terms of the provision, the property could be used exclusively for charitable purposes’. The subsection is contemplating a provision which satisfies this condition even though the trust property ‘could nevertheless be used for purposes which are not charitable’. It also proceeds on the hypothesis, for the purposes of the definition only, that the provision in question is valid (or at least capable of construction) both in respect of the possible charitable and the possible non-charitable objects. It thus asks one to consider, in the case of a (notionally valid) provision which permits both charitable and non-charitable applications of property, whether the whole ‘could’ be applied for charity. Another way of putting that question is to ask whether anyone would have a legitimate complaint if the whole were applied for charity. The obvious candidates for making such complaint would be either the founder or those interested in the non-charitable application (again assuming a notional locus to make such complaint). If, upon an examination of the objects of the trust, as expressed by its wording construed against the appropriate factual matrix, the answer to that question is that no one could object to an exclusively charitable application, the provision satisfies the condition. So construed, the Act is incapable of producing (pace Cross J in In re Mead's Trust Deed [1961] 1 WLR 1244) an absurd result: the provision is incapable of taking effect in a way which would flout either the intention of the settlor or the legitimate expectations of those interested under the non-charitable objects. Provided that the Act took care (as it did) to protect in an appropriate way the interests of those entitled on the hypothesis of invalidity, Parliament was not in my judgment guilty of the irrationality of which those who affected to be perplexed by its provisions have accused it. 30. An approach on the above lines has no difficulty in drawing a line between In re Wykes, decd [1961] Ch 229, on the one hand, and In re Saxone Shoe Co Ltd's Trust Deed [1962] 1 WLR 943, on the other. In In re Wykes, as Cross J pointed out in In re Mead, the settlor would no doubt not have objected to a confinement of the objects to relief of poverty. By contrast the company in In re Saxone (and it was not competent to Mr Abbott as testator to change the position) most certainly could have protested at such a confinement, as could the wide class of employees intended under the Saxone trust deed to be objects of its bounty. The Saxone trusts were plainly intended to have a wider potential application than merely to relieve poverty amongst the identified class as a charitable object: that is manifest from the width and nature of the class of the employees, the wide variety of types of application contemplated, the identity of the trustees and, last but not least, the express attempt to confine the duration of the trust to a valid perpetuity period (an exercise wholly unnecessary if the founder had contemplated, and therefore provided, that the whole might be devoted to exclusively charitable purposes). The consequence of applying the 1954 Act to the Saxone gift might indeed have been to flout the intentions of the company as settlor. On the approach I prefer, that was itself a sufficient reason for holding the Act not to apply.”
[55]In the present case, as I have already said, it is clear that the primary purpose of the Trust Deed was to benefit the Club. If the Trust Deed were to be restricted to exclusively charitable trusts for the benefit of the Church, the Club would be deprived of the benefit which it was intended to have and has in fact enjoyed for the past 70-odd years. In those circumstances, it seems to me that, whether or not Mr Tweddle might have objected, the Club would certainly have legitimate grounds to object to an exclusively charitable application. Accordingly, I conclude that the Trust Deed is not validated by the 1954 Act.

Is there an implied trust in favour of the Church?

[56]Counsel for the Church submitted that, if the Trust Deed was void and not validated by the 1954 Act, there was an implied trust in favour of the Church. I cannot see how an implied trust on different terms to those contained in the Trust Deed can arise if the express trust fails, however.

Is there a resulting trust in favour of the members of the Club?

[57]Counsel for the Club submitted that, if the Trust Deed was void and not validated by the 1954 Act, there was a resulting trust in favour of the members of the Club. In support of this submission she argued that the purchase of the Land was funded from the general assets of the Club, and therefore the Land was to be regarded an accretion to those assets to be dealt with in accordance with the Club’s Rules. Counsel for the Church disputed this.[58]There are a number of problems with the Club’s case on this point. The first is the absence of the Rules of the Club which were in operation at all the key dates (1938, 1948 and 1955). Without expressly doing so, counsel implicitly invited me to proceed on the basis that the Rules at those dates were not materially different to the 1976 Rules. I shall assume, without deciding, that that was so.[59]The second problem is that the factual premise of the argument is inaccurate. In fact, the acquisition of the Land was funded in four ways. First, by way of partial gift from Mr Tweddle. Mr Tweddle agreed to accept £525 rather than whatever the Land was worth in 1948, which was probably more than the £750 he had paid for it in 1938, and he agreed to forego the payment of rent from 25 December 1947 until the purchase was completed in 1955. Secondly, by way of partial gift from the lenders. Even if it is assumed that 4% was at all material times a commercial rate of interest, the lenders agreed to waive the repayment of capital during the seven years covered by the 1948 Agreement and it appears that some of them subsequently waived repayment entirely. Thirdly, by partial gift from people who contributed to fund-raising activities for the purpose. Fourthly, from the subscriptions paid by the members of the Club.[60]The third problem follows from the second. In Neville Estates Ltd v Madden [1962] Ch 832 at 849 Cross J identified three ways in which a gift to an unincorporated association such as a sports club could take effect:
“In the first place, it may, on its true construction, be a gift to the members of the association at the relevant date as joint tenants, so that any member can sever his share and claim it whether or not he continues to be a member of the association. Secondly, it may be a gift to the existing members not as joint tenants, but subject to their respective contractual rights and liabilities towards one another as members of the association. In such a case a member cannot sever his share. It will accrue to the other members on his death or resignation, even though such members include persons who became members after the gift took effect. If this is the effect of the gift, it will not be open to objection on the score of perpetuity or uncertainty unless there is something in its terms or circumstances or in the rules of the association which precludes the members at any given time from dividing the subject of the gift between them on the footing that they are solely entitled to it in equity. Thirdly, the terms or circumstances of the gift or the rules of the association may show that the property in question is not to be at the disposal of the members for the time being, but is to be held in trust for or applied for the purposes of the association as a quasi-corporate entity. In this case the gift will fail unless the association is a charitable body.”
[61]In re Recher’s Will Trusts [1972] Ch 526, upon which counsel for the Club relied, is perfectly consistent with this analysis. Brightman J not only expressly adopted the passage I have quoted as correctly stating the law (at 540H-541D), but also held that the gift with which he was concerned was a gift in the second category (see in particular 539C-D and G-H).[62]In the present case it is common ground that the gifts were not in first category. In my judgment, if it is assumed that the relevant Rules were not materially different from the 1976 Rules, the effect of Clauses 7 and 8(2) of the 1976 Rules is that the gifts were not within the second category. Clause 7 of the 1976 Rules prevents the members of the Club from dividing the Land or its proceeds between them, and clause 8(2) prevents the members of the Club from amending the Rules without the consent of the Church. (Clauses 5(j) and 7 of the 2004 Rules are to similar, although not identical, effect.) It follows that the gifts were in the third category, and since the Club is not a charitable body, they failed.

Is there a resulting trust in favour of anyone else?

[63]Although counsel for the Trustees very properly pointed out that the various contributors to the purchase of the Land (or now their estates) might have a claim, in circumstances where the intention of all those concerned at the relevant times was that the Land should be held subject to the trust established by the Trust Deed, but that trust has failed, it seems to me that the correct conclusion to be drawn is that the Land is held on a resulting trust for Mr Tweddle (or now his estate). It seems clear that the Land would not have been acquired by the Trustees from Mr Tweddle if he had not made his generous offer in 1948. Furthermore, Mr Tweddle appears to have been the largest single donor, and the donations made by the smaller donors were predicated upon Mr Tweddle’s donation.[64]It follows from this conclusion that the Land does not pass to the Crown as bona vacantia.[65]By letter dated 13 April 2011 the Executors stated that “in the event that any Court should consider his Estate to have an interest we renounce it in favour of St Andrews Church”. As counsel for the Trustees pointed out, however, the Executors cannot simply renounce their beneficial interest. Counsel for the Church submitted that the letter should be interpreted as an assignment, but I cannot accept that submission. The Executors may wish to make a gift of the Land to the Church, but they should take tax advice first.

Section 61 relief

[66]The Trustees (and their predecessors) have been administering the trust on the assumption that the Trust Deed was valid. The Trustees have not, for example, required the Club to pay any rent for its use of the Land. There have been a number of occasions in the past when legal advice has been taken on matters relating to the Trust, and the absence of a perpetuity period had passed entirely unnoticed. It was only when the Trustees became concerned about the dwindling relationship between Club membership and Church membership that a problem was identified. At the request of the Club and the Church the Trustees then allowed a period of time for them to try to resolve their differences without resort to litigation, but unfortunately that has not proved possible.[67]Counsel for the Trustees submitted that, if there has been a breach by the Trustees of their duty to the true beneficial owner(s) of the Land, the Trustees have at all times acted honestly and reasonably and ought fairly to be excused from liability for such breach under section 61 of the Trustee Act 1925. I accept that submission.

Conclusions

[68]For reasons given above, I conclude that: i) the Trust Deed is invalid; ii) the Trust Deed is not validated by the 1954 Act; iii) there is neither an implied trust in favour of the Church, nor a resulting trust in favour of the members of the Club; iv) the Land is held on resulting trust for the estate of Mr Tweddle; and v) the Trustees are entitled to section 61 relief.